The video director asked me what makes me different than other real estate attorneys? Well first, I grew up around real estate, tagging along with my mom to open houses. She was a Realtor in the Metrowest Mass. area for 25 years. I did my homework at her realty office when MLS printed off a dot matrix printer. I knew what a “P&S” agreement was at age 8. Real estate is in my blood.

Second, I’m what I like to call “ultra-responsive.” Real estate is a 24/7 business, and the attorney who doesn’t get that, well, doesn’t get it. I’m available whenever my Realtors, loan officers and clients need me — via text, email, phone, fax, even Facebook and Twitter.

I love what I do. Everyday I get to help people buy, sell, finance and resolve disputes involving their real estate. It’s incredibly rewarding. One day I’ll help a young couple with a baby purchase their first home. Another day I’ll navigate a client through the complex Massachusetts court system. I also help folks start new businesses, counsel them on employment issues, and other legal stuff for small businesses like mine.

If you like this video and want one for yourself, shoot me an email. I’m very friendly with the gentleman who owns the video company.

Here is the YouTube link to the video.

Score One For Property Rights Advocates

Massachusetts has the well-deserved reputation of being one of the most challenging states to permit a new housing development due to its myriad of rules, regulations and zoning by-laws. Real estate developers seeking to build a new subdivision typically go through an arduous permitting process before the local Planning Board, Board of Selectmen, Board of Health, Conservation Commission, Zoning Board of Appeals and other town boards.

Open Space Set-Asides

In what has become very much en vogue and required in the last decade are towns requiring that the developer dedicate or deed some of its developable land for open space and recreational purposes. In the recent case of Collings v. Stow Planning Board(embedded below), the Appeals Court ruled that the planning board went too far in requiring that the developer set aside almost 6 acres of a 5 lot subdivision for open space and “environmentally significant areas with views.”

Now usually, the developers don’t like to sue town planning boards over these type of exactions or “give and takes” as they want to get their projects approved and “play ball” with the towns. Apparently, the Collings family stood their ground in this case and won a decent victory for other developers who are less inclined to sue town boards.

Ruling: Open Space Requirements Must Be Tied to Legitimate Subdivision Concerns

Generally, a planning board condition requiring the dedication of open space which in effect reasonably limits the number of buildable lots, imposed out of safety concerns arising from the length of the street, would not be illegal. The Appeals Court found that the Stow planning board did not limit itself to a reasonable open space requirement but went much farther and required dedication of open space for public use, including the actual transfer of that open space to the town or a land trust. The court ruled that the exactions also provided no additional benefit above and beyond the open space requirement that relate to the safety concerns that are the subject of the subdivision law and the street length requirements. “Although a planning board’s authority under the subdivision control law certainly encompasses, in appropriate circumstances, requiring open space, it does not extend to requiring the transfer of that open space to the public for reasons unrelated to adequate access and safety of the subdivision without providing just compensation,” the Court held.

This case is a wake up call to town planning boards who may be a bit power-hungry.

Collings v. Planning Board of Stow

___________________________________

Richard D. Vetstein, Esq. is an experienced Massachusetts Real Estate Development Attorney. For further information you can contact him at info@vetsteinlawgroup.com.

Litigation Over Condominium Construction Can Derail Financing

It’s always humbling to be quoted in a major real estate publication such as Inman News. Last summer, I wrote about the nasty effect of the newer pending litigation Fannie Mae condo rules. Steve Bergsman, from Inman, was gracious enough to retell a story about how these rules left my client with a denial of his financing just days before his condo closing, leaving him living in a motel for weeks. (Another attorney represented him in the transaction, who I believe bordered on committing malpractice by not following my guidelines, below).

My legal advice for Realtors and condo buyers is to:

1. Have the condominium association disclose whether it is involved in any type of pending litigation which could trigger the Fannie Mae guidelines.
2. Get this information as early as possible, because it’s a deal killer.
3. I always put a provision in my purchase and sale agreement rider in which the seller represents there is no pending litigation involving the condo.

Here is the Inman story, entitled New Rules Make Condos Harder To Sell (March 18, 2011):

Attorney Richard Vetstein told me this story: A client was going to buy a unit in a condominium development and thought he had it all wrapped up; he had an agreement in hand, deposit down and was two days away from closing.

Then he got a call from his lender, who said there were issues. “Issues?” the client asked. Essentially, his lender said there was active litigation involving the condominium building, and the loan would not be approved by underwriters.

Vetstein, of the eponymous Vetstein Law Group in Framingham, Mass., has done a considerable amount of legal work in the always colorful condominium world. Of the client in the story, he said, “Luckily, I was able to negotiate his deposit back, but he lost the deal, and since he had sold his prior residence, for awhile he was living in a motel. It just ruined his life for a couple of months.”

The episode didn’t make the seller of the condo unit any happier, either. Buyers these days are extremely hard to come by.

So what happened?

Recent changes to the Fannie Mae Selling Guide, including some alterations that went into effect March 1, make that afternoon leisure time on your personal veranda with the ice tea in your tumbler and a Robert Patterson paperback in your hand more chilling than comforting.

Condo watchdogs generally are focusing on two changes that could affect your pocketbook, either as a homeowner or home seller. The first has to do with newly converted, non-gut rehabilitation condo projects, while the second, which affected Vetstein’s client, has to do with the collateral damage of an ongoing litigation.

Fannie Mae now declares mortgage loans in progress on a condo involved in any type of litigation, other than minor litigation (i.e., disputes over rights of quiet enjoyment), ineligible for delivery, said Orest Tomaselli, CEO of White Plains, N.Y.-based National Condo Advisors LLC.

“There are different types of litigation, from slip-and-fall cases to structural issues, so Fannie split it all up and any project where the HOA is named as a party defending litigation that relates to safety, structure (or) soundness of functional use (is) ineligible,” Tomaselli said. “These projects will not be able to enjoy Fannie Mae project approval nor the financing that results from it.”

The Fannie Mae guidelines read: “Any project (condo, co-op, or planned unit development) for which the homeowners association or co-op corporation is named as a party to pending litigation, or for which the project sponsor or developer is named as a party to pending litigation that relates to safety, structural soundness, habitability or functional use of the project, remains ineligible.”

What this means is, if your neighbor has some personal beef with the homeowners association or developer because his plumbing doesn’t work or the front door of the building has a bad lock and sues, well, that can affect you because a potential buyer can not get a Fannie Mae loan. Sure, the buyer can go to a bank and get a different loan, but that would just be more expensive.

What happened with Vetstein’s client was that a crazy, litigious unit owner was suing the condo association and prior builder for minor leaks.

“It was something that really should have been resolved by the trustees, builder or even insurer,” Vetstein explained. “It didn’t involve a lot of money, but the lawsuit was out there, pending and not resolved. There was no waiver because the litigation fell within these parameters of structural soundness and safety. Fannie Mae said, ‘Sorry, there’s no gray area here.’ ”

The changes present a conundrum for HOAs. It’s not uncommon in cold-weather states to experience poorly worked roofs resulting in water penetration of condominium units. Condo owners get upset, the HOA gets upset, and everyone wants to sue the builder or roofer. Unfortunately, this triggers a Fannie Mae issue.

“There is nothing the condo association can do about someone suing over defective conditions, but it certainly does have control over who they sue,” Vetstein said. “The HOA needs to know a lawsuit will have a ripple effect.”

The other problem for condo owners is specifically for those who live in developments that essentially have been converted from rentals into ownership units, or as Fannie Mae officially labels them, newly converted, non-gut-rehabilitation condo projects.

Those developments have to go through a Project Eligibility Review Service, or PERS.

The Fannie Mae Selling Guide updates read: “Many buildings are converted to condominiums without the replacement of major components resulting in eventual increased costs to unit owners for maintenance and major repairs. In order to mitigate the additional risk that newly converted, non-gut-rehabilitation projects pose, all newly converted, non-gut-rehabilitation condo projects must be submitted to PERS for review and approval.”

The problem is the cost to the HOA. Fannie Mae charges $1,200 for the review, plus $30 for every unit in the buildings, said Tomaselli. So, if you’re looking at 200-unit building, that’s $7,200 that has to paid out.

In addition, the newly converted non-guts have to undergo a reserve study to determine over a 30-year period of time what the repair costs are going to be in regard to such items as elevators, roofs, mechanical and structural systems, and the exterior.

“The current guidelines require that only 10 percent of the budget be set aside for reserve. Once the reserve study is done, an accurate number is given on what the reserve should be — and those numbers can be tremendous,” Tomaselli said.

The main goal of a reserve study is accuracy. “This guideline requiring reserve studies for new non-gut-rehab condominiums will ensure accurate reserve funding enforcement that will eliminate special assessments in most cases,” said Tomaselli.

It’s not a bad thing for Fannie Mae because it is making sure homeowners are protected — but for developments, increased maintenance can loom large.

Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, “After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade,” has been ranked as a top-selling real estate investment book for the Amazon Kindle e-reader.

A new Harvard report predicts a big jump in home remodeling – and with markets like Greater Boston that have lots of older homes leading the way. With the real estate market in recovery mode, a lot of folks in the last few years have put their money towards additions, in-law suites, finished basements, expanded garages, tear-downs, and other major home remodeling projects. In some cases, however, these projects require a special permit from the local zoning code. Here are some frequently asked questions about special permits under the Massachusetts Zoning Law. (I will cover variances for the next post).

Why Do I Need A Special Permit?

The most common reason why a Special Permit is necessary is that the proposed dwelling or the new addition does not meet the setback requirements set forth in the local zoning bylaw. Setbacks are buffer zones surrounding your boundary lines which provide for a “no-build zone.” For example, in the Sudbury, Mass. zoning code for the basic residential district, the side yard setback is 20 feet, the rear yard setback is 30 feet, the front yard set back is 40 feet, and the maximum structure height is 2.5 stories, or 35 feet. So if your proposed in-law suite juts into the side yard setback of 20 feet, then you will need to obtain a special permit from the zoning board of appeals (ZBA).

The other reason you may need a special permit is if your property is “non-conforming” and you wish to make a major expansion or alteration to it. “Non-conforming” means that the zoning code has changed since your home was originally built. For example, in Sudbury, the basic residence zoning district is now a minimum of nearly 1 acre. Many Sudbury homes built in the 60′s are way under 1 acre, so they are “non-conforming.” Virtually any tear-down and major reconstruction or alteration of a non-conforming property will trigger review by the building inspector and the application for a special permit from the local zoning board.

What Do I Need To Do To Get A Special Permit?

Obtaining a special permit requires a formal application to the zoning board with your plan, notice to your abutters, and the presentation of your application in front of the board at the public hearing. It is a formal legal proceeding, and can be complex giving the nature of the zoning issues and the extent of any neighborhood opposition. The chances of success rise dramatically if you have an experienced Massachusetts zoning attorney handling the zoning application. I was an associate member on the Sudbury zoning board for 9 years, and have appeared before countless boards in other towns.

What Are The Legal Requirements For A Special Permit?

The specific requirements for a special permit differ from town to town. But they all have the same general theme. Here is the Sudbury Mass. standard:

• That the use is in harmony with the general purpose and intent of the bylaw;
• That the use is in an appropriate location and is not detrimental to the neighborhood and does not significantly alter the character of the zoning district;
• Adequate and appropriate facilities will be provided for the proper operation of the proposed use;
• That the proposed use would not be detrimental or offensive to the adjoining zoning districts and neighboring properties due to the effects of lighting, odors, smoke, noise, sewage, refuse materials or other visual nuisances;
• That the proposed use would not cause undue traffic congestion in the immediate area.

What Happens At The Public Hearing?

The Board Chairman will open the hearing by reading the application or legal ad into the record. The applicant and/or their attorney is then called to make their presentation to the Board. Correspondence received from other town boards and or committees is read into the record as well as any correspondence from abutters. The Board members may ask questions of the applicant. The Chairman will ask if any audience members wish to speak.

For residential additions, tear downs and the like, the board is generally concerned with the general impact, if any, to the abutters, any safety or traffic issues, stormwater runoff, septic issues, and visual issues. Early communication with your neighbors is vital to ensuring the approval of your project. Neighborhood opposition to your application will decrease the likelihood of approval. While the board is technically not supposed to be a “second architect” on the project, many board members often provide comments and suggestions about the design of the project.

After all of the input the Board may close the public portion and discuss the request among themselves. The Board typically makes a decision at the end of their deliberations.

What Happens After The Board Reaches A Decision?

Once the Board makes a final decision, it is written up and and recorded with the Town Clerk. After a 20 day appeal period, the permit is mailed to the applicant, who then files the permit with the county Registry of Deeds. A copy is forwarded to the Board of Appeals Office and the Building Department. The Building Department may not issue a building permit or occupancy permit without receiving a copy of that recorded decision.

Can I Appeal The Board’s Decision?

Yes, you may appeal the decision in the Superior Court. You must act very quickly however, as appeals must be filed within 20 days of the filing of the decision with the Town Clerk. Zoning appeals are very complex and involve the submission of evidence at a trial before a Superior Court judge. It’s not something that should be undertaken without an attorney.

Richard D. Vetstein, Esq. is an experienced Massachusetts Zoning Attorney, who formerly sat on the Sudbury, Mass. Zoning Board of Appeals. Attorney Vetstein handles zoning matters across the state including the Metrowest towns of Framingham, Natick, Wayland, Weston, Ashland, Sudbury, Wellesley, Northborough, Southborough and Westborough. He can be reached at info@vetsteinlawgroup.com or 508-620-5352.

While folks here in Massachusetts are finally drying out from the Big Flood of 2010, it’s clear that it has negatively impacted the spring real estate market, and will have repercussions for years ahead for buyers and sellers of affected properties.

Impact On The Market

As recently reported in the Boston Globe, realtors around the state have said the flooding caused canceled and delayed closings, final walk-throughs under inches of standing basement water, and postponements of listing homes for sale. Also, lenders are requiring re-inspections and second appraisals to ensure that homes haven’t lost significant value due to the flooding. This is unfortunate as we’re in the middle of the usual busy spring sales season, made even busier by the soon-to-expire $8,000 first time home buyer credit. (Hey President Obama, how about extending the credit for Massachusetts like you did for the tax filing deadline!).

Disclosure Dilemma

Sellers who’ve been affected by the flooding are asking themselves and their realtors how they should handle the inevitable question from buyers: did your basement flood? Under Massachusetts disclosure law, while sellers are under no obligation to volunteer information, they must answer truthfully to any question posed directly by buyers regarding the condition of their property. Real estate agents are held to a higher standard. They must affirmatively disclose any fact that may have a material impact on whether the buyer would purchase the property. You better bet that whether a home experienced water penetration is “material.”

So, realtors and sellers would be wise to come clean if a home was affected by the recent flooding. The key is how to present the flood damage in the best possible light. Which brings me to the next topic…

Get It Fixed, And Done Right

How did you repair the water damage, and are you taking any steps to prevent it from happening again? Tough questions, because this was a 50 or even 100 year storm event. A flooded basement two weeks ago may never get a drop of water again.

Regardless of whether you are now going to invest in a perimeter drain/sump pump system, homeowners should hire licensed contractors who will pull permits to repair all flood damage. Having it done right will prevent even greater headaches later in the form of mold, dry rot and the like. As my friend general contractor George Lonergan of Lonergan Construction points out, pulling permits gives  sellers the ability to show buyers that flood damage has been repaired correctly by licensed and qualified contractors with sign offs from the local building inspector.

Lastly, I want to point out to buyers that they shouldn’t simply walk away from a home which experienced flooding or has a sump pump system. Many properties in river watershed communities like Wayland, Sudbury, and Natick for example have historically been subject to flooding and wet basements. Seeing a well run and working dry basement system/sump pump/french drain is a good sign actually. What you don’t want is what looks like a dry basement which later floods and then requires a sump pump system later on.

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

A lot more than you might think. Plus, Massachusetts law now requires attorneys to preside over residential real estate closings.

Many buyers and sellers often wonder what a real estate closing attorney does other than conduct the closing. Well, quite a bit of work actually.

The closing attorney acts as the “quarterback” of the closing process, performing many time consuming tasks preparing a transaction from intake to closing. (Important note: many borrowers don’t realize that they may request to select their own closing attorney instead of the bank attorney. The new RESPA rules which went into effect on January 1 encourage lenders to allow borrowers to select from a list of attorneys or their own personal attorney. This will most often save you several hundred dollars because you won’t have to hire a separate attorney to review/negotiate the purchase and sale agreement.

Intake/Title Examination

When the title order arrives from the lender, the closing attorney first orders a municipal lien certificate, which verifies the real estate taxes and other municipal charges on the property. Insurance binders and payoffs of mortgages are also ordered.

The closing attorney is responsible for examining the title to the property. For purchases, the title is researched going back 50 years. The closing attorney carefully reviews the title examination to ensure there are no title defects; if there are any issues, the attorney will work with all parties to resolve them. Some title defects are extremely difficult to resolve. (By law, the closing attorney must provide new home buyers with a certification of title).

Title Insurance

The closing attorney also coordinates the issuance of title insurance to the lender and the new home buyer. I always recommend that buyers obtain their own title insurance policies because even with the most accurate title examination, there can be hidden title defects that could derail a later sale or refinance. Look no further than the Land Court Ibanez foreclosure mess for what can happen when you don’t get an owner’s title policy.

The Closing

As the closing day approaches, the closing attorney will coordinate with the lender for the preparation and delivery of numerous documents to be signed at closing, including the mortgage, promissory note, truth in lender disclosures, and most importantly, the HUD-1 Settlement Statement. The closing attorney will also coordinate with the seller to receive the deed to the property, final utility bills, smoke detector/CO2 certificates and condominium 6(d) certificates. As outlined in the Settlement Statement, the closing attorney is responsible for handling a number of issues at closing:

• Payoff and discharge of mortgages
• Payment and allocation of real estate taxes and utilities (water, oil, etc.)
• Payment of realtor commissions
• Disclosure and payment of lender fees and closing costs
• Funding of mortgage escrow account
• Payment of transfer taxes and recording fees
• Payment of pre-paid interest
• Distribution of sale proceeds
• Title V septic certification and condominium 6(d) certification

The closing attorney then conducts the closing. He will explain the numerous loan and closing documents signed by buyer and seller, collect and distribute all funds, and otherwise ensure that the closing is properly conducted.

Post Closing

After the closing, the attorney processes the loan funding, performs a title rundown to ensure there are no changes in the title, then records the deed, mortgage and other recordable instruments. The attorney will also ensure that all paid off mortgages and liens are discharged. Title insurance policies are issues several weeks after the closing.

We are experienced Massachusetts real estate closing attorneys. Please contact us if you need legal assistance with your purchase, sale or refinance transaction.

Here is a great video outlining the closing process from our underwriters at Westcor Land Title-New England.