In the near recent past, most real estate purchases in Massachusetts had one thing in common. They closed on or before the date set for closing in the sales agreement.  The writer, a Massachusetts title attorney with more than forty years of experience, has recently seen a departure from that truism. Loans are now closing, when the Lender is ready, and that may well be after the specified date in the sales agreement.

Generally, when I have represented Buyers, I can get by this delay because I am working with fellow professionals who have been on my side of the fence in other matters, and they are sympathetic. We enter into extensions to permit delayed closings. I cannot really count on this goodwill every time I represent a Buyer. I , therefore, approach the problem frontally and insist on some protections in the sales agreement which are designed to lessen the stress when the Massachusetts Mortgage Lender insists that the loan is not “clear to close” because the third appraisal review has not been completed, and Martha is on vacation, and she will not be able to get to it until next Tuesday. (Your scheduled closing date is next Monday!!!)

So with this knowledge in hand I work hard to insure that the following provisions are in my Buyer representation sales agreements:

     1. The Mortgage Contingency Clause. I insist that the mortgage commitment be “in writing” and does not contain “any terms or conditions which are beyond the Borrower’s ability to fulfill in a reasonable time” I now am insisting that the appraisal which is the basis for the mortgage commitment “indicate a value equal to or greater than the purchase price.” The appraisal piece is becoming much more important with the new appraisal rules. I say to the other side, “Look, we all entered into deal this in good faith, but if we are wrong about the appraised value, we can not go through with the deal”. In these days, this seems to work.

     2. Delay Protection Provision. Getting a solid mortgage contingency provision helps, but it does not deal with the internal idiosyncracies concerning the understaffed Mortgage Lender. So, even after I make the mortgage contingency provision have some teeth, I  also insist on a provision as follows; “The parties agree to extend the deate of closing for a period not to exceed fifteen (15) buisiness days if the delay is caused by Buyer’s Mortgage Lender. or the Seller”.

     3. November 30, 2009. I have also recently been putting in a provision that if the Lender’s, or Seller’s delay causes the transaction not to close on or before November 30, 2009, the parties agree that the purchase price will be reduced by $8,000. This may seem harsh, but that closing cost credit would appear to be vanishing on December 1, 2009, and I want my client protected. I am not always successful in getting this provision accepted, and I do allow  the clause not to take effect if the Buyer Tax Credit is extended.

These are my suggestions. I would welcome yours. Masschuseets Mortgage Lenders are understaffed. They are working on short sales and modifications. They fail to grasp what “time is of the essence” means. We need to think ahead to protect our clients and customers.