All posts by Robert Bevans

Active Rain Got Active–I have a Local Connection that Will Probably Work

I am not going to divulge the name of this person. It is important to me, but really is not germane to the point of this post. Suffice it to say that this person liked some of the material I have been writing and re-blooged it on her own blog. She and I have made contact, and we are going to meet soon for a cup of coffee to explore future joint undertakings. The prospect of a new person to work with interests and excites me. To paraphrase a sports metaphor “It’s why we play the games”.

I have written almost 80 posts since February, 2009. I was reluctant to write at first. I have been more confident about writing posts in the last few months. To me, writing posts is like submitting a paper or a blue book in college. Once I am finished with the work, it is up to the reader to assess whether my work is relevant or useful. I have done all I can by writing the material.

So, when a person not only reads my stuff but thinks it is useful enough to include in his or her blog, that makes me feel that the effort is worthwhile. I can honestly tell you that I now have no idea whether something I write is going to achieve “Featured Post” status (it  has happened a couple of time) or crash and burn. That outcome is totally out of my hands. All I can do is continue to observe and analyze, and then write things down.

I am a Massachusetts real estate lawyer. Through my writing on ActiveRain, I may have made an important connection to grow my business. That is a serendipitous result from my real pleasure in writing for the Active Rain nation. I have this to be thankful for, and I wanted all of you who have commented on prior posts to know how appreciative I am of your feedback. It gives me ideas and insights. What more could I ask from any audience?

Looking to Help Your Customer Obtain Mortgage Financing–Don’t look Too Far from Home

Yesterday, I was in a meeting with the Sales Manager of a local thrift institution. Her Bank portfolios all of their adjustable rate loans and all their jumbo product. They sell conforming product in the secondary market. This person informed me that on one day last week, she received an aggregate of 85 changes in the FNMA/FHLMC?FHA rules. In effect, her head was spinning.

She told me that her Bank was still lending the way it has successfully for the last twenty years. They try to understand the Borrower. They obtain information about the property and the Borrower which they deem important. They then make the decision about the loan. They try not to go way beyond their community for loans or Borrowers. At present, they have eleven(11) of their residential loans in foreclosure. They must be doing something right.

The point of this post is this. This IS the time for your local thrift. Their small size and intimacy with their customer base can now serve you and your customers. Stop in to day hello to the originator at the branch. Start introducing these peole to your Buyers. They are much more accessible than those bargain deals on the Internet, which crash and burn with regularity.

Stay close to home. The money is there for your customers, and, ultimately, for you.

How to find your “T Spot”—Building Your Business By Building Trust

My 20 year old daughter has already told me she will be mortified if I use a vaguely suggestive title to draw people to this post. The bottom line is that we are all in the marketing business, and I write to reach the broadest section of AR Nation that I can, so, perhaps,  prudes need not read further.

Of course the “T Spot” refers to engendering trust from those you work for, and with. Once trust is established, everything gets easier. In Massachusetts, where I practice real estate law, attorneys are responsible for the mortgage loan closing. The typical Borrower comes into my office ready to distrust, and dislike, me and my firm. There is no question that we are only involved to take advantage of them in some way or other.

To combat this generalized notion, I try to prepare for the closing. I look at the Form 1003 to see if there is some common ground between me and the Borrower. “Oh, you are a nurse; you know, my sister-in-law is a nurse”. “Oh, you have kids in college; so do I. Can you believe how much college costs?” I need some door opener to convince the Borrower that I have the same kinds of hopes, dreams and concerns that they have. I need to make myself into a human, not a robot who is going to make it difficult for them to own their new home.

It is hard to say when the moment of trust will occur. Sometimes, I can go deep into the closing before I feel the pendulum swing, and the Borrower starts to loosen up and enjoy the process. Sometimes, it never happens, and I can chalk one up to experience.

The point of this post is to articulate how important it is for all of us to gain our client’s or customer’s trust. We do this by being friendly and congenial. We do this by working at our trade, so we really do have most of the answers. We also do this by having enough humility to tell the customer that we don’t know the answer but we will try to find it and get back.

Post-Closing Checklists–The work is not done until it is done

As a Massachusetts real estate attorney, my role in the closing is different from attorneys in almost every other state. Not only do I conduct the closing, and attempt to explain matters to the parties involved while I am doing same, my firm also researches the title, writes the title commitment, coordinates closing documents from the Lender, and, general, runs the “show”.

There is a lot for Massachusetts conveyancing attorneys to do, but, if I must be honest, I love every minute of it, even the messy closings where things just continue to wobble off the track. When the transaction is completed, and I send the documents off to the local registry of deeds, and give the keys (and garage door openers) to the Buyers, my work is far from done. I wanted to share with you some of the things that need to be done, post-closing, which are integral parts of my firm’s marketing efforts.

     1. Be in immediate touch with the mortgage originator.  In Massachusetts, the mortgage originator decides who gets the closing business. It took me a while to embrace this concept, but I now have it completely under control. So, I need to have a”relationship of trust” with my mortgage originators or they will seek other closing agents. I urge the mortgage originator to attend the closing. I give him or her scores of good reasons why it would be helpful for them to attend. They rarely follow my advice. Since they are so important to the contuance of my closing agent business, i have instituted a “no-exceptions” rule with regard to mortgage originators. After each closing, the attorney in my office MUST contact the mortgage person and tell him or her “how the closing went”

 Loan closings, like many other thngs in life, generally fall into three categories, good, great or bad. There follows my rationale for appropirate information disclosures to the mortgage originator:

         a. A good closing. Well, things went fine. Nothing much to report. All parties seemed reasonably satisfied. You are in “no danger” if you contact the Borrower, the Realtor or other referral cource. The deal got done, and the parties moved on.

           b. A great closing. The chemistry was there. The parties all got along. The Buyer complimented the Lender for efficiency and honesty. If my voice was no so dreaful, I would join everyone in singing “KUMBAYA”. This is good information for the mortgage originator. He or she knows that if a call is made to the Borrower, or the Realtor, that there will be much positive reinforcement. Many accolades will be exchanged. The seeds for the next deal will be sown. All parties are happy.

           c. A bad closing. These happen, and there is sometimes no way to prevent them. The Lender is late in getting closing figures to my firm. My paralegal makes a costly mistake on the HUD-1 Settlement Statement. The walk-through goes badly and infects the entire closing process. You do the best you can, sometimes even write the Borrower a check to ease some of the pain of the event, and move on. The first person you call is the mortgage originator. You tell him or her what happened, you try to explain why. Most importantly, you inform the mortgage person what you, or your firm, has done to make things a little better. At least, when the mortgage person gets the irate call, he or she is forewarned. Many times, just having the information improves his or her position. The originator can say “I understand that Topkins & Bevans wrote you a check for $250 as an attempt to make thngs better. Was that helpful?” Sometimes, this type of approach can turn a disaster into a marketing triumph. Sometimes not. The important thing is that your referral source is not “blind-sided”. He or she knows the facts.

     2. Make sure you follow through on promises made to closing participants at the Closing. if you said you were going to send them an Estate Planning Questionnaire, send it. If you promised to look into a special taxing provisions for owner-occupants in Somerville, look into it and get back. It is amazing how grateful people will be when they realize that you are a follow through person, who keeps his or her word.

As I said above, I am extremely fortunate that I live in a state where the attorney still runs the closing. I relish each and every chance to complete a closing. After all, it is a very important event in the lives of each participant, and I have done my part to make it happen.

The Liquidated Damage Provision in the Sales Agreement–Often misunderstood, more often a trap for the unwary

One of my pet peeves as a Massachusetts real estate attorney is the printed language in most standard purchase and sale agreements regarding liquidated damages. To paraphrase the legalese contained in the printed form “if the Buyer defaults, the Seller may keep Buyer’s deposit as liquidated damages unless the Seller within thirty days of such default decides to avail himself,or herself, of other options”

These “other options” would definitely include suit for specific performance of the contract, which in a falling market, could mean a financial disaster for the Buyer. In effect, if the Seller sold the property to another Buyer, the defaulting Buyer would be responsible for damages measured by the price in his or her contract versus the actual sales price realized by the Seller.

The alarming thing about this provision is that in my forty plus years of practicing real estate law, I have never had an attorney for the Seller refuse my request to eliminate the second option.  So,if for some reason, you Buyer’s Agents are forced to “fly solo” because your client will not retain an attorney, I urge you to, at the very least, make sure that you request a change from the printed form.

The changed version reads, that “if the Buyer defaults, the Seller may retain Buyer’s deposit, and such retention shall constitute Seller’s sole remedy against the Buyer” That remedy is a horse of a different color and,of course, much more favorable to the Buyer.

Those of you who are starting to serve as Buyer’s Agents should also be aware that many Sellers are inserting provisions in the purchase and sale agreements to the effect that “since there is no way to truly measure the damages suffered by the Seller, if the Buyer defaults,both parties agree that the retention of the entire deposit constitutes an acceptable remedy for both side.”

I strenuously resist this provision when representing Buyers, unless their deposit is very small. The only Massachusetts Supreme Judicial Court decision which actually address this issue held that five (5%) was a reasonable sum for liquidated damages. Many deposits are in excess of five (5%) per cent. I would rather leave the provision quoted above out of my agreement, and argue that five (5%) per cent is, indeed, plenty of compensation for a Seller, especially if the default occurs in a relatively short period of time. I have a lot more wood to cut if I have agreed the retention of the deposit, no matter of what amount, is a “fair measure” of damages.

It is never pleasant when circumsatances dictate that a Buyer must “walk away”. In circumstances where we are representing Buyers, it is important not to turn this cruel turn of fate into a financial disaster for the Buyer, which usually cannot be easily remedied.

Confidence and Humility–Get the blend right and the world will beat a path to your door

In Massachusetts, where I practice, we have been very fortunate in having excellent professional sports teams, with enlightened management. Only the Bruins, our representative in the National Hockey League, has not won a championship in the 21st century. The Patriots have won three times, and the Red Sox twice.

Still, there are times of frustration for New Englanders as fans, and last night’s Patriot’s 34-35 loss to Indianapolis surely ranks as one of the most difficult pills for me to swallow as a sports fan. What made it worse for me was the rather blase manner in which Bill Belichick tossed off a bad decision late in the game, and never just said “I made a mistake”.

That smug attitude in defeat got me to thinking about what I would have done in a similar situation. I have been practicing real estate law in Mssachuseets for more than forty years, and I have made many mistakes along the way. There was a time when I would make excuses for my mistakes, or, worse yet, blame others for problems I created myself.

Just about the time I started getting things done on time rather than making excuses why I had not, I realized that most clients would accept an honest apology, especially when it is coupled with an action plan to fix the problem. In fact, i have had some of my best triumphs after I started out in the worst of positions.

Americans are great “forgivers”. They are ready to give people a second chance almost all the time. Keep that in mind when you are practicing your profession. Lying, or making lame excuses, is not the course of action for a person of integrity. Admit what you did wrong, and try to fix it. If you demonstrate humility now and again, you will endear yourself to those people who sought you out because of your confidence and talent.

There is a balance there, and we should seek it every day. Coach Belichick should have just said he made a mistake. We all do, and with his track record, he is entitled to a few. So are all of us.

Having Trouble with Unit Owners in Massachusetts who are behind in their Monthly Common Area Fees?–There is a Simple Way Out, and We can Help

The current economic slowdown has hit people’s pocketbooks across the board. People are behind on their mortgage payments, and people are behind on their taxes, and people are behind on their monthly common area fees.

Lenders are dragging their feet on starting, and completing, foreclosures. Their data may indicate that things are slowly getting better, and if they can hold on a little, they will start to get higher prices at auction. In my opinion, this is the reason that approval of shirt sales has slowed to a trickle.

The procedures for tax sales in Massachusetts are cumbrous, and many short-staffed municipalities just do not have the person-power or the resources, to engage in a wholesale campaign to collect overdue taxes. There are political and social ramifications involved in tax sales, as well, so that the area of tax collection for overdue payments seems to be meandering along, at best.

Delinquent common area fees in Massachusetts, howvever, are a much different story. They can be collected, rather inexpensively, even if the Unit Owner is in the throes of a foreclosure. The reason for this is a 1995 change in the Massachusetts Condominium Statute, which permits unpaid common area fees to be classified as a “super lien”, so that an execution-type sale for same can remove mortgagee entirely as secured creditors.

The procedure is simple. A letter is sent to the Unit Owner demanding payment. If this is ignored, a letter is sent to the mortgage lender(s) explaining that if the arrearage is not paid, including late fees and accrued attorney fees, the condominium will hold an execution sale and sell the Unit, free of the mortgage(s) on the property. It is amazing to me how quickly Lenders respond when they are apprised of these facts.

The best part of the “super lien” process is that it costs the Condominium virtually no money. Most law firms who are knowledgeable in this area (mine included) will take on an engagement like this without even asking for a retainer for out of pocket expenses. The reason for this is that all legal fees and expenses will be paid by the Lender when they realize the consequences of inaction and settle the “super lien” with the Condominium.

If you live in a Massachusetts condominium, or have clients or customers who do, please forward this post to them.  As I have indicated, this “super lien” approach has even worked for condominiums we have represented when the Unit in question is in foreclosure status.

Buying a Property in Massachusetts that has a foreclosure in the Chain of Title–Make sure your Buyer gets a Policy of Owner’s Title Insurance

Massachusetts foreclosures have experienced a “turn-around” since the seminal Land Court decision in the IBANEZ case. Among other things, that case held that if the entity foreclosing had not received all appropriate assignments of the mortgage prior to commencing the foreclosure, the foreclosure was ineffective, and must be started again. The hitherto acceptable process of obtaining the appropriate assignment(s), post petition, would no longer be permissible.

The immediate effect of this decision was to require all foreclosures to “stop in their tracks” and start the process again after all the correct assignments were in hand. That slowed foreclosures and REO sales down considerably, but they are now getting back on track on a case by case basis.

The lurking problem, however, are those foreclosures which took place before IBANEZ where title attorney and title insurance agencies closed using the old rules. The IBANEZ rules apply just as forcefully to these situations, and title examiners and title insurance companies are rightly concerned that some Borrower may come out of the woodwork and claim that his or her foreclosure was not done properly and demand the property back. That all being said, my advice to any and all Buyers of property that have foreclosures in their title is OBTAIN AN OWNER’S POLICY OF TITLE INSURANCE!!!!! Many current REO Owners received an Owner’s Policy when they purchased the REO. Have your attorney arrange to have that title insurance policy re-issued. In the long run, it will cost your customer much less than the expense of an action to quiet title. If no policy of Owner’s Title Insurance is available, seek a price discount!!

Believe me, we have not heard the end of this problem. Do whatever you can at the time of purchase to make sure it does not harm your Buyer more than the cost of the Owner’s Policy of Title Insurance.

Refinancing Your Present Mortgage–Make sure that the Lenders, and Closing Agents, are Financially Able to Perform

In today’s edition of the Boston HERALD, there is an article about a Borrower in Illinois, who recently refinanced his mortgage with a mortgage lender. The check which the refinancing Mortgage Lender sent to the person’s then mortgage lender “bounced”, and the former mortgage lender is now foreclosing on the property because the Borrower has not made his mortgage payments to the former Borrower since he completed his refinancing. There are two other similar cases, in different jurisdictions.

This type of situation is disastrous for the homeowner, and care should certainly be taken to prevent its re-occurrence. At the very least, the Borrower needs to be extremely vigilant with his or her former mortgage lender to make sure that the former loan has been paid in full. This full payment should be effected no later than ten days after the refinancing is completed, and it behooves any person doing a refinancing to check this out. If there are any problems at all after this contact has been made, I would recommend at speedy call to the Consumer Protection Office of the Attorney General; of the state in question, and also a call to the division of the State Banking Commission to make an immediate complaint.

In Massachusetts, where I have been practicing real estate law for more than forty years, there has been a recent incursion of mortgage companies who do refinancings without using licensed attorneys. This certainly saves the company a fair amount of money, which savings may,or may not, be passed along to the customer. The big difference is, in Massachusetts, when the attorney is responsible for clearing the title, the attorney uses his or her clients account trust funds to pay-off the old mortgages. If the checks which the attorney sends are dishonored, the attorney has committed a crime under Massachusetts law, and can be imprisoned, or fined. An attorney who bounces a check also has committed an ethical violation and will almost certainly be sanctioned by the Massachusetts Board of Bar Overseers.

My advice to all real estate professionals is to be very careful when you are refinancing, or your customers are refinancing. The price the gentleman in Illinois is now paying is extremely steep, and he did nothing worng, other than verifying the successful termination of his former mortgage.

Getting the deal done—Common Goals almost Always Make People representing both sides “Comrades in Arms”

I was speaking with a fellow Massachusetts attorney yesterday about our practices. He is a partner in a downtown Boston firm; my firm is mid-sized and mostly suburban, with an office on Newbury Street in Boston, but one office in the Western suburb of Waltham and one office in the Southern suburb of Braintree. After we spent the better part of an hour hammering out the terms of a purchase and sale agreement for commercial property in Boston, Massachusetts, we agreed that he would do the changes in the latest draft, send it along to me for final review, and we could sign things up before the end of this month.

When we finished out work, and we exchanged pleasantries about how smoothly our negotiations had gone, and how we had developed a basically fair deal for both sides, he commented to me that this result is why he has enjoyed practicing real estate law so much. He said the common enterprise which followed the negotiations makes real estate transactions different from all other areas of law. His point was that when you have a willing Buyer and a willing Seller, and we perform required due diligence through inspections and confirmations with governmental authorities, we have a “deal” and all sides are working together to get the sale closed and the buyer moved in.

Upon reflection, it occurred to me that this was the charm of real estate work in general. After the preliminary discussions, and offers and counter-offers, the deal gets done, and both sides are generally pleased with the outcome. This is not the sale of a business where the Seller knows of some changes in revenue projections which mean that the Buyer may be overpaying. This is not a litigation where there is a winner and a loser.

We are engaged in a professional where everyone can win and walk away smiling. I have been impressed with how many realtors comment about the great feeling they experience when the deal is closed, and the Sellers and the Buyers coalesce into discussions about maintenance issues or reliable artisans and contractors to use.

So, at a “feel-good” time of the year, after we have thanked our young men and women for defending our country on Veterans Day, and prepare to thank a higher being for the joys of family and home and good friendship on Thanksgiving, we can also have good feelings about our profession. Each in our own way, we make the dream of home ownership a reality for people every day. And we do it together, both sides working together to try to make things as manageable as possible for Buyers and Sellers who have justifiably relied upon us for assistance. I salute us all.