The Cautionary Tale of Hill Financial Services Co. v. Murphy, Mass. App. Ct. Docket No. 14-P-54 (2015)

In 2004, a Massachusetts real estate developer purchased a number of undeveloped parcels for $590,000 with the apparent plan of assembling and developing the properties. However, unbeknownst to the developer and his lender, the Massachusetts Historical Commission had contacted the developer’s lawyer prior to the time of the purchase to inform the lawyer that “a Native American burial site containing at least one skeleton” had been discovered on the properties. Under G.L. c. 38, § 6, any person who discovers unmarked skeletal remains must notify the Office of the Chief Medical Examiner, who, if the remains are suspected of being 100 years old or more, must contact the state archeologist. If the state archeologist suspects that the remains are likely to be Native American, he or she must notify the Commission on Indian Affairs. While the discovery of a Native American skeleton is not necessarily fatal to development plans, it does require that the developer handle the remains with care and in cooperation with the Commission. Thus, land containing skeletal remains will impose additional costs and delays on the development process. Nevertheless, in this case, the developer’s lawyer did not mention the presence of the remains to the developer prior to, or after, the closing.

The developer and his lender first learned of the skeletal remains only after the lender had foreclosed upon the property. An expert hired by the developer concluded that the presence of the skeleton rendered the property essentially worthless. The developer sued his former lawyer for damages. At trial, the lawyer argued that he should not be held responsible for the developer’s losses because the developer’s inability to make his mortgage payments was unrelated to the presence of the remains. However, the jury, finding for the developer, was persuaded that the developer would never have purchased the property in the first place, and consequently would not have taken out a mortgage loan, had he known of the skeletal remains.

The lesson from Hill Financial for any purchaser or developer is clear: when buying property, experienced and trusted counsel is essential to help you find any skeletons in the closet… and in the ground.

Researching a property’s history is an essential part of any real estate purchase. The Law Office of Edward Fegreus has over 35 years of experience with Massachusetts real estate transactions. Call or e-mail us today.