Insurance

The Ice Dam Cometh!

by Rich Vetstein on February 19, 2014 · 1 comment

in Construction Law, Insurance, Safety

Massachusetts Ice Dam Treatment & Prevention

A little break from law stuff to talk about some important safety information. With up to a foot of snow on most Massachusetts roofs and a spring thaw on the way, there will be widespread ice dam and roof damage afflicting homeowners in the next weeks. I have a feeling it’s going to be very bad.

There are ice dams all over my roof. My son’s bedroom just sprung a leak. And I can’t get a crew out here to get on my roof until Friday at the earliest. (Sorry, but I’m not risking life or limb climbing up my ice covered roof!). I did use a roof shovel to clear a few feet of snow off the roof, but I need some professional help.

Here are some tips from my friend, George Lonergan of Lonergan Construction in Framingham (Tel:  508-875-0052) – whose roof clearing crews have been out 7 days a week. For folks closer to Boston, GF Sprague Roofing out of Needham is also good.

  1. Try to remove snow from the roof but only if it can be done safely. A roof rake or push broom can be used but may cause damage to the shingles. If it’s not possible to remove the snow safely, call a professional.
  2. Chisel grooves into the dam to allow the water behind it to drain off. This is a good emergency measure, especially if rain or a sudden thaw is coming. Be careful not to damage those shingles!
  3. Fill an old pair of your wife’s pantyhose with calcium chloride snow melt and lay it across the dam. It will help to melt the dam and also keep that area of the roof clear. DO NOT USE ROCK SALT! It may stain the roof and siding. It is best for small dams or prevention. It’s also a good idea to scrape the snow off the roof first.

To prevent ice dams in the longer term, keeping warm air from escaping into the attic is the first course of action. In addition to helping resolve ice dam issues, it will result in a more comfortable and less expensive to heat home.

Ice Dam Insurance Coverage

Very few insurance policies cover ice dam or snow removal from your roof or anywhere else on your property for that matter. However, certain cases of interior damage caused by an ice dam or roof collapse may be covered. As with any insurance claim, call the claims department immediately and take photos of the damage.

Good luck and happy raking and chiseling!

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government shutdown I’ve been glued to CNN in recent days, watching incredulously as those buffoons in Washington grind our government to a halt. I though for sure that a midnight deal would have been struck, but I woke up this morning with the dreaded news that the government has indeed shutdown. I’ve been trying to get a handle all morning on how this is going to affect the Massachusetts and national real estate market, and here’s what I have so far. (Updated 10/1/13 at 4:30pm below).

Tax Transcripts/SSN Verification Delays

Virtually all federally back mortgage lenders request copies of borrower’s tax transcripts through the IRS and social security numbers through the SSA. According to my friend Rick Moore, loan officer at Lendmark Loans in Framingham, and media reports, the shutdown will apparently either stop or hinder the federal agencies’ ability to issue those verifications, resulting in mortgage approval delays across the board. I know that lenders were furiously ordering tax transcripts and SSN verifications last week, in preparation for the shutdown. If your loan is in the middle of underwriting, speak to your loan officer now. You may be facing a delay in getting a clear loan commitment and a resulting delay in your closing date.

Federal Housing Administration (FHA)
The shutdown’s impact on FHA loans appears to be not as bad as originally thought. HUD’s Contingency Plan states that FHA will endorse new loans in the Single Family Mortgage Loan Program, but it will not make new commitments in the Multi-family Program during the shutdown. FHA will maintain operational activities including paying claims and collecting premiums. Management & Marketing (M&M) Contractors managing the REO portfolio can continue to operate. You can expect some delays with FHA processing.

VA Loan Guaranty Program
Lenders will continue to process and guaranty mortgages through the Loan Guaranty program in the event of a government shutdown. However, borrowers should expect some delays during the shutdown.

Flood Insurance
The Federal Emergency Management Agency (FEMA) confirmed that the National Flood Insurance Program (NFIP) will not be impacted by a government shutdown, since NFIP is funded by premiums and not tax dollars. Changes to the flood insurance program scheduled to take effect on Oct. 1 will be implemented as scheduled.

USDA Loans
For USDA loan programs, essential personnel working during a shutdown do not include field office staff who typically issue conditional commitments, loan note guarantees, and modification approvals. Thus, lenders will not receive approvals during the shutdown. If the lender has already received a conditional commitment from the Rural Development office, then the lender may proceed to close those loans during the shutdown. A conditional commitment, which is good for 90 days, is given to a lender once a USDA Underwriter approves the loan. If a commitment was already issued, the funds were already set aside and the lender may close the loan at its leisure. If Rural Development has not issued a conditional commitment, the lender must wait until funding legislation is enacted before closing a loan.

It is important to note that the traditional definition of “rural” for qualifying communities for assistance will be continued in effect during the shutdown.  We expect that language to continue the current definition will be included in whatever funding measure is eventually enacted.

Government Sponsored Enterprises
Fannie Mae and Freddie Mac will continue operating normally, as will their regulator, the Federal Housing Finance Agency, since they are not reliant on appropriated funds.

Treasury
The Making Home Affordable program, including HAMP and HAFA, will not be affected as the program is funded through the Emergency Economic Stabilization Act which is mandatory spending not discretionary.

Updated (Oct. 1 at 4:30pm). Memo from national mortgage lender:

“There has been no progress today toward a resolution to the government shutdown. Fortunately, the initial impact of the shutdown on mortgage originations has been small. The biggest concerns are obtaining transcripts from the IRS and social security verifications from the SSA. Certain Government produced economic reports will not be available. The Construction spending report due out this morning was not issued. The Non-Farm Payrolls report due on Friday may be affected. The impact on the mortgage market of this lack of data is difficult to anticipate.

At this time, Fannie, Freddie, and Ginnie say they will continue to operate as normal. VA says that they, too, will have no disruptions in services. FHA, however, expects delays due to reduced staffing. Origination companies, correspondent banks, and warehouse lenders may react differently as they access the risks associated with an extended shutdown.”

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flood-insurance-new-bedford-guideNew Flood Insurance Rates and Map Changes To Drown Homeowners With Premium Surge, Subsidies To End 

I was recently working on a sale transaction in Wareham which went under agreement with no issues. As is common in that coastal area, the property is in Flood Zone with a subsidized flood insurance annual premium of around $3,000 which the buyer was willing to live with. However, during the underwriting process, the lender advised that under new federal flood insurance map and rate changes, the property was not only in a higher flood risk elevation zone, but would also lose its subsidy upon a sale, with a new premium running a whopping $55,000 — a 1700% increase! Needless to say, the sale sank to the bottom of Buzzards Bay, and the current owner is left with a significantly devalued property.

The culprit for this storm surge is the Biggert-Waters Flood Insurance Act, which was passed after Hurricane Katrina. Under the new law, many homeowners will grapple with a double-whammy of costs — first, because their homes are no longer above base flood elevation, and second, the Act will eliminate the grandfathering of properties that were allowed to use old flood-risk data, and will end subsidies for certain types of properties. According to most projections, flood insurance premiums have the potential to increase by 25% per year for many, and for some, exponentially — like my Wareham client. Furthermore, many additional homes have been placed in the high-risk flood zone for the first time, and if the owners have mortgages, they will be required to buy flood insurance.

According to the Boston Globe, the changes will have widespread impact along coastal communities. For example, in Marshfield, roughly 1,500 homes are located in the expanded flood zone, and in Scituate, about 500, according to local officials. Coastal towns have been scrambling over the last several months to assist affected homeowners and petition Congress and FEMA to help, mostly to no avail.

Property owners have the right to appeal their inclusion in the flood zone, but they have barely more than six weeks left to do so. The deadline is Oct. 17 throughout the county. For an appeal to be successful, the owner would have to prove, with professional documentation, that the elevation is different from what the maps indicate. That’s a high burden and very costly to boot.

This situation has real potential to drown listings and sales along the affected coastal areas. I’ll be monitoring this looming storm in the weeks ahead. Stay dry!

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dive-warningLandlords Could Be Held Responsible for Tenant Paralyzed Jumping from Trampoline into Kiddie Pool

I don’t write a lot about premises liability in this blog, but this tragic case out of my hometown of Framingham may be a classic example of the saying that “hard cases make bad law.” The Supreme Judicial Court has granted a new trial to a man paralyzed by jumping off a trampoline into a kiddie pool while playing with his small son. The case is Dos Santos v. Coleta (SJC – 11188). This is a case which will get all the tort-reformers screaming in protest, but it is evident that premises liability law in Massachusetts keeps on evolving and not in a good way for property owners.

The moral of this case for landlords and all homeowners is to not leave potentially dangerous contraptions in yards for tenants and kids to get injured on. Also, make sure you have liability insurance coverage for at least $1 Million, and look into getting an excess umbrella policy for up to $5 Million.

Summer Fun Goes Terribly Wrong

In the summer of 2005, Cleber Dos Santos lived with his wife and son in one unit of a two-family home in Framingham that he rented from the Coleta family. The landlords, who lived in the other unit, set up a trampoline immediately adjacent to an inflatable kiddie pool in the backyard. The landlord disregarded warnings printed on the side of the pool cautioning against jumping or diving into the pool. He knew that setting up the trampoline next to the pool might be dangerous but thought it would be “fun.”

The landlords moved to South Carolina on July 31, but they maintained ownership of the home and continued to rent the other unit to Dos Santos and his family. The landlords left the pool and trampoline in the backyard and understood that both items would continue to be used by their friends and family.

On the evening of August 2, 2005, Dos Santos, who had never before used the trampoline, came home from work and decided to play with his son on the trampoline while his wife recorded a video of them to send to their extended family in Brazil. He decided to entertain his son by flipping into the pool. He severely underrotated the flip, entered the water headfirst, and struck his head on the bottom of the pool. As a result of the impact, Dos Santos sustained a burst fracture of his C-5 vertebrae, and is permanently paralyzed from the upper chest down. He has been hospitalized ever since with medical bills exceeding $700,000.

SJC Clarifies Open and Obvious Danger Rule

Perhaps not surprisingly, the jury rendered a defense verdict on the basis that Dos Santos’ backflip from a trampoline into a kiddie pool was an “open and obvious” danger. But the SJC found the trial judge’s jury instructions lacking, holding that even if the jury believed that the danger present was open and obvious, the jury should have considered whether the absentee landlord should have removed or remedied the dangerous trampoline/pool setup from the backyard.

Having established that the existence of an open and obvious danger will not necessarily relieve a landowner of all duties to lawful entrants with regard to that danger, we set out to answer the following principal question: where the duty to warn has been negated, in what circumstances will the duty to remedy nevertheless exist–or, in other words, in what circumstances “can and should a landowner anticipate that the dangerous condition will cause physical harm to the lawful entrant notwithstanding its known or obvious danger”?

In plain English, Judge Cordy is basically saying that performing a backflip from a trampoline into a kiddie pool may be stupid and dangerous, but it’s also just as stupid and dangerous for a landlord to leave the deadly contraption out in the backyard for anyone to get injured on.

The justices ordered a new trial in the case, so this tragic 8 year legal saga will continue on. (Also remember that it appears that the landlords are covered by a liability insurance policy, the amount of which is unknown).

In sum, the SJC has now shown that Massachusetts premises liability law continues to shift towards even greater responsibility and liability for rental property owners.

_____________________________________________________

RDV-profile-picture-larger-150x150Richard Vetstein is an experienced Massachusetts landlord tenant attorney. You can contact him at info@vetsteinlawgroup.com or 508-620-5352.

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massachusetts snow roof collapseWinter Safety and Insurance Alert

With more heavy, wet snow in the forecast and roofs already covered in snow, the risk of roof collapse and ice dams remains very high. The Massachusetts Emergency Management Agency (MEMA) warns that fluffy snow piled high on roofs can act as a sponge, absorbing rain and adding additional stress to structures.

Relatively flat roofs are particularly vulnerable, MEMA says. In other cases, roof ice dams have formed causing water build-up, leading to interior damage. These conditions can accelerate the snowmelt.

Prevention of Roof Collapse

  • Be on the alert for large accumulating snow build-up or snowdrifts.
  • If roof snow can be removed with the use of a snow rake (available at most hardware stores), do so. Try to avoid working from ladders, as ladder rungs tend to ice up, snow and ice collect on boot soles, and metal ladders and snow rakes conduct electricity if they come into contact with a power line.
  • Flat roofs can be shoveled clear, but only if it is determined that the roof is safe to stand upon. Exercise care when on the roof to avoid potentially dangerous falls.
  • Flat roof drainage systems should be kept clear to minimize the risk of excess roof ponding in the event of subsequent heavy rainfall or melting.
  • Large icicles can form on roof overhangs, but do not necessarily mean ice damming is occurring. Icicles overhanging walkways can be dangerous and should be carefully removed.
  • All of the above actions should only be performed by able-bodied adults. The snow is heavy, and roofs and other surfaces may be slippery.
  • Protective headgear and eye protection is recommended.

ice-damIce Dam Treatment & Prevention

  1. Try to remove snow from the roof but only if it can be done safely. A roof rake or push broom can be used but may cause damage to the shingles. If it’s not possible to remove the snow safely, call a professional like I did.
  2. Chisel grooves into the dam to allow the water behind it to drain off. This is a good emergency measure, especially if rain or a sudden thaw is coming. Be careful not to damage those shingles!
  3. Fill an old pair of your wife’s pantyhose with calcium chloride snow melt and lay it across the dam. I’m not kidding! I did this over the weekend and it seemed to work. It will help to melt the dam and also keep that area of the roof clear. DO NOT USE ROCK SALT! It will stain the roof and siding. It is best for small dams or prevention. It’s also a good idea to scrape the snow off the roof first.

To prevent ice dams in the longer term, keeping warm air from escaping into the attic is the first course of action. In addition to helping resolve ice dam issues, it will result in a more comfortable and less expensive to heat home.

Ice Dam Insurance Coverage

Very few insurance policies cover ice dam or snow removal from your roof or anywhere else on your property for that matter. However, interior or exterior damage caused by an ice dam or roof collapse is typically covered. As with any insurance claim, call the claims department immediately and take photos of the damage.

Good luck and be safe!

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Massachusetts Homeowner’s Insurance Coverage for Hurricane Damage

Although Massachusetts was spared a direct hit by Hurricane Sandy, there are widespread reports of flooding and property damage. Whether the damage to your home from Hurricane Sandy is covered by your homeowner’s insurance policy depends on the source of the damage. Typically, damage caused by wind, downed trees and power outages are covered. However, flooding caused by rain or surface water is typically not covered. I will explain each below.

Wind Damage/Downed Trees

The standard Massachusetts homeowners insurance policy typically covers damage caused by wind — including broken windows, torn roofs and any interior damage from trees or limbs falling into the home. (If a tree falls onto a car, many comprehensive auto policies will cover the damage.)

Some policies, however, require that homeowners pay a hefty deductible before homeowners’ insurance policies kick in for wind damage — often 1% to 5% of the total amount the home is insured for.

Power Outages

The hurricane has left hundreds of thousands of Massachusetts customers without power. Homeowners’ insurance policies typically cover any property damage caused by electrical outages due to a hurricane. Some policies will even reimburse you for spoiled food.

Flooding and Water Damage

Flooding — defined by insurers as any water that rises from the ground or from the sky, including tidal waves — is typically not covered by Massachusetts homeowner’s insurance policies. If your home has flooded due to coastal ocean storm surge, rising streams, ponds or wetlands or from surface water, your homeowner’s policy will unfortunately likely not cover the damage.

To get reimbursed for hurricane flooding damage, homeowners would have already secured federal flood insurance. The average flood premium is about $600 annually, but rates go up to nearly $6,000 for the highest-risk coastal properties, according to the National Flood Insurance Program.

Homeowners who live in flood zones usually have flood insurance already: Many lenders won’t provide these home buyers with a mortgage unless they’ve signed up for flood coverage. These homeowners can rest (relatively) easy; if their home floods, flood insurance will pay for that damage. Those unlucky homeowners in the interior parts of the state aren’t so lucky.

Condominiums

Hurricane damage to condominiums raise special concerns. The coverages are typically the same as outlined above, however, there is usually a question as to whether the master condominium insurance policy or the HO-6 homeowner policy will be the primary policy in play. That depends on whether the damage originates from a common area or inside a unit and the particular provisions of the master deed and by-laws.

Serious Damage

If a home becomes so damaged that it’s uninhabitable, most standard homeowner policies will pay for a family’s living expenses — including lodging and food — while the house is being repaired.

Making An Insurance Claim

As with any insurance damage claim, my advice has always been document, document, document. Take photos and video of the damage. Keep all receipts for fans, blowers, wet vacs, sump pumps, repairs, new windows, etc. Be prepared to wait for the insurance companies to process the thousands of claims arising from Hurricane Sandy.

Liability For Fallen or Downed Trees

Given all the trees and branches which fell across New England, the pressing question of the day is, clearly, who is responsible if my neighbor’s tree or tree branch fell on my house, car, shed, patio, grill, etc. during the storm?

Under Massachusetts law, an owner of a healthy tree which falls during a hurricane or storm is generally not liable for any damage because the law considers this an “act of nature” for which no one is legally liable. Thus, if your neighbor’s tree has fallen on your house or car, you will have to make a claim under your and/or your neighbor’s homeowner’s insurance policy for the damage.

On the other hand, if the neighbor’s tree was diseased or decayed, was known to be at risk of falling and the neighbor ignored it, there could be negligence and liability. Either way, if you have homeowner’s insurance, the insurance companies will sort out fault and blame.

Local Insurance Claims Numbers

Acadia Insurance (800) 691-4966
AIG (Global Energy) (877) 743-7669
Chartis (formerly AIG) Private Client Group 888-760-9195
Andover Companies: Cambridge Mutual & Merrimack Mutual (800) 225-0770
Chubb Group (800) 252-4670
Commerce (800) 221-1605
Fireman’s Fund (888) 347-3428
Great American (888) 882-3835
Guard Insurance Group (888) 639-2567
Hanover Insurance (800) 628-0250
Hartford Insurance (800) 327-3636
Hingham Mutual (After hours claims) (800) 972-5399
Mass. Property Insurance Underwriting (800) 851-8978
Trident (After hours claims) (800) 288-2502
Tower (877) 365-8693
Quincy Mutual (800) 490-0047
Safety Insurance (800) 951-2100
Selective Insurance (866) 455-9969
Splash Program (Emergency Pollution related claims) (866) 577-5274
Splash Program (Emergency Non-Pollution related claims) (800) 746-3835
Travelers Personal lines:
(877) 425-2466
Commercial:
(800) 832-7839
Utica National (800) 216-1420
Vermont Mutual (After hours claims) (800) 445-2330
Zurich/Maryland (800) 565-6295

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Richard Vetstein is a Massachusetts real estate attorney. If you have any property damage questions, please contact him at info@vetsteinlawgroup.com.

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Impact on Pending Home Sales and Refinances

Meteorologists are now predicting that early next week Hurricane Sandy will either pass close by or make a direct impact on New England. This storm is potentially huge, rivaling last year’s Hurricane Irene and the Perfect Storm of 1991.

  • If you are closing on a property next week, you may want to consider pushing up the closing to before the hurricane makes landfall on early Tuesday. I realize that may not be possible at this point, but it’s worth a shot.
  • If you have not secured a homeowner’s insurance policy, you should probably wait until the storm passes as most carriers will not write new policies right now.
  • If you are closing on a purchase or refinance after the storm passes — and especially if the Federal Government declares a Federal Disaster Area –be prepared to have a re-inspection of the property before closing. A hurricane considered to be an Act of God and as a result the borrower will be required to pay for any re-inspection fee. These re-inspections range from $125 to $200. You will receive notice from your lender and re-disclosures prior to closing. This will also likely delay your closing
  • If there is substantial damage to a home you are purchasing, you’ll have to look to your purchase and sale agreement as to whether you have a right to pull out of the deal or proceed, provided you get the benefit of any insurance proceeds.

Hurricane Safety Precautions & Information

Important Links

Pre-Planning:

  • Plan an evacuation route to the nearest shelter or “safe” area and keep a map handy. During emergencies, shelter locations will announced on the radio.
  • Replenish emergency kits and supplies.
  • Get lots of batteries and flashlights!
  • Secure important documents from possible damage or move to a safe location.
  • Develop a list of important phone numbers.
  • Develop a plan to secure loose objects around the house; trim branches and trees.
  • Ensure that your pets have collars and identification tags.

Prior to the Hurricane:

Secure all loose objects outdoors.

  • Secure all windows using plywood.
  • Fill your vehicle with fuel.
  • Charge all batteries (i.e. phone, lamps, flashlights, radios, etc.)
  • Listen to the emergency broadcasts of the storm.
  • Be prepared to evacuate with emergency supplies to a predetermined location.

During the Hurricane:

Stay in doors and away from windows.  Keep to the center of the building on the ground level.

  • Listen to the emergency broadcast on the radio or television.
  • Turn off all electrical devices and appliances that are not needed.
  • Stay away from coastal waters, rivers, streams or other flooding areas.
  • Do not try to cross flooded areas with your vehicle.
  • Listen for instructions from emergency officials when the storm is over.

Emergency Supplies and Kits:

First aid kit and personal medications

  • Drinking water
  • Ice Chest
  • Lighter, matches and candles
  • Clothing, personal toiletries
  • Sleeping bags and blankets
  • Portable radio and flashlight
  • Extra batteries
  • Non-perishable foods
  • Manual can opener
  • Important documents
  • Quiet games, books, or toys for children

Local Insurance Claims Numbers

Acadia Insurance (800) 691-4966
AIG (Global Energy) (877) 743-7669
Chartis (formerly AIG) Private Client Group 888-760-9195
Andover Companies: Cambridge Mutual & Merrimack Mutual (800) 225-0770
Chubb Group (800) 252-4670
Commerce (800) 221-1605
Fireman’s Fund (888) 347-3428
Great American (888) 882-3835
Guard Insurance Group (888) 639-2567
Hanover Insurance (800) 628-0250
Hartford Insurance (800) 327-3636
Hingham Mutual (After hours claims) (800) 972-5399
Mass. Property Insurance Underwriting (800) 851-8978
Trident (After hours claims) (800) 288-2502
Tower (877) 365-8693
Quincy Mutual (800) 490-0047
Safety Insurance (800) 951-2100
Selective Insurance (866) 455-9969
Splash Program (Emergency Pollution related claims) (866) 577-5274
Splash Program (Emergency Non-Pollution related claims) (800) 746-3835
Travelers Personal lines:
(877) 425-2466
Commercial:
(800) 832-7839
Utica National (800) 216-1420
Vermont Mutual (After hours claims) (800) 445-2330
Zurich/Maryland (800) 565-6295

Good luck!!!!

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Insured Gets The Short End Of The Insurance Coverage Stick For Parking Lot & Building Flooding

The Massachusetts Supreme Judicial Court has not been too kind to insureds these days. For the second time in 2 months, the SJC has upheld the denial of a property owner’s claim in connection with flooding, this time in the commercial setting.  In Surabian Realty Co. v. NGM Insurance Co., the Court ruled that a commercial property owner’s claim for flooding caused by a blocked parking lot catch basin was not covered under an “all risk” commercial/business insurance policy.

Blocked Drain

Surabian Realty owned an office building in Foxborough. During heavy rains in 2009, rainwater stopped flowing down the parking lot drain. The drain had become clogged with debris. Rainwater then ponded in the lot and seeped under the door of the building, flooding its lower level. The flooding caused damage to the carpeting, baseboards, and walls, totaling approximately $34,000.

Surabian made a claim under its “all risk” commercial insurance policy which had a special indorsement for this type of situation, which provided, “The most we will pay for loss or damage caused by water that backs up or overflows from a sewer, drain or sump is $25,000 for any one occurrence.” The insurance company, however, denied  the claim on the grounds that the flooding was still excluded from coverage as it was caused by “surface water.”

Court Rules For Insurance Company (Again)

The SJC took an electron microscope to the policy language, parsing the language almost to a fault and unfairly (in my opinion) against the insured. The Court held:

“Construing these clauses in combination, we interpret the insurance contract, as amended by the indorsement, to exclude damage caused by flood waters that spread over the surface of the ground without having entered a drain, but to cover damage caused by water that backed up after entering a drain.”

So basically, the court said that the rainwater has to actually enter the drain, then backup, while a blocked drain that doesn’t allow water to fall down the pipe won’t be covered. Um, ok…. A better rationale would have been that the claim wasn’t covered because maintaining and keeping the drain free of debris was really the responsibility of the insured property owner, not a risk that the insurance company assumed. But I’m not the judge.

This is also the second instance in the last few months where the Court has relied upon the policy’s “anti-concurrent” clause which excluded coverage where  the damage results from the combination of a covered peril and an excluded peril.

Lessons For Property Owners

Aside from making sure catch basins are cleaned, the tough lesson for property owners here is that your supposed “all risk” insurance policy isn’t really “all risk” as you probably perceive it. It seems that these days a lot of insurance claims are denied or insureds are scared of even making a claim lest they get cancelled by the insurance company. It’s a tough predicament.

______________________________________

Richard D. Vetstein, Esq. is an experienced Massachusetts real estate and commercial insurance coverage attorney. For more information, please contact him at 508-620-5352 or info@vetsteinlawgroup.com.

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Real Estate Crash Has Resulted In Many More Forms and Disclosures

These days buyers are leaving closing rooms with not only their keys but a mild case of carpal tunnel syndrome! The reason for sore forearms and wrists is the voluminous stack of closing documents which are now required to be signed and notarized at every Massachusetts real estate purchase or refinance closing.

One of my opening “break the ice” lines at closings is to suggest that the buyers start massaging their writing hands. Then I show them the 2 inch stack of documents they must review and sign, and they usually say, “Are you serious? We have to sign all that?” Yep, I reply. You can thank Fannie Mae and the real estate collapse for that! All the new rules and regulations passed in the last 5 years have resulted in, you guessed it, more forms. Do you think the Feds and state ever eliminate old or out-dated forms? Nope.

Let me quickly go over some of the more important — and less important — documents signed at a typical Massachusetts real estate closing.

The Closing Documents

  • HUD-1 Settlement Statement. This is arguably the most important form signed at closing. It breaks down all the closing costs, lender fees, taxes, insurance, escrows and more. We did a full post on the HUD-1 and all the closing costs you can expect to pay here. Under the newer RESPA rules, most closing costs must be within 10% tolerance of the Good Faith Estimate provided by the lender (which you will also re-sign at closing).
  • Promissory Note & Mortgage. These two documents form what I like to call the “mortgage contract.” The promissory note is the lending contract between borrower and lender and sets the interest rate and payment terms of the loan. It is not recorded at the registry of deeds. The Mortgage or Security Instrument is a long (20+ page) document and provides the legal collateral (your house) securing the loan from the lender. The Mortgage gets recorded in the county registry of deeds and is available to public view. Read a full explanation of the Note and Mortgage in this post.
  • Truth in Lending Disclosure (TIL). The Truth in Lending should really be called “Confusion In Lending,” as the federal government has come up with a confusing way to “explain” how your interest rate works. This is a complex form and we’ve written about it extensively in this post. Your closing lawyer will fully explain the TIL form to you at closing.
  • Loan Underwriting Documents. With increased audit risk on loan files, lenders today are requiring that borrowers sign “fresh” copies of almost all the documents they signed when they originally applied for the loan. This includes the loan application, IRS forms W-9 and 4506′s.
  • Fraud Prevention Documents. Again, with the massive mortgage fraud of the last decade, lenders are requiring many more forms to prevent fraud, forgeries, and straw-buyers. The closing attorney will also make a copy of borrowers’ driver’s licenses and other photo i.d. and submit the borrower’s names through the Patriot Act database. They include Occupancy Affidavit (confirming that borrowers will not rent out the mortgaged property), and the Signature Affidavit (confirming buyers are who they say they are or previously used a maiden name or nickname).
  • Escrow Documents. Unless lenders waive the requirement, borrowers must fund an escrow account at closing representing several months of real estate taxes and homeowner’s insurance. This provides a cushion in case borrowers default and the taxes and insurance are not paid.
  • Title Documents. For purchase transactions, Massachusetts requires that the closing attorney certify that a 50 year title examination has been performed. Buyers will counter-sign this certification of title, as well as several title insurance affidavits and documents which the seller is required to sign, to ensure that all known title problems have been disclosed and discovered. Of course, we always recommend that buyers obtain their own owner’s title insurance which will provide coverage for unknown title defects such as forgeries, boundary line issues, missing mortgage discharges, etc.
  • Property Safety Disclosures. In Massachusetts, buyers and sellers will sign a smoke/carbon monoxide detector compliance agreement, lead paint disclosure, and UFFI (urea formaldehyde foam insulation) agreement. These ensure that the property has received proper certifications and will absolve the lender from liability for these safety issues.
  • Servicing, EOCA and Affiliated Business Disclosures. Chances are that your lender will assign the servicing rights to your mortgage to a larger servicer, like JP Morgan Chase or CitiMortgage. You will sign forms acknowledging this. You will be notified of the new mortgage holder usually within 30-60 days after closing. In the meantime, the closing attorney will give you a “first payment letter” instructing you where to send your first payment if you don’t hear from the new servicer. You will also sign forms under the federal and state discrimination in lenders laws and forms disclosing who the lender uses for closing services.

Well, those are most of the documents that buyers will sign at the closing. Sellers have a slew of their own documents to be signed at closing, and I’ll cover that in a future post. As I said, at your closing, massage your signature hand, grab a comfy pen, and sign your life away!

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Richard D. Vetstein, Esq. is an experienced Massachusetts real estate attorney. He can be reached by email at info@vetsteinlawgroup.com or 508-620-5352.

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Dry Rot Example

Water Damage Originating From Exterior Of Home = Claim Denied

In one of the more important homeowner’s insurance cases decided in recent memory, the Massachusetts Supreme Judicial Court (SJC) considered what is covered under a standard Massachusetts homeowner’s insurance policy when rain, snow melt and runoff create water damage and dry rot to the inside of a home. The case is Boazova v. Safety Insurance Co., SJC-10908 (May 29, 2012).

The Court ruled there was no coverage under the homeowner’s insurance policy where significant hidden water seepage through foundation cracks caused a kitchen floor to turn into a “spongy and mushy” mess. Under the exclusion for damage caused by “surface water,” the court held, there is no coverage for loss covered by rain, flood waters or runoff originating from outside the home, rather than inside the home, like a burst pipe. This interpretation of the Mass. standard homeowner’s policy is not what most insured expect from their insurance coverage, but unfortunately it puts to rest what most homeowners who have suffered a water damage claim know already:  a water damage claim will likely be denied if the source of water is from the natural accumulation of rain, snow melt or ice seeping into the ground, through a roof, or through the foundation.

Severe Wood Rot Discovered

While undertaking a kitchen renovation project, Ms. Boazova, an Arlington homeowner, discovered severe deterioration of the wooden sill plate that rested on top of the concrete foundation at the base of the home’s rear wall, as well as of the adjoining floor joists and wall studs. The kitchen floor and sub-floor was moist, spongy and falling apart. The homeowner’s expert engineer opined that because the concrete patio was poured directly against the house, water and moisture migrated down from the sill plate, below grade to the foundation, causing the water damage. There was no dispute that the origin of the water infiltration and seepage was from outside elements such as rain, sleet and snow melt. The insurance company denied coverage based on the policy’s exclusion for damage caused by “surface water,” and the homeowner sued.

No Coverage For Damage Caused By “Surface Water”

This case is the first in recent memory where the SJC has considered the interplay between the new Limited Fungi, Wet or Dry Rot, or Bacteria Coverage indorsement, the “hidden seepage” provision and the “anti-concurrent cause” exclusion for “surface water damage” in the standard Massachusetts homeowner’s insurance policy. Making sense of the Massachusetts standard homeowner’s policy coverages and exclusions is a bit like reading Egyptian hieroglyphics. Even the SJC justices had some difficulty, albeit they ultimately sided with the insurance company:

“Although the language of the policy and the indorsement is challenging to even the most careful reader because of the way it connects various coverages, exclusions and exceptions, we conclude that Boazova’s claimed loss — the deterioration and rotting of the wooden sill plat, adjoining floor joists, and wall studs — is excluded from coverage by unambiguous provisions in the policy.”

Take-Away: Exterior Surface Water Cause = Claim Denied

The key point is the Court’s conclusion that the surface water exclusion carried the day. Describing “surface water” as “waters from rain, melting snow, springs or seepage, or floods that lie or flow on the surface of the earth and naturally spread over the ground but to not form a part of a natural watercourse or lake,” the judges ruled that there was no coverage because the property damage was a direct result of rain and snow melt migrating down the foundation into the bellow grade kitchen floor. This covers just about every conceivable flooding scenario.

As far as what homeowner’s can take-away from this decision, well unfortunately they should keep an emergency capital reserve fund ready because any claims made for water damage arising out of exterior conditions will likely be denied. The only type of “flooding” claims which will be covered would be burst pipes and possibly overrun interior sump pumps or perimeter drain systems which cause flooding — and even those will likely involve a battle with the insurance company.

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Richard D. Vetstein, Esq. is an experienced Massachusetts real estate and homeowner’s insurance coverage attorney. For more information, please contact him at 508-620-5352 or info@vetsteinlawgroup.com.

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Renter’s Insurance Policy Raises Questions

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.

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Richard D. Vetstein, Esq. is an experienced Massachusetts Real Estate Landlord Attorney. For further information you can contact him at info@vetsteinlawgroup.com.

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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.

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Richard D. Vetstein, Esq. is an experienced Massachusetts real estate attorney. For more information, please contact him at 508-620-5352 or info@vetsteinlawgroup.com.

Sheehan v. Weaver

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Tree down in Andover, Mass. Courtesy Boston.com

Read our post on Hurricane Sandy Aftermath Here

Massachusetts Fallen Tree Law

Given all the trees and branches which fell across New England, the pressing question of the day is, clearly, who is responsible if my neighbor’s tree or tree branch fell on my house, car, shed, patio, grill, etc. during the storm?

The short answer is that, legally speaking, your neighbor is not liable for a healthy tree falling down during a major storm event. That is considered an “Act of God” for which no one is legally liable (except God of course, but I think he enjoys some type of legal immunity–I’m not sure, I’ll have to research that one). So, you will have to make a claim under your homeowner’s insurance policy for the damage caused by the neighbor’s tree.

As the court stated in the 1983 case of Ponte v. DaSilva:

The failure of a landowner to prevent the blowing or dropping of leaves, branches, and sap from a healthy tree onto a neighbor’s property is not unreasonable and cannot be the basis of a finding of negligence or private nuisance. Of course, a neighbor has the right to remove so much of the tree as overhangs his property. To impose liability for injuries sustained as a result of debris from a healthy tree on property adjoining the site of the accident would be to ignore reality, and would be unworkable. No case has been brought to our attention in which liability has been imposed in such circumstances

On the other hand, if the neighbor’s tree was diseased or decayed, was known to be at risk of falling and the neighbor ignored it, there could be negligence and liability. Either way, if you have homeowner’s insurance, the insurance companies will sort out fault and blame.

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Hurricane Irene Damage, Maryland (courtesy David Yarkin)

If It’s Wet, It’s Probably Not Covered. If It’s Wind, It Is Probably Covered.

What Type of Hurricane Damage Is Covered Under A Massachusetts Homeowners Insurance Policy?

I’m writing this post as I watch Hurricane Irene bore down on Massachusetts, scattering my lawn with tree branches and flickering my lights. My Facebook stream is filling with reports of power outages and basement flooding, but luckily I’ve been spared (for now). *Check that–we’ve had no power since 11am on Sunday, a live wire down on our street, and not an NStar crew to be found anywhere!

Being the dorky real estate attorney that I am, I naturally thought to myself, what type of hurricane damage, if any, is covered under a standard Massachusetts homeowner’s insurance coverage? Well, after some research the short answer is that if it’s wet, it’s probably not covered, but if it’s wind, it is probably covered.

Flooding and Water Damage

Flooding — defined by insurers as any water that rises from the ground or from the sky, including tidal waves, as well as destruction from rapid snow melts — aren’t covered by Massachusetts homeowner’s insurance policies. So the flooded basements from all this rain is likely not covered.

To get reimbursed for water damage, homeowners would need additional flood insurance, which is provided by the federal government but can be purchased through an agent or insurance company. The average flood premium is about $600 annually, but rates go up to nearly $6,000 for the highest-risk coastal properties, according to the National Flood Insurance Program.

Homeowners who live in flood zones probably have flood insurance already: Many lenders won’t provide these home buyers with a mortgage unless they’ve signed up for flood coverage. These homeowners can rest (relatively) easy; if their home floods, flood insurance will pay for that damage. Those unlucky homeowner’s in the interior parts of the state aren’t so lucky.

Wind Damage/Downed Trees

Basic homeowners insurance policies do, however, typically pay for damage caused by winds — including broken windows, torn roofs and any interior damage from water falling into the home. Likewise, if strong winds blow tree limbs or entire trees onto a home, garage or shed, it’s likely covered. (If a tree falls onto a car, many comprehensive auto policies will cover the damage.)

But in many states on the East Coast, homeowners may have to pay a hefty deductible before homeowners’ insurance policies kick in for wind damage — often 1% to 5% of the total amount the home is insured for.

Serious Damage

If a home becomes so damaged that it’s uninhabitable, most standard homeowner policies will pay for a family’s living expenses — including lodging and food — while the house is being repaired.

Making A Claim

As with any insurance damage claim, my advice has always been document, document, document. Take photos and video of the damage. Keep all receipts for fans, blowers, wet vacs, sump pumps, repairs, new windows, etc. Be prepared to wait for the insurance companies to process the thousands of claims arising from Hurricane Irene. And of course, stay safe!

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Weather.com 8/26/11 7:00am

Important Insurance Claims Information: Cleaning Up After Hurricane Irene (click here).

Hurricane Preparedness Bulletin

Reports are now saying that Hurricane Irene is potentially tracking for a direct hit on New England in the wee early morning hours of Monday.

Should you be closing on a purchase or refinance after the storm passes and the Feds declare a Federal Disaster Area, be prepared to have a re-inspection of the property before closing. This is considered to be an Act of God and as a result the borrower will be required to pay for any re-inspection fee. These re-inspections range from $125 to $200. You will receive notice from your lender and re-disclosures prior to closing.

Here is some safety information and insurance claims in preparation for the storm surge.

When a Hurricane is Headed Your Way

Careful preparation and planning before a storm arrives will help minimize damage, loss and grief.  The following is a short listing of what could be done to prepare yourself and your family during this season.

Pre-Planning:

Obtain information on flood zones and evacuation shelters.  in some area, these can be found in your telephone book or online.

  • Plan an evacuation route to the nearest shelter or “safe” area and keep a map handy.  During emergencies, shelter locations be also be announced on the radio.
  • Replenish emergency kits and supplies.
  • Secure important documents from possible damage or move to a safe location.
  • Develop a list of important phone numbers.
  • Develop a plan to secure loose objects around the house; trim branches and trees.
  • Ensure that your pets have collars and identification tags.

Prior to the Hurricane:

Secure all loose objects outdoors.

  • Secure all windows using plywood.
  • Fill your vehicle with fuel.
  • Charge all batteries (i.e. phone, lamps, flashlights, radios, etc.)
  • Listen to the emergency broadcasts of the storm.
  • Be prepared to evacuate with emergency supplies to a predetermined location.

During the Hurricane:

Stay in doors and away from windows.  Keep to the center of the building on the ground level.

  • Listen to the emergency broadcast on the radio or television.
  • Turn off all electrical devices and appliances that are not needed.
  • Stay away from coastal waters, rivers, streams or other flooding areas.
  • Do not try to cross flooded areas with your vehicle.
  • Listen for instructions from emergency officials when the storm is over.

Emergency Supplies and Kits:

First aid kit and personal medications

  • Drinking water
  • Ice Chest
  • Lighter, matches and candles
  • Clothing, personal toiletries
  • Sleeping bags and blankets
  • Portable radio and flashlight
  • Extra batteries
  • Non-perishable foods
  • Manual can opener
  • Important documents
  • Quiet games, books, or toys for children

Here are the carrier’s phone numbers:

Acadia Insurance (800) 691-4966
AIG (Global Energy) (877) 743-7669
Chartis (formerly AIG) Private Client Group 888-760-9195
Andover Companies: Cambridge Mutual & Merrimack Mutual (800) 225-0770
Chubb Group (800) 252-4670
Commerce (800) 221-1605
Fireman’s Fund (888) 347-3428
Great American (888) 882-3835
Guard Insurance Group (888) 639-2567
Hanover Insurance (800) 628-0250
Hartford Insurance (800) 327-3636
Hingham Mutual (After hours claims) (800) 972-5399
Mass. Property Insurance Underwriting (800) 851-8978
Trident (After hours claims) (800) 288-2502
Tower (877) 365-8693
Quincy Mutual (800) 490-0047
Safety Insurance (800) 951-2100
Selective Insurance (866) 455-9969
Splash Program (Emergency Pollution related claims) (866) 577-5274
Splash Program (Emergency Non-Pollution related claims) (800) 746-3835
Travelers Personal lines:
(877) 425-2466
Commercial:
(800) 832-7839
Utica National (800) 216-1420
Vermont Mutual (After hours claims) (800) 445-2330
Zurich/Maryland (800) 565-6295

 

If you do not currently have homeowner’s insurance please do not call today to get any, as the carriers will not write coverage until after the storm passes.

Here is the latest forecast from NECN.

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mold_houseApplication of “Discovery Rule” Enables Toxic Mold Claim To Survive Dismissal

Toxic mold is a dangerous condition that can arise in buildings with untreated water leaks and penetration. The most common form of “toxic mold” is Stachybotrys chartarum, a greenish-black mold. It can grow on material with a high cellulose and low nitrogen content, such as fiberboard, gypsum board, paper, dust, and lint. Growth occurs when there is moisture from water damage, excessive humidity, water leaks, condensation, water infiltration, or flooding. Constant moisture is required for its growth. According to the Centers for Disease Control, toxic mold causes upper respiratory tract symptoms, cough, and wheeze in otherwise healthy people; with asthma symptoms in people with asthma; and with hypersensitivity pneumonitis in individuals susceptible to that immune-mediated condition. The CDC also found limited or suggestive evidence linking indoor mold exposure and respiratory illness in otherwise healthy children.

Roof Leaks Lead To Toxic Mold

According to the August 15, 2011 case of Doherty v. Admiral’s Flagship Condominium Trust (see below), Denise Doherty owned a condominium unit at the Admiral’s Flagship Condominium in Chelsea. (If you are driving into Boston northbound on the Mystic Bridge, these are the condominium units on Admiral’s Hill under the bridge.) In 2004, a roof leak led to ceiling cracks and loosening plaster in Doherty’s unit, and she requested that repairs be made. Any repairs made were either untimely or inappropriate. In February, 2006, Doherty noticed mushrooms and water infiltration on the same threshold and notified the condominium management company. It replied that the threshold was rotted, and required replacement. The management company did a shoddy job repairing the damage.

A month later a mold remediation company found hazardous mold in unsafe levels in Doherty’s unit caused by water infiltration and chronic dampness. Following this discovery, the condominium management promised to repair the leaks, and that the mold would be removed. A mold remediation was attempted, but failed, and mold remains in the unit. In 2008, Doherty’s doctor ordered her to vacate her unit due to the presence of the mold. Although Doherty has continued to request repairs of the leaks and chronic dampness, and a full remediation of the mold, no further action has been taken. She filed suit against the condominium and its manager on February 13, 2009, claiming that due to the defendants’ failure to repair, she has suffered severe, permanent health problems, lost income, loss of her personal property, and loss of the value of her condominium unit.

Limitations Period Begins When Toxic Mold Symptoms First Arise

Doherty’s personal injury claims are governed by a 3 year statute of limitations. A statute of limitations is the time period set by law by which a person is allowed to file a lawsuit. If you sleep on your rights, you lose them.

The condominium claimed that the stopwatch for Doherty’s claims started in 2004 when the water leak occurred, and that she filed her lawsuit 2 years late. The lower court agreed and dismissed the lawsuit.

The Appeals Court overturned that ruling, holding that under the “discovery rule” the statute of limitations for a toxic mold claim starts when the injured person becomes aware of the existence of toxic mold through investigation or some physical manifestation of being exposed to toxic mold, such as respiratory symptoms, asthma and the like. In Doherty’s case, she first became aware of the toxic mold when the lab results came back in March 2006 which was within the 3 year limitations period. The court reasoned:

We agree with the foregoing cases that without some indication of a hazardous contamination, the plaintiff could not have been aware that she was being exposed to toxic mold, regardless of when the leak began. Contrary to the defendants argument, it is not a certainty that all water infiltration will eventually evolve into toxic mold. To conclude otherwise would encourage, and possibly even require, a plaintiff to preemptively file suit the moment water starts to infiltrate a dwelling or other building, before any mold or mold-related injury has even occurred.

According to the judges themselves, this decision is the first Massachusetts appellate case dealing with the statute of limitations for toxic mold, so it’s quite important. The case will make it easier for toxic mold victims to sue wrongdoers in state court. The case also highlights the importance of addressing water leaks in condominiums quickly and professionally. If the condominium management had properly dealt with the roof leaks in the first place, perhaps Ms. Doherty would not have been exposed to toxic mold in the first place!

Doherty v. Admiral’s Condo Case

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What happens if the property you have under agreement is wiped out by a tornado, burns down or is otherwise subject to a casualty?

Yesterday’s horrific tornadoes — which leveled parts of Springfield and Central Massachusetts — demonstrate the power and fury of Mother Nature and how little control we have over natural disasters. Our thoughts and prayers go out to everyone affected by the tornadoes….

The tornadoes were also a stark reminder to me that an extremely important part of my job as a real estate attorney is disaster planning. Although most buyers and Realtors don’t like to think pessimistically (and neither do I), we always have to plan ahead for the worst case scenario.

Which bring us to the topic of this post. What happens if the property you have under agreement is wiped out by a tornado, burns down or is otherwise subject to a casualty?

The Standard Form Casualty & Insurance Provisions

Let’s start with the basic concept that the buyer does not own the property until the closing occurs, money is exchanged and the deed/mortgage is recorded with the registry of deeds. The purchase and sale agreement is there to govern the parties’ relationship and the property from the time the offer is signed until the closing. The seller retains ownership and control over the property during this period of “under agreement.”

Seller Must Keep Property Insured

The standard form Massachusetts purchase and sale agreement contains two important provisions dealing with homeowner’s insurance and casualty. First, the standard form provides that the seller must keep the existing homeowner’s insurance coverage in place. A good buyer’s attorney will insert language that the “risk of loss” remains with the seller until the transaction closes, to ensure that if a tornado levels the home, that loss is the seller’s responsibility.

Opt Out/Election

Second, the standard form spells out what happens if there is a casualty. If the house is deemed a causualty loss, the buyer has the option of terminating the agreement and receiving his deposit monies back. However, the buyer has the option of proceeding with the transaction and can require the Seller to assign over to the buyer all of the insurance monies available. Depending on the amount of coverage available and the cost to re-built, this may not be a bad situation, but it’s the buyer’s call.

As a “belt and suspenders” measure, I also add the following provision to my purchase and sale rider to ensure that the buyer is protected in case of a disaster:

Notwithstanding any provisions of this Agreement to the contrary, in the event that the dwelling and/or other improvements to the Premises are destroyed or substantially damaged by fire or other casualty prior to the delivery of the deed, the cost to repair which exceeds $10,000.00, BUYER may, at BUYER’S option, terminate this Agreement by written notice to SELLER, whereupon all deposits made hereunder shall be forthwith refunded, all obligations of the parties hereto shall cease, and this Agreement shall become null and void without further recourse to the parties hereto.

Although natural disasters are rare, a certain amount of disaster planning must be done for every Massachusetts real estate transaction. Think of a real estate attorney as part of your insurance policy to protect you in a worst case scenario.

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images-8Buyer’s Closing Checklist

The day has finally come and it’s time to close on the purchase of your property. You will need to bring the following to the closing:

  • Funds For Closing. If you need to bring cash to the closing, you must bring to closing a bank or certified check PAYABLE TO YOURSELF for the balance of the figure shown on line 303 on your HUD-1 Settlement Statement: Cash From Buyers. This is for fraud prevention, and you’ll endorse the check over to the closing attorney at the closing. The closing attorney should provide you with this number at least 24-48 hours prior to closing. Accordingly, if you need to move funds around from investments accounts, etc., do so well in advance of the closing, and be prepared to make a bank run to obtain that bank/certified check!
  • Homeowner’s Insurance Binder. At closing, you need a homeowner’s insurance binder showing the first year premium paid. If you are purchasing a condominium unit, you will need to provide us with the Master Insurance Binder, and depending on the type of loan you use, you may need an HO-6 policy covering the interior of your unit. The closing attorney will typically get an insurance binder ordered ahead of time, but this should be on your “to-do” list.
  • Your state issued driver’s license with picture or other picture identification. Some lenders now require a second form of i.d. Your closing attorney will advise you of this.
  • If a sale of your present home is required by your new lender, you must bring the HUD-1 Settlement Statement and a copy of the Deed from that transaction.
  • Good Faith Estimate. You should bring the Good Faith Estimate of closings costs that your lender originally provided to you during the loan application process. That way, you can ensure that the final closing costs match up to those originally quoted to you.
  • Draft HUD-1 Settlement Statement. You should have received a preliminary HUD-1 Settlement Statement from the closing attorney’s office. Due to lender delays, it is not uncommon to receive this the night before or the morning of closing, although this is obviously not ideal. Compare the prelim HUD to the HUD you are signing at the closing table.
  • Your Smile. Yes, bring your smile. It’s a happy day, and despite all the tumult and stress you are finally purchasing your home!

Seller’s Closing Checklist

Sellers will need to bring the following to the closing:

  • Massachusetts or state issued driver’s license
  • Keys to home and alarm codes/information
  • Smoke detector and carbon monoxide detector certifications from local fire department. Your Realtor should assist you with this.
  • Signed Deed from you to the buyers. Your attorney should have drafted the Deed.
  • Title V Inspection Report for septic system
  • Evidence of repairs (if applicable)
  • Final water/sewer bill and reading (paid) and final oil bill and statement from oil company as to amount remaining in tank. You will need to make the request at least 2 weeks prior to closing.
  • Copy of last paid real estate tax bill.
  • 6D certificate for condominium unit showing that condo fees are paid up.
  • It’s also a nice gesture to give the new buyers the name of your landscaper, septic company, private trash hauler, handyman, etc. I’m sure your workmen will appreciate it also.

Before you close, don’t forget to:

  • Fill out change of address forms
  • Notify utility companies of move out
  • Discontinue phone service and cable
  • Leave all appliance warranties and instructions in the house (these are usually left in a kitchen drawer so they will be easily found by the new owners)
  • Notify insurance agent of closing date in order to cancel present policy
  • If you are purchasing a new home at the same time, make sure you get a copy of the fully signed HUD-1 Settlement Statement

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Richard D. Vetstein, Esq. is an experienced Massachusetts Real Estate Attorney. For further information you can contact him at info@vetsteinlawgroup.com.

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Having spent the entire weekend in a feeble attempt to shovel the snow and bludgeon the one foot thick ice dams off my roof, I’ve bit the bullet and hired a professional. No use risking life and limb, and doing a third rate job. I also have a nice one inch crack along my family room ceiling, no doubt caused by the huge ice damn above it.

My Facebook stream is filled with pleas from homeowners about ice dams and related winter snow and ice damage. I’m also hearing stories about price gouging on roof snow and ice removal. (According to Sudbury Realtor Gabrielle Daniels Brennan, you should be paying only between $300-$800, max.)

So, time to call in the professionals, and dust off my trusty Massachusetts homeowner’s insurance policy to see what’s covered and what’s not.

Ice Dam Insurance Coverage

Very few insurance policies cover ice dam or snow removal from your roof or anywhere else on your property for that matter. However, interior or exterior damage caused by an ice dam on your roof is typically covered. As with any insurance claim, call the claims department immediately and take photos of the damage.

Ice Dam Treatment & Prevention

In the short term, there are a couple things you can try.

  1. Try to remove snow from the roof but only if it can be done safely. A roof rake or push broom can be used but may cause damage to the shingles. If it’s not possible to remove the snow safely, call a professional like I did.
  2. Chisel grooves into the dam to allow the water behind it to drain off. This is a good emergency measure, especially if rain or a sudden thaw is coming. Be careful not to damage those shingles!
  3. Fill an old pair of your wife’s pantyhose with calcium chloride snow melt and lay it across the dam. I’m not kidding! I did this over the weekend and it seemed to work. It will help to melt the dam and also keep that area of the roof clear. DO NOT USE ROCK SALT! It will stain the roof and siding. It is best for small dams or prevention. It’s also a good idea to scrape the snow off the roof first.

To prevent ice dams in the longer term, keeping warm air from escaping into the attic is the first course of action. In addition to helping resolve ice dam issues, it will result in a more comfortable and less expensive to heat home.

Frozen Pipes Insurance Coverage

Not all companies pay to have frozen pipes thawed by professionals. Some will though. Most policies cover pipe replacement and water damage. The coverage may not apply if you turned the furnace off for the winter without winterizing the house and its contents.

Frozen Pipe Prevention

Frozen water in pipes can cause water pressure buildup between the ice blockage and the closed faucet at the end of a pipe which leads to pipes bursting at their weakest point. Pipes in attics, crawl spaces and outside walls are particularly vulnerable to freezing in extremely cold weather. Holes in outside walls for TV, cable or telephone lines allow cold air to enter the house.

To keep water in the pipes from freezing, take the following precautions:

Fit exposed pipes with insulation sleeves or wrapping to slow the heat transfer. The more insulation the better.

Seal cracks and holes in outside walls and foundations near water pipes with caulking.

Keep cabinet doors open during cold spells to allow warm air to circulate around pipes, particularly in the kitchen and bathroom.

Keep a slow trickle of water flowing through faucets connected to pipes that run through and unheated or unprotected space. Drain the water system especially if your house will be unattended during cold periods.

Interruption of Services

If you lose power during a storm, an all-risk homeowner’s policy usually pays for spoiled food, repairs to damage caused by loss of power, and appliances damaged by the outage. Many policies also will pay for shelter when you lose power for extended periods during the winter. If you lose heat and fail to take steps to prevent pipes from freezing, your policy may not cover the resulting damage.

Additional Resources

Nadine Heaps, Purple Ink Insurance. Nadine is an experienced homeowner’s insurance agent who can answer your questions on coverages.

I’ll Be (Ice) Dammed, The Massachusetts Mortgage Blog by David Gaffin

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Reports are now saying that Hurricane Earl’s track has changed and will hit Massachusetts and especially Cape Cod & the Islands harder than expected. David Gaffin, of Greenpark Mortgage and the Massachusetts Mortgage Blog, is kind enough to let us re-post this article about safety information and insurance claims in preparation for the storm surge.

When a Hurricane is Headed Your Way

Careful preparation and planning before a storm arrives will help minimize damage, loss and grief.  The following is a short listing of what could be done to prepare yourself and your family during this season.

Pre-Planning:

Obtain information on flood zones and evacuation shelters.  in some area, these can be found in your telephone book or online.

  • Plan an evacuation route to the nearest shelter or “safe” area and keep a map handy.  During emergencies, shelter locations be also be announced on the radio.
  • Replenish emergency kits and supplies.
  • Secure important documents from possible damage or move to a safe location.
  • Develop a list of important phone numbers.
  • Develop a plan to secure loose objects around the house; trim branches and trees.
  • Ensure that your pets have collars and identification tags.

Prior to the Hurricane:

Secure all loose objects outdoors.

  • Secure all windows using plywood.
  • Fill your vehicle with fuel.
  • Charge all batteries (i.e. phone, lamps, flashlights, radios, etc.)
  • Listen to the emergency broadcasts of the storm.
  • Be prepared to evacuate with emergency supplies to a predetermined location.

During the Hurricane:

Stay in doors and away from windows.  Keep to the center of the building on the ground level.

  • Listen to the emergency broadcast on the radio or television.
  • Turn off all electrical devices and appliances that are not needed.
  • Stay away from coastal waters, rivers, streams or other flooding areas.
  • Do not try to cross flooded areas with your vehicle.
  • Listen for instructions from emergency officials when the storm is over.

Emergency Supplies and Kits:

First aid kit and personal medications

  • Drinking water
  • Ice Chest
  • Lighter, matches and candles
  • Clothing, personal toiletries
  • Sleeping bags and blankets
  • Portable radio and flashlight
  • Extra batteries
  • Non-perishable foods
  • Manual can opener
  • Important documents
  • Quiet games, books, or toys for children

Here are the carrier’s phone numbers:

Acadia Insurance (800) 691-4966
AIG (Global Energy) (877) 743-7669
AIG (Private Client Group ) (866) 642-5246
Andover Companies: Cambridge Mutual & Merrimack Mutual (800) 225-0770
Chubb Group (800) 252-4670
Commerce (800) 221-1605
Fireman’s Fund (888) 347-3428
Great American (888) 882-3835
Guard Insurance Group (888) 639-2567
Hanover Insurance (800) 628-0250
Hartford Insurance (800) 327-3636
Hingham Mutual (After hours claims) (800) 972-5399
Mass. Property Insurance Underwriting (800) 851-8978
Trident (After hours claims) (800) 288-2502
Tower (877) 365-8693
Quincy Mutual (800) 490-0047
Safety Insurance (800) 951-2100
Selective Insurance (866) 455-9969
Splash Program (Emergency Pollution related claims) (866) 577-5274
Splash Program (Emergency Non-Pollution related claims) (800) 746-3835
Travelers Personal lines:
(877) 425-2466
Commercial:
(800) 832-7839
Utica National (800) 216-1420
Vermont Mutual (After hours claims) (800) 445-2330
Zurich/Maryland (800) 565-6295

I would like to thank Gary Nagle (781)-235-0502 of Corcoran and Havelin Insurance in Wellesley, MA for sending me the following Hurricane Safety and Preparedness list along with the telephone numbers of the major Homeowner Insurance carriers for Massachusetts.

If you do not currently have homeowner’s insurance please do not call today to get any, as the carriers will not write coverage until after the storm passes.

Please use this well and be safe on this long holiday weekend.

By the way readers, should you be closing on a purchase or refinance after the storm passes and the Feds declare a Federal Disaster Area, be prepared to have a re-inspection of the property before closing.  This is considered to be an Act of God and as a result the borrower will be required to pay for any re-inspection fee.  These re-inspections range from $125 to $200.  You will receive notice from your lender and re-disclosures prior to closing.

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