Monthly Archives: June 2010

If Your Posts are not “Singing in the ActiveRain”, there is Only One Solution–Write Some more Posts

Marketing / Communication, ,

I have been writing posts for ActiveRain since February, 2009. I have had a few featured posts; I have had many more which did not evoke any reader interest. ironically, the posts I wrote which became “featured” were not what I considered my best, or even most original. Others, which I absolutely thought would get people making comments,proved to be duds. My observations on this phenomena, and on my involvement with ActiveRain in general,  are as follows:

     1. ActiveRain Nation is one diverse group of people. A lot of you practice real estate in states where attorneys are not very much involved. Accordingly, some of my comments about situations I have experienced are not of much interest to you.

     2. The posts which you have responded to most actively involve situations where strategy is involved. Strategy and planning are two aspects of our profession which people relate to. So if I discuss some of the marketing initiatives our firm has instituted, or the virtues of “walking away” from transactions, you responded actively and with many interesting comments.

     3. There are a lot of smart and motivated people logging in to ActiveRain every day. I enjoy other people’s posts, and I believe been able to learn a lot from them.  In terms of the posts which I have written, some of your comments have been somewhat “anti-attorney”. Most, however, have been helpful and constructive.

Bottom line to all of you, I intend to keep sending in posts and trying to keep them lively and on point.I do not have the luxury of having something tangible to sell, like a piece of real estate whch I have listed. I just need to come up with ideas that are new and appeal to you. i welcome the challenge, and thank those many of you who have been responding to my better efforts.

Golf as Life–Things 18 holes in the sunshine can tell you about yourself and those you play with

Marketing / Communication, ,

I am an avid golfer, and I have been so since the age of six years. My fondest memories of my youth are the late afternoons and early evenings I spent walking around the golf course with my dad, who taught me how to play, and how to behave on a golf course. As I developed a career as an attorney specializing in real estate law in Massachusetts, I have continued playing golf and using golf as an opportunity to network with current, and hopefully future, clients. These are some of my observations about golf as a marketing tool which I want to share with you:

     1. I never, ever talk real business matters on a golf course. If I am playing with you, I have committed to giving you a rest from the hectic business life you lead. I may speak about your family, or your job, but I do not discuss mortgage, or purchase and sale agreements, or anything that can be viewed as self promotion.

     2. Four hours on a golf course with a group of people you do not know well can tell you a lot of things about these people. Do they count all their strokes? What kind of losers are they? Can they make a bad shot and put it aside? Do they realize that other people are on the course to have fun, too, and not just themselves? I also find out what kind of winners they are. Do they gloat? Do they try to teach others when they really are not equipped to do so? I can learn a lot about them, and they won’t really know why I have chosen to pursue them as clients or associates after the round.

     3. Most important of all, I have found out a lot about myself on the golf course. My golf game, when I was a six handicap, used to be all about me. Now, especially, as my skills have diminished, my golf game is about the others in my group enjoing themselves and enjoying my company. This has been a profound lesson, and has helped to shape me as a person.

I am sure many of you have differing golf experiences,  which i would be interested in hearing about. Suffice it to say, I have been able to use my love of golf as a way to advance my life goals, and that is a bonus that I never anticipated.

If you Can’t “Walk”, You Can’t Negotiate–Never Truer Than It is Today

Uncategorized,

These are turbulent times in our industry. More attention than usual has been thrust on real estate because of the generous first-time owners tax credits and other incentives which are being offered to Buyers. A new HUD-1 Settlement procedure goes into effect on January 1, 2010. The thrust of this new procedure is to protect the “unwary”. Never in my long career in residential real estate have I seen a group of Buyers with a greater sense of “entitlement”. Couple that attitude with a general decline in home prices, and you can have a problem on your hands if you are selling property.

I am finding more and more that the only answer to this situation for my Sellers is to “walk”. In other words, while my client wants to make the deal, he or she needs to show that there are limits to what is reasonable. The only way to articulate this position is to say ” I have had enough”: ” I am putting the property back on the market.”

A recent example. A client of mine thought she had a deal to sell a beautiful piece of raw land in a scenic spot in southeastern Massachusetts. The price was agreed upon, and it looked like the deal was done. The Buyer was planning on putting a second home on the property. The attorney for the Buyer drafted a Purchase and Sale Agreement which was better suited to a multi-unit development than the purchase of a single lot piece of property. I told my client to “walk”. Turn the deal around. Tell the Buyer that this is not a game for his lawyer to show how accomplished he was at drafting. The strategy worked. The other lawyer was cut down a peg or two. We brought the deal back to reality.

It is not easy to tell your client that the best strategy is to walk away. Some Sellers are close to desperate. I truly believe that it is at these times that we, as real estate professionals, earn our stripes. You will be surprised at how quickly the tables turn when the Buyer finds out that his or her dream house is not going to be his or hers.

Finding the Perfect Fit–A Great Referral Will pay you back Many Times Over

Uncategorized

The wisdom I am about to impart did not come to me in a dream, or in a flash. I learned what I am about to inform you through experience and disappointment. Early in my career, I gave out referrals like popcorn if I knew the person and I knew he or she did what the person asking was looking for, I gave the referral. I did no check. I had no quality control. Once in a while I was lucky, and the referral worked out. More often than not, that was not the case. The great tennis partner, who happened to be a CPA, spent far too much time on his backhand. The next door neighbor who was also a Realtor was really a “play act” Realtor, who worked when she wanted to and returned phone calls when it was convenient for her.

What is the lesson here? Do not give referral sources until you have first-hand knowledge of the person’s likeliood to perform. Ask the person for references from satisfied customers or clients. Do as much “due diligence” on this person as if you were going to use the person, yourself.

The reality of a referral is simple. By giving a client or a customer a referral, you are giving that person a part of yourself. You are telling the client that you will stand behind the person you refer. You are assuring the customer that the person you are suggesting they use can do what is required. You are not giving a Tax Accountant an engagement in Auditing. You are not giving a trial lawyer a referral in real estate.

If you are careful, and niggardly (I might add), in your referrals, and you really believe in them, you will enhance your standing with the customer or client. If you are anything else, you stand an excellent chance of damaging your career. That is a huge risk.

Do the work before you give the name!!!!!

The Deadly Double Dip–Things for Unhappy Condominium Unit Owners to Think About before suing their Association

Condominium, Litigation/Disputes, ,

The case made perfect sense. The Condominium Trustees were acting capriciously, and without any regard for my client’s well-being. There had been a water main break which has damaged my client’s unit, and he was aware of a substantial payment from the insurance company which provided the common area insurance. My client wanted to repair the damage to his unit, and he wanted a portion of the insurance proceeds to do this repair. 

So we wrote a few nasty letter, which were ignored. Then, we sat down with the client and discussed litigation. We gave the client a budget and a timetable. They were reasonable, and we  got clearance to proceed. We filed a lawsuit, and then we got hit with the BOMB. The Trustees hired a very expensive law firm to defend their position. The law firm required a substantial retainer, far more than our firm quoted for representing the client throughout the entire litigation, including a trial if necessary. By the rules of the Condominium, my client was required to advance his share of the retainer to the Trustee’s law firm. If this sounds like “Oz” to you, you can imagine my client’s reaction.

The case has since settled, with a result that my client could live with. In fact, my client received a substantial percentage of the advanced retainer back when the matter settled. That made things more palatable to my client.

There are some lessons to be learned from this set of circumstances, which I want to pass along to each of you:

     1. Review the Condominium Documents carefully before you Purchase. Look to see if there is an arbitration provision for disputes. Arbitration is becoming more common in newer documents, and some Lenders are insisting on arbitration provisions, especially for smaller Condominiums.

     2. Pursue all non-litigation avenues before deciding to start litigation.  Without arbitration. litigation is a lonely path for a single unit owner, and often more expensive than a unit owner can anticipate. Try to find a sympathetic person on the Condominium Board of Trustees, who can bring about a non-litigation based solution. It is worth the effort.

     3. If your Condominium Documents do not provide for arbitration, try to get them amended.  Amending Condominium Documents is generally expensive, mainly because the consent of Lenders will need to be obtained. Lenders favor arbitration. Therefore, the normal Lender will be receptive to the type of change which institutes arbitration. It is definiotely worth pursuing.

Many Condominiums are poorly managed, with the least capable people serving as Trustees. That being the case, it is imperative that the Condominium Documents be adapted, as much as possible, to permit free speech by unit owners and a non-confiscatory way to settle disputes. “Double dipping” really hurts, and it is not fair.

The Collection of Unpaid Common Area Fees–A Success Story with Legs

Condominium, ,

Recently, a client of mine contacted me with a problem. He was the sole Trustee of a six unit condominium in Massachusetts, where I practice as a title attorney with over 40 years of experience. It seems that one Unit Owner had not paid common area fees for more than a year (believe it or not) and the Condominium was starting to feel the effects of the delinquency.

After chastising my client for waiting so long to get in touch with me, I went to work. Initially i sent a demand to the Unit Owner. As expected, this was ignored. My next course of action was a title search to determine the name of the Unit Owner’s mortgage lender. Once this was determined, I notified the lender of the large delinquency, including penalties, late fees and my fees, again to no avail. Finally, i pulled the trigger with the “silver bullet”–a complaint against the Unit Owner with notice that a foreclosure sale would soon take place to obtain funds to liquidate the outstanding indebtedness.

In Massachusetts, as well as most other jurisdictions, the amount owed for common area fees, when properly handled, constitutes a “super lien”, ahead even of the first mortgage. When the lender was notified of the fact that our law firm was taking the “super lien” step, they contacted me, asked how much the total outstanding indebtedness was and sent us a check for the total amount due, plus attorneys fees.

There are some great results which were realized by this exercise:

     1. The Condominium got every penny that was due.

     2. The Condominium did not have to pay our law firm any fees for services. These were paid by the lender, as part of their steps to remove the “super lien”.

     3. In future Questionnaires from othr lenders, the Condominium does not have to indicate a large receivable from a delinquent Unit Owner. Such disclosure often impeads getting a Condominium cleared for future mortgage loans.

There are some holes here, too. If the Unit Owner continues not to pay, future actions will need to be commenced. That will leave the Condominium with a 60 day or so shortfall on common area fees. On balance, however, the Condominium’s financial position has been much enhanced by the actions we have taken, and I would urge any of you who have this type of problem in buildings you manage, or are attempting to complete sales transactions, to contact knowledgeable counsel immediately to get the Condominium on this sure-fire collection course.

The AirConditoning System Only feeds the second floor–What to do when the pre-closing inspection reveals an issue that complicates closing

closing, Litigation/Disputes, ,

Recently, I conducted a residential closing on a property in a high end suburb of Boston, The property was generally in great condition, but my client, the BUYER, informed me that the pre-closing inspection (not the inspection after the Offer, but the “walk-through”) indicated that the air conditioning system in the home didn’t feed both floors. The SELLER said he was mistaken, and there was no problem with the air conditioning system, at all.

An impasse arose where the closing, itself, was in jeopardy. The problem was that this is a “grey” area in most sales agreements. It is not a material kind of breach of the covenant that the property will be in the same condition that it was at the time of the signing of the sales agreement. On the other hand, the BUYER expected a fully operational air conditioning system.

After some rather heated discussion between counsel, a compromise position was reached, whereby a sum of money was held in escrow pending analysis and repair by an air-conditioning professional. That work was done; the $360 charge paid out of the escrow, and the  both parties were generally satisfied.

That was a good thing, because at the worst part of the closing negotiations, my BUYER was not going to close on the transaction, and perhaps leave a healthy deposit on the table, pending litigation, and the SELLER needed the sales proceeds to buy another home in Florida.

So when it was over, I tried to develop some provision I might put in the sales agreement which could prevent this from re-occurring. I came up with the following provision, and I would appreciate feedback from the ActiveRain community (1) whether you think this approach makes sense or (2) what other ways you have seen to deal with this type of problem.

MY SUGGESTED PROVISION:

       “If at the “walk-through” the BUYER determines, in good faith, that there is a condition on the premises which is not consistent with the condition which existed when the purchase and sale agreement was executed, but which is not of such material nature which would prevent completing the delivery of the deed and the payment of full consideration for the premises, the BUYER may, nevertheless, complete the transaction, and the BUYER and SELLER will agree on an appropriate escrow sum to be held by BUYER’s attorney, for a period of no longer than thirty (30) days to permit the parties to resolve the problem with the assistance of professionals skilled in the area which is in dispute.”

Let me know if you think this works, or any other thoughts you may have. Thanks

Helping your customer purchase an REO–Some important observations which may help you walk through this minefield.

closing, ,

One of the areas which my law firm, Topkins & Bevans, with offices in Boston, Waltham and Braintree, Massachusetts, has recently become extremely active is real estate owned by banks and other financial institutions after foreclosure (generally known as “REOS”). REO purchases are not for the meek, and I thought I would share with the Active Rain community some of the “issues” which almost always obtain when purchasing an REO:

     1. REO Properties are always sold “as-is”. This means that you may be able to get limited financial concessions for problems at, or around the dwelling, but virtually “never” have an REO Seller, which will fix or restore problems in the dwelling.

     2. The closing date on the REO sales agreement is rarely, if ever, the date of the actual closing. There are generally too many title issues which are lurking in the property’s history to permit an orderly closing. This can be especially troublesome for people buying an REO as their intended residence. We have seen many instances where REO Buyers are “homeless” because they have made plans to leave their prior residence for the REO property only to experience delays. Be prepared for not a lot of “human kindness” from the REO Seller even though your client is in a desperate situation.

     3. Most REO properties are handled by servicers for the investors. Accordingly, there is a rather rigid “chain of comman” which muct be adhered to and can rarely be side-stepped. This means that delay in reaching decisions is almost always a “given” and you, and your client, will be disadvanatged.

     4. Foreclosure sales are the culmination of a generally lengthy process, with many areas where terminable error can sneak in. The Internal revenue Service and state Department of Revenue must be given appropriate Notice. The foreclosure documents must be drafted correctly, or confirmatory documents will be required. Any such documents need to go up the “chain of command” and that can occasion delays. The Buyer’s attorney, or title company, will be expected to certify title. This is hard to do if the foreclosure has “flaws”. The investor Seller is rather picky about the flaws in the title. Once the investor signs off, it does not want to deal with the property again. This can definitely cause delays.

     5. If a closing cannot be scheduled in the reasonably near future, the Seller may pull the property off the market even though the Buyer wants to complete the purchase. The Seller would rather wait until the title issues are all resolved. The Seller really doesn’t care to whom the property is sold. The Seller just wants to know that once the deal is done, it is “done”, so that need for closure often drives the bus.

     6. There are some continuing issues with outstanding liens on the proeprty, most notably in the payment of overdue condominium common area fees. If the outstanding fees are in excess of certain prescribed numbers, the Seller will not permit that a HUD-1 Settlement Statement to include payments with respect to that problem. Don’t ask me why, but it can cause problems.

    7. An Owner’s Policy of Title Insurance is an absolute “must” for REO purchases. There are just too many areas where a slip-up will cause problems down the road. Some of our REO Sellers will ask our firm to write the Owner’s Policy and pay for same as their closing cost. Others are not as generous. In any event, make sure you Buyer has a Policy. That is among the best advice you can give to your REO purchaser.

Closing really means Final, Final!!! Things a realtor can do at a closing that REALLY matter

closing, , , ,

Recently, I conducted a real estate closing in Massachusetts that came together in less than two(2) weeks from Offer to Closing. After the closing was completed, but before I had disbursed funds to the Seller, my Buyer discovered that a closing cost credit that was clearly set for in the Purchase Agreement did not make it to the HUD-1 Settlement Statement for the transaction.

This was, of course, after the Lender had “thoroughly reviewed” the HUD-1 and give its approval. Fortunately for my Buyer, our office has a ZERO TOLERANCE policy of not remitting to the Seller until a final review of the Purchase Agreement is made and the items on the HUD-1 Settlement Statement compared to the terms of the Purchase Agreement. To be perfectly candid with my readers, this ZERO TOLERANCE policy was born from a colossal mistake one of my paralegals made in the past which led to our firm absorbing a $5,300 loss in a residential sales transaction.

In any event, I am sure that not all closing agents practice the paranoia we have made as POLICY at Topkins & Bevans. That being the case, I have the following suggestions for you realtors who attend closings on behalf of the Seller or the Buyer:

     1.  Bring the fully signed copy of the Purchase Agreement with you to the Closing. It is a sad commentary, but you may be the only entity which actually has that kind of document in your possession. I find it often the case that I will negotiate the Purchase Agreement, and add riders, but, in the end, I never get a signed copy of the final Agreement.

     2.  Compare the Signed Copy of the Purchase Agreement with the HUD-1 Settlement Statement. The Buyer and Seller are busily working with the closing agent on getting all the documents signed. The Seller wants his money; the Buyer wants to get out of the Closing as fast as possible to pick up the kids at Mom’s, or greet the mover, or do a thousand other last minute things. You are there with actually very little left to do. You have done most of your work already. But, you can do all parties a big favor by just going through things “one more time”.

     3. Bring any discrepancies you discover discreetly to the attention of the closing agent. Certainly, your goal here is NOT trying to “show-up” the closing agent. You just want things to be CORRECT. Believe me, he or she will appreciate your efforts. So should the affected party for whom you may have saved thousands of dollars. If the closing is a chance for you to continue marketing, this diligent review of the Purchase Agreement will only underscore your thorough approach to all situations and enhance your standing with everyone in the Closing room.

The next time you hear a colleague complain about the requirement of going to a closing and being bored out of his or her mind, suggest the review set forth herein. I am almost sure that such advice, after being adhered to a few times, will engender a “thank you” from the person you suggested it to. Money errors at the Closing are hard to fix, and often result in expense of time and money, even if they can be rectified. You can be a vehicle for preventing these errors, and I urge you to be PRO-ACTIVE in this endeavor.

The Yellow Sheet in My Middle Drawer–You want to be on the “plus” side with me (and everyone else you deal with)

Uncategorized, ,

I have been practicing real estate law in Massachusetts for more than 40 years. In that period, I have participated in probably 25,000 or so real estate transactions. Early in the game, I realized that some opposing counsel, realtors, appraisers, mortgage people and other real estate professionals were cooperative, honest and/or enterprising. Others were dishonest, obstreperous and/or downright lazy.

Since Boston is in many ways a small town, I started keep a yellow sheet (now there are about 200 of these) in the middle drawer of my desk. As I dealt with people on deals, I made a determination that they were either “plus” or “minus”. I then divided my yellow sheet with a line, and placed the “plus” people on the left side and the “minus” people on the right side, and then put my sheet back into the middle drawer.

It has been amazing to me how helpful my yellow sheets have been through the years. It is more amazing how many times I have had dealings with people from 5, 10 or 15 years ago on new transactions. I check my sheets to see if they are there, and if they are “plus” or “minus”.

If they are “plus”, I bend over backwards to make the deal work. I accommodate people with extensions for financing, closing and inspections. I travel far and wide to make their life easier. They have earned this type of treatment because they treated me similarly in the past.

If they are “minus”, they are probably going to have a harder time speaking with me, and when they do, they may not like what they hear, I will never be unprofessional, but I will certainly not walk the extra mile to help them out. Sometimes, I will have an advantage, and if the people are “minus”, I will use attempt to use it to their detriment.

The moral of this story is that the real estate community in almost every city is smaller than people think. You may have an edge in some transactions. In others, you will be coming from off the pace. Guide your behavior on the basis that you will probably be dealing with the people on the other side at another time, with another deal. Make yourself a “plus” and you will always have a chance to do a great job for the person you are representing. Don’t ever make a long-lasting enemy in our business. The price you may pay is just not worth it.