After months in the making, I am very pleased to announce the roll-out of TitleHub Closing Services, LLC, a cutting-edge closing settlement service that uniquely provides a full platform of legal and technology-based services. TitleHub’s mission is to transform the convoluted real estate closing process into an easy, customer-focused and technologically enhanced experience. In collaboration with my colleague Marc Canner, Esq., we have created a company that we believe will serve as the model for the next generation of residential real estate title and closing services.

Buyers, sellers, realtor and lenders will “stay informed” and “stay connected” to their transactions through:

• Our innovative, content-packed website (www.titlehub.com) which serves as a great informational resource.
• Our “E-Closings” system. This is a secure on-line document management system that allows borrowers and real estate professionals unlimited real-time access to obtain status updates of their deals and the ability to upload and download key transactional documents (recorded condominium documents, executed Purchase and Sale Agreement, Good Faith Estimate, HUD-1 Settlement Statement, etc). Click here for more information.
• Exclusive partnership with the Massachusetts Real Estate Law Blog.
• Social media interaction. Check us out on Facebook, Twitter, Linked In and Active Rain.
• Seminar Series; We offer topical seminars to realtors and lenders to help them stay current with the complicated real estate legal landscape as well as seminars to learn new marketing, blogging, and social media techniques.
• Paperless Solutions. We do have the ability to electronically record deeds and mortgages at registry of deeds which offer the service. In the future, we hope to be at the forefront of true e-closing paperless transactions, once there is broader lender and regulatory acceptance.

If you are a realtor or mortgage professional interested in TitleHub’s platform, please contact us at info@titlehub.com, and we’ll give you a demonstration.

The TitleHub Leadership Team
Marc E. Canner, Esq., President/CEO
Richard D. Vetstein, Esq., Vice President and Director of Marketing
Patrick T. Maddigan, Esq., Director of Operations & Business Development

Although home buyers sign a never ending pile of legal documents to purchase a home, arguably the most important document in the entire transaction is the purchase and sale agreement. In Massachusetts, the purchase and sale agreement most often used is the so-called standard form agreement supplied by the Greater Boston Real Estate Board or one modeled very closely to this form. The “standard” form purchase and sale agreement is, however, far from standard.

From a buyer’s perspective, there are two major problems with the “standard” form purchase and sale agreement:

1. It significantly favors the seller, and
2. It doesn’t adequately address such important issues as seller repairs, septic system/Title V compliance, radon gas, UFFI insulation, lead paint, mortgage rate lock expiration, certain title issues, and buyers’ access to the property while it is under agreement.

There are also deficiencies from a seller’s perspective as well.  This is why it’s imperative that home buyers and sellers alike retain a Massachusetts real estate attorney to modify the “standard” form purchase and sale agreement in order to best protect all parties’ rights and remedies, and customize the agreement to the particular aspects of the transaction. This is typically done through a “rider” to the purchase and sales agreement. Often, the buyers’ attorney and the sellers’ attorney will attached two different riders to the agreement.

I’ll outline a few common issues not addressed adequately in the “standard” purchase and sale agreement. (Most of these are from the buyer’s perspective).

Mortgage Contingency

The “standard” purchase and sale agreement does provide a basic mortgage contingency which gives the buyer the option of terminating the agreement if mortgage financing falls through. However, for a buyer, the more specific you are in terms of interest rate, points, name of lending institution and definition of “diligent efforts,” the better. Buyers’ counsel should specify that the buyer will not be required to apply to more than one institutional lender currently making mortgage loans of the type sought by the buyer and that the buyer may terminate the purchase and sale agreement unless the buyer obtains a firm, written commitment for a mortgage loan. Here is a sample rider provision:

MODIFICATION TO PARAGRAPH 26: Application to one such bank or mortgage lender by such date shall constitute “diligent efforts.”  If the written  loan commitment contains terms and conditions that are beyond BUYER’S reasonable ability to control or achieve, or if the commitment requires BUYER to encumber property other than the subject property, BUYER may terminate this agreement, whereupon any payments made under this agreement shall be forthwith refunded and all other obligations of the parties hereto shall cease and this agreement shall be void without recourse to the parties hereto.

Home Inspection/Repairs

Typically, buyers complete the home inspection process prior to the signing of the purchase and sale agreement, and any inspection contingency provision is deleted from the purchase and sale agreement. What happens if the inspection results are not ready before the P&S signing deadline or if the seller has agreed to perform repairs prior to the closing or give a credit at closing? In this case, a home inspection contingency clause should be added back to the agreement, and any seller repairs or closing credits should be meticulously detailed in the rider.

Septic Systems/Title V

If the home is serviced by an on-site sewage disposal system otherwise known as a septic system, the Massachusetts Septic System Regulations known as Title V requires the inspection of the system within 2 years of the sale of the home. Failed septic systems can cost many thousands of dollars to repair or replace.  Thus, buyers would look to be released from the agreement if the septic system fails inspection.  Alternatively, buyers could be given the option to close if the seller can repair the septic system during an agreed upon time period, provided that the buyers do not lose their mortgage rate lock.

Radon Gas

Radon is a naturally occurring radioactive gas. The ground produces the gas through the normal decay of uranium and radium. As it decays, radon produces new radioactive elements called radon daughters or decay products which scientists have proven to cause lung cancer. Radon testing should be performed by buyers during the home inspection process. Elevated levels of radon (above 4.0 picoCuries per liter (pCi/l) can be treated through radon remediation systems. The purchase and sale agreement should provide for a radon testing contingency and the buyers’ ability to terminate the agreement if elevated radon levels are found, or the option of having the sellers pay for a radon remediation system.

Lead Paint

Under the Massachusetts Lead Paint Law, buyers of property are entitled to have the property inspected for the presence of lead paint.  (Sellers are not required to remove lead paint in a sale situation). Because the abatement of lead paint can be costly, buyers typically look for a right to terminate the purchase and sale agreement if lead paint exists and the abatement/removal of it exceeds a certain dollar threshold. Here is an example of a provision added to the standard form:

LEAD PAINT.  Seller acknowledges that the Buyers have a child under six (6) years of age who will live in the premises.  In accordance with Massachusetts General Laws, Chapter 111, section 197A, as the premises was constructed prior to 1978, Buyer may have the premises inspected for the presence of lead paint which inspection shall be completed within ten (10) days after the execution of this Agreement, unless extended in writing by the parties.  If the inspection reveals the presence of lead paint, the abatement and/or removal of which will cost $2,000 or more, then Buyer may terminate this agreement, whereupon any payments made under this agreement shall be forthwith refunded and all other obligations of the parties hereto shall cease and this agreement shall be void without recourse to the parties hereto.  Any lead paint removal or abatement shall be Buyers’ responsibility.

Access

When my wife and I signed the Offer to Purchase on our house, she couldn’t wait to get in there with her tape measure, paint chips and fabric swatches. Oftentimes overlooked, but a cause of friction is buyers’ ability to access the house prior to the closing. To avoid such friction, an access clause should be added to the purchase and sale agreement giving the buyer reasonable access at reasonable time with advance notice to the sellers–it’s still their house after all.

These are just a few of the issues not adequately addressed by the “standard” form purchase and sale agreement. There are many more.

Please don’t hesitate to contact me for assistance with your Massachusetts residential real estate transaction.

An excited young couple about to close on their first home walk into into the closing attorney’s office. The day before they received via secure email all of the loan documents to review and approve with their personal attorney. The closing attorney arrives without any paper, armed only with a laptop attached to a digital signature pad. The sellers are not present as they have already signed the deed and other documents electronically the day before over the secure electronic closing system. The couple quickly review the closing documents on the attorneys’ laptop, clicking an “I Agree” button acknowledging receipt and review of each document. The couple sign the digital signature pad, and the captured signatures are automatically applied to all of the signature blocks of the documents. The closing attorney electronically notarizes all documents requiring witnessing or notarization. The closing is over in 15 minutes, and the couple walks out with a CD-ROM containing all the signed closing documents and the keys to their new home. The closing attorney then electronically records the deed and mortgage with the registry of deeds, funds the loan, and makes all of the disbursements. The executed loan documents are then electronically transmitted to the lender and digitally archived.

This is not an imaginary scenario. Electronic closings (e-closings) are happening now, and they are the future of real estate conveyancing. I believe that electronic closings will change the way lenders, title companies and closing attorneys do business.

The advantages of an e-closing system are numerous and include:

• More convenient and efficient closing process for home buyers and sellers.
• Automated delivery of electronically signed loan documents directly to post closing – eliminating costs and time. Fund the loans faster, in as little as 48 hours.
• Drastically improve the efficiency of real estate transactions with reduced contract-to-closing times.
• The Green Factor: Eliminates thousands of paper documents. Buyers receive the entire signed closing package on CD.
• Reduce shipping and closing costs.

Electronic closings are very slowly moving into Massachusetts. (Attorneys, who must conduct most real estate closings in Massachusetts, are notorious late adopters of new technology). Since July, without much fanfare, the Middlesex Registry of Deeds in Cambridge, Hampden County Registry in Springfield, and Plymouth Registry of Deeds have adopted electronic recording capabilities. Hopefully, the other registries follow suit.

TitleHub Closing Services LLC, in Massachusetts, is on the cutting edge of e-closing technology.

Electronic closings are a great selling point to customers mortgage lenders, banks and credit unions. Here is a recent article about a credit union in Michigan successfully offering electronic closings.

Now that time is running out on the First Time Home Buyer Credit–what I call the Realtor Cash For Clunkers program — I came across this comically shameless video produced by one of America’s largest real estate brokerage companies.

Fast Tube by Casper

But seriously folks, the credit seems like a good idea, but filled with exceptions.  From what I can decipher, the basics of how you qualify for the credit are:

• First-time buyer refers to anyone who has not owned a principle residence in the past three years.
• Non-married buyers qualify as long as one person meets the first-time buyer definition. Married tax payers must both be first-timers to qualify.
• The tax credit is equal to 10% of the purchase price, up to a maximum of 8,000 dollars.
• The home must be purchased between January 01, 2009 and December 01, 2009 and remain your primary residence for three years.
• You don’t have to pay it back. (Filing options available from the IRS website).

The confusing part comes into play for those looking to use the tax credit towards their downpayment or closing costs. The basic story is that FHA-approved lenders are able to create an additional loan that would allow you to access this money upfront for the following:

• Assist in covering your closings costs.
• Buy down your interest rate.
• As additional money towards your downpayment.

From what realtors say, the catch is that buyers must still fund a minimum down payment of 3.5% from their own wallets. The tax credit can be used in addition to the 3.5% downpayment but cannot be used to make up any part of the 3.5%. The other catch is apparently these loans are not easily carried out and assistance is not widely available to say the least. Massachusetts just came out with its own program.

My friend Metrowest Massachusetts real estate broker extraordinaire Bill Gassett has all the details in his real estate blog and here.

Good lord, my head is still spinning from that video. I’ll leave it to the realtors to explain the credit in some fashion of clarity.