All posts by Robert Bevans

Representing Same Sex Clients–Documentation at Purchase Is Generally a Worthwhile Enterprise

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In Massachusetts, where I practice real estate law, same sex marriage has been legally acknowledged. In a situation where a same sex, married couple, purchases real estate, I suggest that the Grantee clause read “a married couple, as tenants by the entirety”. Massachusetts law provides excellent protection from creditors to husbands and wives who take title as tenants by the entirety, so I believe it is important to attempt to obtain similar protection for same sex couples who are married. To my knowledge, the validity of this approach has not been tested in a bankruptcy or appeals court, but I am reasonably certain that the protection would be provided if the matter were ever adjudicated.

Many states do not recognize same sex marriages. Many same sex couples in states that permit marriage have not chosen to marry. The question then becomes how to offer solid, enforceable protection to these couples, who do not hold as tenants by the entirety. There are two other ways to hold property in multiple names; tenancy in common and joint tenancy with right of survivorship. The difference between the two types of tenancies (in Massachusetts, at least) is that a tenant in common can leave an undivided one-half interest to his or her heirs, while a joint tenant’s interest passes to the surviving tenant (without the need for a Probate) at death.

Whether a couple owns real property as tenants in common or as joint tenants, there are some “issues” which should be resolved immediately after purchase. My suggestion to my same sex clients is a binding agreement between the two of them which sets forth what will take place between the two parties if there is a “break-up” of their relationship. This, of course, can, and does, happen with same sex relationships in the same way as husband and wife relationships. The difference for married couples is there is a set of laws and decisions which govern divorces. There is no such thing for unmarried couples.

When any of you are involved in a same sex purchase situation, you would be doing your clients a favor if you suggested they address the issue of “what-if” when they are together and happy. The tenancy-in-common agreements I draft provide precise exit terms and conditions, which the parties develop as a couple. Once there is a problem in the relationship, one person’s definition of “fair” may not coincide with the other’s, and painful arguments, and even litigation, may ensue.

The Phenomena of Transference–Use it to Your Advantage When Negotiating Your Deals.

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“Transference” has been around for a long time. What it means in the context of this post is the ascribing or motives which the person on the other side has, and maybe always had, to you. As an example, suppose your are about to finish up an Offer with a listing of yours, and the Buyer’s agent, on the other side, says “How do I know that by the time of closing, you will not substitute a range of lower quality for the range that currently exists?”  Well, you and I know  that this kind of conduct is nothing short of unethical, and may be criminal, but you deal with this issue by telling the Buyer’s agent either that you will put the make and serial number of the appliance on the Offer, or you will “tag” this, and every other appliance, with stickers initialed by both of the realtors.

In other words, there are ways to deal with the “slime ball” on the other side, but now you are sure of who she or he is, and you can make judgments in the future that involve being very defensive and precautionary. By using “transference” you have figured out with whom you are dealing. That can come in handy all the way down the road to closing.

In my practice, I have seen “transference” manifest itself in many ways. When an opposing attorney says to me “How do I know you will not give the keys to the Buyer before I inform you that the Deed is on record?”, I realize that that premature releasing of keys , probably more out of sloth than anything else, is this attorney’s way of doing business. I make a note to get everything in writing with this person in future deals. When a person on the other side accuses me of “back-dating” a document (not something I do), I am reasonably certain that documents I receive from that person may well not contain the actual date they were signed.

The bottom line here is that  using”transference” can give you a necessary advantage when dealing with someone on the other side who does not have your high ethical standard. Listen for tell-tale remarks of transference that may give you clues. In the end, “forewarned is forearmed”, and you can learn a lot about the person on the other side from his or her requests or articulated concerns. We are all “detectives” , anxious to obtain the best results we can for our clients no matter who is on the other side. Effective use of transference can help us attain this goal.

Cleaning House–It is Time to “Fire” No Fewer than Ten Percent of My Clients!!!

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The is no question that Jack Welch, the former CEO at GE, and now a frequent contributor on CNBC and other financial forums is extremely full of himself. If you have read his books, he will regale you with principles and approaches to management that he claims cannot fail. Well, despite the fact that his personal life may have left something to be improved upon,  some of the “Gospel according to Jack” has merit.  He has inspired me to do an annual evaluation of my clientele that has turned out to be very helpful.

Welch’s evaluation is employees; mine is clients. Yours could be customers. The approach goes something like this:

     1. In every context in which we deal, there are A, B and C individuals.

                a.  The A’s (hopefully 25% of so) do not need to be described. They are performers!!!!

                b.  The B’s have potential, but potential can take you just so far. Some of them will become  A’s. Some will fall by the wayside. They deserve careful scrutiny. Your job as a manager is to make the final determination where they will fit, sooner rather than later.

                c.   The C’s are either former B’s, who did not advance, or people who just never bought in to the things which we think are important.  If you continue to retain these people, they will take your organization down. The C group, which hopefully comprises no more than 10% of your emplyee population, must be let go.

     2.  At the beginning of every year, we must find a way to sever our connections with the C’s.

               a.  If we are speaking about employees, we must let the C’s go elsewhere. We have made a determination that they will never be consistent B’s, let alone the A’s which make our organization effective.

               b. If we are speaking about clients (or customers), we must contact the C’s and inform them that we have decided that it is is not in our mutual best interests to continue representing them, or working with them.

This may sound strange, coming from an real estate, transaction-driven,  Massachusetts attorney who is generally  anxious to expand my client base, but there is a method in my madness. My C clients have been nothing but headaches for me. They may have ethics which I do not approve of. They may question every bill I send to them. They may not listen to the advice I give them and then blame me when things go wrong when they have chosen their own course. They delay paying me, and often request bill reductions, not on an exception basis, but all of the time.

I politely inform them that I have decided to provide no further representation for them and suggest they obtain successor counsel. Most sulk off and tell me that I didn’t do a very good job for them, anyway. If that is the way they truly feel, our parting is felicitous for both of us. Some ask me if I could reconsider. I ALWAYS give them another chance to shape up. If they do, I have a client I can work with. If they do not, they will make my cut list next year, or maybe even sooner. Many work hard to improve our relationship. They were truly unaware that things had gone so badly off the track.

I urge each of you to consider the approach I have taken with the people you do work for. It has worked well for me, and I have gradually assembled a group of clients, who appreciate my efforts and with whom I can work effectively. That has always been my goal, and the “clean house” approach has helped me get closer and closer to what I have been seeking.

Closings in Martha’s Vineyard and Nantucket–They are not Quite as Mysterious as you Might Imagine

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I am sure most of you are aware of the existence of Martha’s Vineyard and Nantucket, if for no other reason, the fact that several of our recent president’s have spent summer vacations “on Island” as they call it. Each of these islands has its own Registry of Deeds (Dukes County for Martha’s Vineyard; Nantucket County for Nantucket). Each of the islands has special “land taxes” of Two (2%) Per Cent of the Purchase Price, which must be paid by the Buyer before their Deed will be permitted to be recorded.

Couple the land tax with still lofty prices charged for homes on the island, and there is an almost sense of intimidation that accompanies considering purchasing a home, or assisting a client purchasing a home,  on Martha’s Vineyard and Nantucket.

My  law firm, Topkins & Bevans, has offices in Boston, Waltham and Braintree, Massachusetts. Over the years, we have established many solid connections on the two islands. We regularly conduct real estate closings with respect to island property, and we are familiar with local practices. There is regular plane service from Boston to each of the islands. The flights are short and reliable.

If you are an out of state realtor or attorney, we would welcome the opportunity to assist you in weaving through Martha’s Vineyard and Nantucket transactions. They can be managed “off-island” extremely efficiently and, generally, at a substantial savings in cost.

Bad Things Come in “Three’s”, Too–Three Difficult Situations in the Life of a Massachusetts Real Estate Attorney

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In general, the fact that I have been practicing for over 40 years in Massachusetts puts me in a position where I can honestly say “I’ve seen that, and I believe I know what to do to fix it” rather easily. This past week I encountered three (3)  difficult scenarios, and I am fixing them, but (1) there was a lot more work involved than I will get paid for and (2) I wish I were a little more certain that my solution to each problem is going to work.

1. The Case of the Totally Mismanaged, and Misdrafted, Nominee Realty Trust. In Massachusetts,people use nominee realty trusts  for numerous purposes . The main reason is anonymity, I believe, although there are recent Supreme Judicial Court decisions which suggest that the names of the beneficial (i.e. real) owners can be determined by discovery if there is litigation. In any event, my client is the Buyer purchasing a single family residence from a nominee trust. Seems rather simple, no? It isn’t. The Trust was poorly drafted; two of the beneficiaries have died during its pendency. Probates will be required. We certainly will NOT be closing on January 8, 2010. I have working on a use and occupancy agreement. I must make sure that this document will not adversely affect my client’s financing. These days, anything you do can affect your client’s financing!!!

2. The Case of the Abutter’s Deck having a part thereof on the land my client is purchasing. Fortunately, the Abutter is, in effect, the same person as the Seller. The names on the titles are different so that the two lots are not merged, since neither one of them is a conforming lot for zoning purposes. My solution here is an Abutter’s Agreement, between the Buyer, Seller and Abutter. I am putting this document on record, so it will   who purchase the Abutter’s property. The Abutter’s Agreement will give the Abutter a couple of months to trim his deck. If he does not do it, my client can do the trimming and obtain reimbursement from the Abutter. If the Abutter does not pay, the Abutter has consented to a lien being attached to his home. We can close on this basis; I always worry whether I am opening up a hornet’s nest not getting the work done before closing. There is more than a foot of snow on the ground in Massachusetts. The delayed resolution seems the only one available.

3. The Case of your water and sewer connections going through my land. This case is not so very different from Case #2, except the solution is below ground and continuing. Again, a common owner scheme, so my Buyer had an opportunity to formulate a proposed solution. The plan here was an Easement, which would reference a Engineer’s Plan, which would be recorded at the Registry of Deeds. This is an expensive solution, but I was able to convince the Seller to pay for the Engineering work and my drafting. I guess my concern here is just how careful the Seller will be if he has to dig up my client’s lawn to do a water line rupture. I have included  what I consider “necessary language” regarding indemnification,  but I never can be sure that it will prove to be adequate.

So, these are three situations where creative thought, and drafting are required. Many people ask me how I can continue to do residential real estate transactions because they are so repetitive and boring. Solving the problems set forth above certainly do not qualify in those categories. besides, helping people buy the home of their dreams is really never boring. Ditto, the fact that every client has a different story, and their individual story, which I gain insight into while working with them, enriches my own life experiences.

Internet Recording of Documents in Massachusetts–Our Commonwealth Joins the 21st Century

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Wonder of wonders!!! Massachusetts, the commonwealth (not state, thank you very much) where I practice real estate law, is joining the 21stCentury. Three different counties (there are 15 counties in the Commonwealth) have now made arrangements for attorneys, and other people involved in the land recording process, to record documents over the Internet. The counties which have made this “break-through” are Middlesex, Plymouth and Hampden, and the system is working extraordinarily well.

Massachusetts has a dual land registration system, which involves recorded land (most of the land in the Commonwealth) and registered land (a much smaller fraction of the land). Because of the idiosyncrasies involved in registered land, only “recorded” land filings may use the Internet system.  Just as importantly, the system can only be utilized by those recording entities who have established themselves as “qualified” to use it by  satisfying the particular  procedural and financial requirements established by the Registries, themselves.

My firm, Topkins & Bevans, was quick to become qualified, and we are now actively recording any available documents using the Internet. I am not aware of whether other jurisdictions have for a long time had a system like the one evolving in Massachusetts, or whether Massachusetts is in the forefront here. To me, it hardly matters because we are now able to eliminate, in almost all cases, the inconvenience of Registry closings for recorded land in the counties I described, and the consequent standing in line and waiting to record documents, in person, at the Registry.

If my Massachusetts realtors expect to be involved in closings that traditionally “had to close”  at the Registries described above, because the transaction is “back-to-back” or the Seller needs the funds “right away”, the new procedure should be a Godsend. Make sure to inquire of the closing agent involved whether he or she offers Internet recording. It is an idea whose time has come, and like all the technology which is becoming available to us every day, if that closing agent does not “climb on the bus”, the bus may just pass it by. Topkins & Bevans would be pleased to answer any questions of Massachusetts closing agents about this new process. In the long run, using the Internet for recording will make all of us more efficient and able to increase our productivity.

Representing an Out of State Client in a Massachusetts Real Estate Transaction–The “Massachusetts Rules” Can be Difficult to Comprehend

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When I attended a national law school almost 45 years ago, we would learn two sets of rules in almost every discipline–the law for 49 states and then the “Massachusetts rules”. Today, after practicing law in Massachusetts as a real estate lawyer, I must admit to each of you that the “Massachusetts rules” continue to operate loud and clear, and they can be downright confusing for people who are not used to them. At this time of the year when we all try to “give back”, I have decided to give you some examples of the “Massachusetts rules” with the thought that if you have further questions, you can check my profile and contact me directly. One of my New Year’s resolutions is “I promise to return each inquiry on a prompt and courteous basis”.

Here goes:

     1. Quitclaim Deeds Are the Standard Not the Exception.   In some of the western counties of Massachusetts, and sometimes on Cape Cod, I have seen Warranty Deeds used for conveyancing. Warranty Deeds are not, however, the normal type of Deed which is delivered at the closing. The standard Deed is the Quitclaim Deed, which at first blush, can drive an out of state practitioner wild with fear. You see, in most states, a Quitclaim Deed is what it sounds like. “I am not sure if I have any interest, at all, in this property, but if I do, I am conveying it to you, or words to that effect.” In Massachusetts the Quitclaim Deed says much more. Among other things, the person executing a Quitclaim Deed in Massachusetts warrants that the granted premises are free from all encumbrances made by the grantor, and the grantor and his heirs, successors and assigns will defend the title against all person making claims through, or under, the grantor. In other words, the Massachusetts Quitclaim Deed has similar characteristics to the Warranty Deed in other jurisdictions.

     2. Massachusetts Attorneys Run Almost all Purchase Closings.   Because there is a statute which requires an attorney to render a “title opinion” in every residential purchase to the extent of the purchase price, Massachusetts attorneys continue to conduct purshase closings and serve as closing agents. That is not to say there are not title companies, so-called, in Massachusetts. It just means that the title companies generally work for, or are owned by, attorneys. The concept of “going into escrow” really does not exist under the “Massachusetts rules”.

     3. In Most Purchase Transactions, the Attorney Serves as the Agent for the Title Insurance Company and Writes the Policy.  This part of the “Massachusetts rules” is really a function of the title opinion statute referenced above. Since the Massachusetts attorney is certifying the title, it has proved more convenient for the title insurance companies to use the attorney as title agents.

     4. Despite all these Differences from other Jurisdictions, Title Insurance in Massachusetts is not as Expensive as in Other Jurisdictions. In keeping with all the other idiosyncracies in Massachusetts, you will not be surprised to learn that the cost of title insurance is not regulated in Massachusetts. In point of fact, I have found that most title insurance costs $4.00 per thousand for an Owner’s Policy and $2.50 per thousand for a Lender’s policy. If Owner’s and Lender’s are purchased simultaneously, there is a $175 extra charge. I am told that these rates are in the low to middle range of title insurance charges nationally.

As my clients start to obtain mortgage financing more and more on the Internet, our firm has been doing more and more work for out-of-state Lenders. If any of you fall into that category, please feel free to use Topkins & Bevans as your “source” for Massachusetts mortgages. We have lived with the “Massachusetts rules” for a long time, and we are comfortable wending you through them should you have the need.

The Offer To Purchase–Massachusetts (and perhaps other) Realtors Should Make Extra Effort on this Important Document

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In Massachusetts, where I practice as a real estate attorney, there is a two step process for most real estate purchases. Usually without the assistance of counsel, the parties enter into an Offer to Purchase (the “OTP”). There are some contingencies in the OTP, which generally center around a “satisfactory” inspection. If the property “passes” inspection, the next step is to enter into a Purchase and Sale Agreement (the “PNS”) which has more provisions than the OTP, and “fleshes out” the details of the transaction in greater depth. What every real estate professional in Massachusetts needs to take note of, however, is that there are Massachusetts Supreme Judicial Court decisions, which clearly hold that the OTP, if it includes the basic facts of the transaction (like purchase price, closing date and the like), can be viewed as an enforceable contract, upon which the Buyer can sue the Seller for specific performance, even if the parties are never able to work out a mutually satisfactory PNS.

That being the case, I thought I would make some observations about what I am seeing in many OTP’s which can, and should be, improved by the realtors who generally draw the documents up.

•1.      Make Sure the OTP is legible. This may sound like a basic truism on a document as important as the OTP, but I am amazed at how many times, I receive OTP’s to review, where I cannot read some of the important terms therein, because of strike-overs or substitutions in the margins. The OTP should really be written very neatly, and precisely, because it is from this document that an accurate PNS can be drafted by the attorneys representing the Buyer and Seller.

•2.      Think Long and Hard About Who Will Hold the PNS Deposit. If you are a Buyer’s agent, and would like to get paid at the closing, you are almost always better off having the attorney for the Seller hold the deposit(s). The Listing Broker holding the deposit often takes his or her time to pay you your fee. Then, you have that ugly possibility that the Listing Broker may experience some kind of financial difficulties which delay (or prevent) your getting paid. I would opt for the attorney, who is subject to strict disciplinary rules if the deposit does not get delivered and who should be willing to pay over the deposit(s) at the closing for distribution by the closing agent.

•3.      Be Precise in Indicating What is “Included” and Excluded” from the Sale.  The OTP is the place to be specific in this area. Many disputes at the PNS level can be avoided if there is definition of the inclusions and exclusions.

•4.      Be Realstic in Terms of Date for Mortgage Commitment and Submission.  I have seen many OTP’s where the date to submit the mortgage application has passed by the time I start working on the PNS. Make the dates comport with reality. Similarly, put in a realistic time frame for the receipt of a mortgage commitment. Lenders are understaffed, and appraisals are taking longer than in the past. Give all parties a chance to do what is possible.

As I said above, the OTP is basically completed by the realtors. If you are involved, take the time to make your OTP accurate and realistic. It will make your transactions move more smoothly, and the extra time spent at the outset of the transaction will almost always bear fruit somewhere down the line.

Julie & Julia–An Excellent Film; An Excellent Example of the Power of Blogging

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It was a Sunday night. The football game was one-sided. My wife talked me in to renting the movie “Julie & Julia”. This film turned out to be well worth the two hours I spent watching it, and a monument to the power of blogging on a consistent basis.

For those of you who have not seen the film, I will only touch on plot details. Suffice it to say, that this is a film about two extremely powerful women, whose careers advance, not in spite of their husbands’ support, but in large part, because of the supportive relationship of the respective marriages. All very 21st century “feel good”, but masterfully done.

One of the protagonists, Julie, sets out to write a blog a day. In her case, her posts concerns recipes and how they turned out and what feelings they engendered within her. One of the thrusts of the movie was that her blogging was as much for herself, as her audience, and that started to hit home for me, and, probably for most of you.

I have realized that I write posts to educate and entertain others, but also to make myself feel good. I am a full-time practicing attorney. While my “story” might interest some, it is probably not interesting, or unique, enough to be the subject of a novel or a biography. In other words, I would have little hope of being “published” even if I quit practicing real estate law in Massachusetts and wrote fiction, or non-fiction, every day.

On the other hand, I can write a blog post for Realtor’s Resource (my blog) or ActiveRain (our blog) any time I want to, and it will be read by a few people. Some will comment; most will not. It doesn’t really make that much difference. I am “in print” and I am saying something that I want to say to people who may be interested. That is enough for me.

Defaulting Buyers—What you do, and when, can make a lot of Difference to the Outcome of the transaction

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These are troubled times, and people’s lives are being adversely affected by changes every day. What may have looked like a great place to live,or a great investment property, today does not look so good after you have lost your job or been stricken with a serious and unexpected health emergency. While the judicial system is designed to be even-handed, and objective, it is amazing to me how difficult it has been for my Sellers to enforce their rights when a Buyer defaults, for whatever reason(s).

That being the case, I thought I would reinforce with each of you, as real estate professionals, some of the rules that I try to insist upon, when I am representing a Seller. Although adherence to these rules may not guarantee a great result in terms of specific performance, or at least retaining the Buyer’s deposit, in my opinion they provide you with the best chance of success in those endeavors.

     1. Make “Time is Of the Essence”Your Consistent Mantra in terms of Sale Documents. If your Offer says the P & S must be signed by a certain date, make sure that you get a draft of that P & S to the Buyer,or the Buyer’s attorney, well in advance of that date. A P & S “heaved” at opposing counsel the day before the signing date does not do the trick. The McCarthy decision in Massachusetts, its progeny and decisions in other jurisdictions make it clear that this type of treatment of the other side effectively nullifies “Time is Of the Essence”.  Once you have lost that advantage, you, as the Seller, are at a real risk. You then bring what is reasonable into the equation, and any judge, on any day, will give you a different decision on that issue.

     2. If Deadlines are not going to be Met, obtain written extensions.  There are valid reasons why deadlines for signing, and mortgage commitments, and closings can be delayed. Your job as a real estate professional is to keep track of the important dates, inquire in advance whether it is likely those dates can, or will, be met and then obtain signed extensions if they will not be met. There is no tougher road in a litigation to enforce Seller’s rights than one which shows “sloppy” adherence to the prescribed schedule of events. If it can be made obvious to the judge that the Seller was diligent in enforcing deadlines,or obtaining extensions when meeting such deadlines will not be possible, the chances of success are greatly enhanced.

     3. Take all necessary Steps to Perform even if you are aware that the Buyer will not attend the closing or pay the balance of the Purchase Price. This may be a “hard sell” to the Seller, because it may seem to the Seller that you are throwing good money after bad. Most jurisdictions, however, do not take kindly to premature defaults, and there is much more difficulty in enforcing Seller rights if a representative of the Seller has not appeared at the relevant Registry of Deeds with a Deed, and other related closing documents, and then paged, perhaps as many as three times, the Buyer to inform the Buyer that the Seller is “ready, willing and able” to perform.

There are times when enforcing Seller rights in a defaulting Buyer situation just does not make sense. I can tell you from experience that most litigations whcih I have been involved in are expensive and do not always prove beneficial from a “risk-reward” standpoint. On the other hand, if your Seller wants to have any chance at all of victory, adherence to the advice set forth above is essential.