Category Archives: Attorney Info

“Yes, you can have the keys…as soon as the closing attorney drives to the Registry of Deeds, then waits in line to record….it should only take another four or five hours!”

Well, like the buggy whip and vinyl record album, that statement, spoken by countless Realtors over the years, is fast becoming a thing of the past.  And we owe the disappearance of long waits in line to record deeds, mortgages, and other documents needed to convey real property to technology that has seemingly worked its way into every facet of American life.  In this case it is Electronic Recording, also know as e-recording, which has been available for almost a half-decade.   Not only have we seen this important technological advancement in Massachusetts, but in most parts of the country as well.  Here in Massachusetts, there actually exists a “Registry of Deeds Modernization and Efficiency Commission” that is working hard to assist real estate lawyers, lenders, and property owners in streamlining the once mundane and archaic task of registering important real estate-related legal documents in order to put the world on notice as to who owns what and who owes who!

What exactly is e-recording?  The answer is fairly simple.  With the assistance of imaging technology, the internet, and secure e-recording portal service companies like CSC, PPDocs and Erxchange, to name a few, closing attorneys can now scan documents from a real estate closing table (like a municipal lien certificate, deed, mortgage and homestead), upload those documents through a secure portal company, which in turn checks the documents and then transmits them directly to the selected Registry of Deeds.  At that point, Registry of Deeds personnel view the documents sent, verify the quality of the image and the accuracy of the data (in the same manner they would if the original document was presented in-person to a Recording Clerk), and then accept them for recording.  Payment of the recording fees is automatically debited directly from an account set up by the sender (in this scenario, a closing attorney), and a receipt of proof of recording is emailed to the sender containing the recording information and confirmation of the exact charges for the recording.  The e-recording portal service companies charges a minimal service fee of about $4.00 to $5.00 per document–a small price to pay for the convenience and speed.  Final lien checks and title rundowns are also handled from the closing attorney’s desktop with real-time electronic recording data available by the participating Registries of Deeds.

Now, nothing is without its issues.  For example, if you transmit a package of documents and one of those documents contain an error, like a misspelling in a name from one document to the next, the entire “package” of documents transmitted will be rejected and bounced back to the sender as unrecordable.  This, unfortunately, can cause delay because after the error is corrected and the package is transmitted once again by the sender, the package goes to the end of the recording queue and time is lost.  Also, there are still a few Massachusetts Registries that don’t accept e-recordings, and Land Court/Registered Land Property (Torrens System) documents still must be recorded in person, where originals are collected and kept on file.

What’s next to make things faster, better, easier?  Who really knows!  To quote the late founder of Apple Computer, Steve Jobs, “A lot of times, people don’t know what they want until you show it to them.”

 

Tedesco headshotRobert W. Tedesco, principal and founder of Tedesco Law Offices, P.C., is a Woburn-based Attorney with twenty-five years of experience handling all types of transactional matters including representing buyers, sellers, exchangers and lenders in residential and commercial real estate transactions.  He also works with clients assisting in the sale and acquisition of small businesses, property management and tenant matters, condominium conversion, as well as estate planning and settlement.  His offices are located at 88 Main Street, Woburn, Massachusetts and can be reached at:  781-933-9293 or via email at: rwt@tedescolawoffices.com.   You can check out his website at: www.tedescolawoffices.com


This winticesameer has posed many challenges in real estate.  All the cold and snow have not only dissuaded potential buyers from pulling the trigger in purchasing a home during this time, but have also created serious problems for those buyers who have decided to make the move. For buyers that are under contract, the cold and snow have created many problems scheduling home inspections, appraisals, and the final walk through.  Sellers have had to deal with removing large amounts of snow to allow potential buyers to access the property while also ensuring there are no water leaks entering the home.

The biggest issue for homeowners this winter has been ice dams.  An ice dam is ice buildup on a roof that prevents melted snow from running off the roof and into the gutters.  The melting snow from the roof then gets trapped by the dam and eventually backs up on the roof, travels under the shingles and eventually leaks into the home.  A permanent fix to this problem is proper insulation, sealing and ventilation in the attic.  This could prove costly to the homeowner and it may not be feasible to rectify the issue during the present winter season.  However, there is a simple way to diminish the damage after an ice dam has formed to prevent further damage until a more permanent solution can be put in place for next season.  This could save not only the home from water penetration, but more importantly, a sale.

Instructions:  Fill a leg of discarded pair of panty hose with calcium chloride ice melt.  Lay the hose onto the roof so it crosses the ice dam and overhangs the gutter.  The calcium chloride will eventually melt through the snow and ice and create a channel for the water to flow down into the gutters from the roof.

By tackling an ice dam immediately when your home is under agreement, it will certainly make the process go a lot smoother during this winter season.  If you need assistance with preventing your home from having any ice dams either this season or next, contact an agent at RE/MAX Legacy for a licensed contractor that will be able to help with this problem.

 

Juliano blog headshot photoAbout the Author: James A. Juliano is one of the founding partners of Scafidi Juliano, LLP managing the Woburn office located in Downtown Woburn Center. He currently serves on the Woburn Conservation Commission where he has sat for almost two (2) years.  Mr. Juliano is very active in his community and also serves as the President of the Woburn Baseball Diamond Club which supports Woburn High School Baseball and is on the Board of Directors for the Woburn Boys and Girls Club. Mr. Juliano is also a Director of the Friends of the Tri-Community Greenway, Inc. which is a non-profit corporation responsible for the formation and organization of the 6.63 mile bike path and park that will stretch through Stoneham, Woburn, and Winchester.

Mr. Juliano’s present areas of practice include residential and commercial real estate transactions, residential and commercial lending, land use and zoning, and Landlord/Tenant law.  Mr. Juliano can be reached at jjuliano@scafidijuliano.com or by phone at 781-210-4710, Ext. 102. His company website is www.scafidijuliano.com.


exchange1031 Tax Deferred Exchanges have been a tool that savvy real estate investors and business owners who hold real estate to operate their business from use to defer capital gain taxes when they sell property and “exchange” it for another, or many others, as the case may be.  The basic theory behind such exchanges is pretty simple: encourage the property owner to grow its business or holdings, which in the long run helps us all, without having to stagnate and not grow for fear of paying those capital gains taxes that we all dread.

Here’s an example of a typical exchange that even the novice investor or start-up company can benefit from.  Over the past decade of hard work and sweat equity, Joe the Plumber has built a nice portfolio of five multi-family homes in various towns across the state.  But Joe’s wife wants him to spend more time with her and the kids and less time running around to these various properties making repairs and tending to tenant issues.  His Ford F150 is getting a little tired too from all those extra miles!  Joe, however, fears the huge capital gains tax bill that will come if he sells these properties and puts the money in the bank, thereby eating up all of his accumulated sweat equity.  1031 to the rescue!  Because a 1031 Tax Deferred Exchange is available to Joe, he can now “exchange out” of the several residential buildings he has scattered about the state (these are referred to as “relinquished” properties) and buy that desirable single building containing eighteen two bedroom units or that strip mall (called the “replacement” property) he’s had his eye on.

Don’t think that any good government program will come without rules–there are some basic rules that need to be followed.  A typical exchange must be completed within 180 days (approximately six months) with the replacement property you’d like to purchase identified by midnight of the 45th day after closing on the sale of the relinquished property.  So Joe can now sell all the scattered multi-family buildings and purchase the single larger building, putting all of the proceeds of those sales into the transaction, without paying a single penny of capital gain taxes, preserving 100% of his equity.

And it doesn’t stop there.  Let’s say Joe has had his eye on that special building and it’s finally come up for sale, but he still has all those other properties to sell before he can benefit from an exchange.  A “reverse exchange” allows Joe (who’s got super credit and a commercial bank waiting in the wings willing to lend on the new building) to purchase the replacement property before closing on the sale of the relinquished properties.  In this example, Joe does not need to deal with the 45 day identification rule.  For all you late night infomercial fans, “But wait, there’s more!”–there are still other options for Joe to make his dream come true: the replacement property parked option, the relinquished property parked alternative, the partial exchange and the reverse-improvement exchange.

In order to complete any successful exchange, the services of a “Qualified Intermediary” are required.  The QI is that person or entity that will hold the proceeds of the sale, because Joe cannot actually touch or receive the money from his sale that will be rolled into the acquisition of the new property.  Once the proceeds touch his hands, even for a day, the tax man cometh.

Thinking of doing an exchange?  Well, think fast, since more often than not, all good things come to an end.  There is word on the street that our friends on Capitol Hill are seriously considering doing away with 1031 Tax Deferred Exchanges sooner rather than later.  But for now, if you do want to complete an exchange, be sure to contact a lawyer experienced in handling exchanges who can provide you with specific legal advice, a CPA who can provide solid tax advice, and finally, retain a Qualified Intermediary that has specific security measures in place to protect the funds that they will be holding on your behalf (oddly enough, there is no entity at the Federal level that oversees or regulates QI’s and how the proceeds are to be invested and kept safe) and who will facilitate the exchange for you.

Tedesco headshotAbout the author: Robert W. Tedesco, principal and founder of Tedesco Law Offices, P.C., is a Woburn-based Attorney with twenty-five years of experience handling all types of transactional matters including representing buyers, sellers, exchangers and lenders in residential and commercial real estate transactions.  He also works with clients assisting in the sale and acquisition of small businesses, property management and tenant matters, condominium conversion, as well as estate planning and settlement.  His offices are located at 88 Main Street, Woburn, Massachusetts and can be reached at:  781-933-9293 or via email at: rwt@tedescolawoffices.com.   You can check out his website at: www.tedescolawoffices.com.

 


Wetland julianoWhen someone purchases a home near a wetland area, they usually never know it until an issue comes up.  Believe it or not, being next to these areas can restrict the use of your property.  It is critical that due diligence is used before you purchase the property, rather than finding out after you have closed.

The term “wetland” is a general term but usually encompasses any pond, lake, river, stream, ocean, or any land that is subject to flooding or where the water table is constantly high.  These areas are protected under the Massachusetts Wetlands Protection Act, Department of Environmental Protection (DEP) Regulations, and local Bylaws and Ordinances.  The purpose of these laws is to protect these resource areas from damage.

If you own property within a certain distance from these areas, DEP and the municipality you live in have jurisdiction to regulate activities in or near wetlands or water bodies by imposing certain measures.  For example, if you live near a wetland and wish to construct a shed on your property, you cannot simply just construct a shed.  You must go before the local Conservation Commission and petition that they allow the construction of the shed.  Their job is to ensure that the construction of the shed will not damage or ruin the integrity of the existing wetland by such construction.   Such petition could cost you money and time.

It is important to do thorough due diligence about the property before you sign the purchase and sales agreement. If the property falls under the jurisdiction of DEP and the municipality due to the property’s proximity of a wetland, it is always better to find out before you have invested time and money into the property.  A good start is to go to the local conservation office in City Hall and ask the conservation administrator about the property.   They will inform you if the property abuts a wetland and if so, if the property is in compliance with all local and state regulations.

Juliano blog headshot photoJames A. Juliano is one of the founding partners of Scafidi Juliano & Hurd, LLP, managing the Woburn office location in Downtown Woburn Center.  He currently has served for the past two years on the Woburn Conservation Commission, and was former chairman of the Stoneham Conservation Commission for 4 years.   Mr. Juliano is currently an active member in the Woburn Residents Environmental Network (WREN) and is a Director of the Friends of the Tri-Community Greenway, Inc. which is a non-profit corporation responsible for the formation and organization of the 6.63 mile bike path and park that will stretch through Stoneham, Woburn, and Winchester.  Mr. Juliano is also very active with the Eastern Middlesex Association of Realtors (EMAR) and serves on the Board of Directors for the Women’s Council of Realtors – Northern Region Massachusetts Chapter.

Mr. Juliano’s present areas of practice include residential and commercial real estate transactions, residential and commercial lending, land use and zoning, and Landlord/Tenant law.  Mr. Juliano can be reached at jjuliano@sjh-law.com or by phone at 781-210-4710, Ext. 102. His company website is www.sjh-law.com


No one can deny that we are in an awkward stage in real estate right now.  With homes selling well above asking price due to low inventory and high demand, it is impossible to know the true value of a home at the inception of the listing.  Unfortunately, those days of relying on previous comparable sales are out the window and such homes are only used as a mere gauge when listing a property.  As a result of such pricing flux, appraisals are often and frequently conflicting.   This can sometimes pose a problem for both parties in the transaction.

In a typical transaction where the Buyer is seeking financing from an institutional lender,  the Buyer’s lender sends an appraiser out to the property in order to set a value to the home.  Said value is based on several factors including but not limited to: the home’s physical makeup (square footage, number of bedrooms/bathrooms, amenities, etc.), where it is located, and most importantly, what other comparable homes in the area sold for in the last few months.  The last factor poses the biggest problem when determining a home’s value.  Because homes have only recently been selling higher than their actual values, there are not enough, if any, comparable homes that have sold within the past few months that reflect such pricing increase.  The end result…the home appraises for lower than the agreed upon price.

From a Buyer’s standpoint, this means that the lender will probably deny financing because the lender will not loan money for a property that is worth less than the agreed upon price.  If the Buyer’s lender will allow the Buyer to borrow money, it will usually require the Buyer putting more money down if they choose.   This result would usually allow the Buyer to contractually get out of the agreement and receive a full refund on all their deposits. From a Seller’s perspective, a decision must be made: either drop the purchase price to the appraised value, or find another Buyer.  Either situation is not ideal to a Seller.

Other scenarios however, can pose more complex situations and results.  In the case where a Buyer is paying cash and they opt to do an independent appraisal, the appraisal could come in lower than the agreed upon purchase price, which would alarm the Buyer that they may be overpaying for a home.  In another case where the Buyer is only financing a small amount of money where there is plenty of equity for the lender to finance the desired amount, it could be seen that the Buyer is overpaying for the home as well.  In these situations, it is always best to put a separate contingency in the Contract to Purchase and the Purchase and Sales Agreement which states something to the effect of “This Agreement is subject to the property appraising at or exceeding the purchase price, failing which all deposits given by Buyer shall be forthwith refunded and this agreement shall be null and void without any recourse to the Parties hereto.” This will allow the Buyer the option of either backing out of the contract if the property does not appraise for the contract price or purchasing the property despite  the appraised value being lower, hoping that the home’s appraised value will eventually increase. On the Seller’s end, a way to ensure that a Buyer will purchase the property despite a low appraisal is to insert a clause in the Contract to Purchase and the Purchase and Sales Agreement which states something like “In the event the appraisal is lower than the agreed upon purchase price, Buyer agrees that it shall not be the cause of termination of this agreement and shall be obligated to purchase the subject property subject to the terms of this agreement.”      

Because of what is going on in the market, it is vital to always seek guidance from a knowledgeable and reputable real estate agent and attorney.  The days of cookie cutter transactions are no longer with us and it is vital to have people in your corner during these times.

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Jim - October 2010James A. Juliano is one of the founding partners of Scafidi Juliano & Hurd, LLP, managing the Woburn office location in Downtown Woburn Center.  He currently serves on the Woburn Conservation Commission.  Mr. Juliano is currently an active member in the Woburn Residents Environmental Network (WREN) and is a Director of the Friends of the Tri-Community Greenway, Inc. which is a non-profit corporation responsible for the formation and organization of the 6.63 mile bike path and park that will stretch through Stoneham, Woburn, and Winchester.  Mr. Juliano is also very active with the Eastern Middlesex Association of Realtors (EMAR) and serves on the Board of Directors for the Women’s Council of Realtors – Northern Region Massachusetts Chapter.

Mr. Juliano’s present areas of practice include residential and commercial real estate transactions, residential and commercial lending, land use and zoning, and Landlord/Tenant law.  Mr. Juliano can be reached at jjuliano@scafidijuliano.com or by phone at 781-210-4710, Ext. 102.

 


The Importance of a
Solid Commitment for Financing

mortgageMost residential real estate transactions include a financing contingency which typically provides that the Buyer has until a certain date to obtain a commitment for mortgage financing.  This contingency has never been as important as it is today, but in order to maximize their protection under this contingency, a Buyer needs to understand the potential dangers involved in the ‘standard’ financing contingency and realize that once the contingency is satisfied, there are few remaining protections built into the agreement to protect the Buyer.

In order to preserve the contingency, it is standard that the Buyer must submit a complete mortgage application by a certain date.  Submitting a complete loan application is a relatively simple process, and can typically be completed over the phone, or in some cases via the internet.  It is extremely important to submit the application by the required date.  With the loan process taking longer than ever, Buyers should take care to start the financing process as early as possible in order to meet the commitment and closing dates.

As the transaction proceeds, some mortgage lenders will issue a loan commitment in haste in a misguided attempt to impress the client and/or the Realtors involved in the transaction.  In some cases where a commitment is issued far before the expiration of the mortgage contingency the Realtors involved may comment how great the loan originator or lender is, but in reality the originator may have unwittingly put the Buyer at risk.

Quick commitments usually are not solid commitments.  If a commitment is issued with conditions that could jeopardize whether the Buyer (or the property) will ultimately be granted the loan (ie. subject to an appraisal, homeowners’ association questionnaire, etc.) the loan originator may be putting the Buyer’s deposit in jeopardy.  I have even seen loan commitments, from reputable lenders, which were issued subject to the review of the Buyer’s income tax returns or, in one case, an FHA approval for the condominium project.  In both of these cases the lenders issued commitments but ultimately denied the loans.  A Realtor who is acting as a Buyer’s agent should recognize that a commitment which is not a ‘solid’ commitment does nothing for the transaction and ultimately puts the Buyer’s deposit at risk, and should insist that such a commitment should not be issued.

Having a commitment, whether or not the lender ultimately delivers on said commitment, satisfies the mortgage financing contingency.  It is at this point the contingency no longer protects the Buyer and the Buyer must fulfill their obligations under the Purchase and Sale agreement or be in default.  In the past I have seen a situation where the lender issued a clean commitment three weeks prior to the expiration of the financing deadline.  While this is seemingly a good thing, what the lender did not know when they issued the commitment is that ‘life happens’.  This particular Buyer lost their job and as a result was no longer eligible for the loan.  This is just one of many issues that could arise, lender insolvency being another, where the ‘early’ commitment could come back to hurt the Buyer.  In these instances, the Buyers no longer had the protection of the financing contingency and their deposit was in jeopardy.

While there is no way to totally eliminate risk to the Buyer in a real estate transaction, using a good Realtor in the capacity of a Buyer’s Agent and the use of a qualified real estate attorney will go a long way toward managing that risk.  A good real estate attorney will typically modify the purchase and sale agreement to address the issue of receiving a ‘less than solid’ mortgage commitment or even any potential lender insolvency.  Also, it is best to work with a mortgage lender who realizes how their actions could put you at risk.  Ideally, your lender will not only have a mortgage commitment, but a clear to close, which is the last step in the financing process prior to closing, on or before the expiration of the mortgage contingency and should only issue a commitment on the actual day the contingency expires.

The Buyer is best served when their Realtor, attorney and mortgage lender all understand their respective roles in making the transaction as smooth, and low risk, as possible and understand the financing contingency.

About The Author: Douglas M. Mercurio, Esq. is the founder and principal of the Law Office of Douglas M. Mercurio, PC. where he regularly represents Buyers, Sellers and Lenders in residential and commercial purchase, refinance and reverse mortgage transactions and has closed thousands of real estate transactions. Doug can be reached at doug@mercuriolaw.com or by phone at 978-276-3100.


In this episode of “Let’s Talk Real Estate,” I have as my guest Michael Callahan of Sigman Law Office. Our topic today is: We Must Protect This House. I borrowed this phrase from the slogan of the popular clothing line Under Armor as I feel it is applicable to home owners. As a home purchaser you literally MUST protect this house!  My conversation with Michael focuses on the various forms of home protection and the importance of being represented by a real estate attorney during the home buying or selling process.

About the Author: Anthony Giglio is one of the broker owners of RE/MAX Legacy and is the host of the TV show “Let’s Talk Real Estate” featured on the several local cable channels. You can learn more about him by going to his website www.myhomeMA.com