|T&B Trending March 2015 Vol 2-2015|
Housing Market Continues Slow Climb Toward Stable Levels
The latest Multi-Indicator Market Index (MiMi) from Freddie Mac, released Wednesday, showed that the U.S. housing market showed continued stabilization for the fourth straight month in December.
Q4 2014 Commercial Real Estate Cycles from Dividend Capital
Source: Ted C. Jones
There is one blog topic that I write about quarterly that is preceded by several calls and emails as to when it is scheduled to be available – The Cycle Monitor – Real Estate Market Cycles from Dividend Capital, prepared by Dr. Glenn Mueller from the University of Denver. Read more >>
FHA launches historic homebuyer ‘care package’ for 2015
After several years of lackluster participation in the housing market, first-time homebuyers are getting a boost from the Federal Housing Administration (FHA) this year.
March 2015 Newsletter Trending Now
Source: Topkins & Bevans Blog
This is the time of the year when all of us have no choice but to pour through our bank statements, credit card statements, checks and acknowledgments from charities regarding contributions….. While you are going through this data-producing exercise, you might want to consider your Will, and other elements of your Estate Plan, at the same time.
Topkins & Bevans
Boston, Braintree and Waltham
This is the time of the year when all of us have no choice but to pour through our bank statements, credit card statements, checks and acknowledgments from charities regarding contributions. Whether you prepare your own tax returns, or have a professional assist you, the first step is always to gather together data from the past year and assemble it into a form which will permit the preparation of an accurate tax return.
While you are going through this data-producing exercise, you might want to consider your Will, and other elements of your Estate Plan, at the same time. While your Estate Planning documents focus more on whom you would want to take charge of your assets, and to whom, and in what amounts you wish your assets to be distributed, preparation for getting your Estate Plan in shape is not that much different from getting your tax information together. Perhaps, you have an Estate Plan, but it was executed many years ago and the people you selected to serve as executors and trustees, or health care agents, are no longer living or have moved away. Maybe, your children have achieved a level of maturity where you can trust them to take care of things when you are no longer able. Maybe you have developed a relationship with a bank, or other financial institution, which you are comfortable with, and whom you want to get involved.
The point is just like your tax returns take some effort to gather information; your Estate Plan requires the same type of thinking and assembling. It matters not that you have located all the information concerning your income for 2014, if you do not get same on the return; you are in jeopardy with Federal and Massachusetts tax-collecting authorities. Similarly, even if you have located your old Will or Trust, your wishes will not be served unless you make the effort to meet with an attorney and inform him or her whom you want to be in charge, and to whom your assets should be distributed. Sometimes, all you need to do is “tweak” your current Will or Trust with a Codicil or Trust Amendment. Other times, you may need to prepare entirely new instruments, because the ones you have in place are so “dated”.
If you are one of that majority of Americans who have no Will or Trust in place, AT ALL, tax time may be the time that you climb off the fence and stop procrastinating with your family’s future. You really owe it to your spouse and children to put down in writing to whom you want your assets distributed, and which people you want involved in making it happen. Not everyone in your family will be happy with your choices, but no one will be able to say “Mom would have wanted this” or “Dad would have wanted that”. You do not have to rely on the laws of the Commonwealth of Massachusetts to distribute your wealth. You will have made it perfectly clear what you want.
|T&B Trending January 2015 Vol 1-2015|
|Top StoryNovember 2014 Job Growth – 7th Best Month in 10 Years Source: Dr. Ted C. Jones
Job growth continues to accelerate into the fall and winter as November 2014 saw 321,000 net new jobs (preliminary) added on a seasonally-adjusted annualized rate. That was the seventh best month of job growth in the past 10-years. Read more >>
In The News
Forecast: Full Steam Ahead for Housing
The housing market will continue its gradual recovery and gain momentum in 2015 after a disappointing 2014.
Home Sales, Housing Starts Expected to See Significant Growth in 2015
Improvements in economic fundamentals, notably employment growth among millennials, will fuel significant increases in home sales and housing starts and a modest rise in home prices in 2015. Read more >>
In Our Neighborhood
First-time homebuyers given more options to buy a home by FannieMae and FreddieMac:
Source: Topkins & Bevans Blog
Earlier this week new lending guidelines for first-time homebuyers were released in a statement by the FHFA Director Melvin L. Watt . Watt wrote “The new lending guidelines released today by Fannie Mae and Freddie Mac will enable creditworthy borrowers who can afford a mortgage, but lack the resources to pay a substantial down payment plus closing costs, to get a mortgage with 3 percent down. Read more >>
Earlier this week new lending guidelines for first-time homebuyers were released in a statement by the FHFA Director Melvin L. Watt . Watt wrote “The new lending guidelines released today by Fannie Mae and Freddie Mac will enable creditworthy borrowers who can afford a mortgage, but lack the resources to pay a substantial down payment plus closing costs, to get a mortgage with 3 percent down.
The lower down-payment requirement will allow more first-time homebuyers the opportunity to buy a home. Often the greatest hurdle for the first-time homebuyer is saving enough for a down payment. Many first-timers would try to save 20% of the purchase price that many lenders required. It can take a significant period of time to save that large amount of a down-payment forcing first-timers to wait to buy a home. Right now with rates as low as they are it very well may be cheaper to buy than rent.
FannieMae in its statement regarding its My Community Mortgage® “announced an option for qualified first-time homebuyers that will allow for a down payment as low as three percent. …the 97 percent loan-to-value ratio (LTV) option will expand access to credit for qualified first-time homebuyers that may not have the resources for a larger down payment.” Other requirements will still have to be met by the first-timer. These include “the usual underwriting, income documentation and risk management standards. These loans will require private mortgage insurance or other risk sharing, as is required on purchase loans acquired by the company with greater than 80 percent LTV.”
FannieMae expressed its hope that “Our new 97 percent LTV offering is simply one way we are working to remove barriers for creditworthy borrowers to get a mortgage. We are confident that these loans can be good business for lenders, safe and sound for Fannie Mae and an affordable, responsible option for qualified borrowers.”
FannieMae will require for this program that at least one of the borrowers be a first-time homebuyer.
FreddieMac also provided its guidelines for the low down-payment program. The program is entitled “Home Possible Advantage”
FreddieMac also set forth its Key Facts:
- Home Possible Advantage offers qualified low- and moderate-income borrowers a conforming conventional mortgage with a maximum loan-to-value ratio of 97 percent.
- Home Possible Advantage mortgages can be used to buy a single unit property or for a “no cash out” refinance of an existing mortgage.
- First time homebuyers must participate in an acceptable borrower education program, like Freddie Mac’s CreditSmart®, to qualify for Home Possible Advantage.
- Home Possible Advantage mortgages are available as 15-, 20-, and 30-year fixed rate mortgages.
These programs are seeking to allow the first-time homebuyer the ability to buy a home with less of a down payment but also limit the risk that the loan will go bad or default. They are focusing on the borrowers’ credit worthiness as opposed to the size of their down-payment. There is always an element of risk with requiring a lower down-payment; the homeowner has less of their own money at risk. But when you balance this against the economic drag of so many potential buyers sitting on the sidelines the benefit of pulling pull them into the real estate market may outweigh that risk.
We offer reduced rates for first-time homebuyers. Contact if you are thinking about buying a home. We will provide you with over a century of experience in dealing with real estate.
The current pace of our lives makes finding time to develop an Estate Plan more and more difficult. Please find below some moves you can make which are not complicated, or expensive, but which can improve your position, and let you sleep at night.
Create or Update Your Will or Revocable Trust
These documents are the cornerstone of your Estate Plan. They insure that your assets will be distributed exactly as you would like. Failure to keep these documents current may result in disinheritance or financial hardship for loved ones who depend on you.
Review Beneficiary Designations. When you established life insurance or retirement plans, you were asked to name beneficiaries of these accounts who will receive the assets upon your death. It is important to review these designations regularly to ensure that your assets pass to the appropriate loved ones.
- Create or Update Your Health Care Proxy and Living Will You need a health care proxy to appoint your spouse, a trusted friend or family member to make medical decisions on your behalf in the event you are unable to make those decisions yourself. Your health care agent will work with your doctors and other health care providers to make sure you get the medical care which is best for you. A living will is a type of advance directive that gives you the opportunity to formalize your wishes as to prolonged health care in the event that your condition is terminal. NOTE: Living Wills give direction but are not legally binding
- Create a Durable Power of Attorney. Regardless of the size of your estate or your family circumstances, you should have a durable power of attorney. You may appoint your spouse, a trusted family member or friend to handle all of your financial affairs on your behalf in the event you are not able to do so, yourself.
- Establish Guardianships for Minor Children. Have you considered who would take care of your minor children in the event of the untimely passing of you and your spouse? If you do not finalize your wishes in your Will, a court will decide who will care for your children. Do not leave your children’s well-being in the hands of a court. Appoint a Guardian for you minor children in your Will.
- Encourage Your Adult Children to Create an Estate Plan. Whether your son or daughter is going off to college or beginning a career, encourage your child to set up an Estate Plan. If your adult child requires medical attention, you have no legal right to their medical records, nor can you participate in health care decision, without a duly executed health care proxy.
- Encourage Your Aging Parents to Create, or Update, Their Estate Plans. It becomes increasingly more difficult to discuss finances and health care decisions with your parents as they age. Encourage your parents to put an Estate Plans in place, or review their existing Estate Plans.
The Massachusetts Appeals Court in Allen V. Allen ruled that a deed signed by a grantor but not acknowledged by the grantor before a notary was not enforceable. This was family transaction involving the family home in Lexington. The matriarch of the family Ethel began the process of moving from her Lexington home to live with one of her daughters, Nancy in 2001. Ethel’s son Harold claims that a deed from Ethel executed on July 23, 2001, conveyed the house to him and Ethel as joint tenants. This deed is the subject of the litigation. An Attorney prepared the deed and notarized it. The acknowledgement (notary) was dated July 23, 2001, and it read: “Then personally appeared the above named Ethel M. Allen and acknowledged the foregoing instrument to be her free act and deed, before me”. The attorney then recorded the deed on August 10, 2001.
Later that year, on November 30, 2001, Ethel established the Allen Realty Trust and executed a deed conveying the Lexington property to herself and to her daughter Deborah as co-trustees of the Trust, reserving a life estate for herself. Ethel specified in the trust that the property would be sold upon her death and the proceeds divided among several of her descendants, including Deborah. This deed was recorded on February 8, 2002. Ethel died on December 20, 2009. It was at this time that Harold revealed the July 23, 2001, deed. Neither Deborah nor her sister Nancy nor the attorney who prepared the November deed had discovered Harold’s deed. When the second deed was recorded no title examination was done. Deborah commenced a litigation in January of 2010. Her suit disputed Harold’s claim to the property and sought to declare the deed to him was unenforceable.
The judge at the trial found that Ethel’s signature on the July deed was authentic. But he determined that Ethel never appeared before the attorney/notary to acknowledge the deed. The judge found that Ethel had signed the deed in front of Harold; he then brought it to attorney/notary for his signature, and then the attorney had notarized the deed without Ethel in his presence.
The Land Court ruled that the deed was unenforceable because it was improperly notarized. It was not sufficient that Ethel had signed the deed. She had not confirmed before the notary that the deed had been her free act and deed. The deed because of the invalid acknowledgement was not entitled to be recorded as the Registry of Deeds. The Court stated “We therefore conclude that the latent defect in the certificate of acknowledgment of the July deed prevented it from giving constructive notice to Deborah of the prior conveyance.” The Appeals Court affirmed the Land Court’s findings in its decision.
There were other arguments made by Harold which all also failed. Always remember that a document cannot be notarized unless you are in the presence of the notary when you execute it or when you acknowledge that your signature was your free act and deed. Also whenever you have a document conveying an interest in real estate recorded, have the title checked for any other matters first and then record your document.
When I first started practicing law, it was accepted practice to bill matters by the hour. After all, the only thing I was selling was my time, and if I spent more time on a matter than I expected, why shouldn’t the client compensate me for that effort? While these axioms remain true, the marketplace has changed, and consumers are now aware that “shopping” for an attorney is no different than shopping for any other service or commodity. Because of these trends, and because I want everyone I represent to believe they have been well served and fairly charged for services, my firm now uses a “fixed fee” approach to almost all real estate transactions. My practice is to enter into an initial discussion with the client to determine the level of complexity of the transaction, and then to agree upon a fee, which will not change even if the transaction goes viral, and I spend more time on the matter than anticipated.
Accordingly, if you work with Topkins & Bevans for the purchase or sale of your home, you will know, up front, what the matter will cost you, and you can factor that expense into your budgeting process.
There are several inherent advantages to this approach:
- You and our firm establish a relationship of TRUST, our most important product.
If you believe that you are working with honorable professionals, you will feel comfortable telling your friends and family about us, and that helps Topkins & Bevans to expand our client base. You may also feel comfortable using our firm for other legal matters which may arise, including helping you develop an Estate Plan for your family.
- You are not hesitant to email or call when you have a question.
Many people worry about calling when the meter is “on”. They have concerns, but they do not want to expand the amount of their legal fee. Fixed fee billing eliminates that factor from the equation. When the pressure is off, people communicate better. On the other hand, the situations are few and far between where a client takes unfair advantage of the fixed fee approach.
- We get all the information from you that we need to give you appropriate representation.
Our firm has real estate experience at almost every level. We have completed condominium conversions. We have prepared subdivisions. We are familiar with current lending practices. None of this expertise will help you unless we know all the facts of your situation. When you are not worried about the added cost, you can open up and give us good information. That usually translates to our being able to give you effective representation.
If you are considering buying or selling a home, we would love to hear from you. We will work with you on a fixed fee basis and even defer payment of some, or all, of your fee until the closing. There is nothing better in our line of work than a satisfied client, and that is what we aim for, each and every time.
Like everyone else’s business, my business as a Massachusetts real estate lawyer runs in spurts. Lately, I have been involved in three situations concerning Easements. In one situation, a client of mine is buying a guest house while the Seller is retaining the major home. All the systems, however, run through the major home. To make things more complicated, some of the utility lines actually leave the street and pass over the land my client is purchasing. A reciprocal Easement is needed to protect both sides in terms of repair and access. With the assistance of an excellent surveyor, who drew up recordable plans which I can use, I should be able to articulate the rights of the parties in a manner that does not give rise to disputes somewhere down the road.
The other Easements were retained restrictions imposed a relatively long time ago by a land owner who wanted to protect the environment. Since these Easements were put in place, the Towns where the property is located have become much more vigilant in enforcing local and state conservation laws and codes. The people who put on the restrictions originally now are willing to remove some of the more onerous restrictions, since times have changed and there has been other development in the neighborhood. We are very close to reaching agreement, which enhance the value of both the retained and purchased land, and still provide requisite environment protections.
Because they represent encumbrances of the title, all Easements start with an accurate title report. Until we know who the current lien holders on the property are, we cannot complete the Easement work. In the case of the major home-guest house, the owner of the major home has a mortgage on his property. A Subordination of this mortgage to the Easement must be obtained before the Easement can be fully in effect. This takes some time, so we will hold back some funds from the Seller until the Seller delivers the Subordination. One never knows how long obtaining the Subordination will take. I am going to request that 1.5% of the purchase price be held back. That should “encourage” the Seller to act quickly.
In the restrictive Easements situations, my goal is to either eliminate, or weaken, the effect of the restrictions. That will take some negotiating and compromise, but restrictions like these, while laudable, can really make the value of property diminish.
The last issue is whether a full certified Plan is necessary for an Easement. I have prepared Easements where a sketch of the property lines and rights of way is adequate. Naturally, I would prefer a Plan prepared by a Surveyor, in recordable form. Most of these considerations are financial, but unless there is precision in Easement drafting, which includes accurate depiction of the property in question, the money saved in the present tense may be spent many times over in the future.
Home-ownership is often complicated, and never exactly what you expect. Nothing you have done previously in your life can prepare you totally for owning a home. Don’t get me wrong: there is not a greater believer in home ownership than I. All I am saying is that there are some definite steps you should be taking, and moves you should be making, and the sooner you get things organized properly, the easier you will find the home ownership experience. Here is my list of “do’s” and “don’ts”, in no particular order of importance:
- DO file for a Homestead. I do deal with Homesteads each and every day. There is no downside to recording the Homestead Declaration, unless you think a $100 dollar investment to protect $500,000 is not a good deal. How you will employ your Homestead when it is necessary is not something you can predict. Just understand that you only need to file a Homestead once, and it will endure through countless refinancing transactions. A Declaration of Homestead is truly “the gift that keeps on giving”.
- DON’T be a careless record keeper. The current tax laws are extremely favorable to middle-class America. If you have lived in your home for at least 2 of the last 5 years, you can sell your home and not pay any capital gains tax to a maximum exclusion of $250,000 for a single person and $500,000 for a married couple. Especially these days, that exclusion covers most of us, and we can make one, two or more transactions without any concern for paying the tax man. Well, there is no guarantee that our law makers will continue this tax benefit forever. What if fiscal needs require the termination of this program? Are you ready to recreate your tax basis in your home? Do you have records of improvements and additions which can be added to your tax basis? The time to determine whether you do is NOW, not when you are staring down the barrel of a tax audit.
- DO be a believer in preventive maintenance. Letting needed repairs slide is not a good idea, even in a recession. If your roof is not sound, or you need new windows, get the work done before greater woes befall you. You may find that the payback with new windows on energy costs justifies the expense. Ditto with needed insulation. Attend to these items as they are needed. You will receive the benefit.
- DON’T wait too long to consider Elder Care transactions with regarding your home. If you are fortunate, and have children you can trust, you may want to consider getting your home out of your name and into a Grantor Trust. These Trusts can be helpful later on, but there are waiting periods in place to prevent abuses and every time they change, they seem to get longer. Don’t let this go so that when you decide you want to make a move, you too close to need attendant care to insulate your assets. Again, each circumstance is different, but certainly 60 years of age is not too early to start planning.
Earlier this month, I represented a Seller in a Boston condominium. Every transaction has its issues, and the issue in this matter was the fact that the Condominium, which had more than sixty (60) units, was undergoing renovation, and there were going to be Special Assessments to pay for same. The Seller and Buyer spent a substantial amount of time and effort trying to figure out an equitable way to split the responsibility for same. I normally take the position that if the subject of the Special Assessment is looking backward [repairing a rotted roof, foundation cracks or brick pointing], it is clearly the Seller’s responsibility. If the subject is a new feature for the Condominium [recreation room, pool] the Buyer should pay. There is never a clear path, but, generally, if both the Seller and Buyer are motivated, we can reach agreement.
Once I put this matter to bed, it occurred to me that Assessments, which are often viewed with horror by both Buyers and Sellers, are really a positive sign of good Condominium governance, and not something to avoid. As I started to think about Condominiums which I have owned, or assisted people in buying or selling, I realized that not having Assessments, and addressing either deferred maintenance or improving the Condominium complex, is, in fact, a negative factor, because when problems do arise, they are that much more significant since they have been ignored no long. For example, the Condominium where I live has not changed its monthly fee, or had a Special Assessment, for the more than the twelve (12) years I have lived there. I do not view this as a good thing: I view it as sloth and indolence on the part of the people who run the Condominium.
The bottom line is that there is a lot of deferred maintenance in all homes, but especially in Condominiums. If you live in a Condominium, where management is up-front and pro-active in keeping the systems and components in good shape, chances are that there will never be a major problem, because the smaller problems are being addressed on a continuing basis. I now also believe that “self-management” is really a code word for “cheap”, and that a self-managed condominium is not as valuable as one which has professional management and experienced operatives dealing with normal, and extraordinary, issues which arise. The more I see of self-management, the more I see megalomania. That results because like our political system, competent people are not willing to serve as Trustees and condominium officers, so people without experience or framework assume power, often leading to poor decisions and a Condominium with no prospects of having the value thereof increase. The only thing these individuals possess is plenty of spare time, and the old adage “if you want to get something done, ask a busy person” very often applies.