SENATE, No. 754

SECTION 1. Chapter 183 of the General Laws is hereby amended by adding the following new sections:

Section 17A. Statutory Form of Housing Restriction.

   A deed, covenant or restriction (“restriction”) in substance following the form entitled Deed with Statutory Housing Restriction or the form entitled Statutory Housing Restriction shall when duly executed have the force and effect of an affordable housing restriction as defined in section 31 of chapter 184, without limitation as to enforcement thereof as stated in section 32 of chapter 184, to the use of the holder and its successors and assigns with statutory housing covenants, upon the statutory housing condition and with the statutory housing power to sell, as defined in the following sections 17B, 17C and 17D, to secure the performance of the statutory housing restriction and any obligation therein specified related thereto. The parties may insert in such restriction any other lawful agreement or condition reasonably related to the creation, maintenance and preservation of the premises as statutory housing.

Section 17B.  Meaning of "Statutory Housing Covenants”.

In a conveyance of real estate the words "Statutory Housing Covenants" shall have the full force, meaning and effect of the following words, and shall be applied and construed accordingly: “The grantor, for the grantor and the grantor’s heirs, executors, administrators and successors, and assigns covenants with the holder and its successors and assigns,

            a) that the granted premises are free from all encumbrances made by the grantor,

            b) that the grantor will, and the grantor’s heirs, executors, administrators, successors and assigns shall, warrant and defend the same to the holder and its successors and assigns forever against the lawful claims and demands of all persons claiming by, through or under the grantor, but against none other;

            c) that the grantor and the grantor’s heirs, successors or assigns, during their respective ownership of the statutory housing premises, will comply fully with the statutory housing condition; and

            d) that the grantor and the grantor’s heirs, successors or assigns, in case a sale shall be made under the statutory housing power to sell, will, upon request, execute, acknowledge and deliver to the purchaser or purchasers a deed or deeds of release confirming such sale, and that the holder and the holder’s successors and assigns are appointed and constituted the attorney or attorneys-in-fact irrevocable of the said grantor to execute and deliver to the said purchaser such deed or deeds and a full transfer of all policies of insurance on the buildings upon the land covered by the statutory housing restriction at the time of such sale.

Section 17C.  Meaning of “Statutory Housing Condition”.

The following "condition" shall be known as the "Statutory Housing Condition", and may be incorporated in any deed, covenant or restriction by reference:

The grantor intends, declares, and covenants on behalf of the grantor and grantor’s heirs, successors and assigns that the grantor and the grantor’s heirs, successors and assigns shall:

(a) except as may be authorized in writing by the holder, occupy the dwelling unit on the statutory housing premises as the principal residence of the grantor and the grantor’s eligible household;

(b) pay and discharge when due and payable all debts secured by the statutory housing premises, including without limitation taxes, mortgages and other voluntary liens, and judgments and other involuntary liens;

(c) not encumber the statutory housing  premises or any portion thereof in an amount in excess of their affordable value, nor convey, transfer or otherwise dispose of the statutory housing  premises or any portion thereof other than as statutory housing; and

(d)  unless otherwise authorized in writing by the holder, upon disposition, convey any fee interest in the statutory housing premises only to one or more members of an eligible household approved in writing by the holder for consideration not exceeding the affordable value thereof at the time of the conveyance;  provided however that a continuing or newly acquired ownership. with continued occupancy as principal residence during his or her lifetime, by the surviving spouse of a qualified owner in the eligible household who resided at said premises as his or her principal residence at the time of the qualified owner’s death, without regard to the surviving spouse’s income, shall not constitute a breach of this condition.

Section 17D.  Meaning of “Statutory Housing Power to Sell”.

The following "power" shall be known as the "Statutory Housing Power to Sell", and may be incorporated in any deed, covenant or restriction by reference:

But upon any default in the performance or observance of the foregoing or other condition reasonably related to maintaining the premises as statutory housing, the holder or its successors or assigns may sell the statutory housing premises or such portion thereof as may remain subject to the statutory housing restriction in case of any partial release thereof, together with all improvements that may be thereon, by deed, first complying with the statutes relating to the holder’s sale of statutory housing by the exercise of the statutory housing power to sell, and may convey the same by proper deed or deeds to the purchaser or purchasers absolutely and in fee simple but subject always to the statutory housing covenants, on the statutory housing condition and with the statutory housing power to sell, and to full satisfaction of such mortgages and other liens on said premises securing such debt as in the aggregate did not exceed the affordable value when recorded; and such sale shall forever bar the grantor and all persons claiming rights of fee simple ownership under the grantor or claiming mortgages or other liens against the statutory housing premises in excess of such affordable value from all right and interest in said premises, whether at law or in equity.

Section 17E.   Definitions Related to Statutory Form of Housing Restriction.

Affordable Value Defined  The "Affordable Value" of the statutory housing premises under the statutory housing condition and the statutory housing power to sell, unless otherwise defined in the restriction, shall be equal to the consideration paid by the grantor for the said premises subject to the statutory housing restriction adjusted in proportion to any increase of the area median income from the date the grantor acquired said premises to the date next preceding the sale for which such information is publicly available. In a restriction stating an alternate means of determining the value of the statutory housing premises, affordable value shall be the amount determined as stated in that restriction.

Area Median Income Defined    “Area Median Income” means the median income for the standard metropolitan statistical  area in which the statutory housing premises are located, adjusted for household size, published by the United States Department of Housing and Urban Development, or such other standard established by Massachusetts or the federal government to measure individual and household incomes in Massachusetts.

Eligible Household Defined    "Eligible Household" means the grantor and all persons residing together and with the grantor at the statutory housing premises and whose household income determined in connection with their acquisition of said premises subject to the statutory housing restriction did not exceed the maximum household income established by the holder at the time of such acquisition, or in the absence of the establishment of a maximum household income in the deed, covenant or restriction, did not exceed 80% of the area median income, adjusted for the number of individuals in the eligible household. The term “grantor” includes any person granting a covenants on the statutory housing condition and with the statutory housing power to sell, and also any individual acquiring the premises subject to such a restriction previously granted.

Household Income Defined   “Household income" means the aggregate combined gross income of all members of a household stated as a percentage of area median income under standards established by the United States Department of Housing and Urban Development, or such other standard established by Massachusetts or the federal government to measure individual and household incomes in Massachusetts.

.Statutory Housing Premises Defined   “Statutory housing premises” means residential real property subject to the terms of sections 17B, 17C or 17D.

Section 17F.  Entities Eligible to be Holder of Statutory Housing Restriction.

The entities eligible to be a holder of a statutory housing restriction shall be a governmental body, churches, universities or other charitable corporation or trust whose purposes include creating or retaining or assisting in the creation or retention of affordable housing under government sponsored federal, state or local subsidy programs for occupancy by persons or families of low or moderate income, and any other entity so authorized by the Massachusetts Department of Housing and Community Development (or any successor agency); provided, however, that no restriction granted on statutory housing covenants with the statutory housing condition and on the statutory housing power to sell shall be invalid by reason of being held by other than an eligible entity provided that it is assigned to an eligible entity prior to exercise of the statutory housing power to sell. "Governmental body", as referred to in this section means the United States or the commonwealth, acting through any of its departments, divisions, commissions, boards or agencies, or any political subdivision or public instrumentality thereof or any public authority or any quasi-public entity or any instrumentality created pursuant to chapter forty F, whether acting for its own account, or as agent or designee for or assignees of any private individual or private entity which has been required to place such restriction in its chain of title as a condition to receiving financial or other assistance from the United States or the commonwealth.

A city or town, acting, for cities, by the mayor, unless otherwise provided by charter, ordinance, or vote of the city council, and for towns, by the board of selectmen, unless otherwise provided by charter, bylaw, or vote of the town, may acquire by gift, purchase, grant, bequest, devise, lease or otherwise a statutory housing restriction on real property resulting from regulatory action or funding by the city or town, or otherwise authorized by the city or town, and shall have authority to hold and exercise all the holder’s rights, including the authority to acquire and re-convey the real property as statutory housing, and otherwise administer and enforce the statutory housing restriction.

Section 17G.  Holder’s Obligation to Issue Affordable Value Certificate.

            On written notice from any owner of statutory housing premises, or from any mortgagee, proposed mortgagee or other person holding a lien on said premises, the holder shall state in writing the affordable value of the statutory housing premises as of the nearest date for which such determination can be made from public record. The  holder may charge a reasonable fee for providing said certificate.

Section 17H  Term.  Termination of Statutory Housing Restriction.

            A statutory housing restriction shall continue until terminated by agreement of the holder, or by legislative or judicial action, or otherwise according to law unless a term of years is stated in the restriction, On termination of a statutory housing restriction for any reason prior to its stated term, and after payment of the affordable value to the owner, mortgagees and other lien holders according to the priority established by law, the holder (and no other person) shall be entitled to receive the difference between  the affordable value of the statutory housing premises immediately before termination (assuming the statutory housing restriction to have been perpetual) and the fair market value of those premises immediately after termination. Such amount shall be considered a first priority lien in the event that the statutory housing restriction is terminated by judicial action in a bankruptcy proceeding.

The statutory housing covenants, statutory housing condition and statutory housing power to sell shall not be subject to section 23 and sections 26 through 30 and shall have the benefits of section 32 without approval otherwise required thereunder, but all other provisions of a statutory housing restriction shall remain subject to section 23 and sections 26 through 30 and shall have the benefits of section 32 only if approved as stated therein.

Section 17I.  Effect of Mortgage or Other Foreclosure or Sale on Statutory Housing Restriction.

            Unless otherwise agreed in an instrument appearing of record, following a mortgagee’s foreclosure by a regulated for-profit, not-for-profit or governmental mortgagee holding a first mortgage, to sell the statutory housing premises in satisfaction of a debt which was subordinate to a housing restriction established by deed, covenant or other form of restriction that included the statutory housing covenants, statutory housing condition or statutory housing power to sell, only the statutory housing covenants, the statutory housing condition and the statutory housing power to sell, as defined in sections 17B, 17C and 17D, appearing in the restriction shall continue in effect binding the premises at the affordable value for ownership and occupancy by an eligible household as established in the housing restriction, and all other provisions of the restriction shall be extinguished, but the foregoing shall not affect the right of the holder to establish, or agree to with an eligible household, other affordable housing restrictions and provisions thereafter.

Section 17J.  Ownership of Statutory Housing by Holder, Mortgagee or Other Lien Holder.

            Ownership of premises subject to a statutory housing restriction, either by the holder or by a mortgagee or other lien holder, or its designee, pursuant to exercise of lawful remedies against the owner, shall not constitute a violation of the statutory housing covenants or the statutory housing condition so long as the premises are being held for re-sale to, and are re-sold to, an eligible household as statutory housing for an amount not exceeding the affordable value.