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 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 are fees are for this service. We look forward to hearing from you.
The following information is a brief introduction to several issues you will encounter in the home-buying process.
Please feel free to contact our office with any questions that you may have.
Title Insurance
Buying a new home is one of life’s most gratifying experiences. As you approach the big day of closing, however, all the details can be overwhelming. You might easily overlook the single most important step in the entire process – purchasing an Owners Title Insurance Policy.
1. What Is A Title?
A title is the legal evidence that a person has ownership and possession of land. Since it is possible that someone other than the owner has the legal right to the property, the premium coverage offered by an Owner’s Title Insurance Policy is a MUST for the added peace of mind.
There can be a number of problems that remain undisclosed even after the most careful search of public records. These hidden “defects” are very dangerous. Sometimes these defects are not discovered for months or years after you purchase your home. You could be forced to spend substantial sums on a legal defense to protect your rights. With an Owner’s Title Insurance policy you are protected.
2. Two Types of Title Insurance
Your lender will require that you purchase a Lender’s Policy. This policy only insures that they (the lender) have a valid, enforceable lien on the property. It does not protect you! The Owner’s Title Insurance policy, on the other hand, is designed to protect your equity.
3. How Much Does Title Insurance Cost?
The one-time premium is directly related to the value of your home. Typically, it is less expensive than your annual auto insurance. It is a one-time only expense, paid when you purchase your home. Yet it continues to provide complete coverage for as long as you or your heirs own the property. Please contact our office for a quote. The Owner’s Policy provides complete protection from these and a host of other hidden defects:
- Creditor Claim
- Undisclosed Heirs
- Mistakes In Recording
- Incorrect Legal Description
- Forged Deeds
- Errors In Tax Records
In addition to all of the coverage provided in the traditional owner’s policy, some policies offer expanded coverage. Now you can also insure against:
- Zoning Violations
- Subdivision Law Violations
- Improvements That Encroach Into An Easement
- Unmarketability Of Your Title
- Inflation
These expanded policies provide more coverage than ever before. Now you can have the peace of mind that your title is protected in many additional ways. Purchasing an Owner’s Policy when you close on your home provides you with lasting protection and coverage.
Holding Title to Real Estate
The three most common ways two or more persons may hold title to real estate are:
- Tenants in Common
- Joint Tenants
- Tenants by the Entirety
Who Has Control and Management of the Property?
- When title is held as Tenants in Common or Joint Tenants, the rents, control, management and possession of the property is in the owner 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 of the others.
- Under the provisions of G.L. c. 209, § 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.
What Happens Upon the Death of One of the Owners?
- 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.
- When the title is held as Joint Tenants or as Tenants by the Entirety, the title automatically succeeds to the surviving title holder or title holders without the necessity to probate the estate of the deceased before the real estate may be sold or mortgaged.
- In any case of death of an owner of real estate, whether Tenants in Common, Joint Tenants or Tenants by the Entirety, it is necessary to procure a release of the estate tax or taxes which automatically – by statute – become a lien on the property.
Please note: This information is intended only to give a brief description of the three common ways of holding title and is not provide 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 consult with an attorney for further advice.
The Massachusetts Homestead Exemption
Massachusetts homeowners are urged to take advantage of a simple but underutilized law that allows homeowners to protect certain equity in their principal residence from the majority of creditors. Massachusetts General Laws Chapter 188, § 1 allows an owner of real estate, for the benefit of themselves and their immediate family and heirs, to exempt Five Hundred Thousand Dollars ($500,000.00) in home equity from attachment, levy on execution, or sale for payment.
The mechanism is relatively simple. A Declaration of Homestead, prepared for the owner, executed (signed in the presence of a notary public) by them, and recorded at the Registry of Deeds in the County where they reside, provides the protection allowed by statute.
The estate of homestead, or “homestead exemption”, provides protection and security to homeowners, eliminating the threat that the equity in their principal residence could be exposed to satisfy common debts or obligations.
There are limited exceptions to the obligations afforded homestead protection:
- A town, city, the Commonwealth of Massachusetts, federal government, or other taxing entity may attach property or force a sale to collect taxes owed;
- Debts contracted prior to the acquisition (declaration) of the homestead are not exempt. Obligations which arise from any personal obligation, including negligence are included, but for obligations other than contract, it must be reduced to a judgment before the exception is triggered;
- Debts related to the purchase of the home (most commonly, mortgages) are not exempt.
- Orders of the probate court to collect obligations for the support of a spouse or minor children may be enforced over a Declaration of Homestead.
One quirk in the statute is that while it provides protection to an “owner or owners”, and for a single person or a family, “only one owner may acquire an estate of homestead in any such home.” Joint owners, including spouses, should therefore give serious consideration to which individual is more likely to incur liability for a claim that is not covered by insurance.
Finally, special provisions apply to the “elderly” (defined by statute as age sixty-two or older) or disabled, as defined by statute. Unlike the homestead discussed above, all qualifying owners may declare a homestead, allowing for greater protection. These special homestead provisions are governed by Massachusetts General Laws chapter 188, § 1A
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