Massachusetts, where I practice real estate law, is not experiencing the suffering as hard as other areas of the country. Perhaps, that can be put a little differently. Massachusetts was one of the first states to get hit by the real estate slowdown. Because of that fact, we may be ahead of some other states in recovering.
The real estate market is still not booming in Massachusetts. There are sales in certain pockets. It is becoming painfully clear that Lenders in Massachusetts are as slow, or slower, than other jurisdictions, appraisals are coming in “all over the place”, and people continue to lose their jobs. With that in mind, I have adapted my purchase and sale agreements, when I am representing the Buyer, as follows:
1. Closing Date. Massachusetts remains a “time is of the essence state”. The dates in the contract mean something, at least that is what the reported cases say. I put in a provision in my agreement that says, flatly, “The Closing Date may be extended for a period not to exceed 14 calendar days, if, for any reason, Buyer’s Lender is not prepared to close on the Closing Date”. No real need for explanation here. The Lenders are deadly slow in processing, even on purchases. I cannot afford to have some nervous Seller pull the plug on my client if the Lender does not deliver documents and money.
2. Mortgage Contingency Subject to Appraisal at the Purchase Price. This is becoming more and more important as appraisals, generally delivered the day before the mortgage contingency date, cannot be predicted as to value. I generally will permit the deal to go forward, if the Seller agrees to adjust the purchase price to the amount of the appraisal received by the Lender. This keeps things moving, and many times times Sellers will agree to this provision, as so modified.
3. The Buyer’s obligations are Subject the one or both Buyers being employed on the Closing Date. This problem just arose for me when I got a timely commitment from the Lender (wonder of wonders) and my client lost her job between the date of the commitment and the Closing Date. In that situation,cooler heads prevailed, and we worked things out based on the husband’s income. People continue to lose their jobs. When they lose their jobs, they generally lose their mortgage. We need to protect our clients against this not terribly remote problem.
I am sure there are more “recession driven provisions” which you are using. Share them with me and the ActiveRain nation. We are all in this situation together, and there could not be a more important time for us to hang together.