Massachusetts Commercial Real Estate Loans: Deeds Excise & PACE

Commercial property loans in Massachusetts use the same programs as every other state — SBA 504, DSCR loans, bridge loans, bank and life-company permanent loans. What Massachusetts changes is where the closing costs fall: the deeds excise is the seller's and modest, the mortgage pays a flat recording fee instead of a tax, and the large local costs are a 2% land bank fee on the islands and emissions limits on big buildings in Boston and Cambridge. Foreclosure is usually out of court, under a power of sale with strict notice rules, and PACE Massachusetts can finance energy work if the existing lender consents.

One tax on the deed — and none on the loan

The deeds excise under M.G.L. c. 64D, § 1 is $2.28 for each $500 of consideration, or fraction of $500, above $100 — $4.56 per $1,000 — and it is paid by the person who makes or signs the deed, which is the seller. Barnstable County is the only county with its own excise on top of the state's; on Cape Cod the combined rate is $6.48 per $1,000. There is no separate tax on the mortgage: the registry of deeds records it for a flat $205, Community Preservation Act surcharge included, and the deed for $155.

Example: a $2,000,000 building bought with a $1,400,000 loan.

• Deeds excise outside Barnstable County: $2,000,000 ÷ $500 × $2.28 = $9,120 (seller)
• Same sale in Barnstable County: $2,000,000 ÷ $1,000 × $6.48 = $12,960 (seller)
• Tax on the $1,400,000 mortgage: $0 — recording fee $205
• On Nantucket or Martha's Vineyard, add the land bank fee: $2,000,000 × 2% = $40,000 (buyer)

Outside Barnstable County and the islands, the $9,120 is less than half of Florida's $21,700 on the same example and under a fifth of Maryland's $50,000 in Baltimore County, and almost none of it falls on the buyer. A refinance pays no excise at all, because no deed changes hands — only the $205 to record the new mortgage, whether it is a rate-and-term refinance or a cash-out refinance.

The islands: a 2% land bank fee on the buyer

Nantucket (Acts of 1983, c. 669) and Martha's Vineyard (Acts of 1985, c. 736) each fund a land bank with a 2% fee on the purchase price, paid by the purchaser at transfer unless an exemption applies. On the $2,000,000 example it is $40,000 — more than four times the seller's $9,120 excise. It is cash the buyer brings to closing, so build it into the equity — loan-to-value is measured against the price or appraisal, not against closing costs. Size the cash need with the commercial mortgage calculator before you sign the purchase agreement.

Foreclosure: out of court, but notice must be exact

Most Massachusetts mortgages carry the statutory power of sale, so the lender can foreclose by public auction without first getting a court judgment. M.G.L. c. 244, § 14 sets the notice: publication once in each of three successive weeks, the first at least 21 days before the sale, and registered mail to the owner of record at least 14 days before it. The Supreme Judicial Court requires strict compliance — in U.S. Bank v. Ibanez, 458 Mass. 637 (2011), sales by foreclosing parties that did not hold the mortgage when they gave notice were void. For a borrower, that means the timeline from notice to auction can be short, so a refinance or sale has to start well before a default notice. Read the personal guarantee too — and, on a non-recourse loan, the carve-outs that would turn on recourse.

Building emissions rules and PACE Massachusetts

Boston and Cambridge set their own emissions limits for large buildings. Boston's BERDO covers non-residential buildings of 20,000 square feet or more and residential buildings of 15 or more units, with standards from 2025 for the largest buildings and from 2030 for the rest; a building over its limit can make an alternative compliance payment of $234 per metric ton of CO2e. Cambridge's BEUDO requires non-residential buildings of 100,000 square feet or more to reach net zero by 2035, and those of 25,000–99,999 square feet by 2050. For a lender, a building that heats with gas in either city has a dated upgrade bill attached, and that belongs in the underwriting.

PACE Massachusetts (M.G.L. c. 23M), administered by MassDevelopment, can pay for that work. A city or town opts in once; it then levies a betterment assessment on each financed property, collected like property taxes, and — subject to the consent of existing mortgage holders — the lien ranks ahead of all other liens except municipal real estate taxes. C-PACE Desk, a BestLoanUSA site, tracks Massachusetts's C-PACE status. Bring your current lender in early — without its consent the financing can't close.

Where to start

Choose the program — SBA 504 for an owner-occupied building, a DSCR loan or permanent loan for an income property, a bridge loan for a transition — and check whether the property is on the islands or covered by BERDO or BEUDO before you set the budget. For financing that isn't tied to real estate, the Massachusetts business loan guide covers SBA offices and state programs.

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Sources: M.G.L. c. 64D, § 1 and Massachusetts DOR Directive 95-4; Barnstable County, A Brief History of the County Excise Tax; M.G.L. c. 262, § 38 and c. 44B, § 8, Plymouth County Registry of Deeds fee schedule; Nantucket Islands Land Bank, Transfer FAQ; Acts of 1983, c. 669 and Acts of 1985, c. 736; M.G.L. c. 244, § 14; U.S. Bank v. Ibanez, 458 Mass. 637 (2011); M.G.L. c. 23M, § 3 and MassDevelopment, PACE Massachusetts; City of Boston, BERDO emissions standards; City of Cambridge, BEUDO. Checked 2026-10-09.