Tag Archives: Real Estate Lawyer

How to Setup a Security Deposit Account

20 Nov

By Attorney George Warshaw
MetroBoston Publication Date: November 20, 2013

 

There’s more to it than you may think.

First, the account has to be set up within 30 days of when the security deposit is paid, and the tenant given notice of the account within that 30 days period.

Second, it must be placed in a bank located in Massachusetts. You can’t use Fidelity to hold the money and you can’t deposit it in another state.

So you can’t set it up at Bank of America in New Hampshire or Citizens in Rhode Island. The account branch has to be located in Massachusetts.

Most banks have what they call security deposit accounts; basically a savings or escrow account that pays interest. Usually the name of the account identifies it by the words “Tenant’s Security Deposit Account” or some variation.

I use TD Bank. TD has a special Security Deposit Account Agreement that complies with the law. Five other banks I surveyed don’t use any special agreement. Therefore, I can’t tell if the account just sounds nice or actually complies with the legal requirements.

Last, landlords have to give tenants notice about the account every year. Make it easy on yourself. Have the printed monthly bank statement sent directly to the tenant. They get the info required and you can always access it online.

 

© 2013 George Warshaw.  George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, litigates real estate matters, and prepares wills, trusts, and estate plans. George welcomes new clients and questions. Contact him at metro@warshawlaw.com.

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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.

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.

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.

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.

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.

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