DEMYSTIFIED: MASSACHUSETTS DECLARATION OF HOMESTEAD

On December 16, 2010, the governor of Massachusetts signed into law the most extensive changes to our homestead law in more than a generation ("The Act"). The Act (Chapter 395 of the Acts of 2010, rewriting M.G.L.c. 188) allows homeowners to choose between Automatic Homesteads, created without a declaration, and Declared Homesteads, available only when the homestead declaration is recorded. The effective date of the Act is March 16, 2011. While this memorandum bulletin is not intended to review all of the provisions of the Act, it does address the major provisions of the Act.

The Act recognizes homesteads created by individuals who intend to occupy homes as their principal place of residence. The individuals may hold the title to their home by themselves, as tenants by the entirety, as tenants in common, or as joint tenants. In addition, if a beneficiary of a trust that takes title to a home intends to occupy the home as his/her principal place of residence, the protection under the statute extends to the beneficiary (although the trust beneficiary must be identified in the homestead declaration as the beneficiary of the homestead). If a single homeowner subsequently marries, the spouse becomes entitled to the benefits of the homestead.

Once the individual acquires title to his or her principal place of residence, the interest so acquired becomes subject to an automatic homestead exemption under M.G.L.c. 188 §4. The amount of the automatic exemption is $125,000.00. Alternatively, the homeowners may choose to declare a homestead exemption. As long as both the homeowner and his/her spouse sign the declaration of homestead, the homeowner's interest in the home will be subject to an exemption in the amount of up to $500,000.00 (M.G.L.c. 188, §5). Special homestead exemptions continue to be available for the benefit of the elderly and the disabled (M.G.L.c.188, §2). Anyone who already has declared a homestead prior to the effective date of the Act will continue to be protected and the existing homestead will be governed by the Act.

The homesteads created under the Act will be automatically subordinate to mortgages encumbering the homes. There is no necessity to add to the mortgage the signature of the non-owner spouse for the subordination to be effective. Lenders are not allowed to request a release of homestead in connection with making a mortgage (M.G.L.c.188, §9).

The homestead may be released by a deed from the owner and the non-owner spouse to a non-family member. In addition, the estate may be released by either termination of the homestead, signed by both the declarant and the spouse, the recording of a new declaration, or by abandonment of the property as a principal place of residence. If the property is owned in trust, only the trustee needs to sign the deed or the release of homestead (M.G.L.c.188, §10). In order to establish the marital status of the grantor, the Act allows a good faith purchaser to rely on the statement of grantor's marital status in the deed or a mortgage (M.G.L.c.188, §13).

Filing a Declaration of Homestead is simple and inexpensive.  However, I always recommend that you consult a real estate attorney and discuss your available options.  A current owner property rundown, deed copy and filing of a Homestead may be conducted by a real estate attorney for about $125.00.


For more information please feel free to contact me anytime.

Jonathan J. Moriarty, Esq.

Law Office of Jonathan J. Moriarty

53 South Main Street, Ste. 3

Randolph, MA 02368

Telephone: (781) 961-2200

Facsimile: (781) 961-0017

Email: jjmoriarty@verizon.net

Website: http://www.attorneymoriarty.com/

5 TIPS TO PURCHASE A MULTI-FAMILY PROPERTY

Multi-Family properties have always been attractive to first-time homebuyers as well as real estate investors.  The concept of having a regular income source to offset mortgage costs coupled with the benefits of real property ownership are very attractive.  Of course, the mechanics of these purchase transactions are riddled with pitfalls for the unwary.  I strongly advise legal representation in all purchase and sale transactions.  However, for those who choose to brave the multi-family purchase wilderness alone, I recommend extreme diligence and the following five tips:

1.  OBTAIN COPIES OF ALL LEASES AND/OR A STATEMENT BY THE SELLER WITH THE DETAILS OF THE TENANCIES.  The leases or agreements should be lawful; state names addresses, and telephone numbers; proper mailing addresses; and state all other adults occupying the unit(s).  The Seller should state in writing the rent, terms of the rent, escalations, security deposits held, last months rent held, locations of the accounts, interest on the accounts, and perhaps even a statement regarding the status of the rent payments (or a copy of a ledger).  Remember, although you may be a 'good faith purchaser' you may assume the liabilities of the prior owner's faults.  This includes failure to account for security deposits, last months rents or interest payments.  Generally, you must know what terms and conditions you are assuming from the Seller/Landlord.  Brokers or Realtors should be very aggressive in seeking to obtain this information as early in the transaction as possible.

2.  AFFIDAVITS OF CONDITION / BOARD OF HEALTH VIOLATIONS.  Always obtain from the Seller a statement of condition of the units (preferably acknowledged by the tenants).  Although the units may have passed a home inspection and an appraisal, these inspections are not conclusive evidence of compliance with the local and state health and sanitary codes.  I always conduct or at least recommend that an inquiry be made at the local board of health regarding past, pending or outstanding complaints and violations.  This will give you an idea of the issues and whether a Seller has been forthcoming with any information.  In sum, do your due diligence to ascertain the condition of the units and all health and sanitary issues.

3.  RENT, SECURITY AND LAST MONTHS RENT ADJUSTMENTS SHOULD BE PLACED ON THE HUD-1 AT CLOSING.  This tip is self-explanatory.  Sometimes there may be issues with placing these items on the HUD-1 (lender disapproval, separate adjustment agreements, etc…).  In which case, I strongly recommend receiving certified funds or a bank check for these amounts.  Also, there should be separate checks for each unit and/or a Schedule of Rents and Deposits signed and delivered by the Seller.  This avoids any confusion, retains the individual integrity of the tenant accounts, identifies all sums for tax purposes and avoids any 'insufficient funds' issues with personal checks at closing.

4.  IDENTIFY ALL ITEMS WHICH WILL BE DELIVERED IN THE PURCHASE AND SALE AGREEMENT.  This includes the following:  warranties; keys; garage door openers; list of maintenance persons and/or servicers; tools; security codes; account numbers; Lead Paint Certificates; and, service contracts.  In the case of older homes, I like to obtain the names and telephone numbers of persons intricately familiar with the dwelling or equipment within the dwelling such as heating systems, ventilation, plumbing or electrical.  Sometimes older homes always have nuances and details only known by the original  installer or servicer. You might just avoid thousands of dollars in repair costs to chase down a crossed wire or a loose connection which has been a reoccurring problem in the past. 

5.  AT CLOSING:

            a.         Prepare and have the Seller acknowledge a letter to the tenants stating the change of ownership, the effective date and how future payments are to be made.  Send them Certified Mail, Return Receipt Requested to each tenant;

            b.         If you are closing within the month, don’t assume the responsibility to collect rents directly from the tenants.  Most rents are due on the first of the month.  The Seller has the affirmative obligation to collect those rents from the tenants.  The purchase and sale agreement reaffirms this responsibility and further states that ‘all rents shall be apportioned at closing’.  Therefore, whether the landlord collects the rents or not, he/she must pay the buyer for the adjustment;

            c.         Insist on compliance with all of the conditions of the purchase and sale agreement.  This means the removal of all personal property of the Seller on the premises.  This includes cars, debris, and other property in the basement such as disconnected heating systems and old or unused building materials.  Insist on an escrow holdback if necessary.  Always assess the costs of removing property, especially if it’s difficult to remove or hazardous material; and,

            d.         Discuss with the Seller all recent developments with the property, requests for repairs and repair or maintenance issues which need to be addressed immediately.  Formulate a plan and address these issues. Remember, once the deed is recorded, you are the owner of the property…and all the problems that may come with it.

In closing, keep in mind that sometimes a Seller is selling a multi-family property because it has been unprofitable.  Some reasons may be poor administration, non-paying tenants, or severe repair issues.  These issues should be identified prior to purchasing the property.  There’s no such thing as a ‘once in a lifetime deal’.  Every transaction has its benefits and detriments.  Identify the detriments; listen to your professionals engaged in the transaction; and, conservatively allocate your budget.

Jonathan J. Moriarty, Esq.

Law Office of Jonathan J. Moriarty

53 South Main Street, Ste. 3

Randolph, MA 02368

Telephone: (781) 961-2200

Facsimile: (781) 961-0017

Email: jjmoriarty@verizon.net

Website:  www.attorneymoriarty.com

SEVEN SPRING TIPS FOR LANDLORDS

It seems like the obligations of a Landlord never cease to exist.  There are always a host of looming issues which must be constantly addressed to keep the tenants content, maintain a positive cash flow and reduce the risk of liability.  One lawsuit or counterclaim by a poor tenant can be devastating.  Attorney's fees, courts costs, and statutory penalties are steep and normally cost thousands of dollars. 

The turn of each season is a great time to remind yourself of some key property issues to be addressed.  The spring season specifically is a crucial time to assess the damages of winter and address some exterior concerns that have been delayed.  Most veteran landlords have developed a schedule for addressing their seasonal issues.  Here are some tips for the tenderfoot landlords that are in the process of developing their maintenance schedules:

1.  DRAINAGE.  Massachusetts has some interesting terrain.  A large part of which is either coastal or at sea level.  Ponds, lakes, rivers, streams, vernal pools and neighboring water runoff and drainage patterns present significant concerns for property owners.  Standing water and moisture in basements lead to mold, rodents, insects, property damage and rot.  The flooding of 2010 presented a troublesome period for landlords who never experienced drainage issues in the past.  Basement water issues are often caused by improper drainage and insufficient downspout directions and extensions.  Assess your elevation, survey the directional runoff and extend your downspouts more than seven (7) feet from your foundation.  Pay special attention to low corners of the foundation.  If necessary, make or purchase pallets to assist tenants in the storage of personal property or elevating appliances from direct contact with the basement floor.  An ounce of prevention is worth a pound of cure.

2.  INSURANCE.  Review your insurance coverage and limitations.  Increase as necessary and research additional riders which may be worth amending to your policy such as sump pump failure coverage, loss of rents, theft, vandalism and landlord personal liability coverage.

3.  INTEREST ON DEPOSIT ACCOUNTS.  It's never too late to review your statements and issue checks to tenants for interest on their last month’s rent and/or security deposits.  These issues, although monetarily small, often rear their ugly heads when tenants fall behind on the rent and an eviction action is initiated by the landlord.  Penalties for failure to comply with the security deposit law include forfeiture of the security deposit, attorney's fees and costs, and damages.

4.  INSPECT STAIRS, DRIVEWAYS AND WALKWAYS FOR DEFECTS.  Premises liability is always an issue.  Whether it may be the tenant or a guest of the tenant.  Any fall or injury which may be attributed to a defective walkway or stairway is devastating.  Inspect your interior and exterior stairs and walkways.  Winter snow, rain and temperature are the elements which cause lifting nails, splitting wood and frost heaves.  Check all the railings and make repairs as necessary.  In the event any repairs are severe and may not be fixed immediately, issue notices to your tenants, post warnings and tape off suspect areas until sufficient repairs may be made.

5.  ORGAINIZE EXPENSE RECEIPTS FROM WINTER.  Organize and calculate the expenses of winter for your records.  Snow removal, fuel expense, maintenance receipts and other minor receipts should be gathered and documented.  You will thank yourself when tax time rolls around.

6.  BUDGET YOUR REPAIRS.  A Landlord's work is never done.  There is always some capital improvement on the horizon.  It may be a new heating system, roof, driveway or retaining wall.  Plan your improvements for this year or the next, organize a plan, and execute on the improvement.

7.  CHECK YOUR PROPERTY VAULE AND ASSESSMENT RECORDS.  The value of the property is a constant interest.  It is what drives the decision to sell or maintain the property.  Most municipal assessments issue in January.  In the event you missed the assessment on the February bill, check it on the May tax bill and compare it to the previous years.

Jonathan J. Moriarty, Esq.

Law Office of Jonathan J. Moriarty

53 South Main Street, Ste. 3

Randolph, MA 02368

Telephone: (781) 961-2200

Facsimile: (781) 961-0017

Email: jjmoriarty@verizon.net

Website: http://www.attorneymoriarty.com/

IMPENDING U.S. GOVERNMENT SHUTDOWN MAY DELAY CURRENT AND PENDING HOME SALES

    As of 5:00 P.M. on April 8, 2011, the U.S. federal Government faces a shutdown.  This would be the second shutdown of the federal government since November 1995.  A government shutdown affects many vital federal departments.  The Federal Housing Administration (FHA) is part of the Department of Housing and Urban Development (HUD).  FHA insures mortgages on single-family and multifamily homes, including manufactured homes and hospitals. It is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.  More than fifty percent of mortgages originated today are FHA mortgages.  This is largely because is permits residential borrowers to purchase homes with as little as a 3.5 percent deposit. 

     In the event the government experiences a shutdown on April 9, 2011, the processing of FHA mortgages will inevitably be delayed.  Although some lenders have publically disclosed that they will continue to close FHA mortgages, others are taking the position that they will not close any FHA loans and refuse to process new applications. 

     First, prospective Buyers beware.  In the event you are on the house-hunt this weekend, I would strongly advise you to consult an attorney before tendering any Offer to Purchase to a seller.  Offers to purchase will typically state a closing date and time.  Should the government shutdown exist for more than several days, it may delay your closing date weeks.  Typical boilerplate Offers to Purchase do not accommodate for government shutdowns or delays in financing caused by inability to obtain FHA financing.  Therefore, if your current mortgage commitment letter is based on an FHA loan then it may not be worth the paper it’s printed on.

     Second, in the event that you already have entered into an Offer to Purchase real estate,  but have not executed the Purchase and Sale Agreement then you may want to consider proposing an extension of the Offer to Purchase until clarification is made by your lender (in writing, of course) that your loan will not be affected or delayed.  In the alternative, you may propose an amendment to the Purchase and Sale Agreement which would accommodate for any delays in financing caused from the government shutdown.  Again, I strongly advise that you contact a real estate lawyer as this language must be carefully crafted to protect your interests and your deposit money at risk.

Jonathan J. Moriarty, Esq.

Law Office of Jonathan J. Moriarty

53 South Main Street, Ste. 3

Randolph, MA 02368

Telephone: (781) 961-2200

Facsimile: (781) 961-0017

Email: jjmoriarty@verizon.net

Website: http://www.attorneymoriarty.com/

FIVE TIPS ON HOW TO BE A BETTER RESIDENTIAL LANDLORD

Landlord-Tenant law in Massachusetts stems from the concept that there are two legal components of a tenancy.  The first component is the right to own the property.  The second is the right to occupy the property.  The landlord is usually the owner of the property.  The tenant has a right to occupy that property.  For purposes of this discussion, the landlord-tenant relationship will assume a lawful occupancy of the tenant by means of a lease or tenancy-at-will.  Much of this discussion is centered on minimizing landlord liability on legal fronts.

1.   BE CLEAR ON THE TYPE OF TENANCY AND WHO ARE THE TENANTS

In most cases, there is either a lease or some other document which defines the responsibilities of the parties.  I strongly recommend a lease in all circumstances.  The purpose of a lease is to define the occupants, terms and duration of the tenancy.  The lease should clearly define the obligations of the landlord.  Where the lease is silent, statutes and common law will apply, as relevant and lawful.  In some cases this may be beneficial or detrimental.  As a landlord, there is comfort in knowing that the unit will be occupied for a fixed period of time. As a tenant, there is comfort in knowing the repair responsibilities of the parties and that the rent will not increase.  First, many landlords make the mistake of not renewing their leases each year.  Depending on the terms and conditions, it could result in a tenancy month-to-month, tenancy at sufferance or some other mutation of either.  Second, all of the adult and minor occupants residing in the property, even if they are not legally bound to the lease, should be clearly identified.  Generally, under Massachusetts laws, all persons occupying a dwelling for three (3) consecutive months shall constitute a tenancy-at-will. Therefore, even though you may not have intended to create a tenancy with a third party, the mere existence of that third party in the dwelling may make them a tenant.  This is typically the situation when a significant other or family member moves into the apartment after the lease was signed.

2.   RENT, SECURITY DEPOSIT, LAST MONTHS RENT AND USE AND OCCUPANCY

In Massachusetts landlord-tenant law, there is much to know however, the following terms should be committed to the permanent memory of every landlord:

a.   RENT.  Rent is what the landlord receives as compensation from the tenant during the agreed upon tenancy.  Normally, this is a monthly fixed amount due on the first of each month and applied for that month.

b.   SECURITY DEPOSIT.  A security deposit is an amount, no greater than the amount of monthly rent, usually created at the inception of the tenancy, and held by the landlord in an account which meets the requirements of M.G.L.c.186 Section 15B.  The landlord must notify the tenant of the location and details of the account in at the bank where it was created.  In addition, the landlord must issue the tenant a Property Statement of Conditions.  Lastly, the landlord must pay the tenant interest which accrues on the account every 12 months and within 30 days after the termination of the tenancy.  The penalties for violating the security deposit laws are severe and may result in the return of the security deposit to the tenant, and damages, including attorney’s fees and costs.

c.   LAST MONTH’S RENT.  Last month’s rent is an amount received by the landlord from the tenant, which shall not exceed the first month’s rent, to be applied at the end of the tenancy.  The landlord ‘shall give to such tenant or prospective tenant at the time of such advance payment a receipt indicating the amount of such rent, the date on which it was received, its intended application as rent for the last month of the tenancy, the name of the person receiving it and, in the case of an agent, the name of the lessor for whom the rent is received, and a description of the rented or leased premises, and a statement indicating that the tenant is entitled to interest on said rent payment at the rate of five per cent per year or other such lesser amount of interest as has been received from the bank where the deposit has been held payable in accordance with the provisions of this clause, and a statement indicating that the tenant should provide the lessor with a forwarding address at the termination of the tenancy indicating where such interest may be given or sent,’ M.G.L.c.186 Section 15B (2)(a).

d.   USE AND OCCUPANCY.  Use and Occupancy are like rent payments insofar as they are intended to be applied towards the amount the tenant owes for residing on the property however, the classification has a very important legal significance.  Use and occupancy payments are received by the landlord after the proper termination of the tenancy (ie., 30-Day Notice to Quit or 14-Day Notice to Quit).  All payments received by the landlord after the proper termination of the tenancy should be identified and acknowledged by the tenant as ‘use and occupancy’ or else the landlord runs the risk of establishing a new tenancy and nullify all the time and expenses related to terminating the tenancy in the first place.

3.   MAINTAIN A PROPERTY/TENANT JOURNAL

Most landlords tend to get sloppy with their paperwork as years pass.  This is often the case when the property is in excellent condition and the tenants are stable.  However, in most cases of tenant default, it comes with little notice and with great upset.  When a landlord initiates an eviction action, the tenant will most likely allege the landlord failed to do certain things to the property which entitles them to damages.  Regardless of whether the claims are real or fabricated, the landlord needs to be able to recount the history of the property during the tenant’s occupancy including, but not limited to the following: rent receipts; delinquencies; disturbances; damages; repairs; and, communications.  The landlord’s actions, as well as inactions are very credible at trial when he’s able to recount a detailed history of complaints, defaults, repairs, and communications.  The journal is also invaluable as it supplements and assists the landlord in compiling an accounting of expenses and capital improvements for tax purposes.  My personal tip is to encourage all tenants to use technology when available.  Text messages and email are excellent forms of communication, may be stored for years and are admissible forms of evidence at trial.

4.   REGULAR INSPECTIONS OR HABITABILITY INSPECTIONS. 
      This is an issue which is very debatable and should be exercised with caution.  When push comes to shove and a landlord is forced to initiate an eviction action, the tenant will most likely counterclaim against the landlord.  These claims may include the condition of the premises, technical lease violations or other issues which involve the tenancy.  Often, the tenant will contact inspectional services or the local Board of Health to conduct an inspection of the premises.  In which case, the landlord will most likely receive a demand including a laundry list of violations.  From experience, I can say that often times the landlord never actually knew the conditions existed prior to recieving the demand notice.  It could be that the violations were actually the intentional destruction of the premises by the tenant.  The tenant simply may have never notified the landlord in advance.  Or perhaps the landlord knew about the condition, but simply overlooked or forgot about the repair.  Nevertheless, the conditions now exist and must be addressed prior to going forward with the eviction action.  Trust be told, there are some landlords who simply hedge the bet that they will never have to address the repair problem.  However, for the diligent landlord who never wants to become a victim of an allegation of disrepair, there are several preventative options available.  First, some cities and towns offer habitability inspections on vacant units.  The inspections usually cost approximately $50.00 and are conducted by city or municipal agents.  They are independent third parties who conduct a thorough inspection of the property and issue a Certificate of Compliance.  These certificates are wonderful evidence of the fact that the premises where fit and habitable for human occupation and no violations existed at that time.  It is important to note that these inspections may yield unfavorable results, including unknown structural problems.  However, if a landlord is not willing to maintain the property in compliance with the laws then there will be severe consequences in the event the tenant litigates the matter.  Lastly, the landlord should conduct their own regular inspections of the property annually.  I understand that tenants don’t want their landlord snooping around their home however, ‘an ounce of prevention is worth a pound of cure.’  Have a contractor or home inspector go through the basement, electrical and plumbing.  Specifically, the following are common areas of concern: sinks, toilets, boilers; shower areas; windows (open and close); smoke detectors; carbon monoxide levels; lock mechanisms; steps and railings; and, external doors.

5.   KNOW YOUR TENANTS
      This may seem obvious; however, many big problems can be avoided simply by knowing your tenants, their likes and dislikes, personalities and habits.  A simple random act of kindness (birthday card, taking in the trash barrels, or a new mailbox) can go a long way.  As humans, we are not always perfect.  However, the relationships you establish will dictate the behavior you receive in return.  In the event you have to experience the eviction of a tenant and things become ugly, the basis of the relationship may be a factor in trying to mediate a resolution.  And, maybe even the forgiveness of some technical landlord violations.  A random knock on the door for something other than rent may reveal some interesting facts.  I have personally observed everything from illegal contraband on a kitchen table to arguments which became less than civil.  I’m not suggesting that every landlord compile a ‘Howard Hughes’ type file on each tenant, but simply that the landlord know something more than just the names on the check.

Jonathan J. Moriarty, Esq.

Law Office of Jonathan J. Moriarty

53 S. Main Street, Suite 3

Randolph, MA 02368

Telephone: (781) 961-2200

Email: jjmoriarty@verizon.net

For more information visit the Massachusetts Trial Court Libraries at http://www.lawlib.state.ma.us/subject/about/landlord.html

FIVE BUYING TIPS FOR AN OFFER TO PURCHASE

Many individuals initially seek to purchase a home without consulting an attorney in the early stages of the process.  There are many factors which may influence their decision; among the many factors are money and time.  The current recession has left John and Jane Doe with less disposable income to spend on the purchase of their new home and cutting the lawyer out of the picture may be an attractive way to conserve more dollars for closing costs (and that stainless steel refrigerator).  The truth of the matter is that hiring a lawyer for a routine purchase transaction can cost as little as $500.00, including legal representation from the time of the signing of the Offer to Purchase up to and including the closing.

Many times Buyers are unrepresented at the time of the signing of the Offer to Purchase simply because of the immediate and pressing time demands of securing a ‘hot’ property before some other prospective Buyer swoops in.  These circumstances are difficult, but may be navigated by a layman by applying my FIVE BUYING TIPS FOR AN OFFER TO PURCHASE:

1.                  ALWAYS READ THE OFFER TO PURCHASE.  This may sound silly, but actually read the Offer to Purchase.  The Offer to Purchase is normally a one page document written in plain English.  All of the terms and conditions of the contract are set forth: parties; time; place; price; property to be sold; and, other additional terms and conditions.  Take your time and read it twice.  Make sure to include any additional terms and conditions as the parties may agree (closing cost credits, personal property, lawn furniture, pool equipment, repairs, etc…).  Try to memorialize any verbal promises or statements of condition made by the Broker or Seller.  You must understand the contract and your obligations prior to signing the Offer.  An Offer to Purchase is a very dangerous contract because it may be legally construed as a full-blown Purchase and Sale Agreement.

2.                  ALWAYS MAKE THE OFFER CONTINGENT UPON A HOME INSPECTION AND SIGNING OF A PURCHASE AND SALE AGREEMENT.  Most standard form Offers to Purchase include a contingency that the property be inspected by the Buyer to his satisfaction.  Some other inspections may include pest and insect inspections, a mortgage contingency clause and radon.  Be clear which inspections you will be conducting and have them stated in the Offer to Purchase.  I strongly suggest that the Offer state that ‘any and all inspections shall not require the Buyer to expend more than $500.00 in costs for repair or remediation.’  In addition, I suggest that an added contingency should be that all parties execute a Purchase and Sale Agreement prior to the expiration date of the Offer to Purchase.  This provides an added protection to secure the Buyer’s deposit monies in the event that a dispute arises regarding the condition of the property which doesn’t necessarily fit the contingencies mentioned herein.

3.                  REASONABLY ANTICIPATE YOUR TIMELINE AND DEADLINES.  This is probably the biggest issue subject to disputes today.  The dates agreed upon in the Offer to Purchase may be binding dates for the Purchase and Sale Agreement.  The lending process sometimes takes longer than what you may have been initially promised.  Banks and lenders scrutinize loan applications, request supplemental information, conduct verification of employment and obtain IRS wage reporting information. Delays may occur in scheduling necessary inspections. Payoffs, smoke certificates, Municipal Lien Certificates, proof of insurance and 6(D) Certificates may be delayed.  In the event that your file is mishandled or a discrepancy was discovered late in the process, you may be looking at requesting an extension of the closing date.  Extensions are costly and may be a very difficult issue to negotiate, especially if the property is a short sale or a ‘piggy-back’ sale for the Seller.  Always communicate with your broker and lender, confirm and reconfirm their time estimates before you put ink to the page.  I recommend a closing date approximately 45 days from the date of the signing of the Purchase and Sale Agreement or 60 days from the submission of the Offer to Purchase.

4.                  KNOW YOUR DAMAGES.  Sometimes the property may be everything you thought it was however, you may simply change your mind after the home inspection.  Sometimes unforeseen circumstances surface – neighborhood crime, job relocation, or accident.  In which case, you may have to withdraw or terminate the contract.  You must know the consequences of your breach in the event you may choose to exercise this option.  In most cases, a buyer’s breach of the agreement may simply result in the loss of deposit.  However, be very weary of vague language which may enable the Seller to sue you for the value of the breach – which could mean the entire purchase price.  This may be rare however; the cases are in the books to prove that it happens. I recommend inserting language in the Offer to Purchase that states ‘any breach of the agreement by the Buyer shall result in the termination of the Offer and forfeiture of the Buyer’s deposit and that shall be the sole and exclusive remedy of the Seller at law.’

5.                  DON’T FORGET TO GET A PHOTOCOPY OF YOUR DOCUMENTS.  This includes the Offer to Purchase, Disclosures, Contingency Addendum and deposit funds (check).  You will most likely need to supply some or all of these documents to your lender.  In addition, you will often need to have the documents in front of you when discussing the transaction with your agent prior to signing the Purchase and Sale Agreement.  Don’t allow yourself to be placed in a position where you risk making a very important decision without being able to personally reference your contract documents.

- Jonathan J. Moriarty, Esq.

 For more information I suggest reading:  http://money.cnn.com/magazines/moneymag/money101/lesson8/

MIND YOUR OWN P’S AND Q’S

It means mind your own business or keep your nose out!  There’s a certain amount of common sense in this old expression which should be applied when attempting to digest the media surrounding the current state of the United States economy, employment and housing markets.  Recent news suggests that the state of the economy is experiencing an up-swing, recent mortgage applications are increasing and new home construction is back.  Another wonderful source of slanted optimism can be browsed on the website for the United States Bureau of Labor Statistics.  But, what does the macro-economic view of the economy mean for the individual consumer?  Market trends and analysis are simply an opinion or view based on the majority of the statistics available, by persons far more intelligent than me.  Those trends are then shredded, dissected, published and broadcast to us via every available method of communication.  As certain interests and groups celebrate the accomplishments, others object to the analysis with distain and sometimes scary opine. 

As a real estate lawyer, I am constantly focusing on the current housing market trends.  I closely follow local, regional and national housing markets and financial institutions.  I am left staring at what appears to be a Thanksgiving Day plate of factoids which I in turn must consume, digest and regurgitate to my clients seeking legal opinions on investments, purchases and refinances.  In the end, I must always base my opinions largely on the individual, not the masses.  If a client proposes an investment or purchase which is sound, holds equity, and may be sustained with little hardship or risk then my advice will be based on these facts.  As a legal professional, my primary concern is risk and exposure to liabilities.  However, risk and liability may be minimized by the financial strength of the individual consumer.

As a consumer, my advice to you is to ‘mind your own P’s and Q’s.  Focus on your own circumstances.  If your goal is to purchase a new home, then focus on ‘your’ income, savings, credit and debt.  Make ‘YOU’ a priority.  Focus on ‘your’ career, training and advancement – this will increase your job security, financial independence and income.  Reduce your debt.  Increase your savings.  Develop a long term plan to achieve your goal.  And lastly, listen to the macro-economic opinions with one ear, not both.  At the end of the day, you can control the outcome of your financial situation.  And, of course, when you get to that point, always seek the opinion of a legal professional to draft and review your documents.

                                                                        - Jonathan J. Moriarty, Esq.

For more information, I recommend reading: http://www.forbes.com/2010/08/27/retirement-dow-401k-consumer-debt-personal-finance-bogleheads-view-dogu.html