Massachusetts Real Estate frequently asked questions answered by Attorney Stephanie Konarski
Do I need a real estate attorney when I am buying or selling a home?
What is a purchase and sale agreement?
What is a title?
What can make a title defective?
Do I need title insurance?
If the lender already requires title insurance, won't that protect me?
How much does title insurance cost?
What is not covered by title insurance?
What is a lien?
What is an easement?
Should I arrange for a house inspection before closing?
What happens during a closing?
What are closing costs?
What form of money should I bring to the closing?
What obligations are there as a Seller of property?
Will I receive a survey of the property at closing?
Will I receive an appraisal of the property at the closing?
What is adverse possession?
Where can I get copies of deeds and other documents relating to property?
What is a Homestead Declaration?
Can (a) trustee(s) file for home Homestead protection?
What happens to my Homestead if I should re-mortgage or take out a second mortgage or home equity loan?
Can my Homestead be terminated?
Yes, absolutely and following are the reasons. 1. When you are Purchasing a home: This is the biggest purchase you will probably make in your lifetime. The sales contract you signed is long and complicated and many protections you might have are time-driven. Once the time expires your protections are lost. Some of the time frames last from a couple of days to 30 days. If you are not ready to close, for example you cannot get a mortgage (which is more involved than a pre-approval), you could lose your earnest money, and in addition you could be sued. 2. When you are selling a home: When you sell your property, an attorney will provide many services, from ordering and clearing title to drafting closing documents including the deed. Your attorney orders payoff for your mortgages, the survey, zoning and water certification. Additionally, if your property is a condominium, there are several documents needed from your condo association before you close.
A purchase and sale agreement is a standard document between the buyer and seller that states the terms and conditions under which the property is sold.
A title is the evidence that you have outright ownership and possession of land. It is possible that someone other than the owner has a legal right to the property. If his or her right can be established, he or she can claim the property outright or make demands on the owner as to its use.
Any number of problems that remain undisclosed even after the most meticulous search of public records can make a title defective. These hidden "defects" are dangerous because you may not learn of them for many months or years. They could force you to spend substantial sums on legal defense and still result in the loss of your property.
Title insurance insures the record title and protects an owner of property from losses arising from defects occurring prior to the date of the policy. There are two types of Title Insurance – a Lender's Policy and an Owner's Policy. Your lender likely will require you to purchase a Lender's Policy. While an Owner's Policy is not legally required, it is highly recommended. It is a means of protecting yourself from financial loss in the event that problems develop regarding the rights to ownership of your property. There may be hidden title defects that even the most careful title search will not reveal. In addition to protecting you from financial lost, title insurance pays the cost of defending against any covered claim.
Not necessarily. A Lender's Policy only insures that the financial institution has a valid, enforceable lien on the property. Most lenders require this type of insurance and typically require the borrower to pay for it. An Owner's Policy, on the other hand, is designed to protect you from title defects that existed prior to the issue date of your policy such as forgery, undisclosed but recorded prior mortgages, bankruptcies, liens or divorces, deeds not properly recorded, missing wills or heirs and inadequate property descriptions. Such title problems could put your home equity at serious risk. If a valid claim is filed, an Owner's Policy protects you from financial loss up to the face amount of the policy and covers the full cost of any legal defense of your title.
The cost of title insurance is set by the Title Insurance Company. An Owner's Policy is a one-time only premium directly related to the value of your home. Although it is a one-time only expense paid when you purchase your home, it continues to provide coverage for as long as you or your heirs own the property.
Title insurance provides valuable protection for property buyers. Like all forms of insurance, however, it does not cover every conceivable problem and it is important to understand its limitations. Title insurance is based on examination of the county real estate records, and generally will not cover problems arising from facts outside of the recorded chain of title. One common problem not covered by title insurance is boundary line issues, which would be revealed by a survey of the property (for example, it turns out that your fence is actually two feet onto your neighbor's property). Unrecorded mechanics' liens and unpaid public utility bills are other examples. The title insurance policy will describe many of the situations it does not cover; these same limitations will generally be found in an attorney's title examination. A qualified real property attorney can assist in helping a buyer understand the limits of a title policy and can take care of issues not covered by the policy.
A lien is any legal claim on real property that acts as a security for the payment of a debt or other obligation. If the debt is not repaid as promised, the lender or the lien holder can foreclose its claim on the property and force a public sale to pay the debt. The most common form of a lien on property is a mortgage. While all mortgages are liens, not all liens are mortgages. Other types of liens are commonly encountered and part of the work of the real property attorney is to check for outstanding liens at the time a real estate transaction closes. These include such things as judgment liens resulting from a court judgment against the owners, mechanic's liens resulting from recent improvements to the property, liens for unpaid taxes, and liens for unpaid municipal utilities such as water and sewer.
An easement allows another person the right to use your land for a specific purpose. The most usual easements are those granted to public utility or telephone companies to run lines on or under your private property and to neighboring houses to use a common driveway to give access to their home.
YES. To avoid legal headaches and expensive repairs later, you should arrange for a professional inspection before finalizing the purchase of a new home. A satisfactory inspection may also be required by your lender or insurer. Be sure to consult with an experienced real estate attorney for guidance on how to word the contract of sale to protect your interests in case the inspection reveals unexpected defects.
- The deed and other closing papers are prepared
- The title passes from the seller to buyer, who pays the balance of the purchase price
- A closing statement (HUD Settlement Statement) is prepared prior to the closing indicating the debits and credits to the buyer and seller
- The deed, note, mortgage instrument and other closing documents are signed. The note evidences the debt; the mortgage secures the real estate to the note in case you do not pay; and the deed transfers title.
home. They include upfront loan points, title insurance, escrow or closing day charges, document fees, prepaid interest and property taxes. Unless, these charges are rolled into the loan, they must be paid when the home is closed. Typical buyer costs include:
Typical seller costs include:
- Home Inspections
- Pro rate share of yearly property taxes, property association dues and other similar fees (prorated for date of closing)
- Attorney fees for title search and closing
- Title insurance policies, home insurance, lender fees, flood zone certificate fees, recording costs
- Initial deposit for escrow accounts for property taxes and home insurance
- Deed preparation
- Tax stamps, an excise tax based on sales price
- Prorated share of yearly property taxes, property association dues and other similar fees (prorated for date of closing)
- Fees associated with loan payoff or transferring funds (overnight fees, EFTs)
- Any costs seller agrees to share with the buyer.
Buyers should bring a bank check or certified funds to closing. If one of these options is not available, buyers should make arrangements to wire funds directly to the closing attorney at least one business day prior to the day of closing. If verifiable funds are not presented at the time of closing, the recording of the documents will be delayed and the buyer may not be able to move into the new home. Personal checks are acceptable in nominal amounts.
The Seller is obligated to produce a Smoke Detector and Carbon Monoxide Detector Certificate at the time of closing. To obtain a certificate, the seller or its agent must contact the fire department for the municipality in which the property lies to conduct the inspection.
No. In Massachusetts, a lender may require a plot plan of the property which does not formally located all of the property boundaries, but it does locate the house in particular vicinity within the boundary lines.
You are always entitled to a copy of the lender's appraisal if there is a lender involved on your behalf as a buyer. The appraisal is often presented at the closing or it can be requested in writing.
Adverse possession is a right to use or own property that is the result of continued use and occupancy over a period of time, generally ten to twenty years depending on the state. If a non-owner of property occupies and uses the property without the permission of the actual owner for long enough, the law will find that the actual owner has lost his or her rights in the property and ownership has transferred. Since the doctrine of adverse possession results in taking property without payment, the principle is applied very carefully by the courts and only if certain specified conditions are met. Thus, for example, the adverse use must be obvious to the real owner. And the use must be hostile, meaning that it is without the permission of the real owner. Use of another's property with the permission of the owner will never create a right of adverse possession.
The Registry of Deeds of the county in which the property is located is the place where deeds are recorded and kept on record. Any member of the public can examine the deeds, mortgages and various liens and other real estate records that are on file there. Copies can also be made for a small fee.
A Homestead Declaration, once recorded at the appropriate Registry of Deeds, protects your home (within certain limits) up to $500,000 from the unsecured claims of creditors. A Homestead Declaration will protect you or your surviving spouse and dependent children against attachment, levy on execution, or sale to satisfy debts, so long as you occupy or intend to occupy such property as your principal place of residence. Only one spouse can file a Homestead for their family. However, should the parent who declares the Homestead die, the law protects the residence until the youngest unmarried child reaches the age of eighteen (18) and until the surviving spouse dies or remarries.
The Massachusetts Land Court has determined that registered land held in trust cannot be given Homestead protection. There is no such limitation regarding recorded land.
In some cases, the lending institution may require that your Homestead be released. In that case, once the mortgage is recorded or registered, you can record a new Homestead. The statute, in some cases, exempts first and second mortgages from Homestead rights, so the chances are you will not have to release a Homestead to refinance or obtain a home equity loan. Also, most standard mortgage forms used today have a specific release of Homestead rights for that particular transaction, which negates the necessity to file a general release of Homestead.
Your claim of Homestead will be terminated upon the sale or transfer of your home during your lifetime, upon the death of you and the remarriage of your surviving spouse and upon each child reaching the age of majority or by a release of the Homestead estate duly signed, sealed, and acknowledged by you and recorded at the Registry of Deeds, or when the property ceases to be the principal residence.