The Title Examination

Aug 16, 2024 | Uncategorized

By Attorney Christopher Carreira

In Massachusetts, a title examination involves searching at least 50 years of records related to a property at the Registry of Deeds, the Equity Court, the Bankruptcy Court, and even the Probate and Family Court. The purpose of this examination is to ensure that the new homeowner does not face any legal issues in the future with the documents that are publicly available to the law firm closing the transaction. An attorney typically reviews the examination for accuracy.

Title Issues

It is difficult to find someone who has not encountered a title issue at some point. These issues could include a missing mortgage discharge, a deed with typographical errors in the legal description, or a grantor clause with an incorrect name spelling. Fortunately, the Real Estate Bar Association of Massachusetts has a handbook of standards and forms to guide us in resolving these issues. This handbook contains over 200 pages of information on various title issues.

Title Insurance Companies

However, not every problem has a clear solution. It is often necessary for a title insurance company to approve a fix before any action can be taken. Title insurance companies are frequently involved when a buyer is obtaining a mortgage or when a new homeowner wants to insure the title to the property. If a problem is discovered later, lawyers may be needed to resolve the issue in court. Each title insurance company has a team of lawyers to answer questions and litigate title issues, but these lawyers do not always agree with each other.

An Example

A homeowner had two mortgages on her property. She lost her job due to illness, fell behind on her mortgage payments, and had to rely on credit cards. Six months later, she was able to return to work but needed to file a Chapter 13 bankruptcy case to eliminate her credit card debt and catch up on her mortgage payments. As part of the case, she was able to eliminate her second mortgage because the property was worth less than the amount owed on her first mortgage at the time of the bankruptcy filing.

As she got older, she decided to sell her property and downsize to a condominium. She signed a Purchase and Sales Agreement and was two weeks away from closing when the buyer’s lender’s closing attorney advised that the second mortgage needed to be paid off. She explained that the bankruptcy court had eliminated it, so it did not need to be paid off. The closing attorney called his title insurance company, which insisted that a discharge of the mortgage was necessary for marketable title. Despite numerous letters from the closing attorney, the mortgage company refused to discharge the mortgage, delaying the closing date.

The Solution

Frustrated, the homeowner called another attorney, who advised that the mortgage did not need to be discharged and that a copy of the Bankruptcy Court’s order could be recorded at the Registry of Deeds to resolve the issue. The homeowner was puzzled as to why the original attorney had not thought of this solution. Unfortunately, the original closing attorney was only able to work with one title insurance company, which was very conservative and did not allow the court order to clear the title issue. Fortunately, the homeowner suggested the buyer switch attorneys to complete the closing. The new closing attorney worked with three title insurance companies, two of which agreed with the proposed solution of recording the Bankruptcy Court order.

The Cost

After months of wasted time and extra money spent on mortgage payments and bills, the new buyer was finally able to move into the property. However, they had to accept a higher interest rate and payment than originally qualified for because the new closing attorney closed the transaction with one of their three title insurance companies. This situation highlights the importance of having options.

Taking Title from Estates in Massachusett

Aug 16, 2024 | Uncategorized

NAR Proposed Settlement of Class Action Lawsuit

Apr 10, 2024 | Uncategorized

By: Rhonda Duddy, Esq., Massachusetts and New Hampshire Underwriting Counsel, Stewart Title

The recently proposed NAR settlement comes after several years of litigation. The plaintiffs in the lawsuits are home sellers alleging that NAR and other organizations participated in a conspiracy to raise, fix, maintain, or stabilize real estate commissions in violation of Section 1 of the Sherman Act and corresponding state law.

In 2023 the jury awarded the plaintiffs $1.8 billion. Although NAR denies the allegations, they announced on March 15, 2024 that they wished to settle the matter rather than move forward with an appeal. Defendants Keller Williams, RE/MAX and Anywhere Real Estate settled earlier this year. The sole remaining defendant is Home Services of America.

The total monetary settlement amount that NAR has proposed is $418 million, broken down as follows:

Within 30 days following the filing of the first motion for preliminary approval of the Settlement Agreement, NAR will deposit $5 million into escrow; within 90 days following final approval of the Settlement Agreement, NAR will deposit $197 million into escrow; no later than 1 year after the initial $197 million payment, NAR will deposit $72 million in principal, and no later than 2 years after the initial $197 million NAR will deposit another $72 million in principal. No later than 3 years after the initial $197 million payment, NAR will deposit into escrow the remaining principal, along with interest on each of the installment payments. The obligation to make these installments will be evidenced by a promissory note.

The practice changes NAR has proposed to implement are primarily outlined in Paragraph 58 of the 108-page Settlement Agreement and include the following:

• Eliminate and prohibit any requirement by NAR, any Realtor® MLS, or Member Boards that listing brokers or sellers must make offers of compensation to buyer brokers or other buyer representatives and eliminate and prohibit any requirement that such offers, if made, must be blanket, unconditional, or unilateral;
• Prohibit Realtor® MLS participants, subscribers, other real estate brokers, other real estate agents, and their sellers from (a) making offers of compensation on the MLS to buyer brokers or other buyer representatives or disclosing on the MLS listing broker compensation or total broker compensation;
• Require each Realtor® MLS to eliminate all broker compensation fields on the MLS and prohibit the sharing of the offers of compensation to buyer brokers or other buyer representatives;
• Eliminate and prohibit any requirements conditioning participation or membership in a Realtor® MLS on offering or accepting offers of compensation to buyer brokers or other buyer representatives;
• Agree not to create, facilitate, or support any non-MLS mechanism for listing brokers or sellers to make offers of compensation to buyer brokers or other buyer representatives;
• Require that all Realtor® MLS participants working with a buyer enter into a written agreement (before the buyer tours any home) with the following provisions:
  1. The agreement must specify and conspicuously disclose the amount or rate of compensation it will receive or how this amount will be determined;
  2. The amount of compensation reflected must be objectively ascertainable and may not be open-ended; and
  3. Such a Realtor® or participant may not receive compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer.
• Prohibit Realtors® and Realtor® MLS participants from representing to a client or customer that their brokerage services are free or available at no cost to their clients, unless they will receive no financial compensation from any source for those services;
• Require Realtors® and Realtor® MLS participants acting for sellers to conspicuously disclose to sellers and obtain seller approval for any payment or offer of payment that the listing broker or seller will make to another broker, agent, or other representative acting for buyers (such disclosure must be in writing, provided in advance of any payment or agreement to pay to another broker acting for buyers and specify the amount or rate of any such payment);
• Require Realtors® and Realtor® MLS participants to disclose to prospective sellers and buyers in conspicuous language that broker commissions are not set by law and are fully negotiable;
• Require that Realtors® and Realtor® MLS participants and subscribers must not filter out or restrict MLS listings communicated to their customers or clients based on the existence or level of compensation offered to the buyer broker or other buyer representative assisting the buyer;
• Rescind or modify any existing rules that are inconsistent with the practice changes reflected in the Settlement Agreement; and
• Develop educational materials that reflect and are consistent with each provision in these practice changes and eliminate educational materials, if any, that are contrary to it.The Agreement also provides that the practice changes shall not prevent offers of compensation to buyer brokers or other buyer representatives off of the multiple listing service, nor will it prevent sellers from offering buyer concessions on a Realtor® MLS (e.g., buyer closing costs) so long as such concessions are not limited to or conditioned on the retention of or payment to a cooperating broker, buyer broker, or other buyer representative.

  The Settlement Agreement further states that these practice changes will terminate 7 years after the class notice date.

  The Settlement Agreement is still pending the federal court’s approval. We will continue to keep you updated as more information becomes available. If the Settlement Agreement is approved, the changes will go into effect within 60 days.

www.stewart.com

Use DepositLink to make a Deposit to Our Office

Nov 1, 2023 | Uncategorized

Fast, secure, self-serve digital payments.

DepositLink is a complete digital payments solution that eliminates paper check and wire transfers, reduces fraud risk, and keeps transactions moving quickly.

Use the image link below to make your Ernest Money Deposit (EMD) to our trust account.

Deposit link instructions  – Making a Payment through DepositLink Pay.

Stigmatized Property Disclosure Laws: A Close Look at Massachusetts

Jul 27, 2023 | Uncategorized

In the complex world of real estate, one of the most debated topics is the necessity of property disclosure from sellers to prospective buyers. This debate becomes even more intriguing when we delve into the specifics of what is perceived as ‘material facts’—information that could potentially influence a buyer’s decision to purchase a property. These facts can range from structural issues, pest infestations, to a property’s less tangible history, such as deaths or crimes that occurred on the premises.

While property disclosure laws vary by state, we will focus on Massachusetts and the particularities of its legislation—specifically focusing on the disclosure of deaths (natural or otherwise) and crimes on the property.

Understanding Massachusetts Law Chapter 93, Section 114

According to Massachusetts law, particularly Chapter 93, Section 114, sellers are not legally obligated to inform potential buyers if the property in question is “psychologically impacted.” More explicitly, this means if a property was the site of a felony, suicide, or homicide, or that the real property has been the site of an alleged parapsychological or supernatural phenomenon, the seller is not required to disclose this information.

However, it’s essential to differentiate between ‘mandatory disclosure’ and ‘honesty in disclosure.’ While the law doesn’t require sellers to proactively reveal this information, they are obligated to provide truthful responses if buyers directly question them about the property’s history. Misleading a buyer or outright lying in response to direct inquiries can potentially lead to legal repercussions.

Understanding the Rationale and its Implications

The rationale behind this law is to protect sellers from the societal stigmas attached to properties where untoward incidents occurred. In many cultures and societies, properties with a history of death or crime are considered ‘stigmatized’ or ‘tainted,’ and this perception can significantly affect their market value.

However, this law also implies a greater responsibility on the buyers. Potential home buyers in Massachusetts should be aware of this law and take it upon themselves to ask detailed and comprehensive questions about the property’s history.

The Importance of Honesty in Real Estate Transactions

Despite the specifics of the law, the principle of honesty remains a fundamental cornerstone of any real estate transaction. While sellers are not legally bound to disclose certain information, maintaining transparency can foster trust and pave the way for smoother transactions.

Moreover, sellers should consider the ethical implications of withholding such information. While the law might not require them to disclose, the moral question of whether or not to share such details remains a personal decision.

Conclusion

Navigating the intricacies of property disclosure laws can be challenging, but understanding the local laws is crucial for both sellers and buyers. For sellers, it’s about striking a balance between their legal rights and ethical responsibilities. For buyers, it’s about asking the right questions and ensuring they are fully aware of what they are investing in. Regardless of the legal nuances, honesty and transparency should always be the guiding principles in real estate transactions.