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Buying and Selling a Home in Massachusetts

OFFER TO PURCHASE, PURCHASE AND SALE AGREEMENTS, CLOSINGS

For the Buyer, if it hasn’t already, the thrilling reality of buying a home will definitely hit you at the closing. Along with the excitement, the deed and the shiny new keys comes a stack of paperwork. For both parties, it’s important to understand the events leading up to the real estate closing.  The most important thing either party can do to protect himself or herself is to hire a lawyer early on before an Offer to Purchase is submitted or accepted. Because a home is usually the single largest investment that anyone makes, if you are to thoroughly protect yourself, you cannot cut corners by trying to represent yourself or relying on non-legal professionals. If you do, you might simply end up with a lawsuit instead of the home of your dreams.

 

Buying and selling a home involves the following steps:

 

STEP 1. THE "OFFER TO PURCHASE" AND THE "PURCHASE AND SALE AGREEMENT"
Normally, an Offer to Purchaseis made by the home buyer to the seller and once accepted a real estate contract called the Purchase and Sale Agreement(or “P&S”) is signed shortly thereafter. Despite what anyone might tell you, an Offer to Purchase may be a BINDING contract even if you never actually sign the Purchase and Sale Agreement. This means that if either party attempts to walk away before signing the Purchase and Sale Agreement, the other party can ask a court of law to compel the other side to go forward. In addition, it is important to note that there is nothing "standard" about the so called "Standard Form" Purchase and Sale Agreement, as it must be specifically tailored to each transaction. In order to draft these documents properly, both parties also need to know which disclosuresthe seller must make. You, therefore, must obtain a competent real estate lawyer as soon as possible to prevent costly mistakes and to understand the full legal consequences of the transaction.

 

STEP 2. THE MORTGAGE LENDER’S ATTORNEY BEGINS THE TITLE EXAM
After signing the P&S, the home buyer's lender places a request for a title exam (an examination of the home's ownership history), tax information, and begins preparing any necessary paperwork. Each home has a series of documents recorded at the local Registry of Deeds that reflect prior owners, lenders and other parties who have or had an interest in the home. These documents are examined to identify all outstanding interests. In Massachusetts, most good mortgage lenders will allow the Buyer to use his or her own real estate attorney to conduct the closing. We strongly encourage this practice among our clients or an attorney, that you do not know, will be responsible for ensuring your well being. Using your lender's attorney may also be more expensive. If your lender is willing to ignore your wishes, and does require you to use its attorney, it might be grounds for suspicion on your behalf. In the event that you do lose confidence in your mortgage lender, please let us know and we will be happy to provide you with a referral. There are plenty of good mortgage lenders in the area who not only respect their clients but who are also willing to match or beat existing terms. A good lender will make all the difference!

 

STEP 3. MORTGAGE ISSUES ARE ADDRESSED
The mortgage lender’s attorney works with the Buyer's lender to verify dollar figures, taxes (through the "municipal lien certificate" which is issued by the relevant city or town), home owner's insurance (through an "insurance binder"), and other important details of the transaction. In addition, if prior mortgages have to be paid, the attorney closing the loan will also arrange for this with the Seller.

 

STEP 4. THE PROPERTY IS INSPECTED BY A HOME INSPECTOR AND HOME SURVEYOR
In most cases, a professional home inspector will conduct an inspection, and a land surveyor will normally check the property lines for neighboring encroachments and draw up a plot plan. The Buyer may also want to conduct both a "mold inspection", to determine whether "toxic mold" exists, and a "radon inspection" to make sure that such levels are within the EPA standards. A professional home inspection is critical from the Buyer's perspective (although it is sometimes waived to make an offer more attractive to the Seller which can be very risky). It is worth nothing that the Buyer should also keep in mind who is recommending the home inspector. Does that person want the home inspected thoroughly or are they simply interested in the sale taking place? A lawyer who represents you and is looking out for your interests can refer you to a reputable, professional home inspector.

 

STEP 5. THE HUD SETTLEMENT STATEMENT ("HUD") IS PREPARED.
The Lender’s Attorney prepares this document which is a large spreadsheet showing all of the costs that will be paid at the closing by the buyer and the seller. If we are representing the buyer and the buyer's lender, then we will discuss these charges with you ahead of time (otherwise, the first time you see these charges might be at your closing). The Buyer should check with the Mortgage Lender’s Attorney a day or two before the closing to confirm the amount you will need to bring to closing (these are called “closing costs”). These funds must be certified and made payable directly to the Buyer (and directly to anyone else who will appear on the deed with the Buyer).

 

STEP 6. THE REAL ESTATE CLOSING
Both parties should bring to the closing a (1) valid picture ID, and (2) a personal checkbook for any last minute adjustments. During the real estate closing, the Buyer will sign a number of documents, each of which will be explained by the Mortgage Lender’s Attorney. The Buyer will also need to make the critical decision about whether or not to purchase an Owners Title Insurance Policyfrom the closing attorney (which we always recommend). After the closing occurs and the documents have been recorded at the Registry of Deeds the buyer is now the new owner.

 

From the Seller's perspective, the day of the closing will no doubt be chaotic as the Seller scrambles to pack, move out, and move into his or her new residence. Complicating this even more can be commitments at work and commitments to family. It is therefore often wise for the Seller's lawyer to draft a "power of attorney" for the Seller's signature and appear at the closing in the Seller's place. The Seller's attorney will be familiar with the stack of documents that will need to be signed and will be able to proceed through them in an efficient manner.

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