Information
for Buyers/Borrowers
As you may know, our office represents your Lender
in matters relating to your request for a mortgage loan in order
to purchase the above-referenced real estate. We have commenced an
examination of the title and have ordered necessary information to
complete the closing.
When these matters are completed and reviewed
by our staff we will notify you to arrange a time to close the loan.
We will also advise you of any funds you may need to complete the
transaction. You must bring CERTIFIED or BANK
CASHIER’S CHECKS made payable to The Law
Office of Lloyd H. Teitelbaum for
these funds. In addition, you must bring a valid drivers
license or passport with you to closing for proper identification. We
cannot close your transaction without this. Please do not forget
as this is very important.
Please review the Lender’s commitment
letter carefully. If special
conditions are required, they must be met to the satisfaction of
your Lender PRIOR to closing. Also, please review the enclosed instructions
and forms carefully with respect to other requirements that must
be met prior to closing. Respond to each item applicable to your
situation. You may visit our web site for
directions to our offices as well more information regarding matters
discussed in this letter. If you have any questions or comments relative
to these matters please contact us at lteitelbaum@lhtlaw.com.
REPRESENTING THE INTERESTS OF THE BUYER
IN REAL ESTATE TRANSACTIONS
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 your 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 offer to purchase and 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.
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WHAT YOU SHOULD KNOW ABOUT YOUR CLOSING (BUYERS/BORROWERS)
1. INSURANCE. (a) At
the time of closing, please bring with you a homeowner fire and extended
coverage insurance policy or binder for such insurance either in
an amount at least equal to the total of all new mortgages on the
property or 100% of the replacement cost of all insurable buildings
and other improvements on the land. IF YOU ARE GOING TO RELY ON THE
100% REPLACEMENT COST AMOUNT AS SUFFICIENT INSURANCE, THEN THE POLICY
OR BINDER MUST STATE THAT 100% REPLACEMENT COST IS IN EFFECT. The
insurance policy or binder must name all of the persons who will
hold title to the property. The mortgage clause adding the mortgagee’s
insurable interest to all policies MUST BE WORDED in accordance with
the instructions listed in your commitment letter issued by your lender.
Your insurance agent MUST fax or deliver
to our office a copy of a binder for such insurance along with a
receipt showing that the first year’s premium is paid in full,
at least three (3) business days prior to closing. Please have them
fax it to us at
(508) 655-9805.
2. FLOOD
INSURANCE. If the premises is located within a specially designated federal
flood hazard area then flood insurance is a mandatory requirement and you must
provide a flood insurance policy together with a paid receipt for the full
first year’s premium at or before the closing. Please note that if the
premises is located within Zone B, flood insurance is not required.
3. RENT
LOSS INSURANCE. If this transaction involves a loan on investment premises
or a 2-4 family dwelling then rent loss insurance may be required and an appropriate
binder to that effect will be required at or prior to closing. You should
check with the Bank for applicability of rent loss insurance to your loan.
4. TITLE
INSURANCE. The lender requires that they be provided with a
lender’s
title insurance policy (loan policy) to protect their interest in
your property up to the amount of the mortgage. While the premium
for the loan policy is included in your closing costs, it does not
protect you. Your ownership
interests are insured only by an owner’s title insurance policy
(owner’s
policy). While the lender’s coverage under the loan policy
decreases as the mortgage is paid down and terminates when the final
payment is made, your owner’s policy remains in effect for
as long as you and your heirs own the property. The owner’s
policy is available for a one-time premium and at a discounted rate
if purchased simultaneously with the loan policy at the time of closing.
The owner’s policy provides coverage for numerous matters which are not covered by the standard attorney’s certification of record title and which are not discoverable by searching the land records. Typical examples of such matters include forged documents, the incapacity of a grantor, undisclosed or missing heirs, missing signatures, mistakes in recording, unknown creditors and problems involving access to the land. The best owner’s policy now available is known as the Eagle policy, which provides additional protection for problems such as zoning and building permit violations, restrictive covenant violations, encroachments and defects in title.
For your information we enclose a copy of a brochure citing the reasons for our recommendation to purchase Owners Title Insurance. You may also visit our web site for a more detailed explanation of the need for and benefits of having an Owners Title Insurance Policy. Because we believe that obtaining an Eagle Owners Title Insurance Policy is in your best interest we will plan to issue same and include the additional premium cost in the settlement figure you will bring to closing unless you advise us to the contrary.
5. CONDOMINIUM
INSURANCE. If the mortgage involves a condominium unit, we will require
a Certificate of Insurance from the insurance carrier for the condominium naming
you and the Association and identifying the unit you are purchasing. The
language naming the Bank must be in the form set forth in Paragraph 1 above. Please
note that you may be required to purchase additional insurance if the insurance
company does not provide 100% replacement cost coverage.
6. OTHER
CONDOMINIUM REQUIREMENTS. A “6 (d)” certificate stating that
there are no unpaid common charges to the condominium association as of the
date of closing must be issued and sent to us prior to closing. This
certificate is obtained from the trustees or managers of the condominium and
must be in the form prescribed by law. You should be sure that the seller procures
such a document before the closing.
7. MANNER
IN WHICH TITLE WILL BE HELD. You will find enclosed an explanation of
some options on how to hold title to real estate. Please advise our office
or fill out and return the enclosed form indicating how you would like to take
title to the property and fax it back to us. This information should
be provided to us as quickly as possible since many documents which we prepare
require this knowledge.
8. OUR
CERTIFICATION OF TITLE. The following matters apply only if the transaction
involves a purchase of real estate with a dwelling designed to be occupied
by not more than four families and occupied in whole or in part by one or more
of you. Please find an attachment to this letter relative to the examination
of title and our certification pursuant to Massachusetts General Laws, Chapter
93, Section 70. We are required to certify to you that the title to the premises
meets the standard established by that law. Our certification to
you should not be construed as establishing an attorney/client relationship
between you and our office. The services we render are only on behalf of the
mortgage lender unless other arrangements are made with our office, and we
cannot advise or counsel you relative to the transaction. If you wish
to obtain legal advice regarding the quality of the title or with regard to
some other aspect of the transaction, you should retain independent counsel.
9. SMOKE DETECTOR AND CARBON MONOXIDE DETECTOR COMPLIANCE. We call your attention to the provisions of Massachusetts General Laws, Chapter 148, Section 26F, F 1/2 and 527 CMR 31.00, et. seq. You may be required to execute a certification at the closing that you have inspected the installation of the smoke and carbon monoxide detectors and are satisfied as to compliance with this law. You should contact the sellers and insure that they have obtained, and will bring with them, a current certification from the city or town fire department relative to the installation of smoke and carbon monoxide detectors. The foregoing may not apply in certain commercial transactions. If you are unsure of the applicability of this law, please check with your counsel or contact our office.
10. WATER,
SEWER AND ELECTRICITY. You should ask the sellers to obtain a final reading
of the water meter so that all outstanding water and sewer bills may be taken
care of at the closing. If you are purchasing a condominium unit, it
is likely that water and sewer charges are included in the monthly condominium
fee. In that case, a final water and sewer bill is not required. If
electricity is provided by a municipal light plant, the sellers should
obtain a final electric reading.
11. HOMESTEAD
DECLARATION. Our office can prepare a Homestead Declaration for you for this transaction if the home you are purchasing will be your primary residence. Under Massachusetts Law an owner of a home who intends to occupy it as their principal residence can protect a portion of the equity in their home by merely filing a Declaration of Homestead in the Registry of Deeds where the property is located. The cost for this service is $110 which includes the cost to prepare the Declaration and the recording fee. Please let us know if you want us to prepare and record this Declaration.
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OUR FIRM’S PRIVACY POLICY NOTICE
This notice is provided to you pursuant to the Privacy of Consumer
Financial Information Act and the Federal Trade Commission's implementing
regulation thereunder, 16 CFR Part 313.
1. We collect nonpublic
personal information about you from the following sources:
Information we receive from you on applications or other forms either
directly from you or from lenders and their affiliates or agents;
2. We
do not disclose any nonpublic personal information about our clients, borrowers,
or sellers to anyone, except as is necessary in the mortgage loan
transaction as may be necessary to effectuate the transaction with
the lender that you have requested; to prevent fraud or unauthorized
transactions; as otherwise required or permitted by law.
3. We restrict access
to nonpublic personal information about you to those clients, lenders,
third parties and employees who need to know that information to provide
the requested settlement services to you. We maintain physical,
electronic, and procedural safeguards that comply with federal regulations
to guard your nonpublic personal information.
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WAYS TO HOLD TITLE IN MASSACHUSETTS
THE FOLLOWING INFORMATION IS INTENDED ONLY TO GIVE A BRIEF DESCRIPTION
OF THE THREE COMMON WAYS OF HOLDING TITLE AND IS NOT PROVIDED 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 SEEK LEGAL COUNSEL FROM YOUR ATTORNEY OR RETAIN AN ATTORNEY
FOR ADVICE IN THESE MATTERS.
In order to properly prepare the mortgage
documents we require information from you as to how you intend to
take title to the real estate.
The three most common ways two or more persons
may hold title to real estate are: TENANTS IN COMMON, JOINT
TENANTS or as TENANTS BY THE ENTIRETY (tenants by the entirety is
only available for married couples)
What Happens Upon Death
1. 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 and so the deceased persons interest in the property
passes to his or her heirs and not to the other owner(s).
2. When
the title is held a Joint Tenants or as Tenants by the Entirety, the title
automatically passes to the surviving owner(s) without the necessity to probate
the estate of the deceased.
3. In
any case of death of an owner of real estate, whether Tenants in Common, Joint
Tenants or Tenants by the Entirety, it may be necessary to procure a release
of the estate tax or taxes which may, by statute, become a lien on the property.
Who
has Control and Management?
1. When
title is held as Tenants in Common or Joint Tenants, the rents, control, management
and possession of the property is in the owners 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 with the others.
2. Under
the provisions of M.G.L. c.209, section 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. Chapter 209 further
provides:
"...The
interest of a debtor spouse in property held as tenants by the entirety shall
not be subject to seizure or execution by a creditor of such debtor spouse
so long as such property is the principal residence of the non-debtor spouse;
provided, however, both spouses shall be liable jointly or severally for debts
incurred on account of necessaries furnished to either spouse or to a member
of their family.”
Neither the husband nor the wife can divest themselves of their interest
in the property to any one except to each other, so long as the marriage
lasts, without the signature of both."
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OUR CERTIFICATION OF TITLE TO BUYERS OF REAL
ESTATE
Our duties on behalf of the Lender require that
we examine the title to the premises referenced above. In addition,
under the provisions of Massachusetts General Laws, Chapter 93, Section
70 we will also certify title to the premises you are buying. This
statute states in part:
"In connection with the granting of any loan
or credit to be secured by a purchase money first mortgage on real
estate improved with a dwelling designed to be occupied or to be
occupied in whole or in part by the mortgagor, the mortgagor is required
or agrees to pay or be responsible for any fee or expense charged
or incurred by an attorney acting for or on behalf of the mortgagee
in connection with the rendering of a certification of title to the
mortgaged premises such certification shall be referenced to the
mortgagor and to the mortgagee"
The statute further prescribes that:
"The certification
shall include a statement that at the time of recording the said
mortgage, the mortgagor holds good and sufficient record title to
the mortgaged premises free from all encumbrances, and shall enumerate
exceptions thereto. The certification shall
further include a statement that the mortgagee holds a good and sufficient
record first mortgage to the property, subject only to the matters
excepted by said certification."
Because the scope of our examination is confined
to matters of record at the appropriate Registry of Deeds and Registry
of Probate, our certification will specifically exclude the following
matters:
1. Building and zoning laws for (Property City or Town) and other
governmental statutes and regulations which have not been examined;
2. All applicable health, environmental and hazardous waste rules, regulations,
laws and ordinances of the municipality, state and federal jurisdiction in which the premises
is located;
3. Such taxes, assessments or municipal charges that may be due and payable
and not shown on the Certificate of Municipal Liens or on the record at the Registry of Deeds
or from information provided by the municipality.
4. Persons in possession;
5. Any lien or claim, any other tax liability, or any matter of bankruptcy or
insolvency that may not appear in the indices of Registry of Deeds in which the
said premises are located;
6. Any set of facts or errors in description not apparent on the record that
would be shown by any accurate on-site survey or which a physical inspection
of the premises may disclose;
7. Matters not of record; forgeries; errors and omissions in the records and
indices of the Registry of Deeds and relevant Registries of Probate; lack of
sufficient capacity or competency of grantors;
Additionally we will note for exception and your attention significant
easements, restrictions and other material matters of record.
This disclosure is made in advance of the closing to apprise you of
the statutory language regarding certification of title and the scope
of our examination of the title to the premises you are purchasing
as well as the limitations of same. Please be aware that a policy of
Owners Title Insurance would cover issues related to some of the exceptions
noted above. Please call us if you have any questions.
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CLOSING ATTORNEYS AND THE CLOSING PROCESS
— WHAT YOU SHOULD KNOW
Your application to your Lender for a home mortgage loan leads you inevitably to the closing attorney’s office. You undoubtedly have questions as to what the role of the closing attorney is, what tasks the closing attorney will perform and what will take place at the closing. First, understand that the closing attorney represents the interests of the lender, in this case your Lender. If your loan is a standard secondary market type loan the loan transaction and loan documentation are uniform throughout the state.
At our firm it has always been our practice to
be as helpful as we can to assist borrowers in the mortgage loan
transaction. Sometimes issues arise regarding the record title to
a property. If there are title issues, problems in a sale transaction,
or issues involving inaccuracies, we endeavor to keep the borrower
informed of all relevant issues. When possible, we seek to resolve
title issues and disputes, many times without any additional fees.
This usually insures that the loan and, if applicable, the sale of
the property being mortgaged, proceeds forward to close with the
borrowers being satisfied with the result.
The closing fees quoted to you by your Lender include
a variety of items. Those which involve our office include the following
and are standard transactional items for representing the lender
in residential loan transactions:
Legal Fee — Includes ordering and
obtaining a title examination from title examiners at the various
Registry of Deeds, title review, obtaining municipal lien information & survey
information, loan document preparation, title certification ( if
a purchase transaction ), communications with borrowers, sellers,
broker, etc., conducting the closing, final rundown of title, recording
of documents, payoff of liens and sundry other matters relating
to the loan closing.
Title Abstract — Includes
the physical review of the title to your property in the Registries
of Deeds and Probate, including bankruptcy and tax matters where
available.
Mortgage Survey Plan — Sometimes referred to as a plot
plan, this is a tape measure survey of the land to be mortgaged in
order to determine that it was not in violation of zoning when constructed
and that no buildings or improvements encroach upon the property
or over its lot lines. We may not have been instructed by your lender
to order such a plan for this transaction. However, we do recommend
that one be obtained in a purchase transaction and in such instances
we will obtain one in any event for your protection. In a Condominium
transaction we will generally not obtain such a plan.
Municipal Lien Certificate — Obtained from the city
or town where the property lies, this document shows all outstanding
tax and utility liens.
Title Insurance — The lender requires a loan policy
of title insurance for the loan amount in order to protect their
interests from issues relating to the title to the property that
could not be determined from an examination of the record of the
title. In a purchase transaction an owners policy can be purchased
at the same time at substantial savings over the rate if not issued
simultaneously with the loan policy. Owners title insurance is highly
recommended by our office. We can supply you with information regarding
this insurance and the cost.
Recording Costs/Courier & Certified Copy Fee — These
include the cost to courier the mortgage payoff and loan documentation
for safe and timely delivery, to record the mortgage and other transactional
documents and obtaining Registry certified copies that may be required
in certain transactions.
This is a list of some of the items that you may be asked to pay
for in a normal residential loan transaction. In some instances your
Lender may pay some or all of these costs if your loan program so
prescribes. This explanation should serve as a brief overview of
the items described above. For a further explanation please contact
our office. We look forward to seeing you at your closing.
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TITLE INSURANCE AND IT’S IMPORTANCE
IN YOUR TRANSACTION
Real estate title insurance very simply is an insured
statement of the conditions of one's title or ownership rights to
a certain piece of real estate. The policy guarantees that the property
being purchased or mortgaged is free from undisclosed liens or rights
and it guarantees additionally that any confusion as to rights of
ownership will be resolved in favor of the party owning the real
estate or the title insurance company will be liable for loss in
value to the policyholder up to the policy limits.
A buyer purchasing
real estate is offered the opportunity to purchase an owner's policy
of title insurance by the settlement agent, attorney, escrow company
or title agent conducting the real estate closing. For example, you
decide to purchase a house in Boston and are obtaining a mortgage
to help you finance the purchase from a bank or mortgage company.
That institution will require an examination of the title to the
property and have the party reviewing the title issue to them a lender's
policy of title insurance insuring that the property is or will be
owned by the purchaser and that there are no defects, liens or encumbrances
on the property which would adversely affect the marketability of
its mortgage.
Since the settlement agent, attorney, escrow agent
or title agent is already issuing a lender's policy of title insurance
the buyer has the opportunity at that time to obtain an owner's policy
of title insurance at a cost substantially less than the buyer would
pay if the policy was not written simultaneously with the lender's
policy.
The owner's policy of title insurance insures that
the owner has good marketable title to the property free of any encumbrances
or liens that would adversely affect the property, except those made
known to the buyer, and insures to the owner that if any such liens,
encumbrances, defects or other title problems become known the title
insurer will defend the buyer's title to the property.
In many instances we are asked whether or not title
insurance is necessary or advisable for the owner to purchase. We
recommend the purchase of the title insurance for some very simple
reasons. First, the premium for purchase of the title insurance policy
is a one time charge. Since the purchaser is usually borrowing money
to finance the purchase, the majority of the cost of the title insurance
policy that the owner would receive has been paid through the premiums
for the lender's policy which is required by the loan. Usually for
a few hundred dollars or less the owner can insure against a variety
of problems which could occur in the future. These items include
forged documents in the chain of title, signatures of mentally incompetent
persons or minors which are unknown to the party reviewing the title,
mistakes or inaccuracies in recording of legal documents of title
at the appropriate place or recording or registration of title, fraud
in the execution or in the handling of the recording or indexing
of recorded documents, undisclosed or missing heirs, fraud in the
execution or in the handling of a transaction in the prior chain
of title, invalid divorces or misrepresentation of marital status
of the parties signing the documents, and most importantly clerical
errors in the public records and claims of parties unknown because
their claims have not been filed in any indices of public record.
The enhanced policies such as First American’s Eagle Policy
go well beyond these simple coverage and provide coverage for a host
of issues that can affect property both prior to and after you purchase
it.
Even though the buyer may be asked to pay for the
lender's title insurance protection, the lender's policy of title
insurance does not protect the buyer and a claim can only be made
if the lender suffers a financial loss because of a title defect
that adversely affects a foreclosure of the buyer's mortgage. There
have been many of defects in titles which could not be revealed by
an examination of the public records. These defects usually arise
at a time after the transaction has taken place and purchasers can
suffer significant losses as a result of them. That is why owner's
title insurance makes a great deal of sense.
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