Information for Massachusetts Real Estate Buyers & Borrowers
 IMPORTANT
NOTICE ABOUT YOUR CLOSING (BUYERS/BORROWERS)
REPRESENTING THE
INTERESTS OF THE BUYER IN REAL ESTATE TRANSACTIONS
WHAT YOU SHOULD KNOW ABOUT
YOUR CLOSING (BUYERS/BORROWERS)
OUR FIRM’S
PRIVACY POLICY NOTICE
WAYS TO HOLD TITLE IN MASSACHUSETTS
OUR CERTIFICATION
OF TITLE TO BUYERS OF REAL ESTATE
CLOSING ATTORNEYS
AND THE CLOSING PROCESS - WHAT YOU SHOULD KNOW
TITLE INSURANCE
AND ITS IMPORTANCE IN YOUR TRANSACTION
IMPORTANT
NOTICE ABOUT YOUR CLOSING (BUYERS/BORROWERS)
As you may know, our office represents your
lender in matters relating to your request for a mortgage loan
in order to purchase real estate. We have commenced an examination
of the title and have ordered necessary information to complete
the closing.
When these matters are completed and reviewed
by our staff we will notify you to arrange a time to close
the loan. We will also advise you of any funds you may need
to complete the transaction. You must bring CERTIFIED
or BANK CASHIER’S CHECKS made payable to our
firm for these funds. In addition, you must
bring a valid drivers license or passport with you to closing
for proper identification. We cannot close your transaction
without this. Please do not forget as this is very important.
Please review the Lender’s Commitment
Letter carefully. If special conditions are required, they
must be met to the satisfaction of the lender PRIOR to closing.
Also, please review the enclosed instructions and forms carefully
with respect to other requirements that must be met prior to
closing. Respond to each item applicable to your situation.
Click HERE for
directions to our offices as well as more information regarding
matters discussed in this letter. If you have any questions
or comments related to these matters please contact us.
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REPRESENTING
THE INTERESTS OF THE BUYER IN REAL ESTATE TRANSACTIONS
If this is your first home purchase, or perhaps
you haven't purchased a new home in a while, the process may
seem confusing. We hope that our office can make the entire
purchase process easy and enjoyable for you. There are a few
things to remember.
First, understand that the lender's closing
attorney, and this includes our office if we are representing
your new lender, represents the interests of the lender. Therefore,
it is not the responsibility of lender's counsel to advise
you on your rights and obligations regarding your new home
purchase. Because of this, we highly recommend that you retain
your own attorney to represent your interests in this process.
Our office can represent you, even if we are handling the closing
for your new lender, for a reasonable fee and give you the
comfort you need to proceed confidently toward the purchase
of your new home. Some of the services we provide when representing
buyers are:
- Negotiation and preparation of the Offer to Purchase and
Purchase and Sale Agreement to protect your interests and
concerns.
- Resolve issues which may arise during the pendency of your
purchase and assist you if you are selling real estate to
purchase your new home.
- Explain the mortgage process and assist you in understanding
just what the Lender’s Commitment Letter says.
- Assist in the coordination of the closing and represent
you at the closing, review all closing documents and explain
their meaning and significance to you.
- Answer questions you might have and resolve disputes that
may arise at any time during the closing process.
Please call our office to discuss how we
can represent you and what our fees are for this service. We
look forward to hearing from you.
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WHAT
YOU SHOULD KNOW ABOUT YOUR CLOSING (BUYERS/BORROWERS)
1. INSURANCE. At
the time of closing, please bring with you a homeowner Fire
and Extended Coverage insurance policy or binder for such insurance
either in an amount at least equal to the total of all new
mortgages on the property or 100% of the replacement cost of
all insurable buildings and other improvements on the land.
IF YOU ARE GOING TO RELY ON THE 100% REPLACEMENT COST AMOUNT
AS SUFFICIENT INSURANCE, THEN THE POLICY OR BINDER MUST STATE
THAT 100% REPLACEMENT COST IS IN EFFECT. The insurance policy
or binder must name all of the persons who will hold title
to the property. The mortgage clause adding the mortgagee’s
insurable interest to all policies MUST BE WORDED in accordance
with the instructions listed in your commitment letter issued
by your lender.
Your insurance agent MUST fax
or deliver to our office a copy of a binder for such insurance
along with a receipt showing that the first year’s premium
is paid in full, at least three (3) business days prior to
closing.
2. FLOOD
INSURANCE. If the premises is located within a specially
designated federal flood hazard area then flood insurance is
a mandatory requirement and you must provide a flood insurance
policy together with a paid receipt for the full first year’s
premium at or before the closing. Please note that if the premises
is located within Zone B, flood insurance is not required.
3. RENT
LOSS INSURANCE. If this transaction involves a loan on
investment premises or a 2-4 family dwelling then rent loss
insurance may be required and an appropriate binder to that
effect will be required at or prior to closing. You should
check with the bank for applicability of rent loss insurance
to your loan.
4. TITLE
INSURANCE. The lender requires that they be provided
with a lender’s title insurance policy (loan policy)
to protect their interest in your property up to the amount
of the mortgage. While the premium for the loan policy is included
in your closing costs, it does not protect you. Your ownership
interests are insured only by an owner’s title insurance
policy (owner’s policy). While the lender’s coverage
under the loan policy decreases as the mortgage is paid down
and terminates when the final payment is made, your owner’s
policy remains in effect for as long as you and your heirs
own the property. The owner’s policy is available
for a one-time premium and at a discounted rate if purchased
simultaneously with the loan policy at the time of closing.
The owner’s policy provides coverage
for numerous matters which are not covered by the standard
attorney’s Certification of Record title and which are
not discoverable by searching the land records. Typical examples
of such matters include forged documents, the incapacity of
a grantor, undisclosed or missing heirs, missing signatures,
mistakes in recording, unknown creditors and problems involving
access to the land. The best owner’s policy now available
is known as the Eagle policy, which provides additional protection
for problems such as zoning and building permit violations,
restrictive covenant violations, encroachments and defects
in title.
Because we believe that obtaining an Eagle
Owner’s Title Insurance Policy is in your best interest
we will plan to issue same and include the additional premium
cost in the settlement figure you will bring to closing unless
you advise us to the contrary.
5. CONDOMINIUM
INSURANCE. If the mortgage involves a condominium unit,
we will require a Certificate of Insurance from the insurance
carrier for the condominium naming you and the association
and identifying the unit you are purchasing. Please contact
our office for the exact language naming the bank. Please note
that you may be required to purchase additional insurance if
the insurance company does not provide 100% replacement cost
coverage.
6. OTHER
CONDOMINIUM REQUIREMENTS. A “6 (d)” certificate
stating that there are no unpaid common charges to the condominium
association as of the date of closing must be issued and sent
to us prior to closing. This certificate is obtained
from the trustees or managers of the condominium and must be
in the form prescribed by law. You should be sure that the
seller procures such a document before the closing.
7. MANNER
IN WHICH TITLE WILL BE HELD. Below, you will find
an explanation of some options on how to hold title to real
estate. Please advise our office on how you would like to take
title to the property and fax it back to us. This information
should be provided to us as quickly as possible since many
documents which we prepare require this knowledge.
8. OUR
CERTIFICATION OF TITLE. The following matters apply only
if the transaction involves a purchase of real estate with
a dwelling designed to be occupied by not more than four families
and occupied in whole or in part by one or more of you. For
a detailed explanation please see Massachusetts General
Laws, Chapter 93, Section 70. We are required to certify
to you that the title to the premises meets the standard established
by that law. Our certification to you should not be construed
as establishing an attorney/client relationship between you
and our office. The services we render are only on behalf of
the mortgage lender unless other arrangements are made with
our office, and we cannot advise or counsel you relative to
the transaction. If you wish to obtain legal advice regarding
the quality of the title or with regard to some other aspect
of the transaction, you should retain independent counsel.
9. SMOKE
AND CARBON MONOXIDE DETECTOR COMPLIANCE. We call your
attention to the provisions of Massachusetts General Laws,
Chapter 148, you may be required to execute a certification
at the closing that you have inspected the installation of
the smoke and carbon monoxide detectors and are satisfied as
to compliance with this law. You should contact the sellers
and ensure that they have obtained, and will bring with them,
a current certification from the city or town fire department
relative to the installation of smoke and carbon monoxide detectors.
The foregoing may not apply in certain commercial transactions.
If you are unsure of the applicability of this law, please
check with your counsel or contact our office.
10. WATER,
SEWER AND ELECTRICITY. You should ask the sellers to
obtain a final reading of the water meter so that all outstanding
water and sewer bills may be taken care of at the closing.
If you are purchasing a condominium unit, it is likely that
water and sewer charges are included in the monthly condominium
fee. In that case, a final water and sewer bill is not required.
If electricity is provided by a municipal light plant, the
sellers should obtain a final electric reading.
11. HOMESTEAD
DECLARATION. Our office can prepare a Homestead Declaration
for you for this transaction if the home you are purchasing
will be your primary residence. Under Massachusetts law an
owner of a home who intends to occupy it as their principal
residence can protect a portion of the equity in their home
by merely filing a Declaration of Homestead in the Registry
of Deeds where the property is located. Please let us know
if you want us to prepare and record this Declaration.
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OUR
FIRM’S PRIVACY POLICY NOTICE
This notice is provided to you pursuant to
the Privacy of Consumer Financial Information Act and the Federal
Trade Commission's implementing regulation hereunder, 16 CFR
Part 313.
1. We
collect nonpublic personal information about you from the following
sources: information we receive from you on applications or
other forms either directly from you or from lenders and their
affiliates or agents;
2. We
do not disclose any nonpublic personal information about our
clients, borrowers, or sellers to anyone, except as is necessary
in the mortgage loan transaction as may be necessary to effectuate
the transaction with the lender that you have requested; to
prevent fraud or unauthorized transactions; as otherwise required
or permitted by law.
3. We
restrict access to nonpublic personal information about you
to those clients, lenders, third parties and employees who
need to know that information to provide the requested settlement
services to you. We maintain physical, electronic, and procedural
safeguards that comply with federal regulations to guard your
nonpublic personal information.
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WAYS
TO HOLD TITLE IN MASSACHUSETTS
THE FOLLOWING INFORMATION IS INTENDED ONLY
TO GIVE A BRIEF DESCRIPTION OF THE THREE COMMON WAYS OF HOLDING
TITLE AND IS NOT PROVIDED FOR THE PURPOSE OF ADVISING YOU HOW
TO TAKE TITLE. IF FURTHER INFORMATION IS DESIRED ABOUT CREDITORS’ RIGHTS
AGAINST THE TITLE, ADVANTAGES AND DISADVANTAGES WITH RESPECT
TO ESTATE PLANNING AND OTHER PRACTICALITIES, YOU SHOULD SEEK
LEGAL COUNSEL FROM YOUR ATTORNEY OR RETAIN AN ATTORNEY FOR
ADVICE IN THESE MATTERS.
In order to properly prepare the mortgage
documents we require information from you as to how you intend
to take title to the real estate.
The three most common ways two or more persons
may hold title to real estate are: TENANTS IN COMMON, JOINT
TENANTS or as TENANTS BY THE ENTIRETY (tenants by the entirety
is only available for married couples.)
What Happens Upon Death
1. When
title is held as Tenants in Common, it is necessary to probate
the estate of the deceased before the real estate may be sold
or mortgaged. There is no right of survivorship and so the
deceased person’s interest in the property passes to
his or her heirs and not to the other owner(s).
2. When
the title is held a Joint Tenants or as Tenants by the Entirety,
the title automatically passes to the surviving owner(s) without
the necessity to probate the estate of the deceased.
3. In
any case of death of an owner of real estate, whether Tenants
in Common, Joint Tenants or Tenants by the Entirety, it may
be necessary to procure a release of the estate tax or taxes
which may, by statute, become a lien on the property.
Who has Control and Management
1. When
title is held as Tenants in Common or Joint Tenants, the rents,
control, management and possession of the property is in the
owners equally, in the absence of an agreement to the contrary,
but the individuals can divest themselves of their individual
share in the property without the joining in with the others.
2. Under
the provisions of M.G.L. c.209, section 1, when title is held
as Tenants by the Entirety, (which is limited to husband and
wife) rents, control, management and possession of property
are in the owners equally. Chapter 209 further provides:
“...The interest of a debtor spouse in property held as tenants
by the entirety shall not be subject to seizure or execution by a creditor
of such debtor spouse so long as such property is the principal residence of
the non-debtor spouse; provided, however, both spouses shall be liable jointly
or severally for debts incurred on account of necessaries furnished to either
spouse or to a member of their family…Neither the husband nor the wife
can divest themselves of their interest in the property to anyone except to
each other, so long as the marriage lasts, without the signature of both."
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OUR
CERTIFICATION OF TITLE TO BUYERS OF REAL ESTATE
Our duties on behalf of the lender require
that we examine the title to the premises. In addition, under
the provisions of Massachusetts General Laws, Chapter 93, Section
70, we will also certify title to the premises you are buying.
This statute states in part:
"In connection with the granting of
any loan or credit to be secured by a purchase money first
mortgage on real estate improved with a dwelling designed to
be occupied or to be occupied in whole or in part by the mortgagor,
the mortgagor is required or agrees to pay or be responsible
for any fee or expense charged or incurred by an attorney acting
for or on behalf of the mortgagee in connection with the rendering
of a certification of title to the mortgaged premises such
certification shall be referenced to the mortgagor and to the
mortgagee."
The statute further prescribes that:
"The certification shall include a statement
that at the time of recording the said mortgage, the mortgagor
holds good and sufficient record title to the mortgaged premises
free from all encumbrances, and shall enumerate exceptions
thereto. The certification shall further include a statement
that the mortgagee holds a good and sufficient record first
mortgage to the property, subject only to the matters excepted
by said certification."
Because the scope of our examination is confined
to matters of record at the appropriate Registry of Deeds and
Registry of Probate, our certification will specifically exclude
the following matters:
- Building and zoning laws for (Property City or Town) and
other governmental statutes and regulations which have not
been examined;
- All applicable health, environmental and hazardous waste
rules, regulations, laws and ordinances of the municipality,
state and federal jurisdiction in which the premises is located;
- Such taxes, assessments or municipal charges that may be
due and payable and not shown on the Certificate of Municipal
Liens or on the record at the Registry of Deeds or from information
provided by the municipality;
- Persons in possession;
- Any lien or claim, any other tax liability, or any matter
of bankruptcy or insolvency that may not appear in the indices
of Registry of Deeds in which the said premises are located;
- Any set of facts or errors in description not apparent
on the record that would be shown by any accurate on-site
survey or which a physical inspection of the premises may
disclose;
- Matters not of record; forgeries; errors and omissions
in the records and indices of the Registry of Deeds and relevant
Registries of Probate; lack of sufficient capacity or competency
of grantors.
Additionally we will note for exception and
your attention to significant easements, restrictions and other
material matters of record.
This disclosure is made in advance of the
closing to apprise you of the statutory language regarding
certification of title and the scope of our examination of
the title to the premises you are purchasing as well as the
limitations of same. Please be aware that a policy of Owner’s
Title Insurance would cover issues related to some of the exceptions
noted above. Please call us if you have any questions.
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CLOSING
ATTORNEYS AND THE CLOSING PROCESS - WHAT YOU SHOULD KNOW
Your application to your lender for a home
mortgage loan leads you inevitably to the closing attorney’s
office. You undoubtedly have questions as to what the role
of the closing attorney is, what tasks the closing attorney
will perform and what will take place at the closing. First,
understand that the closing attorney represents the interests
of the lender. If your loan is a standard secondary market
type loan, the loan transaction and loan documentation are
uniform throughout the state.
At our firm it has always been our practice
to be as helpful as we can to assist borrowers in the mortgage
loan transaction. Sometimes issues arise regarding the record
title to a property. If there are title issues, problems in
a sale transaction, or issues involving inaccuracies, we endeavor
to keep the borrower informed of all relevant issues. When
possible, we seek to resolve title issues and disputes, many
times without any additional fees. This usually ensures that
the loan and, if applicable, the sale of the property being
mortgaged, proceeds forward to close with the borrowers being
satisfied with the result.
The closing fees quoted to you by your lender
include a variety of items. Those which involve our office
include the following and are standard transactional items
for representing the lender in residential loan transactions:
Legal Fee - Includes ordering
and obtaining a title examination from title examiners at the
various Registry of Deeds, title review, obtaining municipal
lien information & survey information, loan document preparation,
title certification (if a purchase transaction), communications
with borrowers, sellers, broker, etc., conducting the closing,
final rundown of title, recording of documents, payoff of liens
and sundry other matters relating to the loan closing.
Title Abstract - Includes
the physical review of the title to your property in the Registry
of Deeds and Probate, including bankruptcy and tax matters
where available.
Mortgage Survey Plan - Sometimes
referred to as a plot plan, this is a tape measure survey of
the land to be mortgaged in order to determine that it was
not in violation of zoning when constructed and that no buildings
or improvements encroach upon the property or over its lot
lines. We may not have been instructed by your lender to order
such a plan for this transaction. However, we do recommend
that one be obtained in a purchase transaction and in such
instances we will obtain one in any event for your protection.
In a Condominium transaction we will generally not obtain such
a plan.
Municipal Lien Certificate -
Obtained from the city or town where the property lies, this
document shows all outstanding tax and utility liens.
Title Insurance - The lender
requires a loan policy of title insurance for the loan amount
in order to protect their interests from issues relating to
the title to the property that could not be determined from
an examination of the record of the title. In a purchase transaction
an owner’s policy can be purchased at the same time at
substantial savings over the rate if not issued simultaneously
with the loan policy. Owner’s title insurance is highly
recommended by our office. We can supply you with information
regarding this insurance and the cost.
Recording Costs/Courier & Certified
Copy Fees - These include the cost to courier the
mortgage payoff and loan documentation for safe and timely
delivery, to record the mortgage and other transactional
documents and obtaining Registry certified copies that may
be required in certain transactions.
This is a list of some of the items that
you may be asked to pay for in a normal residential loan transaction.
In some instances your lender may pay some or all of these
costs if your loan program so prescribes. This explanation
should serve as a brief overview of the items described above.
For a further explanation please contact our office. We look
forward to seeing you at your closing.
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TITLE
INSURANCE AND ITS IMPORTANCE IN YOUR TRANSACTION
Real estate title insurance very simply is
an insured statement of the conditions of one's title or ownership
rights to a certain piece of real estate. The policy guarantees
that the property being purchased or mortgaged is free from
undisclosed liens or rights and it guarantees additionally
that any confusion as to rights of ownership will be resolved
in favor of the party owning the real estate or the title insurance
company will be liable for loss in value to the policy holder
up to the policy limits.
A buyer purchasing real estate is offered
the opportunity to purchase an owner's policy of title insurance
by the settlement agent, attorney, escrow company or title
agent conducting the real estate closing. For example, you
decide to purchase a house in Boston and are obtaining a mortgage
to help you finance the purchase from a bank or mortgage company.
That institution will require an examination of the title to
the property and have the party reviewing the title issue to
them a lender's policy of title insurance insuring that the
property is or will be owned by the purchaser and that there
are no defects, liens or encumbrances on the property which
would adversely affect the marketability of its mortgage.
Since the settlement agent, attorney, escrow
agent or title agent is already issuing a lender's policy of
title insurance, the buyer has the opportunity at that time
to obtain an owner's policy of title insurance at a cost substantially
less than the buyer would pay if the policy was not written
simultaneously with the lender's policy.
The owner's policy of title insurance ensures
that the owner has good marketable title to the property free
of any encumbrances or liens that would adversely affect the
property, except those made known to the buyer, and ensures
to the owner that if any such liens, encumbrances, defects
or other title problems become known, the title insurer will
defend the buyer's title to the property.
In many instances we are asked whether or
not title insurance is necessary or advisable for the owner
to purchase. We recommend the purchase of the title insurance
for some very simple reasons. First, the premium for purchase
of the title insurance policy is a one time charge. Since the
purchaser is usually borrowing money to finance the purchase,
the majority of the cost of the title insurance policy that
the owner would receive has been paid through the premiums
for the lender's policy which is required by the loan. Usually
for a few hundred dollars or less the owner can insure against
a variety of problems which could occur in the future. These
items include forged documents in the chain of title, signatures
of mentally incompetent persons or minors which are unknown
to the party reviewing the title, mistakes or inaccuracies
in recording of legal documents of title at the appropriate
place or recording or registration of title, fraud in the execution
or in the handling of the recording or indexing of recorded
documents, undisclosed or missing heirs, fraud in the execution
or in the handling of a transaction in the prior chain of title,
invalid divorces or misrepresentation of marital status of
the parties signing the documents, and most importantly clerical
errors in the public records and claims of parties unknown
because their claims have not been filed in any indices of
public record. The enhanced policies such as First American’s
Eagle Policy go well beyond these simple coverages and provide
coverage for a host of issues that can affect property both
prior to and after you purchase it.
Even though the buyer may be asked to pay
for the lender's title insurance protection, the lender's policy
of title insurance does not protect the buyer and a claim can
only be made if the lender suffers a financial loss because
of a title defect that adversely affects a foreclosure of the
buyer's mortgage. There have been many defects in titles which
could not be revealed by an examination of the public records.
These defects usually arise at a time after the transaction
has taken place and purchasers can suffer significant losses
as a result of them. That is why owner's title insurance makes
a great deal of sense.
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With law offices in Framingham, Massachusetts and Milford, Massachsuetts real estate lawyers provide legal services to individuals, families and businesses throughout the Boston metro west and Worcester county region including Ashland, Dedham, Framingham, Franklin, Hopkinton, Maynard, Marlborough, Milford, Natick, Needham, Newton, Shrewsbury, Sudbury, Waltham, and Worcester, Massachusetts.
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