Buyer/Borrower Information
IMPORTANT NOTICE ABOUT
YOUR CLOSING (BUYERS/BORROWERS)
REPRESENTING
THE INTERESTS OF THE BUYER IN REAL ESTATE TRANSACTIONS
WHAT YOU SHOULD KNOW
ABOUT YOUR CLOSING (BUYERS/BORROWERS)
OUR FIRM’S
PRIVACY POLICY NOTICE
WAYS TO HOLD TITLE IN
MASSACHUSETTS
OUR CERTIFICATION
OF TITLE TO BUYERS OF REAL ESTATE
CLOSING
ATTORNEYS AND THE CLOSING PROCESS - WHAT YOU SHOULD KNOW
TITLE INSURANCE
AND ITS IMPORTANCE IN YOUR TRANSACTION
IMPORTANT
NOTICE ABOUT YOUR CLOSING (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 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 our
firm 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 the 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.
Click HERE for
directions to our offices as well as more information regarding
matters discussed in this letter. If you have any questions
or comments related to these matters please contact us.
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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
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 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 our 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. 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.
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.
Because we believe that obtaining an Eagle
Owner’s 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. Please contact
our office for the exact language naming the bank. 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. Below, you will find
an explanation of some options on how to hold title to real
estate. Please advise our office on 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. For a detailed explanation please see 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
AND CARBON MONOXIDE DETECTOR COMPLIANCE. We call your
attention to the provisions of Massachusetts General Laws,
Chapter 148, 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 ensure 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. 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 hereunder,
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 person’s 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 anyone 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. 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:
- Building and zoning laws for (Property City or Town)
and other governmental statutes and regulations which have
not been examined;
- 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;
- 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;
- Persons in possession;
- 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;
- 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;
- 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 to 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 Owner’s
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. 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
ensures 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
Registry 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 owner’s policy can be purchased at the
same time at substantial savings over the rate if not issued
simultaneously with the loan policy. Owner’s 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 Fees - 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 ITS 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 policy holder 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 ensures
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 ensures
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 coverages 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 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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