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

Condominium, Short Sales & Foreclosures,

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

Short Sales & Foreclosures, title,

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

Mortgages, Uncategorized, ,

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”

Uncategorized, , ,

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.

The Hazards of Voice Mail–Don’t let the “Easy Way Out” Turn off Current or Potential Customers

Customer Service, Marketing / Communication,

Voice Mail is not new, and with the advent of increasing email and website usage, phone traffic is on the decline. The telephone still remains, however, a viable means for our customers to connect with us, and , now, when customers call, they have something important to state, or an important question to ask.

If you, or a reliable person in your office, is not available to respond, the customer may become frustrated, or worse yet, angry and disappointed. I have found in the three offices which I operate as a Massachusetts title attorney that putting the customer through an endless series of prompts and instructions will,  in the long run, lose business for me and my firm.

Think of it this way. You are the professional. You know your business better than the customer. The customer is often looking for reassurance or the answer to a simple question. When the customer hears your voice, the customer almost always calms down. The customer has asked for service, and you are providing service.

What if the customer is calling to ask you a question that you don’t know the answer to, although you have been researching the matter?  What if the customer is asking to see his or her HUD-1 Settlement Statement although you have not received “final numbers” from the Lender? My experience has told me that there is no harm in telling the customer that you do not have the answer or the HUD-1, but you are “working on it”. Isn’t that better than having the customer call 4 or 5 times and then decide that you really don’t care enough to even speak with him or her?

I try to stress upon every person in my firm the necessity of actually speaking with the customer, not putting the customer off. There is nothing any of us does that is so unique that another person cannot replace us. Letting the customer know how important we think he or she is, by trying as hard as we can to speak with them when they call, can make the difference between our success, or failure, as real estate professionals.

Eliminating the Emotion–No job that we do as Real Estate Professionals is more important

closing, Marketing / Communication, , ,

I recently wrote a Featured Post about negotiating. I stressed how important it was for people to “walk” at some point in negotiations, either before the property was placed under agreement or at the closing table.

The consistent sentiment from those of you who responded was that you worked hard in the beginning of the engagement to develop a set of expectations from your client , and then tried as heard as you could to keep  that “wish list”, if you will, in front of the client, at all stages, with the objective that  the client would not change course and start to ask for new concessions, normally late in the game.

This approach appears commendable. Almost everything in our business improves with preparation and diligence. I would suggest another important element when you are speaking with your client early in the game. Tell the client that emotions should be “left at home” while they are negotiating for their home. As much as they want the home, or want to sell the home, they need to maintain a “poker face” throughout the process.

In my experience, any  significant show of emotion by Buyer or Seller opens up the doors to the other side. A client needs to  be comfortable with his or her goals for the transaction. They may change somewhat after the home inspection. Perhaps, they need even to be put down in writing. But, I have found that we do out best for our clients if we remind them, gently but firmly, that they should not lose sight of what their goals were in the transaction and what they really expected.

Sometimes the best way to remove emotion is to remove the client. Urge your Seller not to attend the cllosing. Nothing is added by the Seller’s presence, and the chance for an emotional flare-up is increased by the Seller’s presence. The  parties do not need to like the people on the other side; they just need to accomplish what they originally set out to do, purchase, or sell, the property, on terms which they have assessed as fair. If we can keep them focused on that course, we are doing our job,

Big Trouble Brewing in Massachusetts–The Seller does not own the Property you are Buying

Uncategorized, , , ,

The point I am making seems so simple. Of course, my seller owns the home he or she is listing. Why else would the person be speaking with me and going through a listing agreement, and seller statement and countless open houses and execution of an offer and purchase agreement if the person did not own the home.

The cold hard facts are that there is a recent Massachusetts case where the putative seller had placed the property in a trust, where he was the trustee, prior to listing the home. As an individual, he did not own the home. The relevant documents were signed, the buyer applied, and was committed for, a mortgage. The title examination revealed an owner other than the person listed as seller on the purchase agreement. The transaction did not close.

This may seem totally ludicrous to most ActiveRainers. It didn’t strike me as properly defensible either. The buyer certainly had rights against the seller for fraud and deceit. He did not, however, have the right to compel a conveyance from the seller. Each piece of property is, on its face, unique and specific performance could not be granted against a non-owner.

There are ways to guard against this heinous result as follows:

     1. Prior to taking a listing, the listing agent can do a simple owner search. In most states, this can be done online from your computer. If you don’t know how to access your registry online, ask you title company or title attorney to teach you. You can find out from the jump whether you are dealing with the proper owner.

     2. After the initial documents are sign, the buyer  agent can ask his or her attorney, or title company, to confirm the ownership of the property right away. This is a relatively simple process, but it can save heartache and expense in the future.

There is nothing more frustrating in law than having a right without a remedy. Being able to sue a seller for deception is one thing, but it doesn’t get the buyer the property he or she has set their sights on. Go the extra mile to make sure that the record title is in the name of the seller. Anything short of that is not acceptable.

Twitter Power for Active Rain–I Tweeted the Whine and AR treated me fine

Uncategorized, ,

I do not know his name. I always get people’s names, and write them down,  when they call me. I have been practicing real estate law in Massachusetts  for more than forty years. I know better. Suffice it to say, whomever he was, he was very helpful. He responded right after I tweeted that I had been writing thought- ful posts on ActiveRain, and no one was commenting. My feelings were hurt.

Right off the bat, he spotted one problem. My posts were limited to Members; he made a keystroke and now they are available to the public. Ww walked through a recent post of mine, He suggested some key words to include. I needed to make my posts more local to Massachusetts , so they wiould appeal to the audience I was really seeking. He suggested that I put pictures or cartoons in future posts. He showed me how to do this appliocation. I will try to make this addtion, soon.

Bottom line, I received a ten minute, very intensive tutorial on posting on AR. My job now is to make my posts more lively and relevant. That is fair, and I am energized. I am reading a book called TWITTERVILLE by Shel Israel. I am finally starting to understand why Twitter can be powerful in growing my practice. Having said that, the lightning quick response from AR when it was mentioned on Twitter is the best evidence of what Mr. israel is suggesting, AR is living. No tweet is unimportant; no tweet can be ignored.

Frustrated by the Apparent Insourciance of Massachusetts Mortgage Lenders- -Make your Sales Agreements “Bulletproof”

closing, Mortgages, , ,

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.

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title,

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