The Massachusetts South Shore Real Estate Blog: When to Retain a Real Estate Attorney

The Massachusetts South Shore Real Estate Blog: When to Retain a Real Estate Attorney

When to Retain a Real Estate AttorneyThe purchase or sale of Real Estate results in various costs. Among these is the cost of retaining an attorney. Some Buyers and Sellers elect to wait to hire an attorney until the Buyer’s home inspection is finished. The logic is understandable: why should I involve another party, potentially incur additional costs, for a transaction that may not happen? This week, we’ve decided to throw in our two cents and explain why retaining an attorney earlier in the process is cost neutral and can result in other important benefits.

In an ideal world, every Buyer and Seller would have their real estate attorney’s number saved in their cell phone as their number one contact. Before a Buyer submits an Offer, or a Seller accepts an Offer, an experienced real estate attorney can provide legal advice as to the consequence of, or the lack of, contingencies.

Since we don’t live in an ideal world, and real estate agents generally do a nice job advising their clients at this stage, we’re going to assume that the Offer has been submitted and accepted before either the Buyer or Seller calls the attorney–all of that said, we recommend reading a couple of our earlier posts: The Offer Part 1–Five Contingencies for Buyers to Consider and The Offer Part 2–Contingencies for Sellers to Consider.

When Sellers Should Retain an Attorney: Sellers should call a Real Estate Attorney prior to or as soon as they have accepted an Offer. After the initial consultation and quote, the Seller should ask their attorney to draft the P&S. The attorney-drafted P&S will generally include additional provisions that provide further protection for Sellers that are not included in the standard form P&S drafted by a Broker. Further, it allows the attorney to remove the administrative burden from the Broker acting as the “go between” for the respective attorneys. This allows the Broker to focus on other important tasks. In the event that the transaction falls through before signing the P&S, the Sellers will most likely find another Buyer. At this point, the attorney will simply modify the changed terms to reflect the new deal. Since this will incur very little or no cost, there is little cost-savings to wait to retain an attorney.

When Buyers Should Retain an Attorney: With Buyers, there’s a bit more gray area. A Buyer’s Offer is usually contingent on the home inspection. The Buyer may want to see the results of the inspection before investing any time on further negotiation; however, the same logic described above applies here. Stiles Law, with rare exception, will not invoice Buyers in the unfortunate event that the P&S is not signed and thus the transaction is not consumated. We assume that the Buyer will retain our firm for their soon to be purchase; therefore, retaining an attorney early is cost neutral.

Observations from Our Experience:

  1. Waiting Disadvantages your Negotiating Position: After the deal is set in stone, it’s very difficult for a late-comer to make significant changes.
  2. Waiting can Rush the Lawyer’s Review: The offer sets a deadline for signing the P&S. Hiring an attorney the day before this deadline can result in a rushed review that in some cases results in inadequate protection.
  3. Waiting Causes more Stress: It’s a terrible feeling for both Buyers and Sellers to look at the clock to see if their deal is about to fall apart.
  4. Mother Always said “You get What you Pay for”: If an attorney is willing to review this extremely important legal document for free, you should run away…quickly! You should find an attorney that is willing to represent your interests, not one that is simply willing to “look it over as a courtesy for your lender.” It is important that the attorney is representing your interests, not simply going through the motions in order to obtain the eventual legal engagement from your lender.

While the benefits of retaining a real estate attorney are clear, the optimal point to do this is less clear. Hiring an attorney early in the process is cost neutral, strengthens your negotiating position, allows for thorough review, and reduces everyone’s stress.

Stiles Law, with offices located in Boston and Marshfield, Massachusetts, is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions. Stiles Law serves all areas of eastern Massachusetts–the North Shore, Boston, and Cape Cod, in addition to the entire South Shore, including: Plymouth, Kingston, Duxbury, Hanover, Pembroke, Marshfield, Scituate, Norwell, Cohasset, Hull, Hingham, Weymouth, Braintree, and Quincy.

Copyright © 2014 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts. No child labor laws were breached during the creation of this Blog and Bob Bonkley was compensated for his likeness and appearance in the same.

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The Massachusetts South Shore Real Estate Blog: Title Insurance – Protection for the Purchaser of Real Estate

The Massachusetts South Shore Real Estate Blog: Title Insurance – Protection for the Purchaser of Real Estate

Whether to purchase Title Insurance is an often debated issue, though it remains an affordable protection against loss for Buyers.Whether Buyers should purchase Title Insurance at the time of closing is an important, often debated issue. At its most basic level, Title Insurance protects an insured against loss due to a title defect, many of which remain undetected by a thorough title examination. Title Insurance is obtained with a one-time premium, paid at closing. Coverage continues for as long as the policy holder or her heirs has or have an interest in title to the property. In addition to reimbursing policy holders for losses, should it be necessary, the Title Insurance company will also provide for the cost of attorneys necessary to defend the insured’s interest in the property.

But here is the natural question (usually asked at closing):

Why do I need an Owner’s Policy if I’m already buying a Lender’s Policy at closing?

Most lenders require that the Buyer purchase a “Lender’s Policy” at the time of closing. A Lender’s policy, limited to the amount of the loan, protects the lender should there be a loss due to defective title. The amount of coverage reduces over time to reflect the unpaid principal balance and eventually disappears as the loan is paid off. The Lender’s Policy only protects the lender against loss–NOT THE HOMEOWNER. For purposes of Title Insurance, the lender does not suffer a “loss” until there is a title defect and the Borrower defaults on the loan, i.e. the Borrower stops making monthly payments.

An “Owner’s Policy” protects the Buyer and her heirs against losses due to title defects up to the policy amount—the purchase price of the property. Coverage continues as long as the owner or her heirs have an interest in the property and some policy limits actually increase over time to keep pace with inflation.

Title defects are actually common. Here are some of the usual, covered title defects:

  • Errors or omissions in deeds
  • Mistakes in examining records
  • Improperly discharged mortgages
  • Forgery
  • Undisclosed heirs
  • Erroneous or inadequate legal descriptions
  • Silent (off-record) liens (such as mechanics’ or estate tax liens)

You’ve just done a title exam, shouldn’t you know if there’s a title defect?

The short answer: No. The customary title examination reviews records held at the Registry of Deeds and Registry of Probate for a period limited to fifty years. If title defects occur before this point, they will go undetected. Title examiners are not looking for forgeries, missing documents, unrecorded documents, or unaccounted for heirs. Frankly, title examiners are human, which by definition means that they can make mistakes.

It’s new construction, so the title should be clear, right?

No. While the beautiful house you are buying may be brand new, the land that it sits on is not. Any defects that may have affected the land will also encumber your new house. So whether you’re buying a brand new home or buying from a seller who has lived in the house for the past 50 years, the need to adequately protect your home remains extremely important.

The purchase of a home often represents the largest investment that a person will ever make. Home buyers should strongly consider purchasing an Owner’s Policy as an affordable protection for this investment.

Stiles Law, with offices located in Boston and Marshfield, Massachusetts, is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions. Stiles Law serves all areas of eastern Massachusetts–the North Shore, Boston, and Cape Cod, in addition to the entire South Shore, including: Plymouth, Kingston, Duxbury, Hanover, Pembroke, Marshfield, Scituate, Norwell, Cohasset, Hull, Hingham, Weymouth, Braintree, and Quincy.

Copyright © 2014 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts.

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Five Top Provisions to Understand While Reading a Purchase and Sale Agreement

Five Top Provisions to Understand While Reading a Purchase and Sale Agreement

After spending months of searching, you have finally found the place that you’d like to call your new home. You and your real estate agent draft an offer, the Seller It's Important to Understand the Terms of the P&Sreadily accepts it, and….now what?  While the offer contains the necessary broad brushstrokes—the parties, the dates, and the price—to purchase a home, while minimizing uncertainty and liability, homebuyers require the “fine tip” of a Purchase and Sale Agreement (the “P&S”).  The P&S, usually drafted by the Seller’s lawyer, dictates the terms of the sale process and is an incredibly important document to fully understand.  It creates binding legal obligations on the parties which often pertains to the transfer hundreds of thousands of dollars. By perusing this article, the novice P&S reader will have a grasp of the essential provisions which are usually included in this most important agreement.

  1. The Price:  Quite frankly, this is usually the most important term to both the Buyer and the Seller.  The Seller wants to be sure to get top dollar for her property; the Buyer wants to be sure to get the best value for her dollar. In Massachusetts, a deposit, usually of $1,000, is made with the offer, and an additional deposit is made at the time of signing the P&S. Finally, the Buyer is obligated to bring the difference—the sale price less all deposits—to closing.  Understanding this chronology is essential to understanding the Buyer’s obligations.
  2.  Date for Performance: Without a set time and place for closing, either party could plausibly argue that it does not yet have a legal duty to perform its obligations under the P&S.  While this specific time is important, it often changes by a matter of hours, or in the rare case by weeks.  When negotiating the P&S, it is important to realize that the other party could stubbornly refuse your requests for extensions of this date.  With this in mind, you must be confident in your ability to perform at the date and time specified in the P&S before agreeing to it.
  3.  Default Damages: Most P&S Agreements will contain a Default Damages provision which provides that in the event the Buyer defaults—that is, fails to meet his obligations under the P&S—the Seller can retain the Buyer’s deposits as damages. The primary way that a Buyer can default is by being unable to close at the Date for Performance. While this very rarely occurs, Buyers can minimize the risk of forfeiting their deposit by selecting an experienced lawyer to protect their rights during the buying process.
  4. Financing Contingency: Perhaps the most important protection for Buyers in the P&S, this provision conditions the Buyer’s obligations on obtaining a mortgage loan commitment from her lender for a certain sum by a certain date before closing. The Buyer has until this date to notify the Seller of her inability to obtain a mortgage and her intention to terminate the P&S.  Assuming the Buyer effectively notifies the Seller of her intention, all of the Buyer’s deposit will be returned to her.
  5.  Repair Provisions:  After conducting your home inspection (which is always recommended), the Seller may have agreed to make repairs to the home.  Although the Seller “gave you her word” that these would be completed by closing, a buyer should be certain that the Seller’s obligations are clearly stated in the P&S.  If the work requires a licensed service provider, then that should be outlined along with the important language  in a “workmanlike manner.” Without these specifics, the Seller could discharge their obligations under the P&S by having their brother, who happens to be “handy,” repair the electrical panel in an unsafe manner.  It wouldn’t be a bad idea to require the Seller to provide proof–usually a receipt or invoice–of all work or repairs done pursuant to the P&S.  Similarly, if a a repair requires a building permit(s), the repair provision should clearly require that the Seller provide proof that a permit was pulled and signed off by the local building inspector.

The foregoing is a basic outline of some of the more important items in a P&S.  Remember: this is not a complete list and a P&S is a legally binding contract.  With this in mind, a careful consumer would be wise to engage the services of an experienced real estate attorney to represent the consumer’s interests.  That attorney should be reviewing the P&S for your benefit and not simply as a convenience for your lender.  Make certain that if you have an attorney review your P&S, that the attorney puts in writing that they are representing you.

Still have questions?  Check out our other blog posts dealing with the basic (and-not-so-basic) concepts from the home buying/selling process.

Stiles Law, with offices located in Boston and Marshfield, Massachusetts,  is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions.

 

Copyright © 2014 Stiles Law, All rights reserved. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts.

 

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Ten Reasons to Use a Real Estate Agent When Selling Your Home

Ten Reasons to Use a Real Estate Agent When Selling Your Home

Real Estate AgentThe proliferation of real estate information on the internet has made it appear easier than ever to list Real Estate without the help of a real estate agent. While Sellers may believe they will achieve some financial savings by foregoing the help of a seasoned professional, this represents unwarranted scrimping on a very valuable service.  Here are our top ten reasons why going solo is more likely to give you a massive headache than any real savings:

1.  Knowledge and Experience: Most sellers are unaccustomed to the intricacies of selling real estate. By hiring a real estate agent, you don’t need to understand all of the details in order to sell your home.

2.  Better Pricing: Agents are in tune with the market that you are trying to sell your house in.  Quite frankly, without knowledge of comparable listings, an asking price is merely a guess. Agents are not emotionally attached to the property and are able to objectively compare it to other available listings.  Often an agent will capture a sales price significantly higher than if you sold on your own.  This difference in price will often exceed their commission which negates any potential cost savings.

3.  Active Advertisement: Agents still have access to the most robust electronic networks and advertising media. An owner simply lacks the tools of an agent.

4.  Objective Opinion: An agent is unattached to your property.  This objectiveness allows for candid advice for issues ranging from pricing to counteroffers.

5.  Recommend Repairs and Upgrades: Have you ever been to someone’s house and asked: “how can they live with that ugly painting in their living room?” or “why don’t they paint that room to bring it into this century?”  The harsh reality is that we become comfortable with what is familiar. An agent, who likely has never been in your house, will be able to objectively assess what needs to be removed, repaired, or replaced to quickly maximize the sales price.

6.  Help with Negotiation:  Some people can negotiate for the sale of their most valuable asset.  Some cannot or simply choose not to. By having an objective professional in your corner, you are more likely to have your interests maximized.  The agent will know when to press for more and when there’s nothing left to press.

7.  Due Diligence: Due diligence can range broadly, including: inspectional items, pest remediation, repairs, environmental compliance, permitting, adequacy of safety features—just to name a few. Agents are better equipped to quickly address these issues as they appear.

8.  Evaluation of offers: In addition to having experience with pricing and judging the reasonableness of requested repairs, agents have experience judging the “quality” of an offer.  The price that a prospective buyer offers is certainly an important factor but it is not the only factor.  If you are lucky enough to receive multiple offers, a seasoned agent can help advise you of which buyer is more like to get to closing on time, with funds.

9.  Streamlining the Closing Process: Agents will often obtain or deliver necessary documents, coordinate inspections, communicate with the lawyers, coordinate with other agents, and otherwise, grease the closing process so that it proceeds smoothly.  The other responsibilities in your life don’t stop because you’ve decided to sell your house. Using an agent to streamline the process protects your valuable time.

10. Help After Closing: Good agents will help you through closing.  Great agents will help you after closing.  There may be issues that were overlooked, you may just have questions about the property, a great agent will help you even after the closing has occurred.

Stiles Law is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions.

Copyright © 2014 Stiles Law, All rights reserved.

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The Closing (Part 3 of 3): The Mechanics of Signing Documents at a Real Estate Closing

The Closing (Part 3 of 3): The Mechanics of Signing Documents at a Real Estate Closing

In the final part of our three part series: The Closing, we will discuss the mechanics of getting through a closing. You’ve spent the last two months dealing with home inspections, calls from your agent, calls from your attorney, calls from your mortgage broker, movers, utility companies, and all of your other responsibilities.  Frankly, buying a house can take work, dedication, and perseverance. Luckily, closing, the exclamation point of the entire process, is quite possibly the easiest step of all!

 Relax: Buying a home is a great accomplishment.  Take a moment to remember that all of the work to this point has brought you to the last step in your journey to home ownership.

 Bring Your License: Some of the documents you will be signing must be notarized. In all likelihood, the closing attorney doesn’t know who you are and will require a picture ID to verify your identity.  Under the Patriot Act, lenders are required to verify the identity of their borrowers; thus, lenders will require a photocopy of your license.

 Bring Your Checkbook:  The bulk of the funds brought to closing must be by certified check or wire transfer.  As is often the case, last minute adjustments and tweaks may make it necessary for the buyer to provide additional funds.  By bringing a checkbook, you are streamlining the process which allows you to take the keys sooner.

 How to Sit: As silly as it may sound, the logistics of where to sit is half the battle. Take a seat near the head of the table where the closing attorney will be set up.  As Seller or Buyer, you need to be within arms reach of the closing attorney so that documents can be passed efficiently.

 How to Sign: Ask the closing attorney how you should sign your documents. Contrary to what you may think, this level of care prevents the necessity of resigning every document at a later time. Be particularly careful to date all documents, where required, with the appropriate date.

 Why so Many Initials?  Initialing the bottom of a document, as directed by the closing attorney, is an efficient way to prove that a page was in the stack of paper signed at closing.  While it may seem like a pain, think of it as your protection as it prevents anyone from nefariously adding extra pages to the documents you are signing.

 Smile: By the time you get to the bottom of the stack of documents, it’s easy to forget that you just bought a new home! The closing, while sometimes long and tedious, should be a happy occasion.

The closing is the cap to a long process toward purchasing a new home. While there is no real substitute for experience, Part 1, Part 2, and Part 3 of this series each built on your existing knowledge.  Hopefully, by reading these articles, the closing process is a little less mysterious and you are able to enjoy the home-buying process.

Stiles Law is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions.

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The Closing (Part 2 of 3): Learning the Lingo of a Real Estate Closing

The Closing (Part 2 of 3): Learning the Lingo of a Real Estate Closing

In Part 1 of this three Part series, we explored The Who, What, Where and When of Real Estate Closings.  In Part 2, we will explore some of the usual, though not-so-common terminology that is used at the closing table.  While this article only scratches the surface of the important terminology, it will outline what is most essential.The Mortgage

While this is “the tip of the iceberg” when it comes to real estate terminology, this article should provide the basic lingo necessary to survive a closing.  Each party to the transaction should not hesitate to ask questions. The closing attorney will be more than happy to explain any term that you may not fully understand.

In the final part of our three part series, we will discuss The Mechanics of Signing Documents at a Real Estate Closing.

Stiles Law is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions.

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