Understanding a Real Estate Purchase Agreement

A real estate purchase agreement is an essential part of buying or selling property.  Understanding the importance of these agreements is essential for avoiding potential problems later on in the sale process.

Selling Property Generally Requires A Written Agreement 

Massachusetts, like most states, has a statue of frauds, a law requiring that certain types of agreements be in writing to be enforceable, including the sale of property.  With few, limited exceptions, an oral agreement will not suffice when real estate is involved.

Importantly, the type of writing allowed for such agreements is broader than a traditional written contract.  A recent Land Court decision found that a binding agreement for the sale of property was created through text messages, and similar decisions have held that emails are also sufficient for satisfying the statute of frauds.

Common Types of Real Estate Purchase Agreements

For the sale of residential property, there are two common types of real estate purchase agreements: an offer to purchase real estate and a purchase and sale agreement.

An offer to purchase real estate is just that: a written offer for the sale of property.  These agreements are generally one or two pages and contain the “bare bones” terms of the sale.

When the parties are ready to move forward with the sale, a purchase and sale agreement is generally negotiated and signed.  This agreement contains more information on the sale of the property, which generally comes after the parties have had more time to seek financing and discuss the specific details of the sale.

The most important thing to remember about real estate purchase agreements is that such agreements are generally binding contracts.  If signed, a party is generally committed to selling or buying the property.  There can be defenses to such agreements, but a seller or buyer should exercise extreme care in signing one of these agreements.

Drafting Real Estate Purchase Agreements

If you are involved in buying or selling real estate, hire a lawyer to assist you in drafting a real estate purchase agreement.  An experienced attorney will know what to include in these agreements and how to include contingency clauses that excuse a party from performance if they are not able to buy or sell the property.

Enforcing or Defending a Real Estate Purchase Agreement 

If you need to enforce or defend a real estate purchase agreement, you need an experienced real estate litigation attorney on your side.  An attorney will help you in determining the right cause of action for your case and know the ways that the legal system can protect your interest in the property while the legal case is ongoing.

If you need help with one of these cases, contact me for a consultation.

Speak to a Lawyer for Legal Advice

Happy 2017!  I hope the new year is a good one for you.  In this post, I want to discuss why you should speak to a lawyer for legal advice; advice that will serve you well in this new year (and for years to come).

If I had to guess, I would say that more mistakes in law are made from people who receive “legal advice” from non-lawyers.  The biggest culprit, of course, is the Internet: today, it is easier than ever to create a official looking website that claims to be the authority on an area of law.  This occurs for all different types of legal matters, but especially for foreclosure defense: the Internet is filled with websites that attempt to explain foreclosure defense myths to vulnerable homeowners.

As the old adage goes, “saying something doesn’t make it so.”  Merely creating a website, or offering purported “legal advice”, does not make that information truthful.  Many times, such advice—while well intended—is flat out wrong.  The results can be devastating: I have seen claimants lose cases (and their homes) from relying upon advice with no basis in law.

Those offering such “legal advice” won’t tell you what I will write here: law is difficult.  TV lawyers may make our work seem easy, but the truth is that lawyering requires enormous time, effort, and yes, training.  Training is the key part of this: we require lawyers to attend law school and pass bar examination for a reason.  No, law school alone doesn’t fully prepare someone to practice law, but a legal education is essential for making tough legal decisions.  With this in mind, you should never, never, never trust anyone but a licensed lawyer for legal advice.  Speak to a lawyer for legal advice, and avoid the inevitable problems that come from taking poor advice from a non-lawyer.  The picture above is a coffee mug available for sale on Amazon; it is meant as a “gag gift”, but its slogan has an essential message: don’t replace the advice of a trained attorney with something found on a random website.

This post isn’t meant to discard the use of reputable websites and information sources that assist those with legal needs.  I am proud that this blog has helped many homeowners and other lawyers in making important decisions on legal matters.  This blog, however (like any similar legal resource) is merely an aid towards helping those with legal needs get the assistance they need (a reason why I encourage anyone with help in defending against a foreclosure to consult an attorney).

Somerville Eviction Cases

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While I take cases all over Massachusetts, I have many landlord and tenant clients in Somerville . . . not surprising because my office is located in Assembly Square and I proudly call Somerville my “business” home.  Somerville is a fantastic city and I’m proud to be a lawyer in this great community.  In this post, I’ll provide an overview of Somerville eviction cases.

Evictions in Somerville, with a few exceptions, must be brought in Somerville District Court.  Somerville, like many cities outside of Boston, are not within the jurisdiction of a housing court, making District Court the main venue for these cases.  Somerville District Court has jurisdiction over eviction cases not just in Somerville, but Medford as well.  Somerville District Court is located in Assembly Square and is within walking distance of the T.  Parking is generally available near the court as well, but plan ahead to give yourself enough time to find a spot.

Somerville eviction cases, like most eviction cases across Massachusetts, are held on Thursdays in Somerville District Court.  Court begins at 9:00AM, with a “first calling” of the cases before the court.  During this initial reading of the cases, the clerk asks if both parties are in court, and what the parties are in court for.  If the parties are in court for a bench trial (where the judge decides the matter, and not a jury), a trial can be held that day.  If the tenant has requested a jury trial, the court usually holds a pre-trial conference to select a trial date.

For both types of cases, mediation is usually an option for both parties.  Mediation allows parties to meet with a trained facilitator to discuss the issues in the cases and see if the matter can be worked out.  Parties should always try mediation (even if they have an attorney): there is nothing to lose, and much to gain if the parties can work out a resolution on their own.

Compared to other courts (especially housing court), Somerville District Court usually doesn’t have a huge caseload of eviction cases.  You should expect a bit of a waiting time in court, but cases are usually heard in the morning.  If your case needs to go to trial, the court may schedule it on a non-Thursday.

If you find yourself involved in a Somerville eviction case, contact me for a consultation.  Landlord/tenant law can be tricky, and it is helpful to have an experienced attorney on your side.

 

Who Pays for Legal Fees in an Eviction Case?

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A central question that anyone in a landlord/tenant case needs to consider is, who pays legal fees in an eviction case?  The answer to this question makes a huge difference in determining whether to pursue a potential claim against a landlord or tenant.

Massachusetts, like most of the country, follows the American Rule in awarding attorney fees in a lawsuit.  Unless there is a law explicitly allowing attorney fees, a prevailing party doesn’t get attorney fees in a lawsuit . . . even if the court determines they were on the “right” side of the law.

The American Rule most directly impacts landlords in eviction cases against tenants.  Landlords generally cannot recover attorney fees in an eviction case against a tenant.  A landlord who prevails in an eviction case is entitled to the “costs” of the case, but this is generally limited to the filing fee of the lawsuit, and not any attorney fees incurred in one of these cases.  Some leases provide for attorney fees if a landlord brings an eviction case in court, but this alone does not guarantee that a landlord will obtain these fees from the tenant: a landlord (like any party in a lawsuit) can only obtain a judgment from a party with assets.   If the tenant does not a steady income, property, or anything else of value, the landlord will have a judgment that they cannot recover.

The same isn’t true for tenants bringing claims against landlords.  Massachusetts has some of the most tenant friendly laws in the country, allowing for legal fees in an eviction case.  Violation of one of Massachusetts’s many landlord/tenant laws, such as the security deposit law, will not only subject a landlord to monetary damages, but require them to pay a “reasonable” attorney fee if the tenant prevails.  For a lengthy eviction case, these attorney fees can be huge.

With this in mind, both landlords and tenants should keep in mind who pays attorney fees in eviction cases when evaluating their options.  For landlords attempting to evict a tenant, strong consideration should be given to working out settlement agreements in lieu of litigating these cases.  The potential risks of fighting one of these cases can be costly (as unfair as this can  be).  For tenants who are dealing with an unfair landlord, Massachusetts’s landlord/attorney laws, which provide for attorney fees for a prevailing tenant, are a strong reason why tenants should speak with an experienced landlord/tenant attorney if they are dealing with a bad landlord.

If you find yourself in either scenario, contact me for a consultation.

Advice for Landlords

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In this blog post, I am going to give you the single, most important piece of advice for landlords in Massachusetts.  This advice might sound obvious, but believe me when I tell you that it is often ignored.  Ready for it?  Here it is: speak to a landlord/tenant attorney before becoming a Massachusetts landlord.  

I have met countless landlords who start renting homes and apartments without any knowledge of Massachusetts landlord/tenant laws.  Often, these landlords end up being okay in the beginning, when things go well with their tenants.  When things go bad, however, they can get really bad: not following Massachusetts’s extensive landlord/tenant laws can have dire consequences for landlords down the line.

Nearly all of these problems can be avoided by following the law correctly in the first place.  A Massachusetts landlord/tenant lawyer can help you draft a lease, decide on the proper terms of your tenancy, and avoid many of the pitfalls that inexperienced landlords in Massachusetts often make.  Few, if any of us, would start a business without learning the applicable law.  Why should being a landlord be any different?

This advice for landlords stresses an important point: you don’t need to hire a lawyer only when things go wrong.  A landlord/tenant attorney can be a great help to you in becoming a landlord, and help you avoid major problems from not following the law.

Can I Sell My Home Before Foreclosure?

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Homeowners facing foreclosure often ask a common question: can I sell my home before foreclosure?  As with all legal questions, the answer depends.

A lender brings a foreclosure to recoup the money owned on the underlining mortgage loan.  Paying off this debt is the simplest way to avoid foreclosure. If a homeowner can sell the home and satisfy the loan, foreclosure is avoided.

This, however, is dependent on the home selling for equal to or greater than the mortgage loan.  If the home is worth less than the owed money, the home is underwater.  To sell the property, the borrower needs the permission of the lender to do a short sale (where the lender accepts less than the amount owed on the loan).

If the homeowner has equity in the property (where the home value is greater than the amount owed on the loan), a sale of the home to avoid foreclosure is a possibility.  In such a case, the homeowner simply sells the home, pays off the loan, and pockets the difference from the sale.  This choice is especially good for homeowners with alot of equity in their home, but insufficient income to support a modified loan payment.

What is the worst thing that a homeowner with equity in their home can do? Let the home get foreclosed.  In a foreclosure sale, the homeowner collects the difference in money between the foreclosure sale and the amount owed on the loan.  For example, if the home sells for $500,000 and the homeowner owed $400,000 on the loan, the homeowner is entitled to the surplus: $100,000 (minus legal fees and other foreclosure costs).  While a homeowner is entitled to such a surplus (if one exists),  a foreclosure sale almost never collects the same amount as a regular home sale.  This is because foreclosed properties come with a “stigma”, resulting in a lower sale price than the market average.  Simply put, the risk of purchasing a foreclosed property prevents many potential buyers from considering these home, which limits the pool of buyers in a foreclosure sale.  If a homeowner has no options for saving the home, and has equity in the property, they should give serious thought towards selling the home and maximize the amount they can get from the sale.

When considering whether to sell a home to avoid foreclosure, timing is of critical importance.  If the lender has proceeded with the foreclosure process, the lender may not willingly stop the foreclosure: even if the homeowner truly is committed to selling the home.   I have seen some outrageous behavior from banks, who appear “hell bent” on proceeding with a foreclosure despite a homeowner’s ability to sell the home on their own.  Fortunately, there are options in such a scenario.  In such a case, seek the help of a foreclosure defense lawyer right away.  An attorney may help you stop the foreclosure and get the time necessary to sell the home.

Important Things to Include in a Lease

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Signing a lease is an important part of the landlord/tenant process.  A leases spells out the terms of the landlord/tenant relationship, namely the amount of rent and how long the lease will last.  Most landlords use a standard form lease that is pre-written, and only requires the landlord to fill in the blanks (The Greater Boston Real Estate Board has a form lease that is popular for landlords in the Boston area).  Form leases are extremely helpful in drafting a lease; there is no need to “recreate the wheel” in preparing a new agreement when a model lease is available.

However, when using a sample lease, landlords should note that there are important things to include in a lease, many of which are not found in these sample drafts.  Here are a few important things that I think every lease should include:

Payment of Utilities:  Massachusetts law requires landlords to provide all utilities to tenants, but allows landlords to “transfer” the payment of these utilities . . . in writing.  Failure to include, in writing, a requirement that the tenant pay these utilities can be a major problem for a landlord.  As such, a statement that the tenant must pay for utilities is one of the most important things to include in a lease.

No Security Deposit:  The Massachusetts Security Deposit Law is a pro-tenant law that has many traps for landlords.  As such, I (and most other attorneys) advise landlords not to accept security deposits.  If you follow this wise advice, include a term in the lease that the landlord isn’t accepting a security deposit from the tenant.  This helps prevent a claim for a tenant, down the road, that such a deposit was taken by the landlord, setting up a potential problem at the end of the lease.

Description of the Property:  If the rental property is something that is unambiguous (such as an apartment), this might not be necessary.  However, if there is any chance that the scope of the rental property may be misconstrued, it is worth including a description of what is, and what isn’t, included in the lease.  Use of the backyard, driveway, and other common areas are all important things that should be mentioned in the lease.

Allowance of Guests:  The difference between a guest v. a permanent tenant is not always clear.  While a tenant generally has a right to have guests at the rental property, only those persons stated on the lease are allowed to live in the property.  To keep the difference between a guest and tenant clear, consider a term about how long guests are allowed at the property.  This can be helpful if, down the road, the tenant allows others to move into the rental property.

No Smoking:  If you do not want your tenants to smoke in the rental property, be sure to include it as part of the lease agreement.

By no means is this a comprehensive list of everything that should be included in a lease; this will depend on your particular circumstances.  For help in drafting a lease, contact me for a consultation.

How to Stop a Foreclosure in Massachusetts

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I often get asked how to stop a foreclosure in Massachusetts. Homeowners facing foreclosure need to be aware of the different options for stopping foreclosure and how they apply to different scenarios.  Stopping a foreclosure is priority number one in Massachusetts foreclosure defense; homeowners have a much, much better chance of saving their homes by preventing a foreclosure in the first place.  This isn’t to say that homeowners who have been foreclosed lack options, but pre-foreclosure is always the better place to be.

So, how do you stop a foreclosure in Massachusetts?

Paying Off the Owed Debt

The obvious way of stopping a foreclosure is simply to pay off the owed debt on the mortgage loan.  If this amount isn’t too large, this may be a feasible option for some homeowners.  As I have written before, Massachusetts requires lenders to offer borrower a final opportunity to “cure” their mortgage loan debt before starting foreclosure.  Homeowners should bear in mind, however, that even if they pay off their outstanding debt, the terms of their loan remain in place.  If the homeowner was struggling with the loan because it was unaffordable, the homeowner should give serious throught to applying for the next option for stopping a foreclosure: a loan modification.

Loan Modification

A loan modification application, under new federal regulations, requires a loan servicer to stop foreclosure while the application is pending.  Limits exist on this; repeated applications will not continuously stop a foreclosure.  Because foreclosure defense is not about getting a free home, a loan modification should always be a homeowner’s first attempt at stopping foreclosure.  If a homeowner is applying for a loan modification and the bank or loan servicer still begins foreclosure, the homeowner should consult an attorney right away to discuss options for stopping  the foreclosure sale.

Bankruptcy

Bankruptcy provides a debtor with an automatic stay, which will automatically stop a foreclosure.  Under bankruptcy law, the bank is prohibited from foreclosure, which can provide the homeowner with some time to work out their next course of action.  Bankruptcy is a good option for a homeowner with an impeding deadline for a foreclosure sale and no other viable options.  Long term, however, bankruptcy is not always the best choice for avoiding foreclosure in the long run (speak to a bankruptcy attorney to determine if this is a good option for you).  Click here for a great overview of bankruptcy, provided by the Massachusetts Court System.

Civil Lawsuit

Homeowners also have the option of seeking injunctive relief in a lawsuit against their bank or loan servicer.  An injunction is a court order that prevents (or requires) someone to do something.  For foreclosure defense, a court will not grant an injunction against a foreclosure sale automatically; the homeowner needs to show a likelihood of success against the validity of the foreclosure.  In other words, the homeowner needs to convince the court that the impeding foreclosure is being done wrongfully.  Filing a lawsuit and requesting an injunction can be tricky, and a homeowner in need of such services should seek the help of a foreclosure defense attorney.

Practice Pointers: Appealing a Massachusetts Eviction Case

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A party who receives an unfavorable decision in a Massachusetts eviction case has the option of appealing.  In an appeal, the party asks the appellate court to review the decisions made by the trial court and decide if they were done correctly.  An appellate court will not decide the case all over again, but instead will review the issues of law made by the trial judge.

There are many, many things to consider and discuss in deciding whether to appeal, but here’s the most important thing to remember: a party who wants to appeal must timely file a notice of appeal.  A notice of appeal is a simple form that tells the court and other side that you wish to appeal.  A party can obtain a notice of appeal form from the clerk’s office, who can also answer questions on how to fill it out.

Massachusetts eviction (“summary process”) law requires a party to file this notice of appeal within ten days of the court’s decision.  The failure to timely file this notice of appeal can be deadly for bringing an appeal:  Massachusetts courts have stated that the failure to file this notice of appeal within this ten-day deadline prevents a party from appealing (regardless of whether the party had a good reason for not timely filing this notice of appeal).

With that said, be sure to file a notice of appeal if you intend to appeal your case, or have any thought of doing so.  An appeal can always be dismissed, but the failure to bring a notice of appeal is an error that is often “unforgivable” by trial courts.

If you are considering appealing your eviction case, contact me for a consultation.  Appeals require an enormous amount of work and it is best to have an experienced attorney on your side.

FAQ: What is a Principal Forebearance? Is it the Same as Principal Forgiveness?

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Question:  What is a principal forbearance?  Is it the same as principal forgiveness?

Answer:  No.  A homeowner applying for a loan modification often owes a great deal on his or her home.  As such, a loan modification attempts to make the payments affordable by restructuring the loan.  This usually starts with a term extension and interest rate reduction, but the final (and often most important) part of the process is what to do about the unpaid debt.  Often, the total, unpaid debt is too much to create an affordable payment, requiring the lender to forgive or forbear the debt.  Any homeowner in need of foreclosure defense needs to understood both of these loss mitigation options.

With principal forgiveness, the lender agrees to forgo a portion of the unpaid debt.  That part of the debt is gone, lowering the amount that the borrower owes.  The borrower, however, may still owe tax on this forgiven debt.

With principal forbearance, the lender agrees to take a portion of the unpaid debt and add it to the end of the loan, as a “balloon” payment.  This debt doesn’t go away, but it does remain due at the loan’s payoff.  This forbeared amount is almost always interest free.  Principal forbearance is one of the steps of the federal government’s Home Affordable Modification Program (“HAMP”).   HAMP, notably, does not require lenders to forgive unpaid debt.

Obviously, principal forgiveness is the better option of the two, as the owed debt is gone.  Principal forbearance, however, is not a terrible option for many homeowners committed to staying in their homes.  Homeowners should speak to a financial advisor for help in making this financial decision.