Buyer/Borrower Information
What you should know about your closing
Matters of Interest for Buyers and Borrowers
What Happens Upon Death
Closing Attorneys and the Closing Process - What you should know
A Brief Note about Title Insurance
What you should know about your closing
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. The Lender will establish the fee for their representation and it will appear on your good faith estimate. 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 your interests be represented. Our office can represent you for a reasonable fee and give you the comfort level you need to proceed toward the purchase of your new home. Some of the services we provide representing buyers are:
Negotiation and preparation of the 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 other 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.
Facilitation of IRS Section 1031 Exchanges.
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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Matters of Interest for Buyers and Borrowers
1. INSURANCE. At the time of closing, you will have to provide evidence of insurance. Our closing specialist will contact you for information so that we can order the binder. We will assist you in obtaining the insurance binder. It 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 the commitment letter issued by your Lender. (Note that if you are purchasing a condominium unit, it will be the Seller’s responsibility to provide a certificate of insurance, but we will tell you about other optional varieties of insurance that may be available to you.)
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 will be required to provide a flood insurance policy together with a paid receipt for the full first year’s premium at or before the closing.
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. If that is the case we will work with you and your insurer to obtain the necessary binders.
4. TITLE INSURANCE. The lender generally 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.
See the Section below entitled: “A Brief Note about Title Insurance” for an expanded explanation. Because we believe that obtaining an Eagle Owners Title Insurance Policy is in your best interest we will plan to issue same and include the additional premium cost in the settlement amount that you will bring to closing unless you advise us to the contrary.
5. OTHER CONDOMINIUM REQUIREMENTS. If you are purchasing a condominium unit, the Seller must provide a “6(d)” certificate stating that there are no unpaid common charges or special assessments due to the condominium association as of the date of closing. This certificate is also required if you are refinancing your mortgage. If that is the case, we will assist you in obtaining the 6(d) certificate from the trustees or managers of the condominium.
6. SMOKE AND CARBON MONOXIDE DETECTOR COMPLIANCE. The Seller is required to produce 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. We will make that determination and insure that the proper certificates are obtained if required.
7. WATER, SEWER AND UTILITIES. The Seller is required to obtain a final reading of the water meter so that all outstanding water and sewer bills may be adjusted at the closing. If you are purchasing a condominium unit, it is possible 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 Seller should arrange for the termination of the service to coincide with the Buyer’s purchase date. Tanks for propane gas and oil are customarily topped off and paid for by the seller just prior to closing, and the Seller is credited with the cost of a full tank at the closing.
8. HOMESTEAD DECLARATION. Our office can prepare a Homestead Declaration for you for your 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 his 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.
9. MORTGAGES. If you are refinancing we will ask you to fill out a form which allows us to obtain the pay-off information on your existing mortgage(s). If you have an equity line on the property, and your new mortgage holder allows it to remain in effect, we will arrange for a subordination so that you can keep the equity line in place.
10. WAYS TO HOLD TITLE IN MASSACHUSETTS. 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. We will discuss the creation of other title holding entities with you upon request.
11. REAL ESTATE BROKERS: Our office highly recommends the use of experienced professional real estate brokers. A good broker can perform a myriad of important functions, including the ability to assess your buying and mortgage capabilities, pre-qualify you with your lender, oversee your condition inspection process and effectively communicate with other parties to the transaction on your behalf. Their efforts are highly beneficial in finding the right property for you and streamlining the closing process.
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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 as 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.
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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.
At our firm it has always been our practice to be as helpful as we can to assist buyers/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 our client informed of all relevant issues. When possible, we seek to resolve title issues and disputes. This will insure that the closing occurs to our client’s satisfaction.
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 Registries of Deeds, title review, ordering municipal lien information and survey information, loan document preparation, title certification, if a purchase transaction, communications with borrowers, other attorneys, sellers, brokers, municipal employees, 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 Registries 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. 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 unless there is no recorded site plan on record.
Municipal Lien Certificate - Obtained from the city or town where the property lies, this document shows all outstanding tax and betterment liens.
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 to obtain Registry certified copies that may be required in certain transactions.
Please Note: 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. As stated above, we may represent you as to other matters for an additional fee. For a further explanation please contact our office. We look forward to seeing you at your closing.
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A Brief Note about Title Insurance
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.
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 policyholder 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 attorney. Since the settlement attorney 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. 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. The owner's policy of title insurance insures 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 on the policy, and insures to the owner that if any such liens, encumbrances, defects or other title problems become known the title insurance company will defend the buyer's title to the property.
There have been many of 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. Problems 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, fraud in the execution or in the handling of the recording or errors as a result of incorrect 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 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.
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Any unauthorized use of material contained herein is at the user’s own risk. Transmission of the information and material herein is not intended to create, and receipt does not constitute, an agreement to create an attorney-client relationship with this Law Firm or any member thereof.
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