Monthly Archives: June 2010

Difficult Condominium Trustees and Officers–The Enemy Down the Hall

Condominium, , , ,

Recently. I have experienced difficulty in dealing with Condominium “management”, so-called, with respect to matters which involve my clients. I am a Massachusetts title and real estate attorney, and in the course of my representing both Buyers, Sellers and current  Unit Owners of condominiums in Massachusetts, I have experienced an array of frustrations, including the following:
     1. Answering Lender Questionnaires.

Getting the condominium officials to respond to the Lender’s Questionnaire, so that a mortgage loan can be processed in connection with a sale. Recent underwriting restrictions have made the answers to the Questionnaire more important than ever. Most condominiums are not involved in litigation, or disputes with Unit Owners. The Lender needs to know these things, and the Questionnaire is the vehicle. Many times I have experienced situations where the Trustees just can’t get around to providing answers. There is no urgency for them, and they take theri sweet time.

     2.Disputes between the Trustees and a Unit Owner

These can range from permitting a Unit Owner to fix his or her Unit after a natural or other disaster to approving a request to do structural work to personal “vendettas” between neighbors. Most older documents do not have Arbitration provisions. In that situation, the affected Unit Owner often must initial litigation to rectify a perceived wrong. The irony of this type of situation is that once a litigation is begun, the affected Unit Owner  must pay not only his or her own legal fee, but a percentage share of the legal fee incurred by the Condominium Trustees to defend. As a practical matter, this unfairly inhibits the ability of a Unit Owner to protect his or her rights.

     3. Arbitrary or Capricious Trustees or Officers

There is not much that can be done with a person who wants to say “no” to every suggestion, even down to the need for the Trustees to have frequent meetings and keep minutes of meeting. If the difficult Trustee doesn’t like you. or doesn’t like anyone, you have a major problem, and the expense and stress of going to Court to have a Trustee removed is huge.
     4. Charges for Items that should be Free.

 Why is it really fair for a condominium to charge $150 for a Certificate that there are no Common Area liens on a Unit which is being sold? Why should a selling Owner be charged $200 for a “move-out” fee? Where is the justice in any of this, but, as most of you know, it happens, and it can chill transactions.

There are solutions to these problems, but they are not easy to effect, especially with the requirement that Mortgagees need to be involved in Master Deed amendments. These are some solutions which I would recommend, however, and they should improve the situation materially:

     1. Pay Trustees a decent stipend for serving. I would suggest forgiving two or three monthly common area fees for Trustees. That would encourage more people to become Trustees and eliminate the “Trustee for Life” people who have nothing better to do than frustrate the realistic requests of Sellers, Buyers and Unit Owners.

     2. Amend the Declaration of Trust to permit arbitration of disputes, with the losing party required to pay not only its fees and costs, but the fees and costs of the winning party. This approach would force more attention on reasonable compromises.

     3. Set term limits for management companies and Condominium officials. Change management companies every three years. Only permit Trustees to serve for two (2) terms. This will make it possible for new ideas and new approaches. it will, in effect, end “tyranny”  by the current regime.

Please let me know your ideas on this!!! I am quite willing to spearhead an offensive to change things in Condominium operations. Such changes are way, way overdue.

Short Sale Rules for Lenders–Our Real Estate Community Needs to Unite and Speak Out

Short Sales & Foreclosures, ,

Recently, in connection my my representation of an individual who was far behind in his mortgage, I encountered the following scenario. The borrower (my client) has not made a mortgage payment for more than two (2) years. The house has been on the market for 18 months. Because of my experience as a Massachusetts title attorney with more than 40 years of real estate experience, I located a suitable listing agent, and we received a cash offer for the property to close in no longer than 45 days.

This is where the problems began. We made a submission to the Lender (I would like to share the name but the sad truth is it could be any of a number of Lenders) which included the following:

     1. A signed Purchase and Sale Agreement

     2. A verified statement from both Buyer and Seller that they had no affiliation with each other and were not related by blood or marriage.

     3. Two(2) separate Broker’s Opinion of Value for the property, which included no fewer than 3 recent sales of comparable property.

     4. A proposed HUD-1 Settlement Statement, which set forth the real estate broker fees, the legal fees, the stamp taxes and recording fees for the transaction. There were back taxes due and owing and they were included on the HUD-1, as well.

This statement was submitted more than a month ago, and we cannot even get a “denial” from the Lender. An extremely low-level employee, who has refused to inform me as to the name of her supervisor, has informed me that this is her project, and since she is so “overwhelmed” with requests for short sale consents, she doesn’t know when she can get to ours. The fact that we have a 45 day “window” and a Buyer who will probably walk shortly thereafter has not moved her to act in any way.

In today’s (July 7, 2009) edition of the Boston GLOBE, there is an article indicating that with respect to modifications or mortgages, the Lenders are dragging their heels because they do not want to take the financial “hit” associated with modifying the mortgage. I am suggesting that the same type of “hidden agenda” exists for short sales. Congressman Barney Frank was adverted to in the story, and his comment that the government would have been better served giving TARP money to beleaguered borrowers to catch up on their mortgages than to Lenders, who are really not using the money to get things moving in the real estate industry.

My suggestion to all of you is to contact Congressman Frank to demand that he institute the following procedures with regard to short sales from all Lenders, but at least to Lenders who have received TARP Funds:

     1. There should be a formal protocol as to what documents are required for a Lender to consider a short sale request.

     2. All short sake requests which include the requisite documents set forth in the protocol shall receive responses from the Lender within fifteen (15) business days of the date received.

     3. if the request for short sale is denied, the Lender shall be required to furnish specific reasons for the denial, and a value for the property which would make the short sale acceptable. There must be supporting documentation which would substantiate the higher value.

All of us are working hard to effect real estate transactions to get the market moving again. Shirt sales, although painful for the Lender initially, represent a way to set reasonable valuation benchmarks for moving forward toward recovery. Many Lenders have been compensated for the losses they may sustain with short sales (or modifications) through receipt of TARP money.

The Words “Actually” and “Absolutely”–Overused and Lacking Meaning

Uncategorized,

I don’t know about the rest of you, but I have become increasingly irritated by a person answering the phone and responding “Actually, he is away from his desk” or “She, is actually, on another phone call”. First of all, the term “actually” adds nothing to the response. If anything, it almost sounds like the person giving the response if making up a story on the fly. Our world would be better if people would do all they can to delete the word “actually” from their vocabulary.

Ditto the use of the word “Absolutely”. “Yes” will convey the same meaning with less bravado. If the response you receive is always “Absolutely” where a simple “yes” will do, what has been added? “Absolutely” is another word which could be comfortably deleted from most people’s vocabulary without any real loss of power to communicate.

As a 66 year old Massachusetts title attorney, I have lived through the lives of four adolescent children (now grown-ups) and their addictive use of the word “like”. Just when I thought it was safe to communicate with others using real English, I have been recently hit with a barrage of “Actuallys” and “Absolutelys”. Let’s all work hard to eliminate these terms from our everyday business communications. Their loss will be our gain!!!!!

Elliott Topkins   www.topkinsandbevans.com

KIDS AT COLLEGE–Some College “Prep” of Your Own

Health Care Proxy/HIPPA, , , ,

Among the learning experiences for parents with children away at college is the fact that having reached the age of 18, your child is no longer your ward, and you are no longer your child’s legal guardian. That doesn’t mean that cannot pick up the tab for tuition, room and board, but you are not, as of right, entitled to see your child’s grades, and you are not, as of right, entitled to be informed of health issues confronting your child or to make medical decisions for your child.

The grade issue can be circumvented by interaction with your child. The health considerations are a little bit more complicated and require some forethought. The two documents that will assist you in being in position to help your child in medical emergencies, or even routine medical decisions, are a Health Care Proxy (which gives you the right to make “informed consent” decisions for your child) and the FICCA form (which gives you access to your child’s medical records) and Durable Powers of Attorney. These documents are part of our standard Estate Planning package when we assist our clients with Estate Plans. We are now suggesting that the appropriate execution of these forms become part of your checklist for sending your child away to college in August.

Wherever you are located, we, at Topkins & Bevans, can either prepare these forms for you, and supervise their proper execution or locate someone in your state to do same, all for a minimal fee. With the reticence that many medical and educational institutions have developed to release information and records, the Health Care Proxy, HIPPA Form and Durable Powers of Attorney have become “don’t leave home without it” items. Don’t wait until you have a frantic child on the phone whom you really cannot help at all without the expense and frustration of climbing into a plane or your car to be there, in person!!!

Newly Built Home or Condo–Work very very hard on the Offer Document

closing, ,

I have been running into a lot of situations where there was a “misunderstanding” as to what was included in a newly built home or condominium. In one situation, the developer indicated in the marketing piece that he would direct the gas range vent outside at his cost. Now when we are trying to reach agreement on the P & S, he wants an extra $500. One developer indicated that he would place a door on the Buyer’s garage. When we sat down to draft the  operative document, he indicated he cannot do this because of “zoning requirements” As Roseanne Rosannadanna used to say, “There is always something”.

What can we, as responsible real estate professionals do? What we have always done, ask questions, take notes and get things down in writing either on the submission document or in a letter between the parties. A lot of developers are tight for cash. They will “weasel” out of verbal commitments if they can. If it is in writing, and signed off on, it is much more difficult. And by being extremely thorough, you and I are doing “right” by our customers. That is a good feeling, especially in these days where there are not a lot of deals out there. Let’s make the ones we do “Da Vincis”.

New Condominiums–More TRAPS for the unwary

Condominium, , , ,

It is starting to happen again. Just like it did in the late 1980’s and early 1990’s. Condominiums are in financial trouble, I have previously written a Featured Post about delinquent condominium Unit Owners and what Trustees MUST do to collect common area fees from them.

A similar, but potentially much more serious, situation obtains with the Condominium developer. As most of you probably know, as soon as the Master Deed is recorded, each Unit in the recorded document must start paying common area fees. There is some question whether each Unit needs to contribute the required amounts to the reserve account. That varies from state to state. Let’s just stick with the fee for each Unit for operations.

The law is that the developer must pay condominium common area fees for his unsold Units. I am afraid that this requirement is “more honored in its breach than in its observance”, as the Bard would say. Cash flow is generally tight for new developers, and they perhaps cannot afford to pay. They can deliver a Certificate at the closing, indicating that the common areas fees are paid with respect to the Unit which is being purchased. It may well be a different story for the unsold Units.

My suggestion in this area is that the real estate professionals representing the BUYER need to be militant. Place a provision in the Purchase and Sale Agreement or Rider where the SELLER makes an affirmative statement that the common area fees for all Units owned by the SELLER are current. Require the SELLER to demonstrate that fact at the closing by bringing a Condominium Bank Statement which  proves that payment has been made.

Once the SELLER understands that there will be no closing without everything being current, there will be a great incentive to make matters right. The numbers can really “explode” unless some approach is taken to require the developer to keep up the monthly payments. It is not a pleasant situation for a new BUYER to walk into a situation where there are financial problems at day one. All of us need to work hard to try to prevent this.

If you are looking for suggested P & S language for these situations, please contact me at etopkins@topbev.com. I am a Massachusetts real estate attorney, but I am reasonably confident that the language I have developed will hold up in other jurisdictions, as well.

The Blase Mortgage Lender–How Much Longer Can we Put Up with This?

closing, , , , ,

Recently, I was representing a young couple buying their first home with an FHA mortgage. The Purchase and Sale Agreement was signed in early March. The closing was set forth for late April. Plenty of time for the Lender. The written mortgage commitment issued in late March with standard conditions. My clients easily fulfilled them.

THREE days before the scheduled closing, the Lender informed my client that “they were backed up and all closing were being pushed back for FIVE days.” The Seller had scheduled a day off for the original closing date to do the final walk-through. My clients are looking a being homeless if there any any further delays. There were no suggestions of underwriting problems. The Lender was “backed up” and that was all there was to it.

When you consider all of the things that all real estate professionals need to do to have a successful closing, this “walk away” approach by the Lender is simply not acceptable. The SELLER in my case wants to be paid (at least a per diem for the delay). My clients are in jeopardy of not having a roof over their heads. Do you think there is any way that the Lender will “chip in”” on this? Personally, I do not.

As an industry, we really need to develop ways to make the Lender more accountable for this type of behavior. I would suggest substantial fines for each time it happens, some of which could be paid to FNMA/FHLMC and some which can be paid to the Borrowers. Maybe, the state Banking Commission should suspend licenses of Lenders who do this more than “X” times in a given period. I am a real estate attorney in Massachusetts, and in our state, the attorney conducts the closing, I am fed up with the insouciance of the Lender. We all suffer when closings do not take place, and allowing the Lenders to run “roughshod” over our industry is unacceptable.

I would appreciate your view and suggestions. In this time of reduced activity, every closing is important. Lenders must be hed accountable for not realizing how many people they hurt when they are “backed up”. Hire some more people!!!Work longer hours!!! Stand up and be responsible!!!

Delinquent Common Area Fees–The Only Policy is ZERO TOLERANCE

Uncategorized, , , ,

It was the late 1980’s. Condominiums in Massachusetts were literally going “broke” because unit owners were not paying their common area fees. That meant that water bills and common electricity bills were not being paid. The towns and utilities tried to work with the Trustees to the extent they could. In many situations, Condominiums went bankrupt because the amounts due and owing got “out of hand”.

But help was on the way. Condominium Trade groups organized in states across the country started drafting new, and effective, legislation which gave Condominiums some clout with the Unit Owners. Massachusetts adopted this statute in 1992. It should have proved a Godsend, but unfortunately, it has not. There are still condominiums in trouble because of delinquencies. The statute involved, which has become part of Section 6 of Chapter 183A, is not being used to its fullest capacity.

In effect the new statute gave the Trustees tremendous power to collect. Fall behind by 60 days or more, and the Trustees can commence an action against you, force you to pay penalties and legal fees, and if you do not get caught up, sell your Unit at foreclosure and wipe out all mortgagees.

The last sentence is the important one. Once this type of action is commenced, the only thing the Trustees need to do is notify the Mortgage Lender(s) for the Unit. It has been my experience that the Unit Common area fees get “caught up” in days. WHY, you ask? Because if the Lender does not pay, in full (including attorneys fees and penalties) the Lender will lose out on the collateral.

So, my advice to each and every person reading this post who owns a condominium is to question your Trustees to make sure they have an automatic procedure for collectionm once Common Area fees become 60 days deliquent. If they so not, they should, and there should be zero tolerance for not proceeding. The enforcement action costs the Condominium nothing!!!!

If any of you have further questions on enforcement procedures, please contact me at etopkins@topbev.com. This is an important Condominium right, and SHOULD NOT EVER BE IGNORED OR DELAYED.

The post set forth above was originally included in my blog, www.realtorsresourceblog.com, which is intended to assist the real estate profession with various topical issues. I am an experienced Massachusetts real estate and estate planning attorney. I hope you will find these materials useful.

Massachusetts Tenancy by the Entirety and Declaration of Homestead–A Basic Primer

Uncategorized, , , ,

In Massachusetts, and possibly in other states as well, significant protection is given to the non-debtor spouse if the married couple elects to take title as “husband and wife, tenants by the entirety”. There are other advantages to tenancy by the entirety, such as avoiding probate, but the principal advantage is one of protection. The bottom line is this: IF YOUR PRINCIPAL RESIDENCE IS PROPERLY PUT IN YOUR NAME WITH YOUR SPOUSE, AS “HUSBAND AND WIFE, TENANTS BY THE ENTIRETY” A CREDITOR CANNOT ATTACH YOUR HOUSE, OR FORECLOSE ON YOUR HOUSE, FOR AN OBLIGATION INCURRED BY THE OTHER SPOUSE.

It is important to note that, in Massachusetts, you must be married at the time you take title, the property must be your principal residence, and the deed must include the “husband and wife, tenants by the entirety” language. A deed to only “husband and wife” creates a tenancy in common. A deed to “married persons” creates a joint tenancy without the protections described above. A deed to unmarried persons as “tenants by the entirety” also creates a severable joint tenancy.

Even though “tenancy by the entirety” creates important protection to a married couple, I still recommend that one of the married owners record a Declaration of Homestead. There is a $35 filing fee involved, and a small fee for producing the document, but that is the spouse’s only exposure. In exchange, a Massachusetts Homestead declarant receives insulation of up to $500,00 of equity in his or her home (subject to some “anti-fraud” provisions in the Federal Bankruptcy Law and a few other exclusions). This type of protection is especially helpful in the following situations:

     1. The obligations involved are “joint” so that tenancy by the entirety will not protect.

     2. There is a divorce or death, which has the effect of terminating a tenancy by the entirety.

     3. There are minor children in the home, who are protected by a Declaration of Homestead.

There may be circumstances, mainly for wealthy clients who need to establish individual assets for estate planning reason, where tenancy by the entirety is not the proper choice for ownership. In more than forty years of practicing real estate law, I have not identified ANY situation where filing a Declaration of Homestead is not advantageous. I would be more than happy to discuss any aspects of this post with potential Massachusetts property owners, or out of state individuals who are considering a purchase of real estate in Massachusetts. The consequences of the choices such as the ones described herein can be important, and you need to know what you are getting into before deciding which type of ownership is best for you.

Braintree, Massachusetts–A Great Place to Practice Real Estate Law

Uncategorized, , ,

While my principal office location is on Newbury Street in Boston, Massachusetts, I spend a considerable amount of time in my Braintree, Massachusetts office (150 Grossman Drive, Suite 405, Braintree, Massachusetts: 781-849-5906; Facsimile 781-848-3656). Real estate attorneys are finding out every day that their physical location is critical to garnering clients who buy and sell homes, and require real estate mortgage financing.

Braintree, Massachusetts is literally the “Gateway to the South Shore” of Massachusetts. Located approximately 14 miles south of Boston, Braintree offers convenience for South Shore real estate transactions to many thriving residential communities like Norwell, Hingham, Scituate, Cohasset and Milton.

I have enjoyed having an office in Braintree for more than 15 years. There are cultural advantages in Braintree; Thayer Academy is located there. There are wonderful restaurants and one of the most active shopping Malls in Massachusetts. The Public Library is well-run as are other municipal services.

Please do not hesitate to contact me for all of your South Shore real estate transactions. I am available at any time, at any place, to give you the kind of legal service which you deserve. For those of you in the Western suburbs, Topkins & Bevans also has a full-service office at 255 Bear Hill Road, Waltham, Massachusetts (781-890-6230; Facsimile: 781-466-6982).