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How Can a Creditor Attach Real Property to Help Recover Their Money?

In my last blog, I discussed the benefits of creditors availing themselves to the remedy of bank attachments. In this blog, I will focus on another widely used creditor's remedy called an attachment of real estate.

A. Attachment of real estate without notice. As with trustee or bank attachments, attachments of real estate can go along way in helping to secure your claim and, at the same time, put pressure on the debtor to settle with you. Under the Massachusetts Rules of Civil Procedure, there are two ways to obtain an attachment of real estate: 1. With notice and 2.Without notice. Where a creditor seeks to attach property without notice, as with bank attachments, a creditor must demonstrate that there is a clear and convincing danger that the property will be sold, conveyed, transferred or assigned in order for a court to grant an attachment without notice or, as we say, an ex parte attachment. To do this, a creditor must put forward an affidavit that will accompany a complaint and motion telling the court why the circumstances of its case warrant such relief. The classic case of where courts allow such motions is, for example, if the debtor has a "for sale" sign on its property. Other situations giving rise to an ex parte attachment may include liquidation of properties, conveyance from the debtor to a family member, and/or other creditors who may be seeking to attach the same real property. Unless you can show that the property is going to be for sale almost immediately the judges on the Superior Court, in particular, will require that you provide notice of any hearing to the debtor in the first instance before the Court take any action.

B. What happens if a court disallows a motion for attachment of real estate without notice. Once a court disallows a creditor's motion to attach a debtor's real estate without notice the matter will then be held for a subsequent hearing wherein the debtor will receive a notice and be given the opportunity to present its side of the story. When notice is provided to the debtor the only two things the creditor needs to show is that there is a reasonable likelihood of success on the merits of the creditor's claim and that the debtor to the best of the creditor's knowledge has not liability insurance to cover the creditor's loss. 

C. Preparing for either an ex parte/no notice hearing or a  hearing. In either case, the most important document for the court's determination in deciding whether to grant or deny a motion to attach real estate is the affidavit. An affidavit is a sworn statement made under the pains and penalties of perjury by the creditor who has first-hand knowledge of the facts in the case. Now that person may not be the President of a company. Often, the person with the most first-hand knowledge may be a credit manager or loss prevention manager who has been dealing with the situation for a while before it got to the litigation stage. What is critical here is not the job title necessarily but the knowledge of the person submitting the affidavit. The affidavit itself should be detailed, not conclusory, and without any opinion. The affidavit should only set forth facts. If there are important documents then those should be referenced in the affidavit itself and appended as exhibits to the affidavit.

D. The affidavit is filed with motion and complaint. The affidavit is but part of three main documents to be filed by the court at the time a creditor seeks to attach a debtor's property. The first document is the civil complaint setting forth the basis for the action itself (i.e. is the case a promissory note case or does it have to do with goods sold and delivered). The next paper to be filed is a motion which is essential acts as the device to bring it before the Court. It is incumbent upon the creditor who is seeking this kind of relief to ensure that its papers-complaint, affidavit, and motion are all consistent and that there are no discrepancies among the documents submitted to the Court.

E. What happens when an attachment is granted. If a court grants a creditor's request for an attachment the Court will provide the creditor with a writ of attachment to be filed at the registry of deeds. The writ is then completed and sent to the specific county sheriff for service on the registry. You should make sure that the attachment is recorded on the right side of the registry-recorded or unrecorded land. A filing on the wrong side of the registry will render a creditor's attachment useless.

At the Katz Law Group, we have helped many creditors get the results they need through the use of an attachment of real estate. Please feel free to call us at 508-480-8202 for further information as to how we can help your business secure its legal interests.

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