The Massachusetts Supreme Judicial Court has agreed to hear the case of DeWolfe v. Hingham Centre Ltd. which will consider two very important issues for the real estate community, especially agents. The first issue is the scope of a real estate agent’s duty to disclose and independently verify property information posted on the Multiple Listing Service (MLS). The second issue is whether the exculpatory clause found in the Greater Boston Real Estate Board’s standard form purchase and sale agreement legally prohibits a buyer’s misrepresentation claim against the real estate agent.
The case was originally decided by the Appeals Court, and I wrote a full post about it here. The original opinion can be read here.
In summary, the real estate agent, relying on what turned out to be erroneous information supplied by his client, listed a Norwell property on Multiple Listing Service (MLS) and newspaper advertising as “zoned Business B.” The property was not, in fact, zoned for business use; it was zoned residential, thereby prohibiting the hair salon the buyer wanted to open at the property. Despite the general disclaimer on the MLS system and in the purchase and sale agreement, the Appeals Court held that the Realtor could be held liable for misrepresentation and Chapter 93A violations due to providing this erroneous information.
This will be a very important case for the real estate brokerage industry, and we will be monitoring it. Oral arguments are expected to be held in late summer or early fall, with a final ruling coming a few months thereafter.
In the meantime, my advice remains the same:
Do not make any representations concerning zoning. Advise the buyer to go to the town/city planner or hire an attorney for a zoning opinion.
Never trust your client. I hate to say this, but when it comes to disclosures, it’s true.
Always independently verify information about the property from available public sources. Here, the agent could have simply gone down to the town planning office to verify whether the property was zoned commercial or residential. (The buyer or his attorney could have done so as well—this was a complete failure on all sides).
When it comes to zoning, which can be complex and variable, think twice before making blanket statements. Better to be 100% sure before going on record about whether certain uses are permissible. You can always get a zoning opinion from a local attorney.
*Hat tip to a new real estate blog on the scene, Disgruntled Neighbors by Attorney Andrew Goldstein, for bringing this to my attention.
Are There Liability Concerns For Accepting Back Up Offers?
My colleague Rona Fischman at the Boston.com Real Estate Now Blog had an intriguing question on the legalities surrounding accepting back-up offers. This question is especially timely with the rise of bidding wars in the Greater Boston real estate market. Rona asks:
I have been told that a back up offer cannot be presented to a seller because it is inducement to interfere with a contract in place (the accepted offer.) I have also been told that a back up offer must be presented, forthwith, like any other offer. Since I never list property, I don’t know which one is true. Can you give a legal and practical explanation for the blog?
Answer: I do not believe that merely soliciting and presenting a back-up offer can give rise to a legal claim for interference with contractual relations as long as the seller does not break the existing contract with the buyer. Moreover, I believe that real estate agents have a legal and ethical obligation to present to their seller clients all offers made on the property, but it is the seller’s preference whether or not to solicit back up offers once he has already accepted an offer.
What Is a Back-Up Offer?
For those who do not know, a back-up offer is an offer made after the seller has already accepted and signed an offer to purchase with a buyer, in the hopes that the first offer will fall through and the seller will select the back-up offer. It is the seller’s decision whether to accept back-up offers at all. Back-up offers are common in bidding wars where there is frenzied competition for a well-priced property. Most buyers who submit a back-up offer will continue with their home search because the probability that their back-up offer is ultimately accepted is usually a long-shot.
Unlawful Interference with Contract?
Rona is worried that accepting back-up offers could expose an agent to liability for interfering with an existing contract. I don’t think she has much to worry about unless the seller tries to cancel the existing deal without legal right.
In the real estate context, the requirements to make out a valid claim for unlawful “interference with contractual relations” are the following:
There must be an accepted and signed offer to purchase between the buyer and seller which is sufficient to form an enforceable contract under Massachusetts law;
The competing buyer (making the back-up offer) must have knowledge of the contract;
The competing buyer must have intentionally induced or persuaded the seller not to perform its contractual obligations, i.e, not proceed with the transaction;
The interference was improper in motive or means; and
The plaintiff was legally harmed.
Under this legal definition, there is liability only where the seller unlawfully breaks the existing offer/contract with the first buyer. As a general matter, merely submitting a back-up offer (and not formally accepting it) will not support a legal claim because there has been no breach of the first contract.
A thornier question is what happens if the seller tries to wriggle his way out of the first offer in favor of a better offer? Those are the situations which often result in litigation and the filing of a lis pendens. I would advise any seller and their agent to consult an attorney before they try to break an offer or purchase and sale agreement with a buyer. On the other hand, if a buyer loses his financing and cannot proceed with the transaction, and therefore has defaulted on his contractual obligations, then it may be clear to accept a back up offer. It is always the prudent course to obtain a release and waiver from the first buyer before dealing with a back-up offer. I cannot stress this enough.
What Are Realtors’ Legal & Ethical Duties With Back-up Offers?
Back-up offers are on a slightly different footing than offers made while the property is still actively listed. I would say that if a prospective buyer makes an unsolicited back-up offer, that offer must be conveyed to the seller regardless of whether or not she has decided to accept back-up offers. The agent should not make the decision to decline an offer for the client. The seller may, of course, decide to not solicit back-up offers or to solicit them. Such a decision should be noted on the MLS. It’s always the client’s prerogative to solicit back-up offers. For agents, the safe practice is always to convey any offer which comes in, and to have the seller state in writing that she is refusing to accept back-up offers.
If you have any “war stories,” questions, or comments, please post them in the comment section below.
Well, someone in government has been listening to the chorus of complaints about lenders taking too long to make short sale decisions. In a *rare* move of federal government housing competence, the Federal Housing Finance Agency has instructed Fannie Mae and Freddie Mac to impose new guidelines which should accelerate short sale decisions. The new rules require that short sale lenders make a decision on a short sale within 30 days of a complete application, and if more time is needed, they must give weekly status updates. This will make short sale agents, sellers and buyers much happier. The new requirements go into effect June 15.
However, how much of an impact this will have on national short sales remains to be seen. Freddie Mac has jurisdiction over a small percentage of short sales, mostly HAFA short sales as well as a limited number of traditional short sales, totaling about 45,000 last year. (Bank of America did over 150,000 short sales last year, by comparison). This is certainly a step in the right direction, and hopefully will lead to more regulatory pressure on the big banks to speed up short sales.
It is no secret that both lenders and loan servicers have made continued efforts during recent months to vastly improve their short sale approval time-frames. As someone who exclusively negotiates short sales, I think it is important to note that the new Freddie Mac regulations don’t include any penalties or sanctions for loan servicers or lenders who fail to comply. What’s more, the new rules appear to only require short sale lenders to “make a decision on a short sale within 30 days of a complete application, otherwise they need to send weekly updates.” Most lenders will simply comply with the new requirements by sending out a weekly letter stating that the file is incomplete and request more short sale documents from the homeowner (most lenders already do this). Lenders could also comply with the new rules by simply making an unreasonably high counter-offer. What most people fail to realize is that most lenders, such as Bank of America, Chase, Wells Fargo, and GMAC all utilize an automated short sale processing software, known as Equator, that enables them to approve a short sale in as little as 30 days. The majority of short sales that take more than 60 days to get approved do so because the person submitting the paperwork fails to submit a complete package or the lender “loses” a portion of the submitted paperwork. While the new guidelines are a step in the right direction, without any sanctions or penalties I don’t see them having much of an effect on the time in which the lenders and loan servicers process short sale requests.
In an effort to make the short sale process more transparent, Freddie Mac (OTC: FMCC) is updating its timelines and also requiring servicers to provide weekly updates when decisions take more than 30 days after the receipt of a complete application for a short sale under the Obama Administration’s Home Affordable Foreclosure Alternative (HAFA) initiative or Freddie Mac’s traditional requirements. All decisions must be made within 60-days. Today’s announcement marks the newest part of the Servicing Alignment Initiative (SAI) Freddie Mac and Fannie Mae launched in 2011 at the direction of their regulator, the Federal Housing Finance Agency, to set consistent servicing and delinquency management requirements. Last year Freddie Mac completed 45,623 short sales, a 140 percent increase since the housing crisis began.
News Facts
Freddie Mac’s new short sale timelines require servicers to make a decision within 30 days of receiving either 1) an offer on a property under Freddie Mac’s traditional short sale program or 2) a completed Borrower Response Package (BRP) requesting consideration for a short sale under HAFA or Freddie Mac’s traditional short sale program. (BRPs are standardized assistance applications developed as part of the Servicing Alignment Initiative.)
If more than 30 days are needed, borrowers must receive weekly status updates and a decision no later than 60 days from the date the complete BRP is received. This will help servicers who may need more time to obtain a broker price opinion or a private mortgage insurer’s approval on a BRP or property offer.
In the event a servicer makes a counteroffer, the borrower is expected to respond within five business days. The servicer must then respond within 10 business days of receiving the borrower’s response.
Freddie Mac will use the new timelines to evaluate servicer compliance with the SAI and its own servicing requirements.
Freddie Mac completed 45,623 short sales in 2011, a 140 percent increase since 2009. Overall, Freddie Mac has also helped more than 615,000 distressed borrowers avoid foreclosure since the housing crisis began.
Richard Vetstein, Esq. is an experienced Massachusetts short sale attorney. For more information, please contact him at info@vetsteinlawgroup or 508-620-5352.
Utility, Gas Pipeline, Access, Drainage & Prescriptive Easements, and More!
When you are considering purchasing a home in Massachusetts, the property may have the benefit or burden of an easement. Most easements and restrictions are quite “harmless” and standard, however, some can have a major impact on future expansion possibilities and the right to use portions of the property. In this post, I’m going to go through the most common types of easements and how they can affect the value and use of your property.
What Is An Easement?
In plain English, an easement is a right that another person or company has to use your property. They don’t own your property, but the easement gives them the legal right to use your property as specified in the easement instrument. The property that enjoys the benefit of the easement is sometimes referred to as the “dominant estate,” and the property over, under, or through which the easement runs is sometimes referred to as the “servient estate.” Easements are usually recorded in the registry of deeds, but sometimes they can arise from “implication” or “by necessity.” I’ll explain those later.
Utility Easements
The most common types of easements in Massachusetts are utility easements for such things as overhead and underground power lines, cable lines, gas lines, and water mains. These easements allow the utility companies to use portions of residential property to provide their respective utility services. Sometimes, the easements will show up on a plot plan or survey, and some will be found recorded in the title, usually when the lot was first laid out. The majority of these easements do not materially affect the use and expansion of your property, however, the one type of easement to take note of are high pressure gas line easements. For obvious safety reasons, these easements usually carry with them strict restrictions on what can be built on or near them. Here is a good article on gas pipeline easements, albeit from Pennsylvania, but the law is generally the same here.
Driveway or Access Easements
Another common type of easements that are found in Massachusetts are access easements for driveways and the like. Properties with shared driveways will often have easements enabling such sharing– or they should! These easements should also provide for common maintenance and upkeep responsibilities and expense. Other types of access easements include walking and bike paths and beach access – very common down the Cape and on the Islands.
Drainage Easements
Another common type of easements are drainage easements which are typical for newer subdivisions. Drainage easements allow for one lot to drain its storm water onto another or into a detention pond.
Prescriptive Easements
If you have heard of adverse possession, then you know what a prescriptive easement is all about. An easement by prescription is an easement acquired through adverse possession – which is the hostile adverse use of someone else’s property for 20 or more continuous years. Prescriptive easements arise where people have acted as though an easement has existed but there is no instrument of easement recorded at the registry of deeds. For example, a prescriptive easement can arise if a neighbor’s family has used a walking path on the neighbor’s property for over 20 years. twenty years. I’ve written extensively on adverse possession in this post.
Easements by Implication and by Necessity
An easement by implication is found in the law when there is no recorded easement, but where the circumstances show an easement was intended to exist. It usually exists where there is common ownership of a lot, the seller conveys a portion of the land under current ownership, and both parties intended to create an easement at the time of conveyance. If someone claims an easement by implication which negatively affects one’s property, the owner’s title insurance policy, if any, will typically cover that situation. Easements by necessity occur when a property is sold in a land-locked configuration without any legal access. An easement is therefore created “by necessity” to prevent the land-locking. An adverse easement by necessity would also be covered by an owner’s title insurance policy.
When you are considering purchasing a home in Massachusetts, the property may have the benefit or burden of an easement. Most easements and restrictions are quite “harmless” and standard, however, some can have a major impact on future expansion possibilities and the right to use portions of the property. In this post, I’m going to go through the most common types of easements and how they can affect property.
What Is An Easement?
In plain English, an easement is a right that another person or company has to use your property. They don’t own your property, but the easement gives them the legal right to use your property as specified in the easement instrument. The property that enjoys the benefit of the easement is sometimes referred to as the “dominant estate,” and the property over, under, or through which the easement runs is sometimes referred to as the “servient estate.” Easements are usually recorded in the registry of deeds, but sometimes they can arise from “implication” or “by necessity.” I’ll explain those later.
Utility Easements
The most common types of easements in Massachusetts are utility easements for such things as overhead and underground power lines, cable lines, gas lines, and water mains. These easements allow the utility companies to use portions of residential property to provide their respective utility services. Sometimes, the easements will show up on a plot plan or survey, and some will be found recorded in the title, usually when the lot was first laid out. The majority of these easements do not materially affect the use and expansion of your property, however, the one type of easement to take note of are high pressure gas line easements. For obvious safety reasons, these easements usually carry with them strict restrictions on what can be built on or near them.
Driveway or Access Easements
Another common type of easements that are found in Massachusetts are access easements for driveways and the like. Properties with shared driveways will often have easements enabling such sharing– or they should! These easements should also provide for common maintenance and upkeep responsibilities and expense. Other types of access easements include walking and bike paths and beach access – very common down the Cape and on the Islands.
Drainage Easements
Another common type of easements are drainage easements which are typical for newer subdivisions. Drainage easements allow for one lot to drain its storm water onto another or into a detention pond.
Prescriptive Easements
If you have heard of adverse possession, then you know what a prescriptive easement is all about. An easement by prescription is an easement acquired through adverse possession – which is the hostile adverse use of someone else’s property for 20 or more continuous years. Prescriptive easements arise where people have acted as though an easement has existed but there is no instrument of easement recorded at the registry of deeds. For example, a prescriptive easement can arise if a neighbor’s family has used a walking path on the neighbor’s property for over 20 years. twenty years. I’ve written extensively on adverse possession in this post.
Easements by Implication and by Necessity
An easement by implication is found in the law when there is no recorded easement, but where the circumstances show an easement was intended to exist. It usually exists where there is common ownership of a lot, the seller conveys a portion of the land under current ownership, and both parties intended to create an easement at the time of conveyance. If someone claims an easement by implication which negatively affects one’s property, the owner’s title insurance policy, if any, will typically cover that situation. Easements by necessity occur when a property is sold in a land-locked configuration without any legal access. An easement is therefore created “by necessity” to prevent the land-locking. An adverse easement by necessity would also be covered by an owner’s title insurance policy.
Common Eviction Defenses Ruled Unavailable To Squatters Who Lived Rent/Mortgage Free For 3 Years
In a April 10, 2012 ruling, the Massachusetts Appeals Court just made it easier for foreclosing banks to evict squatters of foreclosed properties. This is one of the few pro-bank Massachusetts decisions coming out of the foreclosure crisis, and should help speed up the disposition and sale of foreclosure and REO properties which, in turn, should help the housing market.
The case is Deutsche Bank v. Gabriel, and can be downloaded here. The defendants were all members of a single family living at 195-197 Callender Street in Dorchester for over 28 years. In 2009, the property went into foreclosure, and Deutsche Bank acquired title by foreclosure deed. As has become common in neighborhoods throughout Boston, the foreclosed upon family refused to leave, and Deutsche Bank brought eviction proceedings against them.
The family fought the eviction tooth-and-nail, and asserted the very common statutory defense based on poor property conditions. This defense, if successful, can prevent a landlord from recovering possession. Aside from irony that the family had been living at the premises for 28 years and was therefore the clear cause of any bad property conditions, the Appeals Court held that the family were squatters (and not tenants) with no legal entitlement to raise this defense. Barring another appeal, the court cleared the way for the eviction, some 6 years after the foreclosure and presumably with the tenants living rent and mortgage free the entire time.
With the housing market turning around, this decision is some long-awaited good news for those dealing with REO and foreclosed properties. Squatting tenants will be easier to evict and properties should be back on the market faster. Bad news for those fighting foreclosure, but good news for the real estate market.
Marc and I are very humbled and honored to have been selected by Boston Magazine as one of their Top 5 Real Estate Blogs Worth Reading (click for article). We got a little write up which was amusing (and kind of a back-handed compliment and knock on our site design).
Be warned: the look of this one will probably bum you out after scrolling through the nicer-looking blogs above. But I include this one because it is filled with rich, expert content from two well-known Boston-area real estate attorneys. Blogs with stock photos usually send me clicking away instantly, but as an agent, I find the content compelling and valuable. Here is a great one on legal issues surrounding bidding wars (which are back, baby!)
Well, no one ever said lawyers were known for their design taste (although I think our site is smartly designed!). Seriously, it was nice to have been recognized. This will be our 4th year writing the blog, so this award is especially cool. Thanks to all our loyal readers, commentators, contributors, sponsors, and to our families who have put up with many nights writing blog posts!
And while Boston Magazine has their own Top 5 blog list, here is our own Top 5 List of “Real Estate Blogs Worth Reading”:
The Massachusetts closing attorney is responsible for verifying the correct amount of real estate taxes assessed against the property, collecting sufficient amounts to pay for any outstanding and/or upcoming tax bills, and to adjust between buyer and seller any payments already made by the seller. The way in which Massachusetts real estate tax bills are due and payable, however, often creates confusion for parties at the closing.
For most Massachusetts cities and towns, real estate tax bills are mailed and taxes are collected on a quarterly basis. The fiscal year for property tax is July 1 to June 30. The schedule of mailings, due dates, and the three months each payment covers is outlined on the following chart:
Quarter
Mailed By
Due Date
Payment is For
1st
June 30
Aug 1
July, Aug. Sept.
2d
Sept. 30
Nov. 1
Oct., Nov, Dec.
3rd
Dec. 31
Feb. 1
Jan, Feb., March
4th
March 31
May 1
April, May, June
The confusion is caused because most folks are not aware that the tax bill which is due on Aug. 1 covers taxes due for the preceding month of July and the following month of September.
So, if you are closing on March 1 and the seller has already paid the tax bill due on Feb. 1, the buyer will be responsible for an adjustment due the seller for the 31 days of March.
Now, here’s the kicker. As part of the mortgage escrow account requirement, explained below, the lender will most likely require the borrower to pay the real estate taxes due May 1 in advance, thereby requiring the borrower to bring a lot more to closing than he or she was expecting. The lender wants to ensure that all real estate taxes are paid in advance so no tax lien gets filed on the property. This is very common, but not often explained by the loan officer ahead of time, thereby falling on the closing attorney to break the “bad news.”
Mortgage Escrows
All lenders are now requiring that borrowers establish an escrow account for the payment of real estate taxes, homeowner’s insurance, and mortgage insurance (if lower than 20% down payment). The escrow account is like an insurance policy to ensure that real estate taxes, insurance and PMI is paid by the homeowner. The escrow account will typically be funded with up to 3-4 months of payments in advance, paid at closing. Some lenders will allow for a waiver of the escrow account, but often with an increase in the interest rate.
Borrowers, Shut Up, Listen, And Do What Your Lender Asks–Even If It’s The Third Time They’ve Asked For The Same Documentation!
When I was a kid, my dad would often answer my questions with “because I said so,” and it would drive me crazy! Now it’s prudent advice to borrowers says Mark Greene at Forbes.com. Mr. Greene recently wrote one of the best articles I’ve seen in a long time about the current state of mortgage underwriting. It’s called The Perfect Loan File (click for link). It’s a must read for consumers and real estate professionals alike.
The point Mr. Greene makes so well is that lenders are going absolutely nutty over borrower financial documentation to create a “put-back” immune loan file. (A put-back is when Fannie Mae or Freddie Mac make lenders buy back bad loans). Mr. Greene tells to borrowers to give their lender everything they ask for even if they want to stick needles in their eyeballs, and don’t talk back. I will just highlight some gems from the article:
When I was a kid, my father occasionally issued directives that I naturally thought were superfluous, and when asked why I needed to do whatever it was he wanted me to do, his answer was often: “Because I said so.” This never seemed to address my query but always left me without a retort, and I would usually comply. This is exactly what consumers should do during the mortgage approval process. When your lender requests what seems to be over-documentation and you wonder why you need it, accept the simple edict – “because I said so.” You will find the mortgage approval process much less frustrating.
Every nook and cranny of your financial life has to be corroborated, double- and triple-checked, and reviewed again before closing. This way, if the originating lender has created a loan file that is exactly consistent with published underwriting guidelines and has documented while adhering to those guidelines, the chances are that your loan will not be subject to repurchase.
It all comes down to your proof. If the lender asks for a specific document, give them exactly what they are asking for, not what “should be OK,” – because it won’t be. This is where the approval process tends to go off the rails, when the lender asks for specific documentation and the borrower supplies something else. Here, too, is where both sides get frustrated. So if the lender asks for a bank statement and there are 5 pages for that bank statement, send them all 5 pages, and not just the summary. If you send them the summary page and they ask again, don’t complain that the lender keeps asking for the same thing when you never sent it in the first place. This may sound elementary, but the vast majority of mortgage approval process woes stem from scenarios just like this.
So when your loan officer or underwriter responds to another one of your questions with “because I said so,” do him or her a favor and do it. Your loan approval will go a lot smoother and quickly if you do.
Borrowers, agents, and loan officers, feel free to share your thoughts and advice on this article!
I cannot believe I’m writing this post, but yes it’s true, the real estate market in Greater Boston, Massachusetts has now come full circle and bidding wars are back. Don’t believe me? Just read this Boston Globe article from today.
Now that bidding wars are back, buyers and sellers have questions, so we’ll try to answer them here. I’ve also asked a few local real estate agents to offer their expertise as well.
What Are The Legal Issues Surrounding Bidding Wars?
A bidding war arises when there are several competing offers for a listing at the same time. There are really no hard and fast legal rules with bidding wars. Contrary to popular belief, a private seller in Massachusetts is not legally obligated to accept the highest offer made during a bidding war. A seller can be as financial prudent or as irrationally arbitrary as she wants in deciding which offer to accept. A seller may decide to forgo the highest offer in favor of a lower offer due such factors as the financial strength of the buyer (i.e., a cash buyer), because the buyer waived inspections, or simply because the buyer wrote the sellers a lovely letter about how wonderful their home is! (Read on for one agent’s advice on letter writing).
Legally, an offer is simply an invitation to negotiate, and provides a buyer with zero legal rights to the property. An offer does not create a legally enforceable contract — unless it is accepted and signed by the seller.
For real estate agents involved in bidding wars, they have an ethical and fiduciary duty to get the highest and best offer for their sellers. There is nothing illegal about a seller or their agent creating a bidding war, so as to pit one bidder against each other. A listing agent is doing a good job for their client in creating such a market for a property. Ethically, a real estate agent must be truthful and honest when communicating with all prospective buyers and cannot make any material misrepresentations, such as lie about an offering price. Agents must present all offers to their clients, however, the ultimate decision to accept an offer always remains with the seller.
There are different ways to manage a bidding war, and again, there are no special legalities for it. Some agents will set a date by which all preliminary bids have to be in. If there are only two bidders, an agent can go back to the lowest bidder and ask if he or she would like to re-bid. An agent can continue that process until one of the bidders backs out. If there are more than two bidders, some agents will set a second round of bidding with a minimum price of the highest bid in the preliminary round. If no one bids in the second round, the agent can return to that high bid. Bidding wars are fast moving, so buyers need to be able to react quickly.
Generally, disgruntled buyers who lose out on bidding wars do not have a legal leg to stand on — unless their offer was accepted and signed by the seller or there is clear proof an agent lied about something important. That is why making your offer stand out in a bidding war is so important.
Buyers: How To Make Your Offer Stand Out In A Crowd
In a bidding war, buyers ask how can they maximize their chance to be the offer the seller accepts? Gabrielle Daniels, of Coldwell Banker Sudbury, offers this great advice on her blog, LiveInSudburyMa.com:
Make your offer STRONG. If you know that there are other offers on the property, make your offer financially strong as possible. If you believe the house is worth asking price, offer asking price. Forget about the TV shows that tell you to offer 90 percent of asking. That is ridiculous – UNLESS that is what the house is worth. Every situation is different. Every house is worth something different. There are no “general rules” about what to offer.
Be prepared. Have your pre-approval ready. Sign all of the paperwork related to the offer (seller’s disclosure, lead paint transfer, etc.) Write a check, leave a check with your agent. It is better than a faxed copy of the check. Don’t leave any loose ends.
Show some love to the house (and the seller). Write a letter to the sellers, tell them why you love the house and why you are the best buyer for the house. Sure, this is a business transaction, but it is one of the most personal business transactions in which you will be involved. Your real estate agent should be able to help you with this.
Sellers, How Can You Take Advantage of Bidding Wars
For sellers in a bidding war market, it all comes down to pricing, as Heidi Zizza of mdm Realty in Framingham explains on her blog, MetrowestHomesandLife.com:
I had a house listing in Natick this past year. The house valued out to around $620,000. We could have gone to market at $629,900 or $639,900 and had many showings that eventually would land us an offer around $610,000 or so. We figured that at that price it would take the average days on market which was (if memory serves correctly) close to 90 days. We decided to go to market at $599,900. The house got so much attention we had a HUGE turnout at the first showing/Open House and had 4 offers by that evening all competing and all over asking. The highest bid was $620,000 and we sold the property in one day. You too can do the same thing. Market your house at a price that is so attractive you will be best in show. Your buyers will let you know it, and you will definitely get an offer, maybe even several!
For those of us in the real estate business who have weathered the storm of the last 4-5 years, this is “all good” as we say! The more bidding wars, the better!
Tips For Massachusetts Real Estate Cash Buyers & Sellers
As Yogi Berra once humorously said, “cash is just as good as money.”
This is especially true in real estate transactions where a cash buyer is often perceived as better and less risky than a mortgage financed buyer. (Please note that we often encourage buyers to obtain a conventional mortgage where possible given the federal tax benefits through the mortgage interest deduction and also because of the low interest rates available).
What Is A Cash Buyer?
The term cash buyer means a buyer who plans to buy real estate without using a mortgage. The term can also apply to a buyer who plans on using a mortgage, but doesn’t plan on using a mortgage contingency with the purchase contract. (This carries significant financial risk, which we typically do not recommend except for rare instances).
Cash Deals On The Rise In Mass. and U.S.
Massachusetts cash real estate transactions have risen considerably in the last few years, as reported by the Boston Globe. Cash sales accounted for a surprising 34% of all Massachusetts residential real estate transactions in 2011, according to data provided by the Warren Group. According to the Globe, cash buyers include baby boomers downsizing to Boston condominiums with profits from the sales of their suburban houses, well-off parents purchasing homes for college-age children, and investors seeking discounted properties they can rent or sell. They are turning to cash for various reasons, including tighter lending guidelines that have made mortgages less attractive, dwindling bank financing for investment properties, and a volatile stock market that has sent people looking for other places to put their money.
Frequently Asked Questions For Cash Transactions
If you are a cash buyer, or considering selling to one, you may ask whether the transaction will proceed the same way as in a mortgage based transaction and whether there are any other special considerations involved. The short answer is that the transaction, for the most part, will proceed in the same manner, and often with a shorter time-frame than a mortgage financed deal, but there are a few special considerations that a cash buyer needs to be aware of, which I’ll outline below.
Do I Need A Real Estate Agent?
Absolutely. A cash buyer needs a real estate agent for the same reasons a financed buyer needs one. Those reasons include market knowledge and savvy; skilled negotiation; being a critical liaison between the parties; and keeping the transaction and all the players on target for a successful closing. Plus, as with all transactions in Massachusetts, including cash, the seller, not the buyer, pays for the real estate commission.
Do I Need A Real Estate Attorney?
Yes, it’s not only the smart choice but it’s the law. Massachusetts law now provides that only licensed attorneys can conduct real estate closings. In mortgage backed transactions, the lender will assign a closing attorney (who is often the same attorney working for the buyer) to close the transaction. With a cash transaction, however, there’s no lender, and thus, no lender appointed closing attorney to rely on. So a cash buyer must select his or her own attorney to close the transaction.
A cash buyer’s attorney will act as the closing attorney and legal “quarterback” on the deal, having the ultimate responsibility for the vast majority of legal work on the transaction. Here is an outline of all the responsibilities which will fall upon the attorney for a cash buyer:
Reviewing and editing the draft Purchase and Sale Agreement (“P&S”)
Drafting a “Rider” to the P&S to provide additional protections to the Buyer
Negotiating the P&S with the Seller’s attorney
Keeping the Buyer updated throughout the negotiations
Advising the Buyer about the provisions in the P&S
For condominiums, reviewing the condominium documents, including the Master Deed, the Declaration of Trust, and the Operating Budget
Conducting a 50 year title exam;
Ordering the Municipal Lien Certificate and Seller’s Payoff Statement(s)
Reviewing the 6(d) Certificate, Smoke Cert and Unit Deed
Preparing the HUD Settlement Statement
Procuring an Owner’s Policy of Title Insurance and Declaration of Homestead
Preparing Documents for Closing
Conducting the Closing;
Receiving and Disbursing Funds at Closing
Conducting final title run-down then recording the Deed, MLC and Homestead.
Post closing issues: mortgage discharge tracking, payment of outstanding real estate taxes
Without an attorney, the cash buyer is simply lost. I would never recommend that the buyer hire the same attorney who is representing the seller. Not only is this a huge conflict of interest, but the seller’s attorney allegiance will rest with the seller, not the buyer.
Do I Need Title Insurance?
As we always recommend, yes! There are two types of title insurance policies: lender’s and owner’s. In a cash transaction, there will be no lender’s policy, and the owner should always opt to obtain an owner’s owner’s title insurance policy. We’ve written extensively about owner’s title insurance here. It’s especially important in this day of paperwork irregularities with mortgage assignments and discharges, robo-signing, and botched foreclosures.
When Do I Need That Cash Again?
As with all transactions in Massachusetts, a cash buyer will put down between $500 – $1,000 with the Offer and 5% of the purchase price with the signing of the purchase and sale agreement. With no mortgage lender involved, the cash buyer must realize that at the closing they must have liquid funds for the remaining “cash to close” (usually hundreds of thousands) in the form of a cashier’s check or bank check at the closing. Accordingly, the cash buyer must make all investment withdrawals, transfers and receipt of gift funds well in advance of the closing date. Since cash deals proceed much quicker than financed deals, my advice to cash buyers is to have all necessary cash in hand and in a no-risk account when the purchase and sale agreement is signed. Don’t stick your cash in some stock fund which crashes weeks before the closing.
What Happens If I Have Second Thoughts or Don’t Have Enough Cash To Close?
This is where the cash buyer is at more risk than the mortgage financed buyer who has the benefit of a mortgage contingency. If the mortgage buyer cannot obtain financing within the agreed upon deadline, he can opt out of the deal with no penalty. By contrast, after signing the standard purchase and sale agreement, the cash buyer is locked in to going forward with the deal with little, if any, wiggle room to get out. Generally, if the cash buyer has to default, he will lose his deposit (5% of the purchase price). So for any cash buyer, make sure you don’t get any buyer’s remorse!
Best of luck on your Massachusetts cash real estate purchase…
Sheppard v. Zoning Board of Appeals of Boston: Appeals Court Overturns Variances, But Does Not Order Tear-Down Of South Boston Rehab Project
Disabled Southie homeowner Robert McGarrell wanted to improve his living situation. McGarrell, who suffered chronic emphysema, planned to rehab his dilapidated bungalow style house with a new townhouse style open floor plan enabling him to get around better with his oxygen tank. After discovering that the foundation was crumbling, he had no choice but to do a full gut rehab.
Abutter Alison Sheppard complained about the perceived impacts of the new house. The front of the new home was 4 feet closer to the front property line, and it extended approximately 4 feet deeper into the lot, bringing it closer to Sheppard’s three-decker house. The proposed house was also larger in mass, having a full second story (under a flat roof) over virtually its entire footprint (with a basement floor opening up to the back yard, as before).
In 1998, McGarrell went to the Boston Zoning Board of Appeals and they told him he needed 5 variances. After revising his design to address some of Sheppard’s concerns, the board granted the variances. Unhappy, Ms. Sheppard appealed to Superior Court.
Approval of Variances Always At Risk of Appeal
The result of this case will not surprise anyone who has experience with Boston zoning and permitting. The Boston Zoning Board of Appeals can be fairly liberal in doling out variances, however, the law says they should be rarely granted only in unique circumstances. I would say 80% of all variances issued by the board are susceptible to reversal on appeal, and the Appeals Court ruled McGarrell’s variances were no different.
The City of Boston has its own special zoning code which is both similar and different from the state-wide zoning code known as Chapter 40A. To obtain a variance, a Boston applicant must show 3 things:
Special and peculiar circumstances or conditions of the land or building such as exceptional narrowness, shallowness, shape of the lot, or exceptional topographical conditions, and that failing to grant zoning relief would deprive the applicant of the reasonable use of such land or structure;
For reasons of practical difficulty and demonstrable and substantial hardship, the granting of the variance is necessary for the reasonable use of the land or structure and that the variance is the minimum variance that will accomplish this purpose;
Granting of the variance will be in harmony with the general purpose and intent of the zoning code, and will not be injurious to the neighborhood or otherwise detrimental to the public welfare.
The Appeals Court ruled that neither McGarrell’s rectangular lot nor dilapidated home was peculiar in any way to those in the neighborhood. The Court also held that McGarrell could have constructed a smaller home on the existing footprint, and that he could not expand his home vertically “as of right.”
Remedy: Second Chance
For McGarrell, the court left the door open for his new home to stand. Usually, in the case of construction built at the risk of permits being overturned, the court will order the new structure torn down, as in the recently publicized Marblehead mansion. Since the board supported McGarrell’s improvement of a dilapidated structure, the court allowed McGarrell to proceed on an alternative path under another section of the zoning code. The case will go back to the board for further findings, and this 14 year legal odyssey will go on.
Lesson: Get Neighborhood Support Early
The lesson here, as with any Boston zoning matter, is to get the support of the abutters and neighbors as early in the process as possible. Sometimes it’s not always possible, so you have to litigate.
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Richard D. Vetstein is an experienced Boston zoning, variance and permitting attorney who has substantial experience with variance and special permit applications before the City of Boston Zoning Board of Appeals and in Superior Court. Please contact him via email ([email protected]) or tel: 508-620-5352.
I’ve recently become aware that some Massachusetts landlords are requiring that tenants procure their own policy of renter’s insurance as a condition of leasing. In fact, MSN Real Estate did a nice write up about the practice here. But I am also hearing about a dark side to this practice where some landlords have a kickback arrangement with the insurance provider where the landlord receives compensation for any policy taken out by a tenant.
Renter’s insurance is almost always a good idea, but under Massachusetts law, can a landlord require that a tenant get a policy (if the tenant doesn’t want one) and must it disclose a referral relationship with the insurance provider?
Landlords Should Be Careful About Renter’s Insurance Requirement
In light of recent court decisions, landlords should re-examine the legality of a mandatory renter’s insurance policy requirement. In the recent Hermida v. Archstone class action ruling, which considered amenity fees under the Massachusetts security deposit statute, the court held that landlords can only charge first and last month’s rent, a security deposit, and a lost key fee at the beginning of a tenancy, and no other types of fees. Any other type of fee or financial obligation required to be paid by the tenant at the beginning of the lease could be deemed illegal under the Mass. Security Deposit law, Mass. Gen. Laws ch. 186, sec. 15B. Accordingly, landlord must be very careful about what and how much they charge tenants at the inception of leases, over and above the standard rent deposits and new key fee. At the very least, renter’s insurance should be optional, and any affiliate or kickback arrangement should be fully disclosed to the tenant. This still may not prevent a landlord from getting sued over a mandatory renter’s insurance requirement.
Renter’s Insurance Still Smart Choice
That said, I always recommend that tenants get their own renter’s insurance policy. It’s fairly inexpensive and provides protection to your personal belongings. Massachusetts law does provide for a minimum of $750 per unit for tenant relocation assistance due to fire displacement. However, that is not nearly enough for the average renter.
Has your landlord required that you purchase renter’s insurance? Have they disclosed any referral relationship? I’d like to hear from you. The practice may well be illegal.
Another Expansion Of Massachusetts Landlord Liability
In yet another case demonstrating Massachusetts’ inhospitable legal environment towards residential landlords, Northeast Housing Court Judge David Kerman has ruled that an owner of a mixed used residential – commercial building is “strictly liable” for a drunk tenant’s fall through a defective porch guardrail. The 17-page ruling is Sheehan v. Weaver, and is embedded below. The imposition of strict liability, sometimes called absolute or no-fault liability, makes landlords 100% liable for the injuries of tenants where there is a building code violation, regardless of whether the tenant was equally at fault for the accident. This is a troubling ruling and another reason supporting the notion that Massachusetts is landlord unfriendly!
Faulty Porch Guardrail
The landlord, David Weaver, owned a building with three residential apartments located above a commercial establishment. None of the apartments were owner-occupied. One of Weaver’s residential tenants, William Sheehan, fell through a porch guardrail, several stories onto the asphalt pavement below, suffering serious injuries. There was evidence that Sheehan was intoxicated, however, the connection of the guardrail to its post gave way because it was defective and in violation of the Building Code.
After a four-day trial in the Housing Court, a jury found for the tenant on the negligence claim, awarding approximately $145,000 after a 40% reduction for the plaintiff’s own negligence. The jury also found the landlord strictly liable, assessing $242,000 in damages.
Building Code Violation At Issue
The Massachusetts State Building Code provides for strict (100%) liability for any personal injuries caused by any building code violation at any “place of assembly, theatre, special hall, public hall, factory, workshop, manufacturing establishment or building.” The landlord argued that the primarily residential structure was not sufficiently commercial to be considered a “building” within the meaning of the Building Code’s strict liability provision. But Judge David D. Kerman disagreed:
“[T]he structure in this case may well be at the outer margin of the class of structures that fall within the ambit of the term ‘building’ in the strict liability law,” wrote Kerman. “However, it is my opinion that the mixed residential-commercial four-unit non-owner-occupied structure in this case is ‘commercial’ and ‘public’ enough to fit within the term ‘building’ in section 51.”
The imposition of strict liability resulted in the landlord being hit with the full amount of the $242,000 judgment with no reduction for the tenant’s comparative negligence due to his intoxication. Ouch.
Commentary: Bad Decision
As I stated to Massachusetts Lawyers Weekly, this is a troubling ruling. The Building Code provision, passed in the late 1800’s, was clearly intended to cover structures with a distinctively commercial nature, i.e., “public hall, factory, workshop, manufacturing establishing or building.” The law was not intended to cover a predominantly residential apartment building with commercial/retail on the ground floor, in my opinion.
This ruling will now expand liability for residential developers who have built quite a number of mixed-use residential projects in the last few years. This decision can be read as providing strict liability for anyone injured due to any type of building code violation, however minor. Property managers and commercial insurers should be aware of this ruling, and ensure that there are no building code issues which could cause harm to tenants.
Given the concerning expansion of liability in this case, look for this ruling to get appealed. Judge Kerman is a well-respected judge, and this decision is a close call, but I think he went a bit too far outside the legislative intent behind the law.
Commercial Landlord Must Wait Out 12 Year Lease Term To Recover For Tenant’s Early Termination
In a decision which underscores the importance of careful commercial lease drafting, the Massachusetts Appeals Court has ruled that under a standard form default indemnity provision in a commercial lease, a commercial landlord must wait out the end of a 12 year lease term to recover unpaid rent from a tenant who abandoned the premises in Year 2 of the lease. The practice pointer here is to always have a current acceleration/liquidated damages clause in your commercial lease. See below for some form language.
The case is 275 Washington Street Corp.. vs. Hudson River Int’l, LLC (Mass. Appeals Court March 9, 2012), and is embedded below.
Dental Practice Goes South Quickly
The landlord and tenant entered into a 12-year lease beginning April 13, 2006, and ending April 16, 2018. The premises, located at 221-227 Washington Street in downtown Boston, were intended for use as a dental practice. Within a year of the lease commencement, the dental practice went under and closed. In May 2008, the dentist told the landlord that he would not be making any further lease payments.
Fortunately, the landlord found a new tenant. A new 10 year lease was signed, covering the remainder of the dentist’s term, but at a lower rent. The landlord sued the tenant for the rent differential.
Standard Indemnification Clause
The lease contained a standard default indemnification clause found in many older standard lease forms such as this:
The LESSEE shall indemnify the LESSOR against all loss of rent and other payments which the LESSOR may incur by reason of such termination during the residue of the term. If the LESSEE shall default, after reasonable notice thereof, in the observance or performance of any conditions or covenant on LESSEE’s part to be observed or performed under or by virtue of any of the provisions in any article of this lease, the LESSOR, without being under any obligation to do so and without thereby waiving such default, may remedy such default for the account and at the expense of the LESSEE.
Indemnity Provision Lacking
The problem is that under Massachusetts law, recovery under an indemnity clause of a lease cannot be had until the specified term of the lease has ended. The reasoning underlying this legal tenet is that such liability is ultimately “contingent upon events thereafter occurring, because the full amount which the lessee eventually must pay for the remainder of the term cannot be wholly ascertained until the period ends.” Although somewhat reluctant, the Court was bound to follow the law in this instance:
We are cognizant of the concerns raised by this long-established rule barring recovery until the end of the original lease, given the possible intervention of factors, presently unknown, that make the determination of damages uncertain at the present. We also recognize the possibility that this rule, which forces this landlord to wait until 2018 to determine post-termination damages, may in effect make it impossible for the landlord to recover its true damages from this corporate tenant or guarantor, because of the protections afforded by legal processes, such as dissolution or bankruptcy. However, given the present state of the law and the specific terms of the contract to which parties of equal bargaining power agreed, we are constrained, nonetheless, to deny recovery to the landlord under the indemnification clause of this lease.
Time To Change The Old Law?
The Appeals Court, especially the concurring opinion of Justice Kantrowitz, suggested that the time may be ripe for the Supreme Judicial Court to re-examine and modernize the law in this area. So look for this case to possibly go up on appeal.
Solution: Acceleration/Liquidated Damages Clause
The lease in this case did not contain the more current acceleration/liquidated damage clause which provides that upon a rent default, all unpaid rent is automatically due through the end of the lease term as liquidated damages. I recommend language such as this to prevent what happened to the landlord in this case:
If LESSEE shall default in the payment of the security deposit, rent, taxes, substantial invoice from LESSOR or LESSOR’s agent for goods and/or services or other sum herein specified, and such default shall continue for ten (10) days after written notice hereof, and, because both parties agree that nonpayment of said sums when due is a substantial breach of the lease, and, because the payment of rent in monthly installments is for the sole benefit and convenience of LESSEE, then in addition to the foregoing remedies the entire balance of rent which is due hereunder shall become immediately due and payable as liquidated damages. The Parties acknowledge and agree that (i) the liquidated damages hereunder is the best estimate of such damages which would accrue to Lessor in the event of Lessee’s default hereunder; (ii) said deposit represents damages and not a penalty against Lessee.
In a decision which could impact foreclosure cases involving missing or lost loan documents, the Appeals Court held that a mortgage is unenforceable and must be discharged where the underlying promissory note securing the mortgage could not be found.
Seller Second Mortgage Financing
This case involved an unconventional second mortgage for approximately $15,000 taken back from a private seller. The homeowner subsequently refinanced the first mortgage several times, but the refinancing lenders’ attorneys never obtained a subordination from the second lien-holder. That was a mistake. The first mortgage wound up in Wells Fargo’s hands which realized that due to the lack of recorded subordination, the second mortgage was senior to its first mortgage.
Alas, a title claim arose and the title insurance company had to step in and file an “equitable subrogation” action. In this type of legal action, a first mortgage holder asks the court to rearrange the priorities of mortgages due to mistake, inadvertence or to prevent injustice.
Where’s The Note?
The second mortgage holder had lost the promissory note which secured its mortgage, and notably, could not locate a copy of it. The mortgage itself referenced the amount of the loan and the interest rate but was silent on everything else, including the payment term, maturity date, and whether it was under seal. The second mortgage holder argued that enough of the terms of the missing note could be “imported” from the mortgage, but the Appeals Court disagreed, reasoning that there wasn’t enough specificity on key terms to enforce the mortgage.
Lesson One: Safeguard Original Loan Docs
This decision underscores the importance of safeguarding original promissory notes and other debt instruments, or at a minimum keeping photocopies so that if enforcement is required, the material terms of the original can be proved to the satisfaction of the court. With all the paperwork irregularities endemic with securitized mortgages these days, missing or lost promissory notes and loan documents have become more prevalent. This decision is potentially problematic for those foreclosures where the original promissory note is lost. The standard Fannie Mae form mortgage does not spell out the loan terms with specificity, instead, it references the promissory note. Indeed, the Fannie Mae mortgage does not even reference the interest rate. Based on this decision, a mortgage without sufficient evidence of a promissory note could be rendered unenforceable and un-forecloseable.
(a) A person not in possession of an instrument is entitled to enforce the instrument if (i) the person was in possession of the instrument and entitled to enforce it when loss of possession occurred, (ii) the loss of possession was not the result of a transfer by the person or a lawful seizure, and (iii) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process. (b) A person seeking enforcement of an instrument under subsection (a) must prove the terms of the instrument and the person’s right to enforce the instrument. If that proof is made, section 3-308 applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.
Lesson Two: Get Subordinations For Junior Liens
This decision also underscores the importance of getting a subordination agreement for second mortgages and other junior lien-holders when closing refinances. A subordination agreement is a contract whereby a junior lien-holder agrees to remain in junior position to a first mortgage or other senior lien-holder during a refinancing transaction. Otherwise, the first in time rule of recording would elevate a junior lien-holder to first, priority position after a refinance. If a subordination was obtained and recorded here, this case would not have occurred.
Disclaimer: I drafted the original complaint in this case while working at my previous law firm. I had long since left when the case was decided at the Appeals Court.
Massachusetts Senate Bill 830 Addresses Toxic Foreclosure Titles
Finally, Massachusetts lawmakers have taken action to help innocent purchasers of foreclosed properties in the aftermath of the U.S. Bank v. Ibanez and Bevilacqua v. Rodriguez decisions, which resulted in widespread title defects for previously foreclosed properties. The legislation, Senate Bill 830, An Act Clearing Titles To Foreclosed Properties, is sponsored by Shrewsbury State Senator Michael Moore and the Massachusetts Land Title Association. Full text is embedded below.
The bill, if approved, will amend the state foreclosure laws to validate a foreclosure, even if it’s technically deficient under the Ibanez ruling, so long as the previously foreclosed owner does not file a legal challenge to the validity of the foreclosure within 90 days of the foreclosure auction.
The bill has support from both the community/housing sector and the real estate industry. Indeed, the left-leaning Citizens’ Housing and Planning Association (CHAPA), non-profit umbrella organization for affordable housing and community development activities in Massachusetts, has filed written testimony in support of the bill.
Properties afflicted with Ibanez title defects, in worst cases, cannot be sold or refinanced. Homeowners without title insurance are compelled to spend thousands in legal fees to clear their titles. Allowing such foreclosed properties to sit and languish in title purgatory is a huge drain on individual, innocent home purchasers and the housing market itself.
A recent case in point: I was recently contacted by a nice couple who bought a Metrowest condominium in 2008 after it had been foreclosed. Little did they know that the foreclosure suffered from an “Ibanez” title defect. Unfortunately, the lawyer who handled the closing did not recommend they buy owner’s title insurance. They have been unable to track down the prior owner who went back to his home country of Brazil, and now they are stuck without many options, unable to refinance or sell their unit. This bill will help people like this who have helped the housing market by purchasing foreclosed properties, and improving them.
All of the Massachusetts registries of deeds now offer free online document search capabilities. The main portal for most registries is www.masslandrecords.com operated by the Secretary of State’s Office. Other registries have their own systems.
Here is a handy list of all registries liked to their online search portals:
In the basic search form, you input the property owner’s last name and first name and hit search. For common names, this will often generate too many names results as the search function is not limited to town.
2. By Name/Advanced
In the basic search form, click the Advanced button on the right side. The search will expand to the screenshot above. This is the optimal search method as you can limit the search by town and document type. I usually leave the search on “all document types.”
3. By Book and Page
Massachusetts Registry of Deeds documents are organized by “book and page.” Before electronic records, land records were recorded in actual thick book volumes. The “book” reference refers to the volume number and the page refers to the page number. Each recorded instrument has its own unique book and page reference at the top of the document’s first page. Even with the proliferation of electronic records, the book and page reference is still in operation in Massachusetts.
4. By Property Address
A newer functionality, you can also search by street address. In my experience, however, the results are often inaccurate so I would not rely on this search method.
Search In Action
So, let’s give this a try. Find your registry where you live. Use the Registry County Map if you don’t know. In the basic search form, click advanced. Input your first and last name and click your town in the drop down menu. Press Search. Voilá, there’s a list of all recorded instruments on your title. For viewing and printing, click any of the documents. The details will appear on the right side of the search page. Click View Images and the image will appear in a new window. You can print from there.
Please note that the above is not a substitute from a full title exam by a qualified title examiner and should not be relied upon for any purchase, sale or refinance transactions. A statutory title certification covers a 50 year period and also checks bankruptcy and probate records.
Final product will be a combination of both the final Truth in Lending (TIL) form and the HUD-1 Settlement Statement — a dramatic change from the existing forms.
For the second time in as many years, the federal government is substantially overhauling two of the most important disclosures given to mortgage borrowers, the Truth in Lending Disclosure and the HUD-1 Settlement Statement. The revisions are mandated by the Dodd-Frank Act. The new Consumer Financial Protection Bureau is in charge of re-designing and testing the new forms.
Most real estate industry professionals are unaware that these new changes are on the horizon. The new forms are expected to be implemented in 2013 after rule-making and industry comments are completed.
If you want to track the CFPB’s activity on these forms, I highly recommend the CFPB Monitor. The CFPB’s “Know Before You Owe” website also has updates and is pretty good for a government site.
Here is the new prototype HUD-1 Settlement Statement:
What do you think about the new forms? At first, glance it is easier to read, understand and explain to borrowers. We’ll keep track of this important issue.
After a 16 year long saga, wealthy Marblehead mansion owner Wayne Johnson’s battle to save his house from a court-ordered wrecking ball has come to an end. The underlying legal saga is convoluted and complicated, but the end result was swift and destructive — the million dollar mansion is now rubble.
Johnson’s battle started in 1995 when he recorded a plan dividing his land into two lots. One lot contained an existing single-family dwelling. The second lot contained a garage. The house lot complied with all zoning dimensional requirements, but the garage lot didn’t comply with lot width requirements. The Building Inspector incorrectly determined that the garage lot complied with all applicable zoning requirements.
Johnson’s neighbors appealed the Building Inspector’s decision, arguing that the new house would greatly diminish their valuable ocean views. The local zoning board allowed the issuance of a building permit. After the building permit issued, the plaintiffs filed an appeal in Land Court and asked for an injunction to prevent construction on the garage lot. The Land Court judge warned Johnson that proceeding with construction was at his peril. In a decision by another judge in May, 2000, the court ordered the building permit to be revoked. However, the court ruled that the house could remain in place while Johnson attempted to obtain appropriate zoning relief.
Johnson, however, was unable to obtain zoning relief. After several unsuccessful appeals, the Land Court ordered Johnson to remove the house by October 4, 2010. Johnson failed to comply with that order, and the neighbors attempted to hold Johnson in contempt. With the threat of contempt and possible jail looming, Johnson finally threw in the towel.
The Land Court ruling can be read here: Schey v. Johnson and is embedded below.
Richard D. Vetstein, Esq. is regarded as one of the leading real estate attorneys in Massachusetts. With over 25 years in practice, he is a four time winner of the "Top Lawyer" award by Boston Magazine, a "Super Lawyer" designation from Thompson/West, and "Best of Metrowest." For Rich's professional biography, click here. If you are interested in hiring Rich or have a legal question, email or call him at [email protected] or 508-620-5352.
