Tag Archives: real estate closings

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

The Closing Table–A Venue for Marketing!!!

closing, Marketing / Communication, ,

As a Massachusetts title attorney with over 40 years of closing experience, I am often shocked at the number of missed opportunities for marketing that the closing table presents. For my own part, I view the closing table as a chance to market my law firm and to provide the Buyer with an array of services my firm offers. This not only includes helping their friends and relatives with their next real estate transaction; it also includes explaining why home ownership presents a need to bring their estate plans up to speed and to make sure their insurance coverage is adequate. After all, they have just signed up for a large liability in their mortgage, and they want to make sure that if something happens to them, their home (and children) will be protected.

There are several other things I do at each closing:

     1. I always give the Buyers a small gift. Sometimes a special bottle of wine, other times an umbrella with my law firm’s name emblazoned on it.

     2. I have now taken to preparing a large loose leaf binder with the name of the Buyer and the property address. I tell the Buyer to place a copy of the HUD-1 Settlement Statement and a copy of their Owner’s Policy of Title Insurance as the initial entry into the binder. Thereafter, I advise them to place a copy of each and every invoice relating to their home into the binder. If they are diligent in doing this, they have created a wonderful marketing book for you, the real estate professional, to sell their home when that time comes. recently, I have inserted a plastic sheet for business cards. i place mine in the sheet and urge the selling broker or buyer’s agent to place theirs in the sheet, as well. I am a member of a BNI Group. I also place the cards of those BNI Members in whom I have confidence into the binder.

These are the marketing opportunities I have observed for other real estate professionals:

     !. Realtors. A realtor in attendance can often firm up future business by being at the closing and being helpful. I have seen realtors bring small gifts, as well. Many seasoned realtors also backstop suggestions I make to the Buyer, and in general serve as liaisons in the process. It is akin to bringing home the girl you brought to the dance, and the sense of closure is important.

     2. Mortgage Professionals. I am surprised at how few appearances these people make at closings. To me, this is a perfect opportunity to market only to the selling broker or Buyer’s agent who almost certainly in attendance. On many occasions, the listing agent appears, as well. Closings take an hour or so, and there is a lot of dead time for the realtors. What a great chance for a mortgage originator to make a captive sales call. He or she can answer questions, speak about new programs to people who have no choice but to listen. Maybe a new deal sprouts from this initiative!!!

Perhaps, many of you have found closings to be boring chores foisted on you by your superiors. As this post indicates, I view them quite differently, and I urge you to give some thought to some, or all, of the marketing ideas I have shared herein

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!!!