## Facts

- Nancy Coraccio bought a home in Chelmsford, Massachusetts, and, to secure a loan from Lowell Five Cents Savings Bank, conveyed the property to herself and her husband as tenants by the entirety and granted the bank a first mortgage.
- Without Nancy’s knowledge or consent, her husband later executed a second mortgage to the same bank to secure a $65,000 note.
- Nancy did not sign the second mortgage, was not obligated on the note, and was unaware of the transaction.
- After her husband defaulted, the bank began foreclosure proceedings on the second mortgage.
- Nancy sued for damages (negligence; breach of the implied covenant of good faith and fair dealing; violations of Mass. Gen. Laws ch. 209, § 1 and ch. 93A) and sought a declaration concerning the validity and effect of the second mortgage.

## Issues

1. Whether Mass. Gen. Laws ch. 209, § 1 prohibits one spouse from unilaterally encumbering their interest in property held as tenants by the entirety.
2. If unilateral encumbrance is permitted, what interest a mortgagee acquires from a mortgage signed by only one spouse and how survivorship affects that interest.
3. Whether acceptance of such a mortgage can support damages claims for negligence, breach of the implied covenant of good faith and fair dealing, or liability under ch. 209, § 1 or ch. 93A.

## Decision

- The court held that Mass. Gen. Laws ch. 209, § 1 does not bar one spouse from encumbering their own interest in entireties property.
- The court held the second mortgage was not void as a matter of law; it was effective only as to the mortgagor spouse’s interest.
- The mortgagee’s interest was defeasible and remained subject to the nonmortgagor spouse’s right of survivorship.
- The court affirmed dismissal of Nancy’s damages claims for failure to state a claim.
- The court modified the judgment to include a declaration clarifying that ch. 209, § 1 permits unilateral encumbrance of a spouse’s interest in entireties property, with survivorship limiting the mortgagee’s rights.

## Legal Principles

- Mass. Gen. Laws ch. 209, § 1 equalizes spouses’ rights in tenancy by the entirety but does not require joint consent for a spouse to encumber that spouse’s own interest.
- A mortgage executed by only one spouse on entireties property conveys to the mortgagee only the mortgagor spouse’s interest, not full title to the estate.
- The mortgagee’s interest is contingent and defeasible by the other spouse’s survivorship right; if the nondebtor spouse survives, the survivorship may extinguish the mortgagee’s interest.
- A lender’s acceptance of a unilateral mortgage on entireties property, permitted by law, does not by itself create tort liability to the nonmortgagor spouse or constitute an unfair or deceptive act under ch. 93A.
- The implied covenant of good faith and fair dealing generally runs to parties to the relevant contract; a nonparty to the challenged mortgage transaction cannot base such a claim on that transaction alone.
- When declaratory relief is properly sought and the legal issue is presented, the court should declare the parties’ rights even if damages are unavailable.

## Conclusion

The court concluded that a spouse may unilaterally mortgage their interest in Massachusetts tenancy-by-the-entirety property, but the mortgage reaches only that spouse’s defeasible interest and remains subject to the other spouse’s survivorship; the nonmortgagor spouse’s damages claims against the lender were properly dismissed, though declaratory relief clarifying the statute was required.


Coraccio v. Lowell Five Cents Sav. Bank, 415 Mass. 145, 612 N.E.2d 650 (1993)