Now that it’s autumn, we all have a bit more yard work to do. We received another question from a viewer this week, “I’m selling my house and I have a lot to do. I don’t really have time for yard work. Do I need to rake my leaves?”
In short: it depends. As a legal matter, we must consider what Massachusetts contract law requires: what did you agree to do? Purchase and Sale Agreements often contain a “Broom-Clean Condition” or “Continuing Maintenance” provision. These paragraphs dictate what the seller is expected to do prior to closing. Those paragraphs will create clear obligations for the seller and should be followed closely.
As a buyer, you may be wondering if you can make the seller do a fall clean-up before you move in. We think it is a good idea to change the word from “make” to “ask.” Everything is negotiable and it never hurts to ask. You may be surprised that your sellers are happy to accommodate.
If you have any questions about selling your home, contact Stiles Law by calling (781) 319-1900.
We received another question from a viewer: “What is the difference between a mortgage contingency and a mortgage commitment?”
A mortgage commitment is a written promise to lend a borrower money once certain conditions are satisfied.
A mortgage contingency is a provision in an offer and purchase and sale agreement which allows a buyer to terminate the contract, with the return of buyer’s deposit, if the buyer is unable to secure a mortgage commitment on or before a certain date. This term is included with the offer and is an important term of the contract.
A lender will ask any borrower for many important documents. It is critical for a borrower to deliver those documents as quickly as possible. By responding quickly, the borrower has increased the chances of an early mortgage commitment or understanding what additional information or documents may be necessary. Many lenders will check a borrower’s creditworthiness early in the process; however, before issuing a commitment to lend, the lender will underwrite the loan to verify many aspects of the borrower’s qualifications including the borrower’s income, debt obligations, employment history, credit score, and much more. A borrower should never lie to their loan officer. In most cases, the loan officer will already know the truth.
A successful borrower will provide their lender all of the requested documents as quickly as possible to receive a mortgage commitment before the mortgage contingency date and to avoid unnecessary delays. When a commitment has not issued before the mortgage contingency date, the buyer’s attorney usually must ask for an extension on the mortgage contingency date. This can cause all parties involved to become anxious. The seller may begin to think that this transaction will not occur and may consider looking for a new buyer.
Try your best to get everything to the lender as quickly as possible. Your loan can then be approved in expedited manner which helps to keep the transaction stress free.
If you have any questions about mortgage contingencies, contact Stiles Law by calling (781) 319-1900.
We received another question from a viewer this week: “Mark, I’m thinking about purchasing a home, but I really need to sell my home. Is it possible to do that?”
Yes, it is. With so many transactions occurring, it is very common that a buyer will make an offer to purchase real estate subject to selling their home first. Most sellers understand that most buyers cannot buy a new home without first selling their current home.
Buyers should be careful to make sure the language in the contingency is very clear. It is not unusual to see accepted offers with home sale contingencies that are unclear and do not protect the buyer.
We recommend drafting the contingency to include language similar to: “The purchase of [property] is specifically subject to the sale of [property] and the receipt of the proceeds from that sale.”
We often see contingencies that provide buyers with a certain amount of time to have their home under agreement. What happens if that transaction goes sour? We like to have a contingency that says the buyer’s obligation to purchase arises only if the buyer’s house has been sold and the proceeds have been received.
If you have any questions about a buying with a contingency, contact Stiles Law by calling (781) 319-1900.
We received another question from a viewer: “I have a client whose property I am about to list. They tell me they have deeded beach rights. Should I disclose this in my listing?”
If it adds value to the property you absolutely want to add this to your listing and marketing materials. That said, we as a real estate professional are hearing this piece of information from our client. We trust what they are telling us, but also should make sure to verify.
Deeded rights are specific rights and you will want to make sure that you describe them accurately. You should look at the owner’s deed and make sure that the beach rights are actually mentioned in the deed. Sometimes it is through a homeowner’s association and sometimes it is noted onto their deed.
Just because the owner has thought they have beach rights and have used the beach without any issues, does not actually mean they have deeded rights. We advise real estate professionals and sellers to make sure this is confirmed before you list the property and state that you have those rights.
In conclusion, trust but verify! Go to the Registry of Deeds to verify the beach rights exist and then make those disclosures. You do not want to be accused of “misrepresentation of a material fact.”
If you have any questions about Beach Rights contact us by calling (781) 319-1900.
We received another question from a viewer: “We are getting ready to purchase a new home (my partner and I), but I’m the only one that is going to be obligated on the financing portion of the deal– can we add my partner to title?”
When we say “title,” we are referring to the person named as an owner on the deed. When a property is conveyed to you by the seller, they are granting their interest to you as the new owners.
When two or more people are purchasing a property, one or more of them may not be financially obligated to repay the loan. A person who is an owner but does not have an obligation to repay the loan is sometimes referred to as a “non-obligor” or “non-borrower.”
One easy solution would be to have the additional name(s) added to the deed after closing. Be careful because the mortgage that borrowers sign includes a covenant stating that the buyer won’t transfer the property without the lender’s permission. Adding a partner to title after closing may be deemed such a transfer resulting in default.
If you know you are going to transfer the property, then you want to notify your lender well in advance of closing.
The lender will likely agree to allow your partner to be a co-owner. Usually, the lender’s only requirement is that the non-obligor owner must sign the mortgage and a few ancillary documents at closing. If the borrower does not repay the loan, the lender will foreclose. The right to foreclose must also be granted by the non-obligor; otherwise, the non-obligor may have the right to claim that the lender cannot foreclose their interest.
In conclusion, you can be a title holder and not be obligated to the loan.
If you have any questions about a Non-Obligor Title holder contact us by calling (781) 319-1900.