Real estate lawyers across Massachusetts could find their jobs to be a little easier when working on a deal that involves registered land, thanks to a law enacted earlier this month.

Acting Gov. Jane M. Swift, on Jan. 12, signed into law a bill that allows for the voluntary withdrawal of land from the state’s registered land system, a move that officials at the Massachusetts Conveyancers Association says is a major win for those looking to develop land in the Bay State.

“This is a wonderful thing for the commonwealth,” said MCA President Elect Greg D. Peterson, an attorney with Hill & Barlow in Boston.

The new law permits landowners to no longer have their property deeded as registered land in the state’s registries of deeds, instead having it recorded as regular unregistered land. The properties in question must meet certain requirements, and the petition for withdrawal must be endorsed by a justice of the Land Court.

Prior to the legislative change, once a parcel was registered, it remained registered land forever except under special circumstances.

While having a parcel registered still provides benefits to many property owners, Peterson said having registered land was often a hindrance when it came to closing deals involving subdivided property, condominiums, or commercial developments.

“Massachusetts is one of only a few states that ever adopted the Torrens Land Registration system,” which originated in the late 19th century, he said. “Basically, [Torrens] was the first attempt at title insurance.”

The Torrens system was implemented in response to a growing number of disputes over rightful ownership of property. Having land registered with the commonwealth afforded the property owner an extra level of protection against disputes.

“The difficulty comes when a system that was set up in a different world than the one we live in now meets modern forms of ownership and financing,” Peterson said. Frequently, he noted, developments are slated for areas of land that contain pieces of property that are both registered and unregistered, which can complicate deals because proponents of projects must deal with two separate offices at the registry of deeds. Also, landowners owning registered land don’t have the same flexibility with their property as do owners of unregistered land.

“Each [registry] has a separate office for registered land, and if some of the land you’re working with is registered, you have to do everything twice.” Peterson said. “It can get pretty complex.

“I’ve seen closings take two weeks to get on record, and that’s pretty scary to real estate lawyers, not to mention there’s only a certain amount of time people have to lock in their financing rates. [The MCA] thought there ought to be a way to work with the Land Court judges to come up with a way that private landowners could withdraw from the registered land system. Then their land would only be on the unregistered side, like everyone else.”

The MCA has been floating the idea of registered land withdrawal for about five years, at first having informal conversations with judges and politicians and later pushing for legislation. The conveyancers worked with state Sen. Robert S. Creedon Jr., D-Brockton, who was a chief proponent of the legislation that was eventually signed into law.

Creedon, who is Senate chairman of the Joint Committee on the Judiciary and was the chief sponsor of last year’s legislation that increased the protected value under the Homestead Act from $100,000 to $300,000, said he worked on the bill in order help out attorneys in the private sector.

Creedon said he frequently had to deal with registered land issues when he practiced as an attorney after serving in the House of Representatives and before becoming a senator.

“I had several estates, where I had land, where a portion of it was registered and a portion was unregistered,” he said. “It makes you do things on two different tracks. Having confronted in my private practice, I thought we should be able to do something to help out … This was a practical piece that made sense.

“This cuts down on the expense of completing the sale, and it takes less time.”

The new law provides a list of circumstances in which withdrawal would be allowed as a matter of right. Those circumstances include when the land that is registered makes up less than half of a series of parcels contiguous to one another and in common ownership, also known as the “archipelago.” Another by-right situation is where the land in question represents less than 10 percent of a larger registered parcel, most of which was previously conveyed without a new perimeter plan. Land may also be withdrawn if it is part of a condominium or timeshare development.

Once approved by the Land Court, the landowner can file a voluntary withdrawal notice with the registry of deeds, and the land would thereafter be treated as unregistered land.

Land may also be withdrawn if a judge determines there is an economic hardship or other good cause demonstrated by a property owner who does not meet the other by-right criteria.

While the ability to withdraw registered land carries some benefits in certain situations, Peterson said he does not foresee the registries of deeds being overwhelmed with requests.

“I don’t expect a mass exodus,” he said. “Registered land will survive nicely. It does serve a number of good purposes. I do expect some movement, however, on the part of landowners to look at the way their property is held, particularly if they are looking at selling or refinancing.”

The law goes into effect in mid-February.

“I don’t think this will have a significant economic impact at the registries of deeds,” Peterson added. Though landowners will no longer have to pay fees at both the registered and unregistered land offices once the property is withdrawn, filing fees for the withdrawn land will still be collected when it is filed as unregistered.

While a less-complicated real estate transaction most likely means less work for real estate lawyers and may result in fewer billable hours, Peterson said the MCA remains completely supportive of the law.

“Very few lawyers take pleasure in a closing that takes two weeks. It can take years off your life worrying about that. No lawyer wants his clients to be in that position,” he said. “One of the things we care about is making sure the business community is well served by the way the system is set up, and the better a the system is set up, the better it is for commerce.”

New Law Permits Voluntary Land Withdrawal

by Banker & Tradesman time to read: 4 min