Boston real estate has it’s own unique set of challenges, so it is important to hire a skilled Boston real estate law attorney.
Canner Law & Associates, P.C. is located at 359-361 Newbury St., 5th Floor, Boston, MA to serve our Boston real estate clientele and provide a convenient closing location.
If you are in the area, please stop by for a cup of coffee to check out the space and talk real estate!
We negotiate Purchase and Sale Agreements for Buyers.
In Boston, the standard form Greater Boston Real Estate Board Purchase and Sale Agreement (“P&S”) is almost always the governing contract between the Buyer and the Seller regarding the proposed property to purchase. Most Buyers submit an initial offer to a Seller, which spells out the terms of the contract. The P&S supersedes the Offer.
At first blush, the purchase and sale agreement, like most legal documents, can be difficult to read and comprehend. The best way to understand it is to divide the document into several sections.
First, like all contracts, the Purchase and Sale agreement sets out the terms of the Boston real estate deal. These terms primarily are taken from the Offer. This includes the names of the parties, the legal description of the property (taken from the current deed), the purchase price, the mortgage commitment date, the closing date, any Seller credits, and any agreed upon fixtures that will remain with the property or be taken by the Seller.
Title and Deed
Second, the Purchase and Sale agreement deals with the title to the property and the deed. It lays out the framework for a conveyance (a real estate transfer) in Boston. The agreement spells out that the Seller conveys the deed to the Buyer in return for consideration, then the deed is recorded and the Buyer becomes the owner of the property. However, in Boston, once the deed is recorded at the proper Registry of Deeds, then any title issues “run with the land.” Thus, the new owner becomes responsible for any outstanding encumbrances or liens that were not properly discharged. In order to protect the Buyer, the purchase and sale agreement provides that the Seller must convey “good, clear and marketable” title. Acting as the buyer’s or lender’s counsel, or both, our Boston attorneys will review the title exam and work with the Seller’s attorney to clear any title issues, so that the buyer will receive a certification of title and an owner’s title insurance policy.
Third, the purchase and sale agreement lays out the responsibilities of the Seller. This includes maintaining insurance and upkeep on the property until closing, obtaining a smoke and carbon monoxide certificate at closing, paying the broker’s commission, obtaining a 6(d) certificate for a condominium, and requiring that the taxes be paid by Seller up until the closing date (through an adjustment to the HUD Settlement Statement). The agreement for the Boston real estate purchase also provides that the Seller’s agent (either the realtor or the attorney) holds the buyer’s deposit in an escrow account.
Anything But “Standard”
There is a note of caution about the standard form Greater Boston Real Estate Board P&S. We like to say that it is anything but “standard.” The standard form provides several hidden advantages to a Seller. Thus, Boston buyers must have an experienced attorney revise the agreement and flag those built in deficiencies. For example, if a Boston Buyer were to default prior to closing, the standard form document provides no cap on the damages; a skilled attorney will know to cap the damages at the deposit. The same is true if a buyer loses his rate lock if there is a delay of the closing; a skilled attorney would use language to protect the buyer in this situation.
An experienced Boston real estate law attorney will produce a Buyer’s Rider to the purchase and sale agreement that will have language that protects a Buyer’s deposit and provides an aggressive layer of due diligence. For example, if the Buyer is purchasing a condominium, the Rider should have the Seller make representations that the Boston condominium association is not contemplating any special assessments, there are no pending lawsuits against the association, and the budget is in good order.
TIPS FOR PURCHASING A CONDOMINIUM IN BOSTON
A condominium is a unique form of communal property ownership created under the Massachusetts Condominium Act. When someone purchases a Boston condominium unit, they acquire exclusive ownership of the condominium unit and shared ownership with the other unit owners in the “common areas and facilities” of the condominium. The common areas typically includes roofs, foundations, hallways, stairs, boiler rooms, storage, and parking lots.
In order to manage the maintenance and repair of the shared common area space, each condominium establishes their own condominium association, also known as a unit-owners’ association. The association is run by trustees elected by unit owners who make communal decisions in the best interest of the community. The trustees set the operating budget, monthly condominium fees, and determine if any special assessments are required.
To borrow from a famous phrase, not all condominiums are created equally. Some Boston condominiums are very well run; some are quite poorly run and underfunded. Buyers interested in purchasing a Boston condominium unit must do their homework not only on their individual units but on the financial health and governance of the condominium as a whole.
Some questions buyers should ask of the Boston condominium association include:
- How much money is in the capital reserve account and how much is funded annually? The capital reserve fund is like an insurance policy for the inevitable capital repairs every building requires. As a general rule, the fund should contain at least 10% of the annual revenue budget, and in the case of older projects, even more. If the capital reserve account is poorly funded, there is a higher risk of a special assessment.
- Is there a professional management company or is the association self-run? A professional management company, while an added cost, can add great value to a condominium with well run governance and management of common areas.
- Is the condominium involved in any pending legal actions? Are there any disputes between owners, with developers or with the association?
- How many units are owner occupied? A large percentage of renters can create unwanted noise and neighbor issues. It can also raise re-sale and refinancing issues with Fannie Mae and FHA condominium regulations.
The Boston attorneys at Canner Law & Associates, P.C. are well equipped assist you with this “due diligence.” As part of our standard condominium representation, we will review the following condominium documents and issues in connection with the purchase and sale agreement:
- Master Deed and amendments
- Declaration of Trust/By-Laws
- Unit Deed and Floor Plans
- Condominium Budget and Capital Reserve Fund
- Fannie Mae/FHA Compliance Provisions
- Condominium Annual and Special Meeting Minutes
- Pending or Contemplated Special Assessments or Litigation
We will also build in provisions into the purchase and sale agreement to protect you in case there are unanticipated issues with the condominium.
Finally, if "converting" a Boston multi-family home into a condominium, our attorneys can draft condominium documents and provide counsel for selling the units. There are several steps in the process in Boston, so it is critical to have a Boston real estate law attorney that understands Boston condominium law.
Our office can represent sellers of Boston real estate. Our goal is to seamlessly handle the legal portion of the sales process from Purchase and Sale Agreement through closing. Our Boston Seller legal services include:
- Drafting a Seller oriented Purchase and Sale Agreement;
- Negotiating the Purchase and Sale Agreement with the Buyer’s attorney;
- Drafting the Deed;
- Drafting the Power of Attorney;
- Obtaining the Mortgage Payoff (if applicable);
- Providing your wiring instructions to the Closing Attorney;
- Reviewing the Settlement Statement;
- Attending the Closing;
- Ensuring that the Closing Attorney records the deed in a timely manner and delivers the net proceeds to you (typically by wire)
The Suffolk County Registry of Deeds in Boston imposes an excise tax upon the transfer of any deed, instrument or other writing whereby realty is conveyed to a purchaser. The excise is based upon the consideration given for the property and applies whenever the consideration, exclusive of the value of any lien or encumbrance remaining on the property, is greater than $100. The tax is paid by the person making or signing the deed and is evidenced by a stamp affixed to it. The tax is $2.28 for each $500 or fraction of consideration. The excise tax is collected by the closing attorney at closing and is deducted from seller's proceeds on the final settlement statement. Here is the excise tax calculator from the Suffolk Registry website in Boston. https://massrods.com/suffolk/excise-tax-calculator/
Preparation for Selling:
The Boston Sunday Globe's spring real estate edition ran an article discussing actions a Seller of Boston real estate should take in order to sell. The Boston Globe ran several of Attorney Canner’s quotes in the piece.
Canner Law serves as the closing attorney/ settlement agent for lender and cash closings in Boston.
As part of our role in the closing process, we order a municipal lien certificate from the City of Boston to determine the amount of taxes owed on the property. Our Boston title examiner also orders a title exam from the Suffolk County Registry of Deeds.
As we approach the closing of a Boston home or condominium unit, the lender is required to provide you with a "Closing Disclosure" ("CD") at least three days prior to closing. The CD will provide the final amount of funds needed to close. If you have a cash purchase, the closing attorney will provide the "Settlement Statement" which will similarly provide the final amount of funds to bring to the closing table for your Boston purchase.
You should schedule the "final walk-through" with your Boston agent in advance of the closing. The actual closing takes approximately one hour.
At closing, our office will review the documents that you need to sign at Closing.
The listing agent or the seller’s attorney typically provides the keys at closing.
If we close at our office, we will electronically record the deed, mortgage and other recording documents with the Suffolk Registry of Deeds in Boston for all recorded land closings. https://cannerlaw.com/blog/f/c/72
For registered land closing, we need to file the deed and mortgage at the Suffolk Registry of Deeds. Once we are “on record”, we will immediately send email notification to all parties.