How to Sell Then Buy a New Home

13 Nov

Metro®Boston, Publication Date: November 8, 2011
By AttorneyGeorge Warshaw

Many real estate attorneys have seen a sharp increase in new purchases these last four weeks. While none of us expect a housing miracle, it’s a good idea to review one simple, basic tenet for those selling their homes or condos and then buying a replacement property.

The most important advice I give clients is, “don’t do it all on the same day.” There’s too much that can go wrong. A delay in your sale could seriously jeopardize your purchase.

There are many things that often happen right before the closing that one extra day can fix. What would you do if a last minute repair is needed, the house isn’t broom clean, a lien is discovered, or the movers
don’t show up – and your buyers refuse to close?

Or as I have more recently experienced, the bank is too busy to get the loan documents to the closing attorney on the day of the closing. Believe it not, it has been happening.

Quite simply, you need to build in a margin for error.

So “sell on one day and buy on the next.” Leave the furniture on the truck overnight if you can. You’ll avoid an elevated heart rate!

© 2011 George Warshaw. All Right Reserved.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.  

Legal Advice: Laws, and court decisionsinterpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neitherintended as legal advice nor shall establish an attorney-client relationship.

Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.

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Would You Like Your Name in the News?

2 Nov

Metro®Boston, Publication Date: November 2, 2011
Expanded content

Lost in this age of the internet is almost any hope of privacy and confidentiality.

I suppose if I won the lottery I wouldn’t mind my name appearing all over the
Boston Globe or the Herald; but I wouldn’t want my name publicized if it came
from the police blotter – or a new home that I bought.

Buy a home, and your neighbors, relatives and fellow employees can read about it in the newspapers. Want them to know how much you paid and the details of your mortgage, you don’t have to say a word. They’ll know in a New York minute!

Real estate transactions are published in many local town or neighborhood newspapers – and appear all over the web!

People who want to protect their personal information from public disclosure can use a number of techniques. Since newspapers report the names of buyers that appear on deeds, the most common privacy technique is to substitute a “Trust” for the buyer’s name on the deed.

Rather than your name appearing on the deed as the new owner, designate a Trust that you own and control instead. If done right, your privacy is protected.

The typical real estate trust is simply a legal device in which a person who is named as trustee follows the directions of the beneficiaries or real owners; i.e. you.

The first step in creating a trust is to choose a name for the trust. The second step, and this is the key for privacy purposes, is to choose a person other than yourself to serve as trustee. It may be a friend, lawyer, accountant or financial advisor.

When the newspaper reports your purchase, it publishes the names of the trust and the trustee – who is someone other than yourself. Privacy is thus protected.

Using a Trust is not without its pitfalls. It can, for instance, make getting a mortgage more difficult, depending on the type of mortgage and the lender you wish to use.

While many banks have no problem providing a mortgage loan where title to a home is held in a trust, mortgage brokers and lenders who sell all their loans often will have a problem. Thus, sensible planning is essential.

If you’re interested in using a trust for your home, contact me. I’ll be glad to help with your real estate or estate planning needs.

 ©2011 George Warshaw. All rights reserved.

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George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship. Before making any legal decision, consult an attorney to see how the foregoing may apply to your particular circumstances.

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Buttoning Up Your House

19 Oct

Metro®Boston, Publication Date: October 19, 2011
Expanded Content

By Attorney George Warshaw

Winter is approaching and the most vulnerable location of energy leakage and wasted dollars are drafty windows. It may be time to replace them.

To learn about replacement windows I spoke with certified master installer Fred LaCorte, of Climate Door & Window, (781-681-7007; climatedoor@verizon.net).

“For most people the first choice is usually whether to get single, double or triple pane windows. Single pane windows offer little or no energy loss protection. Double and triple pane obviously provide more protection, much in the way adding a thin liner into your winter gloves keeps your hands warmer,” Fred told me.

“Homeowners in choosing a window can increase their energy efficiency and save money in two ways. The first by placing a coating on the window; the second, by using a gas to create an insulation barrier.

“lowE is a coating placed on the glass that reflects radiant warming heat back into the atmosphere during summer months, while allowing the sun’s heat to penetrate into the house during the winter months, thus keeping the house warmer when it’s needed most. It also provides UV protection for furniture and carpets.

“Some double and triple pane windows have a layer of argon gas added between the panes,” Fred explained.  “Gas acts like an installation barrier and prevents heat loss in the winter and air conditioning loss in the summer.”

For the consumer, there are a number of measures that rate windows and decipher the mystery. You should find stickers on the windows that provide numerical information rating the energy efficiency of the glass. The lower the number the better.

Glass is rated by “U” value and a solar value called SHGC (solar heat gain co-efficient). For solar SHGC ratings, look for .35 or below. For U value look for .30 or less.

Here’s an example. Double pane without a lowE glass coating have a U value of about .44; with lowE glass coating around .35. Adding an argon gas barrier to a lowE coating drops the U value to around .30.

Triple pane, with double lowE brings have a value of around .20.

Not all windows are built with the same durable construction. A replacement window typically goes into an existing wood frame and is made of vinyl.  More durable windows are made of a composite, have a more rigid frame, and last longer.

Design Pressure measures the ability of a window to withstand flexing and energy loss due to wind velocity. Design Pressure uses numbers such DP 35, DP 50. The higher the number the better it can withstand stronger winds and flexing.

Lastly, don’t forget insulation. If you’re replacing the usual double hung window that used pulleys and ropes to raise and lower the window, make sure that insulation will be stuffed in the pockets where the ropes were used – otherwise the air will just channel around the window.

Home Depot, Lowe’s or the Independent Company

I’ve found the level of expertise more reliable with smaller, local companies than the big chains that merely offer a list of subcontractors. Smaller companies are more accountable and responsive if you’re unsatisfied with the work that was done.

 © 2011 George Warshaw. All rights reserved.

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George Warshaw is a real estate attorney, estate planner and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, prenuptial agreements and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship. Before making any legal decision, consult an attorney to see how or if the foregoing may apply to your circumstances.

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Small Claims – How It Works

17 Oct

It happens often. You’re buying a home but you don’t like the results of the
inspection and you cancel the offer – or at least you try. The seller refuses
to release your deposit.

 You’re a tenant. You paid a security deposit and now you want it back. You’ve asked for it but your requests have been ignored.

Recent changes to small claims procedures make small claims very attractive. The amount that can be sued for in small claims has increased from $2,000 to
$7,000.

You don’t need to hire a lawyer in small claims unless you are a corporation or a
limited liability company. You can do it yourself.

Once the small claims case is filed, notice is sent to the defendant by regular
mail. A date is chosen by the court and the parties must appear or risk being
defaulted.

Hearings are no longer held in front of a judge. Rather, certain court personnel,
designated as Clerk/Magistrates, conduct the hearings.

It’s important to bring with you all the documents that you want considered by the hearing officer. Telling the hearing officer that “it’s at home” will often
lose the case. Be fully prepared to have any witnesses with you, copies of
checks and all your documents. Good luck! 

© 2011 George Warshaw. All rights reserved.

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George Warshaw is a real estate attorney and legal author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship. Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.

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Rebuilding Your Credit

13 Oct

Metro®Boston, Publication Date: October 12, 2011
By Attorney George Warshaw

 “I couldn’t get a loan because my credit was lousy.”

 What can you do about it? There are a few simple things that can help. The starting place is your credit report. Get a free copy and see what went wrong, then start to rebuild.

 The first thing is dispute any inaccuracies in the report. Is something on the report that belongs to a person with a similar name? Has something already been paid? Don’t hesitate to challenge the credit bureau or call the creditor directly.

 Second, and I consider this the most important, start paying all your bills on time, especially mortgage and credit cards. There’s an easy way to avoid future late payments.

 Nearly every credit card or mortgage lender allows you to set up an automatic payment method in which money is taken directly out of your bank account by the creditor to pay the bill.

 If you put every credit card on an automatic minimum payment plan with the creditor, you won’t miss a payment! You can always write a check and send in more later when you look at your written statement, but at least you won’t miss a payment!

 Go to the creditor’s website, register, and look for the payment screen. It will solve a lot of problems.

© 2011 George Warshaw. All rights reserved.

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George Warshaw is a real estate attorney, estate planner and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, prenuptial agreements and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship. Before making any legal decision, consult an attorney to see how or if the foregoing may apply to your circumstances.

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Pre-nups, Co-ownership and Real Estate

24 Aug

Metro®Boston, Publication Date: August 24, 2011
Expanded content

By Attorney George Warshaw

“Honey, I love you, but would you mind signing this little piece of paper for me?”

Relationship don’t always last forever, despite the best of intentions.

If you’ve been married before, broaching the subject of a pre-nuptial or a co-ownership agreement with a partner or future spouse is more the norm than the exception. It should not be overlooked in any relationship when planning for the future, especially if one person has real estate, substantial assets, or a prospective significant inheritance.

In the pre-nup or co-ownership agreements that I do for clients, I suggest simple methods of handling real estate. One way is this (and there are several other ways):

In the event of a divorce or separation, you get back what you put in to buy the property – or your present equity if you are contributing a property that you already own. Anything beyond that (i.e. the increase in value), is split evenly or according to a fair formula that considers everyone’s contributions, past and future.

Here’s an example (it may not be right for you). If you came into a relationship owning a condo consider the equity as yours. If, going forward, both of you make equal contributions towards the mortgage, taxes, insurance and condo fees, then, in the event of a divorce, any increase in the equity over time could be recovered 50-50.

 A variation on this approach is that each person gets back what each paid in to buy the house, pay for improvements and cover core expenses like taxes, insurance and mortgage. Each person’s contributions easily translate into a percentage of investment that can be applied to any profit or loss. While this approach sounds good on paper, this requires a bit of record keeping.

 While there are many ways of dealing with real estate in a pre-nup or co-ownership agreement, what’s often most important is the relationship, and that one person doesn’t feel like they are living in the other’s house. With good planning, that can be easily addressed.

It’s important in any relationship to discuss future finances. A pre-nuptial or co-ownership agreement should just be one of the discussion points. Since “no one suit fits all,” it’s critical to see a lawyer for advice and planning. One simple detail or concern can change the advice you may get.

© 2011 George Warshaw. All rights reserved.

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George Warshaw is a real estate attorney, estate planner and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, prenuptial agreements and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship. Before making any legal decision, consult an attorney to see how or if the foregoing may apply to your circumstances.

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Where Are Interest Rates Going?

11 Aug

Metro®Boston, Publication Date: August 10, 2011

By Attorney George Warshaw

Lost in the debris of the deficit debacle and the stock market free fall is the effect on mortgage interest rates. Will they rocket upwards, stay the same or decline?

Mortgage rates rise or fall based on something. But what?

There are actually two types of mortgage loans and two types of rates: first mortgages are long-term interest rates; home equity loans are short-term monthly rates. The rate on each is established differently, and often go in different directions based on the exact same news.

When the Fed announces that it is lowering or raising rates, that immediately affects the monthly rate charged on home equity loans, not first mortgages.

First mortgage rates are determined by the longer-term bond market. I’ve heard it said that first mortgage rates follow “the 10-year Treasury” or “mortgage backed securities” instead. In other words, as prices on a specific longer-term “fixed income investment” rise or fall on Wall Street, first mortgages interest rates ultimately bounce along with it.

Confused? Since no one seems to be managing our economy right now, you are not alone. Be safe. If you can lower your first mortgage rate, do it now.

Need a recommendation for a good mortgage lender? Email me. I know several good lenders.

© 2011 George Warshaw. All Rights Reserved.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

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Should You Rent Your Condo?

26 Jul

Metro®Boston, Publication Date: July 20, 2011
Expanded Content

By Attorney George Warshaw

Consider, for a moment, a significant asset that you already own; one that could generate a stream of revenue well into the future – your condo. 

Rather than sell your condo to buy a new home, would you rent it instead? There are numerous possible benefits. 

The key is to get your interest rate as low as possible today while you are still living in the condominium. By doing so, you place yourself in the best position to generate future “positive cash flow”; one that will allow the rent to cover your mortgage, taxes and condo fees.

With interest rates at distress levels, now is the perfect moment to plan for the future. As an owner-occupant your rate will be lower than what would otherwise be available after you move.

Given the vagaries of the stock and bond markets, the prospective lack of a sufficient future social security payment – at an age when you might actually enjoy it, real estate is a reliable extra revenue source.

If you decide to rent your condo rather than sell it, keep one important thing in mind: if you plan to refinance shortly before you move and rent, the standard Fannie Mae mortgage form used with owner-occupied loans requires the homeowner to live in the condo for 12 months after signing.  Make your plans well in advance.

So be a smart condo owner – plan now for the future, and get the benefit of rents paying your mortgage. 

© 2011 George Warshaw. All rights reserved.

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George Warshaw is a real estate attorney and legal author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship. Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.

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Money When You Need It

26 Jul

Metro®Boston, Publication Date: July 13, 2011

By Attorney George Warshaw

I’ve always relied on a simple lending principle: banks will gladly loan you money when you don’t need it; but not necessarily when you really need it.

That’s why home equity loans are a key financing planning tool.

A home equity loan (often called a HELOC) is a loan against the equity in your house or condo. The interest rate is typically based on the prime rate and can float or change monthly as the prime changes. It functions like a credit card.

I spoke with William Schulz, a banker at Citibank (617-725-0104, william.h.schulz@citi.com), a specialist in home equity loans.

“Because interest is often (i.e. not always) deductible on your taxes, many people use it for their children’s college education, home remodeling, medical expenses, or to have money available should they need it,” he said.

“The process is simple. It costs the borrower nothing in fees, and nothing if you don’t use it. Once you provide the necessary paperwork, it’s usually 30 days to closing.”

Since interest paid on a credit card is often not deductible, a HELOC can be a sensible way of making major purchases – but be careful: like any mortgage loan, it has to be repaid!

© 2011 George Warshaw. All rights reserved.

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George Warshaw is a real estate attorney and legal author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship. Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.

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Getting Older – The New American Dream

30 Jun

Metro®Boston, Publication Date: June 29, 2011

By Attorney George Warshaw

The economy has changed the way older homeowners view their future.

Many are selling their long-time residence and renting rather than buying a
replacement home. No more mowing the lawn, paying a mortgage and maintaining an aging house. Sell the house, bank the money.

The second home market in a prolonged down economy is usually the first to collapse and the first to present opportunities. Among those who rent their primary residence, many are taking advantage of the depressed market to buy a vacation house.

I spoke about this recently with Jennifer Knight, a REMAX buyer’s broker on Martha’s Vineyard (jennifer@jennifersrealestate.com, (508) 221-2615).

“Tastes and needs have changed. Many who have sold their primary homes still need a place where they can entertain; where friends, children and family can be together, especially in an environment where there is a great deal of life, enjoyment and energy.

“But now they’re buying with cash flow in mind. They’re buying and then renting their Vineyard house for a month or two in the summer. The income from the vacation home rental covers the taxes and possibly operating costs, and they still get to host their family and friends.”

What’s happening on Martha’s Vineyard is not unique as people strive to find a balance between the life style they want or need, and the means to support it.

The prolonged so-called “jobless recovery” has caused many to change their approach to getting older and restructure their personal financial game plan. No one any longer believes that social security will be there for you when you retire.

It’s not simply a matter of the continual rise in the age when you are eligible to receive benefits – obviously they hope you are dead before the government has to pay; rather, the government has “borrowed” most of the money for its day-to-day operating expenses.

The recent debt ceiling crisis revealed that the government raided social security as a loan to be repaid in the future. Now the government needs to raise the debt ceiling to be able to borrow more money to pay its bills and repay social security.

Hmmmm! Perhaps they should consult a financial planner or better yet, I’m sure Bernie Madoff could give them some advice. At least he has experience!

© 2011 George Warshaw. All rights reserved.

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George Warshaw is a real estate attorney and legal author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship. Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.

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New Hub of Young Professionals

22 Jun

Metro®Boston, Publication Date: June 22, 2011

By Attorney George Warshaw

Mention “young professionals” to a real estate agent and it brings images of areas in or near a city, revitalized or re-energized by a surge of younger, city dwellers buying condos, brownstones and single-family homes.

I asked Rodrigo Serrano ((781) 929-7379, rodrigo@rigorealty.com) a realtor and buyer’s broker with REMAX Leading Edge, where many young professionals are buying in today’s market?

“East Arlington and Melrose were discovered a few years ago. It’s the first place where my clients want to look. It’s a combination of price, lifestyle and proximity to Cambridge and Boston.

“East Arlington has a city feel. Buy a condo, walk to stores and restaurants. Melrose is more the affordable, single-family suburban hotspot. While condo and home prices were declining elsewhere, Melrose and East Arlington resisted. They held their value.

“Condos, for example, in East Arlington, sold at an average of $332,532 in 2009. They held their value last year, and increased slightly to $336,916.

“Single-family homes in Melrose increased at a greater rate. In 2009, homes sold on average for $376,459. Last year it increased 4.4% to $392,731.”

If you’re looking for a new home, it sounds like the place to be! © 2011 George Warshaw. All rights reserved.

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Buying or selling your home? We represent buyers and sellers of homes and condos throughout Massachusetts. Call or email me at (617) 262-7800, george.warshaw@warshawlaw.com.

George Warshaw
Boston   Hingham   MV/Nantucket

How Homeowners Make Money Installing Solar Energy

15 Jun

 Metro®Boston, Publication Date: June 15, 2011
Expanded content

By Attorney George Warshaw

In addition to possibly having zero energy costs, there are a number of surprising ways a property owner in Massachusetts makes money by installing solar energy panels – including one way that generates a yearly check!

Tax Credits. Tax credits reduce your income tax. Current IRS rules permit a homeowner to claim a credit of 30% (no max amount) of the cost of purchase and installation of solar energy. Massachusetts provides a similar credit of 15% ($1,000 max) on state income tax.

Cash Rebates. Many towns have a program in which the homeowner receives a cash incentive for installing solar. Concord Municipal Lighting Company, for example, will rebate a buyer at the Riverwalk Condominiums in Concord up to $3,125 depending on the size of the system.

Yearly Income. Massachusetts, like some states, requires the power company generate a minimum percentage of its electrical power to end-users from certain renewable energy sources, such as solar. 

Right now, the power companies can’t generate enough solar power. They make up this deficiency by counting the energy generated by property owners who have installed solar.  The utility companies don’t, however, get to count it for free. They have to buy it each year – from you!

Here’s how. 

A property owner receives one (1) Solar Renewable Energy Certificate (a “SREC”) for each 1,000 kilowatt hours of solar generated power. Generate 10,000 kilowatt hours, get 10 certificates.

According to Steve Weikal (617-596-2777, steve@concordriverwalk.com), solar panels on new condos at Concord Riverwalk  by local solar integrator SunBug Solar (www.sunbugsolar.com) generate between 3 and 6 SRECs, a year, depending on the number of panels installed.

 The power companies compete for these certificates through an auction process. In the most recent auctions, Massachusetts  SRECs have been selling at over $500 each. If you acquired 3-6 certificates through your ordinary use, you would have received between $1,500 to $3,000, less brokerage commissions.

To sell your SRECs, you contact a SREC broker (they’re all over the web). SREC brokers function a lot like Fidelity or Schwab. Instead of selling your stock in Ford or GM, sign up online with a SREC broker and they take it from there.

Buy a solar-powered home, and put money in your pocket! ©2011 George Warshaw. All Rights Reserved.

References

Federal tax credit, http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US37F&re=1&ee=1

Massachusetts tax credit, http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=MA06F&re=1&ee=1

Other Massachusetts tax/credit/rebate programs see http://www.dsireusa.org and search for Massachusetts.

See also http://www.srectrade.com/background.php on selling SRECs.

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George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

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NetZero Solar Living – Imagine Having No Utility Costs

8 Jun

Metro®Boston, Publication Date: June 8, 2011

By Attorney George Warshaw

Is it possible to live for free, where the cost of heating, air conditioning and the power to run every appliance is generated by the home?

“Net Zero” refers to an energy sufficient structure in which the annual energy cost to operate the house or condo is produced by the home’s own mini power plant.

With a solar home, NetZero is reached by “banking” excess electricity generated by the solar panels with the electric company as a credit. The credit pays for electricity drawn from the power company in periods of intensive usage.

To reach NetZero efficiency, the amount of energy you bank annually approximately equals the amount you draw.

I toured a 13 unit NetZero condo project under construction in Concord, Massachusetts – the “Concord Riverwalk.” Each condominium is built as a self-contained cottage style structure with its own solar power plant. Owners share gardens, walkways, garage parking and other common areas.

Each house generates energy through solar panels installed on the south side of the roof, and saves energy through “green” construction techniques that eliminate air infiltration and seepage, i.e. energy loss.

Contact Steve Weikal (617-596-2777, steve@concordriverwalk.com) for more info.

Next week, the economics of solar – get cash back and credits from a number of sources.

© 2011 George Warshaw. All rights reserved.

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George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship. Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.

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The New Mass. Homestead Law

31 May

Metro®Boston, Publication Date: June 1, 2011 

By Attorney George Warshaw

If you mention “homestead law” to someone in Massachusetts, their eyes usually roll in puzzlement and ask, “What’s that?”

Quite simply, it’s a law designed to help homeowners keep their homes when in debt or faced with a judgment they cannot pay. The law does not protect against divorce, taxes, or mortgage foreclosure, but it is very helpful in many other situations.

The law prevents a plaintiff, claimant or creditor from selling your principal residence to satisfy a debt, as long the equity in your home is not more than $125,000 or $500,000.

By filing a Declaration of Homestead in the registry of deeds, you protect up to $500,000 of the equity in your home against liens imposed after the time and date of your filing.

If you choose not to file, you still receive $125,000 in protection – but only if you bought your home on or after March 16, 2011. Otherwise, you must file a written declaration to gain any protection.

Filing a declaration is cheap and easy to do. While it is better to have a lawyer guide you, you can download the form on most registries of deeds websites.

Homesteads filed under the old law are valid with, perhaps, one exception:  recent decisions from the bankruptcy court have led many to question whether the “release of homestead” language in the standard Fannie Mae mortgage inadvertently terminated a homestead filed before March 16th (i.e. under the former version of the law).

Many commentators are suggesting that homeowners file a new homestead declaration to be safe.

How the new law works. Here’s an example:

Husband and wife (H&W) purchase a home for $500,000 and borrow $100,000 from the bank, giving the bank a mortgage for the amount borrowed. It will be their principal residence.

They thought about filing a formal homestead declaration to obtain the maximum protection but did not. Fortunately, the new law gives them an automatic $125,000 protection in the equity in their new house or condominium from liens and lawsuits.

They hire a home improvement contractor and get into a dispute. The contractor files a mechanic’s lien and later obtains a judgment for $25,000. The judgment cannot be enforced against the marital home. Thus, the contractor cannot force the sale of the house or condo to pay the judgment. Their home is safe under the homestead law – at least for now.

A few years pass and the husband and wife sell their home for the same price they paid. The contractor cannot stop the sale or require they pay the $25,000 judgment as a condition of the sale. The husband and wife take the proceeds from the sale, a little less than $100,000, and put it into their bank account. That money is safe for one year under the new law.

If the husband and wife use the proceeds from their sale to buy a new home within one year of their sale, the proceeds and their new home will be protected against the contractor’s judgment.

The new Massachusetts Homestead Law is very complicated, but it works to the benefit of all homeowners. It provides special protections for persons of age 62 or more or who are disabled and permits beneficiaries of a trust to protect their principal residence if the real estate is in the trust.

It will take a few years before the courts provide guidance and clarity on the details of the law. © 2011 George Warshaw. All rights reserved.

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George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship. Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.

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Avoiding Surprises in Home Renovations

24 May

Metro®Boston, Publication Date: May 25, 2011

By Attorney George Warshaw

Your real estate agent or broker, with good intentions, recommends a home improvement contractor. He starts the job but you get into a dispute and quite rightly refuse to pay. Can the contractor place a lien on your home?

Massachusetts law permits an unpaid contactor, including a subcontractor, to place a lien on one’s home for work, labor and materials. It is typically called a “mechanic’s lien.”

A contractor must carefully follow strict procedures in order to acquire and maintain the lien on your house, condo or vacation home, but it’s not hard to do.

If you are renovating or remodeling your home should you care? Try to refinance, get a home equity loan or sell your house with a lien on it!

Now for the surprise. . .

A subcontractor or materials supplier who has not been paid can file a mechanic’s lien on your home – even if you paid the contractor in full, and even if you never signed a single document with the sub!

Can you protect real estate from mechanic’s liens? Make sure the roofer, the plumber, Lowe’s and Home Depot and all subs are paid. The homestead law is another way. More on homesteads next week. © 2011 George Warshaw.

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George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship. Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.

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Protecting Your Home From Liens And Lawsuits

17 May

Metro®Boston, Publication Date: May 18, 2011
Expanded Content

By Attorney George Warshaw

There are several ways that you can protect your home from liens and lawsuits.

The Massachusetts Homestead Act, recently revised, protects all or part of the equity homeowners have in their house or condo from individuals or businesses suing the homeowner. The protection applies only to primary residences and not second homes or investment properties.

Homeowners automatically receive $125,000 in protection upon the recording of a deed. The statute permits homeowners to increase that protection to $500,000 by filing a declaration of homestead with the registry of deeds.

The homestead is particularly valuable in disputes with home improvement contractors. A contractor or subcontractor has the ability to file a so-called “mechanic’s lien” on your home for unpaid work – even if you dispute that work. The homestead law often prevents a contractor from enforcing that lien.

Another method of creditor protection is to place your home into a trust. When done for a legitimate purpose, such as estate planning or as a way of managing real estate, a trust may prevent or deter a creditor from acquiring a lien on your home. A creditor usually has to “break the trust” through a court proceeding in order to attach one’s home. Under the newly revised Homestead Act, one can now utilize both a trust and a homestead to maximize lien protection.

A trust is typically created by signing a “declaration of trust” – a document prepared by a lawyer that often contains creditor protection features. © 2011 George Warshaw.

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George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com.

Legal Advice: The content and information contained in this article is not intended as legal advice. Before making legal decisions consult an attorney to see how the foregoing may apply to your circumstances. Laws change frequently and this article is not updated as laws change.

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Mistakes Home Buyers Make in the Offer

9 May

Metro® Boston, Publication Date: May 11, 2011

By Attorney George Warshaw

You’ve searched MLS (Multiple Listing Service) for a condo or house for sale in Massachusetts, acquired a real estate agent along the way, and now you’re ready to make an offer to purchase your new home.

Here’s a few things, often overlooked, that you may want to include or change in your offer: 

  • Make your purchase conditional on an appraisal that is no less than the purchase price
  • Don’t choose Friday or the last day of the month as your closing date. These are the busiest real estate days and your deed might not get recorded that day (i.e. you could be prevented from moving into your new home when you expect)
  • Make your offer conditional on all systems and appliances being in good working order on the day of closing
  • Be wary of the preprinted “inspection contingency.” These often limit your right to cancel solely to “serious structural or mechanical defects” that may exist in the house or condominium. Change it to an “inspection that is satisfactory to you.”
  • If you’ve also listed your home for sale, don’t try to buy the same day as you sell.

More on this to come. © 2011 George Warshaw. 

The foregoing is not intended as legal advice. Consult an attorney to see how or if the information may apply to you.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at george.warshaw@warshawlaw.com

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How Much May a Landlord Charge at Rental?

4 May

Metro® Boston, Publication Date: May 4, 2011

By Attorney George Warshaw

The law is clear: a landlord in Massachusetts cannot require a residential tenant pay more than a first month’s rent, a last month’s rent, a security deposit (of no more than one month’s rent), and a key and lock deposit when renting an apartment.

That’s the maximum. There are no exceptions.

A pet deposit, a cleaning deposit, or any other kind of “deposit” is nothing more than a security deposit. There’s nothing inherently wrong with a landlord limiting the potential use of a security deposit to repair a specific type of damage to an apartment, such as one caused by a pet. The problem usually arises when the deposit doesn’t relate to the “condition of the apartment” or the total of these security deposits exceeds a single month’s rent.

A landlord who requires a full month’s security deposit and a half month’s pet deposit, for example, asks for too much. A tenant has the right to demand that the landlord immediately return the excess.

Demanding more than what the law permits is considered an unfair or deceptive act or practice under the Massachusetts Consumer Protection Act and subjects a landlord to possible significant damages under multiple landlord-tenant and consumer protection laws.

The foregoing is not intended as legal advice. Consult an attorney to see how or if the foregoing applies to you.

Attorney George Warshaw represents buyers and sellers of homes, condos and investment properties, prepares wills and trusts for inheriting real estate, and trusts that protect your children and pets. George welcomes new clients and questions at  george.warshaw@warshawlaw.com.

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What You Need to Know before Renting an Apartment

1 May

Rental Basics – a two-part series
Metro® Boston, Publication Date: April 20, 2011
Metro® Boston, Publication Date: April 27, 2011

By Attorney  George Warshaw

I’m often asked by landlords, “what should I do before renting an apartment?” My initial advice is “fix up the apartment before you rent it, eliminate every possible code violation and document it.”

Massachusetts gives a tenant the right to withhold rent if there are sanitary or building code violations in the apartment that endanger the health or safety of its occupants. If these conditions exist and certain requirements are met, the tenant is entitled to a reduction in the rent and a defense in any legal action to evict the tenant.

Under current law, a landlord is responsible for defective conditions that exist at the inception of the tenancy, even if the landlord doesn’t know about the problems. If, for example, an apartment has drafty and loose windows or rodents at the time of the rental, the landlord is liable under the law even if the tenant doesn’t complain about it.

So, be a smart landlord; inspect your apartments and eliminate any problems before your tenants move in.

On Security Deposits and Last Month’s Rent

A security deposit is treated differently under Massachusetts law than a last month’s rent. Rent is the landlord’s money and can be spent by the landlord at any time. A security deposit is the tenant’s money and must be protected and preserved. A security deposit must be held in a special security deposit bank account in Massachusetts. The tenant is entitled to interest on both the last month’s rent and security, even though the landlord may freely spend the last month’s rent.

Landlords routinely make 2 major mistakes in handling security deposits.

If a landlord fails to give a tenant an “Apartment Condition Statement” requesting the tenant list any defects in the apartment, the landlord cannot later deduct for damage to the apartment from the security.

If a landlord fails to provide the tenant with the required bank and account information within 30 days of taking the deposit, the landlord forfeits the right to hold the deposit and has to return the deposit on the tenant’s request. © 2011 George Warshaw.

The foregoing is not intended as legal advice. Consult an attorney to see how or if the foregoing applies to you.

Attorney George Warshaw represents buyers and sellers of homes, condos and investment properties, prepares wills and trusts for inheriting real estate, and trusts that protect your children and pets. George welcomes new clients and questions at  george.warshaw@warshawlaw.com.

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A Short Sale Surprise

30 Apr

Metro® Boston, Publication Date: April 13, 2011

By Attorney George Warshaw

In a short sale, a mortgage lender agrees to accept less than it is owed when a house or condo is sold.

The short sale lender issues a letter to the seller (i.e., its borrower) in which the lender promises to release its mortgage upon receipt of a certain amount of money by a specific date. The letter is in turn given to the closing attorney who relies upon the letter in conducting the closing and issuing title insurance.

I recently discovered a lender that issues not one, but two short sale letters: one for the attorney, and one that specifically directs that it “DOES NOT” go to the attorney. The second letter requires additional “side” money before the lender will release its mortgage.

What happens if the sale goes through but the lender never receives the secret side money? The unsuspecting buyer won’t have clear title to the property if the lender refuses to release its mortgage.

The unsuspecting buyer hopefully bought title insurance, but it could still take several years before the mortgage is finally cleared from the title.

Apparently, our Attorney-General was notified of this national lender’s disgraceful practice and has done nothing about it. Maybe that’s the surprise! © 2011 George Warshaw.

The foregoing is not intended as legal advice. Consult an attorney to see how or if the foregoing applies to you.

Attorney George Warshaw represents buyers and sellers of homes, condos and investment properties, prepares wills and trusts for inheriting real estate, and trusts that protect your children and pets. George welcomes new clients and questions at  george.warshaw@warshawlaw.com.

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