Legal Insider

Little Neck - Hard to Swallow. "Solution" Chokes Community.

Atty. Rich Kallman

The sale of Little Neck in Ipswich, MA to its cottage owners will forever be one of the watershed events in this town's long and storied history.  Regardless of your position with respect to the sale, we should all take a moment to recognize that life on Little Neck for its residents will never be the same.  Generations of families summered on that drumlin seemingly unaffected by the social or political issues of the day that swirled around the remainder of the town.  Those families were not the cause of the town's budget crises of the last ten years but those issues propelled them into a public spotlight that I am sure they all look forward to dimming as the divisiveness recedes into the past.

I was fortunate to represent several cottage owners in their purchase whose families had owned their cottages for generations.  The personal stories they recounted as I met with each of them helped me to appreciate the unique sense of community that embodied Little Neck more than if I had lived my whole life in Ipswich.  Many of the buyers were not happy or even relieved to purchase their "condominiums."  They were painfully aware that the fabric of their community had already been stretched by the legal proceedings of the last several years and perhaps torn forever. I imagine that many other purchasers that I did not meet are experiencing the same sense of apprehension.

The days of policing social behavior with a simple phone call to a neighbor or a discussion over a cup of coffee on the front porch will be threatened by a regime of rules and regulations foreign to those who grew up on Little Neck.  Is your neighbor parking on the "Common Area" or your "Limited Common Area?" Now, you can call one of the Trustees or if you wish to be more impersonal, file a complaint with the soon to be hired management company.  Is your neighbor's clothes line blocking your water views?  Just report them to the condominium association.  Matters as simple as nighttime lighting, taking in trash cans on a timely basis and mowing the grass are all regulated under the condominium rules that are now in force.

I, for one, hope that the terms "condominium," "rules and regulations", "common area" and "limited common area" remain as foreign to those lucky enough to enjoy living on Little Neck as they were just a few short months ago.  Only time will tell.  But, I am not optimistic.  Land ownership typically triggers increased expectations of control, privacy and a sense that everyone must adhere to the same rules even when no one really suffers from slight variations or reasonable exceptions.

As I represented each buyer at closing, I, too, felt a sense of loss for the community that was known as "Little Neck" that is now formally named "The Condominiums at Little Neck."  It's the end of an era and all Ipswich residents should recognize the loss.

Legal Insider Content Contributed by Attorney Richard M. Kallman. Contact Atty. Kallman at 978-356-2934 or rich@kallmanlaw.com.

Landlords Beware! Thinking of Buying a Multi-Family? Read This!

Could it get any worse in Massachusetts for residential landlords?  The answer is a loud YES.

Northeast Housing Court Judge David Kerman ruled in the recent case of Sheehan v. Weaver  a landlord is "strictly liable" for a drunk tenant's fall through a defective porch guardrail.  The Massachusetts Real Estate Law Blog cites this as "yet another case demonstrating Massachusetts' inhospitable legal environment towards residential landlords."  The case involved Sheehan, the drunken tenant, falling from the roof of a structure owned by Weaver consisting of three residential top units and one floor level commercial unit.  The landlord argued his structure should not be considered a commercial "building" within the meaning of the Building Code's strict liability provision as it was predominantly residential.     Judge Kerman disagreed ruling "[T]he structure in this case may well be at the outer margin of the class of structures that fall within the ambit of the term 'building' in the strict liability law," ..... "However, it is my opinion that the mixed residential-commercial four-unit non-owner-occupied structure in this case is 'commercial' and 'public' enough to fit within the term 'building' in section 51."   The landlord was faced with 100% strict liability; there was reduction for the drunken tenant's own negligence.

The trend in Massachusetts is grossly skewed to the right of tenants.  The courts are incredibly forgiving and insanely lenient to residential tenants.  The bottom line is - LANDLORDS BEWARE!

Legal Insider contributed by Atty. Judy Field

Judy A. Field, Esq. Law Office of Judy A. Field, P.C. 900 Cummings Center, Suite 306T Beverly, MA 01915 landline (978) 922-0330 cell (978) 500-9530 fax (978) 922-0661 email: judy@judyafieldlaw.com

Justice or A Joke? You Decide!

After wrongful foreclosure practices came to light in October 2010, attorneys general from all 50 states joined forces together with the federal government to punish five large financial institutions - Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial - for mortgage related misconduct, including "robo-signing" and failing to provide mortgage modifications to eligible homeowners.  It now appears that a $25 billion settlement is near, but whether it adequately punishes the offending lenders or lets them off the hook is a matter of considerable debate. The Wall Street Journal reports on Why a New Refinance Program Faces Long Odds - click to read.

While all of the details of the settlement have yet to be released, it appears the bulk of the money ($20 billion) would be used for principal reduction and refinancing programs for borrowers in danger of foreclosure, with the remaining $5 billion going to those directly affected by the foreclosure violations, with the wrongfully foreclosed homeowners receiving an average of $1,800. (Yes, folks, I said $1,800!)  Estimates are that the $20 billion would reduce the average mortgage balance of approximately 100,000 homeowners whose homes are under water by $20,000.  However, there are approximately 2.3 million homes in the foreclosure pipeline that are under water by an average of $60,000, so opponents of the settlement argue that the proposal isn't nearly punitive enough.  When you consider that taxpayers bailed out these same lenders to the tune of $600 billion, you can certainly understand their position.  But, we are in an election year, so President Obama clearly wants to announce a settlement to appeal to his supporters as a champion of consumers. The Wall Street Journal gives us answers to six questions on Obama's Mortgage Refinance Proposal - click here!

Assuming the federal government announces a settlement soon, the major question is whether all 50 attorneys general will approve the settlement, thereby effectively capping the liability that these five major lenders face from their deceptive lending and mortgage practices.  Massachusetts and California are two of the states threatening to refuse to accept the settlement.  For those many citizens that believe the federal government was responsible for the lack of oversight that led to the improper lending practices in the first place and then assisted those lenders with a bailout at the taxpayers' expense, the federal government is again letting the lenders off the hook with a settlement that will hardly impact them. And speaking of improper practices, click here to read about how JP Morgan embarrassed themselves when they wrongly foreclosed on 14 active military families.

Is it still business as usual between lenders and the federal government? That's a question each of us will have to decide for ourselves. Meanwhile the big banks are banking on spending less...click to read.

What's your take on the foreclosure crisis? Do you think Obama's refinance program could work? Discuss!

Legal Insider Content Contributed by Attorney Richard M. Kallman. Contact Atty. Kallman at 978-356-2934 rich@kallmanlaw.com.

Legal Insider - The Wake of Irene

Hurricane Irene has left her mark - trees have fallen- now what?

In this day and age of our litigious society and our complete neglect to remain friendly with our neighbors, the issue of trees has become more and more problematic.  If we lived in a perfect world and neighbors actually got along, a simple conversation from one neighbor to another noting a diseased or decayed tree would be remedied by the property owner wherein the tree is located acknowledging the risk and removing the tree.  If the property owner chooses to ignore the risk, a decayed tree on their property poses the risk that he or she will be exposed to liability.  You as a neighbor and abutting land owner do have the right to remove limbs and branches so much as they overhang on your property.    The other remedy is unfortunately a court action wherein you would have to prove the tree poses a danger to you and interferes with your use and enjoyment of your property and request the court order the removal. 

If a neighbor's healthy tree simply falls on your property during a major wind storm your neighbor is not liable as this is considered an "Act of God".  You in turn will have to make a claim under your own homeowners' insurance policy.

Someone once said to me, "The best neighbor is a 6-foot fence." I personally prefer Judy's recommendation below.

The bottom line, do not ignore your trees nor your abutting neighbor's trees and keep the neighborly lines of communication open. 

 

Judy A. Field, Esq. Law Office of Judy A. Field, P.C. 900 Cummings Center, Suite 306T Beverly, MA 01915 landline (978) 922-0330 cell (978) 500-9530 fax (978) 922-0661 email: judy@judyafieldlaw.com

Witness Closings - Convenient or Calamitous?

Atty. Rich Kallman

 

          Over the last several years, many Massachusetts homeowners may have experienced a real estate closing unlike those that they typically were party to in the past.  These closings were conducted either at their home by an attorney or at a bank branch by non-attorney bank personnel.  The agent for the lender simply witnessed the documents and notarized the homeowners' signatures.

            While the closing process may have been convenient for the borrowers, the practice was challenged legally by organizations that supported real estate closing attorneys.  In their view, conducting real estate closings involved the "practice of law" that could not be delegated to witnesses unfamiliar with the entire transaction.

            The matter is still being litigated, but the real estate bar won a crucial victory with the recent decision of Real Estate Broker Association (REBA) v. National Real Estate Information Services (NREIS).  The Massachusetts Supreme Judicial Court ruled that attorneys must be present for closings and take an active role throughout the entire transaction.  The Court made no distinction between purchases and refinances.

            While many of you may think that attorneys are simply fighting to protect their pocketbooks at the expense of borrower's convenience, I couldn't disagree more.  I have conducted real estate closings for more than 25 years and can attest that the legal fee that a closing attorney gets from a lender today is less than what it was 25 years ago!  The fierce national competition that exists in the mortgage financing industry has forced all lenders to reduce fees to compete.  Lenders have required their closing attorneys to accept lower fees to keep working for that lender.

            Consumers definitely benefit from attorneys handling real estate closings as opposed to "witness" closings.  A witness closer will not answer any of your questions concerning the loan documents as he is paid minimally to witness only your signature.  In addition, he comes to the closing without any knowledge of the title to the property and cannot answer any questions regarding those matters.  Last, as a closing attorney, I frequently encounter undischarged mortgages that were paid off as part of a "witness" refinance.  In those instances, I have no attorney that I can contact to obtain the discharge since the only information available is the notary's name on the current mortgage and that person's position is that he was simply a witness and not responsible for any other part of the process. 

            While the litigation is still on-going, I believe strongly that having attorneys handle all aspects of a real estate closing provides quality and accountability to the closing process.  The lack of accountability associated with witness closings is a detriment to homeowners.

Legal Insider Content Contributed by Attorney Richard M. Kallman. Contact Atty. Kallman at 978-356-2934 or rich@kallmanlaw.com.

Was Your Home Built Prior to 1978? NEW Regulation You NEED to Know.

Do you own a home that was built prior to 1978?  Are you thinking about hiring a professional to conduct renovation, repair or painting activities in or around your home?   Under the Residential Lead-Based Hazard Reduction Act of 1992, the Environmental Protection Agency (EPA) developed strict regulations regarding renovation, repair and painting activities in single and multi-family homes built prior to 1978.  This new regulation effective on April 23, 2010 was enacted to better prevent lead paint poisoning by reducing exposure to dust containing lead paint.  This regulation requires contractors, renovators and property managers to receive training and certification in the EPA's new lead-based paint work practices.  There is a very low threshold for the applicability of the new regulation. Any home improvement project disturbing more than 6 interior square feet of paint or 20 exterior square feet of paint requires compliance with the new regulations.  If you are hiring a professional to conduct renovation, repair and/or painting work in your home, make sure to request a copy of their Certification prior to hiring them for the job.

Nothing in the new regulations requires owners to evaluate existing properties for lead or to have existing lead removed but it is important for Massachusetts property owners to note a rental property owner can be held legally responsible for a lead poisoned child if she/he is poisoned by lead hazards where the child lives.  An owner cannot avoid liability by asking a tenant to sign an agreement accepting the presence of lease and cannot evict or refuse to rent to a family with children under six if there is lead paint in the home.  Discrimination is against the law and carries penalties.  

Atty. Judy Field

Legal Insider Content Contributed by Attorney Judy A. Field.

 

Contact Atty. Field at judy@judyafieldlaw.com.

Everything You Ever Wanted to Know (or didn't want to know) About Title V

Atty. Rich Kallman

In Massachusetts, the law governing septic system installation and maintenance is known as Title V.  Whenever a homeowner is going to be selling his home, he will need to get what is called a "Title V inspection" done.

In order to close on a property in Massachusetts, you will need to have a passing Title V.

If a Title V test reveals that the septic system has failed, a seller has two options in order to get to the closing table.  He can either replace the system prior to closing, or he can put an appropriate amount of money in escrow guaranteeing the system will be fixed.  A third option could be to get the buyer to pay for the septic system, although this is less likely to occur. A buyer who agrees to assume the cost of replacing the septic system will factor the cost of replacement into his bid price for the property.

Who is responsible when the septic system fails and needs to be replaced, the buyer or the seller?The owner or operator of the system is the legally responsible party required to upgrade a failing system.  Prior to transfer of the property, this is typically the seller.  Often, the buyer and seller work out the financial issues as part of the sale of the property.  Title V does not require that a system be in passing condition prior to the sale, but most lenders will not issue a mortgage until the failing system is upgraded or funds to perform the upgrade are escrowed.

How long is an inspection valid for?Inspections required in connection with a property transfer generally are good for two years.  If a property is sold more than once in the two-year period, the single inspection is valid for all transfers.

How do I have my system inspected if I am selling the property in the middle of the winter?If weather conditions prevent an inspection before a sale, Title V allows the inspection to be done up to six months afterwards, provided that the seller notifies the buyer in writing of the need to complete the inspection. (However, no lender will make a loan secured by a property if there is no information on the status of the septic system so this scenario is unlikely to occur).

I'm selling my home and the septic system has failed the Title V inspection.  If I decide not to sell as a result, am I still obligated to repair the system?Yes.  Once an official inspection is performed on a system, the results must be submitted to the Board of Health within 30 days.  Whether or not the homeowner decides to sell, a failed system typically must be upgraded within two years, unless the local Board of Health or Massachusetts Department of Environmental Protection (MassDEP) authorizes an alternative schedule.

For example, the Board of Health may require a shorter timeline in the case of an imminent health hazard, or under certain circumstances may allow use of the system for up to five years under an enforceable schedule for repair, replacement, or connection to a sewer or shared system.

Who is responsible if a system passes inspection before a property transfer, but fails soon after that?The system inspector is responsible for determining that the system meets or fails Title V standards as of the date of the inspection.  The inspection is not a guarantee that the system will continue to function adequately and is not a guarantee that it will not fail at a later date.  If a system fails shortly after a sale, the buyer may have legal recourse, but it may be very hard to prove that the system was in failure at the time of the inspection.  If an improper inspection was done, MassDEP can take enforcement against an inspector, but property owners must pursue claims against the inspector in court.

What is a voluntary inspection?Even if an inspection is not required, a system owner may have a voluntary assessment of the condition and operability of the system performed.  Results of voluntary inspections do not have to be submitted to the Board of Health of MassDEP and do not trigger the repair requirement in the event of a failure. For many homeowners, a voluntary inspection can be helpful as it will let homeowners know that they have to budget for replacement when they actually decide to sell their house.

Are there special inspection requirements for condominiums?Yes.  Condominiums with five or more units must be inspected once every three years.  Those with four or fewer units must be inspected every three years, or within two years prior to the sale of one of the units.

The condominium association is responsible for the inspection, maintenance, and upgrade of the system or systems serving the units, unless the governing documents of the association provide otherwise.

Legal Insider Content Contributed by Attorney Richard M. Kallman. Contact Atty. Kallman at 978-356-2934 or rich@kallmanlaw.com.

Legal Insider - Condominiums...Buyer Beware!

Atty. Judy Field

The mortgage crunch hit condominiums hard with the recent changes to the Federal National Mortgage Association Selling Guide, including some alterations that went into effect March 1, 2011.

Federal National Mortgage Association, also known as Fannie Mae, is a government-backed mortgage provider, a private corporation sponsored by the government that buys mortgage from banks and financial institutions and guarantees roughly a quarter of the US home loan market.  In my experiences, roughly 70 percent of recent buyers are applying for Fannie Mae mortgages so if a condominium unit is not Fannie Mae compliant then it will kill a deal for the majority of current buyers.    

Current Fannie Mae guidelines read: "Any project (condo, co-op, or planned unit development) for which the homeowners association or co-op corporation is named as a party to pending litigation, or for which the project sponsor or developer is named as a party to pending litigation that relates to safety, structural soundness, habitability or functional use of the project, remains ineligible."

What does this mean?  If a unit owner in a condominium complex has some personal beef with the condominium association or developer because his heating doesn't work or the plumbing is leaking and sues, that will affect a potential buyer as the unit will not be eligible for Fannie Mae financing. 

Any upset condominium owner can sue the condominium association or the developer and this unfortunately triggers a Fannie Mae issue.  It is unfortunate all condominium unit owners do not realize the "ripple" effect of lawsuits.

My advice for Realtors and condo buyers is to:

  1. Have the seller/listing agent disclose the name of the condominium management company and call them directly to question whether the association is involved in any type of pending litigation which could trigger the Fannie Mae guidelines.
  2. Get this information prior to the inspection, because it's a deal killer and you do not want to be out-of-pocket for inspection costs.
  3. Work with an experienced real estate attorney, I always put a provision in my purchase and sale agreement rider in which the seller represents there is no pending litigation involving the condo.

 Legal Insider Content Contributed by Attorney Judy A. Field. Contact Atty. Field at judy@judyafieldlaw.com.

Legal Insider - How Will the Fannie Mae/Freddie Mac Bailout Effect You?

Atty. Rich Kallman

As the billions of dollars that taxpayers paid to bail out private companies such as AIG, General Motors, Chrysler, Bank of America and Citigroup after the 2008 sub-prime mortgage/stock market crisis are repaid, there is another, even larger public bailout that doesn't get nearly the publicity it merits.  It is the bailout of Fannie Mae and Freddie Mac that is ongoing and will only get more expensive.  To date, the two private companies have cost American taxpayers over $150 billion and the estimate is that the figure will double to $300 billion. OUCH!

The United States Treasury Department has been studying reforms to Fannie Mae and Freddie Mac since the height of the sub-prime mortgage crisis. Read NPR's series on the subject.  The Treasury's proposals were released just a few weeks ago and Congress is expected to act on them in the next few months.  The most aggressive reform would phase out Fannie Mae and Freddie Mac entirely over five years.  Without these mortgage giants to buy mortgage loans, the housing industry would have to rely exclusively on private lenders to finance the $12 trillion mortgage market. Mortgage rates, particularly for fixed rate loans, would certainly increase without the stabilizing effect of Fannie Mae and Freddie Mac, which currently own or guarantee more than 50% of all mortgages in the United States.  Lesser reforms have also been proposed that will increase the cost of borrowing.  Additional borrower fees or taxpayer-financed insurance are distinct possibilities to protect against a future financial crisis like the sub-prime meltdown that occurred in 2008.  These extra fees are expected to result in interest rate increases for home mortgage loans.

Most Washington insiders believe politicians don't have the stomach to take on true reform of Fannie Mae and Freddie Mac, since they were among the largest monetary contributors to federal lawmakers and one of the best organized lobbying forces in Washington.  As the housing market slowly recovers, the firms' strengths will be restored as will their political clout.

The key for potential homeowners is whether Congress enacts the more modest reforms or legislates the entire phase-out of Fannie Mae and Freddie Mac, housing analysts agree that the period of historic low 30-year fixed rate mortgages is drawing to a rapid close.  These pending reforms, along with a real estate market that has reached bottom, signify that this spring, more than ever, is the time for first-time homebuyers to jump into the market or for existing homeowners to trade up to their dream house.

Attorney Kallman presents a compelling answer to the question I'm hearing most often these days,  "Is now a good time to buy?"  You decide.

Legal Insider Content Contributed by Attorney Richard M. Kallman. Contact Atty. Kallman at 978-356-2934 or rich@kallmanlaw.com.

Legal Insider - The NEW Massachusetts Homestead Law

Atty. Judy Field

Did you know about the Homestead Law? This law effects every homeowner and these changes are effective in just a few days.

For a thirty-five dollar filing fee, Massachusetts homeowners have the ability to protect their principle residence from the claims of certain creditors up to $500,000.00.  Until recently, this protection was only available to homeowners who prepared and filed a "Homestead Declaration" with the Registry of Deeds.  On December 16, 2010, Governor Patrick signed into law the most extensive changes to our homestead law in more than a generation ("The Act"). The Act (Chapter 395 of the Acts of 2010, rewriting M.G.L.c. 188) allows homeowners to choose between Automatic Homesteads, created without a declaration, and Declared Homesteads, available only when the homestead declaration is recorded.  It is important to stress the Automatic Homesteads allow protection up to only $125,000.00 versus the Declared Homesteads allowing protection up to $500,000.00. Key difference!

The new law effective March 16, 2011 amends and clarifies the Homestead Act in some of the following ways:

  • All Massachusetts homeowners will receive an automatic homestead exemption of $125,000 for protection against certain creditor claims on their principal residence, without the need to prepare or record a declaration.
  • All Massachusetts homeowners having "declared homestead exemption" by filing a declaration of homestead at the registry of deeds will continue to be eligible for the $500,000.00 protection.
  • Same-sex married couples have the same rights and protections as are afforded all "married spouses" under the Homestead Act.
  • Homesteads protection will be available for 2-4 family homes.
  • Homesteads protection will be available for homes in trust  if a beneficiary of a trust that takes title to a home intends to occupy the home as his/her principal place of residence, the protection under the statute extends to the beneficiary (although the trust beneficiary must be identified in the homestead declaration as the beneficiary of the homestead).
  • If a single homeowner subsequently marries, the spouse becomes entitled to the benefits of the homestead automatically. 
  • Homesteads now pass on to the surviving spouse and children who live in the home.  Again, married same-sex couples are considered "spouses" for the purposes of the Homestead Act.
  • You do not have to re-file a homestead after a refinance.  Under the new law, homesteads are automatically subordinate to mortgages, and lenders are specifically prohibited from having borrowers waive or release a homestead.
  • The Act imposes a duty on closing attorneys or settlement agents in all mortgage transactions to provide the mortgagor with the notice of the right to declare a homestead.

 Legal Insider Content Contributed by Attorney Judy A. Field. Contact Atty. Field at judy@judyafieldlaw.com.