Buyer
Information
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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