All posts by Robert Bevans

Desperate Times Call for Desperate Measures–Some “Amplifications” in Your Purchase Agreements which can Save Your Deals

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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.

Law Office Confidentiality–Make Sure Your Attorney takes this Seriously

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In Massachusetts, where I practice real estate law, the lawyer is still very much involved in the entire residential real estate process. We draft, and review, real estate offers and purchase and sale agreements, examine the title, prepare the title insurance policy and conduct the real estate closing, many times in one of the three offices (Boston, Braintree and Waltham) which we operate.

Conducting a closing at our office has proven to be extremely convenient for realtors, buyer and sellers in most instances. Massachusetts has started to institute electronic recording for some Registries of Deeds, so we can avoid the chaotic climate that most Registries present by doing our closings “on location”.

There is an old basketball adage, “if you live by the jump shot, you die by the jump shot”. In other words, there are some “confidentiality” risks inherent in office closings, and I thought I would detail some of the steps our firm, Topkins & Bevans, is taking to prevent “leaks” of privileged, and sometimes proprietary, information from falling into the wrong hands. 

    1. All attorneys and staff have been instructed NEVER to mention the names of firm clients so that a visitor to the office would be able to gain this information. This is a ZERO tolerance rule, and we have dismissed one employee who failed to adhere to it.

     2. Without express approval from the supervising attorney, no visitors to our office will be given access to any areas other than the reception area, the conference room and the rest rooms. There are often documents and information lying around offices, and people can glean information not intended, in any way, for them. If entry is permitted for a side conference or negotiation,no visitor will be permitted into the office of any attorney or staff member, unless accompanied by a representative of the firm.

    3. The rule for discussions about client matters described in Paragraph 1 also applies to conversations outside of the office, even with spouses and other family members. As my father used to tell me all the time “I never got in trouble for something I didn’t say” People’s legal affairs are serious, and they should never be the subject of conversation with outsiders.

We consider it a privilege to work with realtors and clients, and we welcome them with open arms into our offices. With that privilege comes responsibility, and we take our ethical responsibilities very seriously. It behooves all people practicing law to go out of their way to make sure that client confidences are never breached. Without this trust, we cannot really provide effective representation.

Let the Camera be Your Friend–Use Your Digital Camera to Enhance Your Professional Image

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It has not always been this way. When I started practicing law in Massachusetts in 1968, single reflex cameras were heavy and required a host of accessories to insure proper lighting, focus and the like. The modern digital camera has none of this complexity, or bulk, and I have found my camera useful in marketing myself as an “in-tune” professional. The plethora of self-taken photographs on ActiveRain is ample evidence of the fact that most of us know how to “point and shoot” which is really all that is required to produce an acceptable photo that can be useful in the following types of situations:

     1. Photographs at the closing. Generally, everyone is smiling once the papers are signed and the keys delivered. I bring my camera to every purchase transaction. I try to get pictures of the Buyers with the Buyer’s Agent. I later email them to both parties. It is something that a savvy realtor can use to his or her advantage, and I have provided it. Here we are at one of the most important days of our lives, and our realtor helped make it possible.

     2. Photographs during the home inspection. The potential buyer have a lot on their minds. They will NOT be taking pictures. If you are their realtor, you can assist them with pictures. If a situation comes up regarding repairs or substandard conditions, you have a contemporaneous photograph of the problem. It may help you work out a solution with the other realtor or the Seller. And, of course, there is always the problem of “what is included” with the home. A photograph at the time of inspection will be great evidence of what was shown to the Buyer.

     3. Photographs when the Buyer moves in. If you are the type of realtor who participates in this event, why not take some photographs when the Buyers are crossing the front door, or flopping on the living room rug, after a rigorous day of moving? These shots will be cherished somewhere down the road, and you will be person providing the memories.

I have just touched the surface here. I am sure each of you can devlop other scenarios where a photgraph can be helpful. I am alwasy interested in new ideas and thoughts. Share them with me when you comment,

Carefully Drafted Mortgage Contingency Clauses–The Deal (or Customer) you Save May be Your Own

Mortgages

I know in a lot of jurisdictions attorney do not get involved in drafting Purchase and Sale Agreements. Since in Massachusetts, where I practice, such practice is not the case, I deal with Mortgage Contingency Clauses literally every day. I might add that my experience has been that most Buyers and Sellers, and some realtors, for that matter, do not understand some of the nuances of the Mortgage Contingency Clause, so I thought it might be helpful for people in Rainland to know a little bit more.

BELOW PLEASE FIND SOME FACTS THAT MAY PROVE USEFUL FOR YOU:

     1. The Mortgage Contingency Clause (the “MCC” for short) is designed to afford protection to the Buyer. It is a vehicle through which the Buyer can sign a purchase agreement, and still get his or her deposit back if financing is not committed to. Please understand that significance of the term “committed to”. I assume most of you know that if after a mortgage commitment, a potential Buyer loses a job, or has some other kind of financial problem, the Lender may not complete the mortgage financing. Unfortunately, I have seen this happen, on more than one occasion.

     2. MCC’s come in all shapes and sizes They can be tailored to meet the particular needs of the Buyer. If the Buyer is seeking FHA or other high-leverage financing, it may be important to have the MCC indicate, straight-out, that the commitment must contain an appraised value at least as high as the purchase price. That will give the Buyer protection if the appraised value comes in lower. I have done MCC’s which indicate that if the appraisal comes in lower, the Buyer and Seller agree to renegotiate the purchase price. If you can get that for your Buyer, you are doing a good job for him or her.

     3. In my purchase and sale agreements, I always provide that the mortgage commitment must be written, and must contain no terms and conditions which the Buyer cannot reasonably be expected to satisfy in a reasonable amount of time. That may help save your customer’s deposit, if a “commitment” is issued, but is full of conditions which are difficult.

     4. Do not let the Seller require the delivery of a rejection for the MCC to take effect. The MCC is for the Buyer. If the Buyer cannot get a mortgage commitment by the time set forth in the purchase and sale agreement, there is no deal. That is the way things should be structured. Anything else leads to needless haggling and a waste of everyone’s time.

     5. Keep track of the commitment date. If it is missed, and the appropriate notice is not given, your Buyer’s deposit is in jeopardy. Whose responsibility is it to monitor the date? That is an excellent question. I have a paralegal in my office who does this. You may have similar assistance. The date is important, especially in those jurisdictions (not new York, I am told) which take “time is of the essence” in a contract seriously.

Home Owner’s Title Insurance–Hidden Real Values for the Realtor

Marketing / Communication,

The subject of Home Owner’s Title Insurance always comes up in purchase transactions in which I am involved. For my more sophisticated clients, it is generally a “no-brainer”. The client spends a little extra money and then has piece of mind respecting his or her title which will last throughout ownership of the home. Even if the person performing the title search missed a probate, or didn’t see an undischarged private mortgage, HOTI will cover it. More importantly, even if there is a forgery in the chain of title or the Registry has lost, or misfiled, an important document, the company providing the HOTI will stand behind the title. This assurance provides a lot of comfort for an investment that far out-shadows all others for the average purchaser,

Having said all this, and truly believing that HOMI is the right way to go, I am continually shocked when realtors at a purchase closing are neutral,or even negative,about their customer’s purchasing HOTI. Perhaps, they are “grandstanding”, trying to show how they are helping the purchaser to husband each and every of their hard-earned dollars for more important things. Perhaps, they are ignorant of the true benefits of HOTI to the realtors, especially the Buyer’s agent who may be involved in the sale of the property being purchased somewhere down the road.

There follow several reasons why this writer, a person who has conducted thousands of real estate purchases over more than 40 years of practice in Massachusetts, believes that realtors should provide whole-hearted endorsement for the purchase of HOI, not only for their customer’s benefit, but for their own, as well:

     1. If there is a title claim, it is more than likely that everyone involved int he purchase transaction, including the realtor, will be named in the litigation. This will mean that time, effort and money will need to be expended by ALL participants to exculpate themselves.

     2. If there is a title claim, no matter what the outcome, all people involved will be “tainted” with being involved in a transaction that didn’t turn out quite right. If there is HOTI, the title insurance company will absorb the costs from dollar one. It is unlikely that anyone, other than the person, or entity, certifying the title, will be involved in any of the proceedings. If anything, the realtor who endorsed the purchase of HOTI will seem like a hero for making such a practical, and ultimately beneficial, suggestion.

     3. Many times, your purchaser will be a seller some day. If the transaction went well, you will get the listing. Won’t you feel that much better knowing that while selling the property my have its owns set of obstacles, obtaining clear title will not be one of them if HOTI was obtained when the property was purchased. 

So the next time you hesitate, or even balk, when the subject of Home Owner’s Title Insurance comes up, think again. The deal you save may be your own!!!!

Tweeting and ADD–I am starting to think there is a connection

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I am new to social networking having started my legal career in Massachusetts in 1968, where a lot of the xerox copies were still “wet” and closing took  hours because the secretary for the Bank’s attorney (a cousin of the President who did every closing) started typing documents only when all parties appeared at the office.

In any event, we have come a long way from that spot, and I have embraced the new system of communication. I have my own blog sire; I write posts on ActiveRain (probably more often than I should, but I like to write). I am on Facebook, Linked-In, and I recently set up Masstitleexpert on Twitter.

Don’t get me wrong. I really do not undersatnd Twitter. I just though I would set up an account and get some “on the job training” by reading the Tweets of others. I am not following thousand of people; thousand of people are not following me.

On the other hand, I am starting to think that the people I am following have nothing else to do in their world than tweet. It is not uncommon for me to get 40 tweets an hour from these people. Some of the tweets are funny or informational. Others are just plain boring.

Am I correct in assuming that Twitter is really a device for adults who have ADD? Can there be any other reason for such a plethora of almost senseless tweets which people send. I would be more than happy to hear responses which say “you are missing the point”. What these people are doing is relevant. Please help me. I would like to know.

Selecting a Real Estate Attorney—Some Advice from the Other Side

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In my over forty years of practicing real estate law in Massachusetts, I have had clients in all sizes and shapes. Many of my clients have been satisfied with my services, others not so much. When I have dissected what went wrong with the clients who were less than enchanted, I found that the old “C” word, communication, led to most of the disappointments on both sides.

With that inmid, I would submit the following set of rules to follow when considering attorneys to assist you in what will, perhaps, be the biggest single investment you will make in your lives.

   1. Ask the prospective attorney the following questions:

       a. Is real estate you primary area of practice? It seems so obvious, but many times you will have counsel who is “learning while you learn”.  This is generally not a good thing.

       b. Will you do this on a fixed fee basis or on an hourly basis? Many seasoned attorneys are not afraid to quote a fixed fee. Others will say “hourly” but will consider a “ceiling” on the amount of the fee. Some will day a fixed fee, with the understanding that if the deal goes way off the tracks, the parties may revisit the fee situation to assure that the attorney is not disadvataged when events really changed in the course of the transaction. In any event, too many people enter into a professional relationship with an attorney with no clear understanding of what the matter will cost, and that can lead to disatsifaction on both sides.

       c. Whatever is agreed upon for fees, enter into a fee agreement with your attorney. This should set forth the amount of your retainer, if any, the hoursly rate if that is the way the transaction is structured and any other important aspects of the attorney’s representation.

       d. Find out in advance if you can expect to be dealing with the attorney you slected most of the time. or if you will be dealing with an Associate or a Paralegal. My firm, Topkins & Bevans, is small, and one of my marketing approaches is “I am the A Team, and there is no B Team”. Other lawyers operate on a different basis. Find out in advance so you will not be frustrated because Mr. X or Ms Y is not returning your calls or emails.

     2. Once you have established the rules wth your attorney, learn to live with them. Attorneys, like any other professionals, cannot manage through exception. Realize that the attorney has other clients, and that sometimes you will have to wait for a response.

     3. Try to listen to the advice your attorney gives you. AsI said abopve, the purchase or sale of real estate is one of the most important things you will do in your financial life. Once you find the right attorney, listen to what he or she has to say. Many of us have been through thousands of transaction, and we know our crsft. Listen to what we tell you; we are on your side.

Life in the Pressure Cooker–Some Suggestions for Extracting Ourselves from Ensuing Difficulties

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As real estate professionals, we are more or less used to the stress level which exists within our clientele. I am a Massachusetts real estate attorney with more than 40 years of experience. I have bought, and sold, five and four homes, respectively. In not one situation was I calm and relaxed throughout the process. it seemed that there were a million things to do, and I did not have the time, or the patience, to tackle all of them. Sometimes the lender created problems with requests for information I was sure I had already submitted. Sometimes, the walk-through did not go particularly well. In one situation I had a flooded kitchen between the time of Purchase and Sale and the closing. That caused its own set of problems.

Looking back on my own situations, and the many others I have handled for others, I have developed a few tried and true approaches to the real estate “pressure cooker”, which I would like to share with all of you, whatever part in the process you are assuming:

     1. Try to Stay Calm. Problems are going to arise, and almost always when we least expect them. Acccept the fact that there can be problems. Think about your customer first. What can you say or do to assuage the issue. I have found that the last minute inspection problem, or the lender delay, or any number of other things which can delay a closing, or worse, are best addressed by calmness. Do not let yourself get emotional about the problems. Speak with the other professionals. Try not to relay bad news to a customer without suggested approaches to a solution. Think positive thoughts; convey your sense of confidence to your customer through your calm mien.

     2. Do Not Point Fingers. Many times the approach which appears simplest to effect is to blame another person or entity for what has happened, and step away. I used to do this, because lawyers are very fat targets when there is a problem, and I wanted to stress that I had done nothing wrong, but Mr, Jones or Ms. Smith, was the true culprit. I no longer take this approach. Rarely do real estate disputes actually result in litigation. More often than not there is a solution out there which everyone can live with. If I have been solution, rather than blame, oriented, I can preserve my relationships with the professionals I will have to work with at other times, and in other places. Furthermore, I have found that coming up with a solution in a difficult situation is the thng that a lot of people remember about me, and my firm, when the smoke clears.

     3. Do Not be Afraid to Call a “Time-out”. In our profession, no one really gets paid unless and until the deal closes. Sometimes, that colors our behavior. We all have lost deals, and spent time on matters that do not produce revenue for us. On the other hand, sometimes a deal just cannot work, no matter how hard we try to push it forward. Sometimes, it can work, but the financing must be re-tooled to fit the specific situation of the Borrower. My experience has been that it is better to call a “spade a spade” early in the game than to labor relentlessy on a project where there is little, ot no, hope of success. Call “Time Out”, regroup, and go a different path.

     4. Never Sacrifice Your Integrity to Make a Transaction take place. New financing rules have severely hampered the ability of the Borrower to exaggerate assets or income, or even lie about them. In a way, that has taken some pressure off the rest of us. There are still situations which arise, however, where a half-truth or a lack of disclosure may let a deal go forward. I suggest to each of you that you do not want to be a part of any effort which involves ANY deceit or subterfuge. I mentioned above that real estate matters rarely become litigations. If they do, however, and you are called upon to testify, you want to make sure that your behavior in the matter, from an ethical standpoint, is above reproach. Deals come and deals go. Your reputation is forever.

More Networking 101–Become the “Catalyst” who puts people, and deals, together

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Like most of you, I have a relatively small group of real “friends”. Because I am a Massachusetts title attorney trying to grow my practice at every opportunity, I have developed a rather large network of contacts and acquaintances. We all know the risks involved in representing, and working with, true friends. Our objectivity is often skewed, and we make decisions for them which are not always logical or positive. That doesn’t mean we cannot work with friends. It just means we need to establish a more disciplined set of rules when friends are involved.

This post is designed to comment about the real potential we possess in our sphere of contacts and acquaintances. it is meant to encourage each of you to utilize these sources to build your business, and reputations.  By becoming the catalyst for contacts to broaden their own spheres, you can very often improve other people’s business or, even personal, relationships.

What I am driving at is that every one of our contacts or acquaintanenaces would probably be happy to meet someone, or come into contact with someone, who can advance their situation. We, as real estate professionals, are in contact with people from all walks of life each and every day. We not only deal with Buyers and Sellers. We deal with appraisers, contractors and home inspectors as part of what we do. Our goal, with any connection like this, is to help people come into contact with others whose skills or connections may benefit them.

I try to do this work as a catalyst as seamlessly as possible. I probe, connect and then step out of the picture. It is enough for me to be part of the process. I feel no need to be the “star”; I am just helping out. My thinking is that if I “help out” enough, someone, somewhere will start to view me as a positive and want to be involved with me professionally. This has not happened overnight, and, in fact, it never happens in some instances. But to be perfectly honest, I feel good about putting two people I like and respect together. It has been enough for me to do this even though real financial benefit may NEVER come from it.

There is one constant in our profession. Our reputation is all we really have to sell. You can enhance yours by working as a catalyst for the benefit of others. That is one thing I am sure of.

The Ins and Outs of Easements–A Primer for Non-Lawyers

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Like everyone else’s business, my business as a Massachusetts title 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. We are working on same as we speak.

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.

Because they represent encumbrances of the title, all Easements start with an accurate title report. Until we know who are the current lien holders on the property, 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 an Engineer 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.