How Should We Take Title?

This is a critical question that you must answer for yourself. Many first-timers are purchasing homes with boyfriends, girlfriends, fiances, siblings, or friends. I recommend that you think about HOW you want to own the property with that person in advance of the closing. I’m amazed when people make these critical decisions at the closing table.

Reading this article is a great start. If you read the bottom section, you will see what you can look forward to if wedding bells are in your future!

Tenants In Common

  1. There are no survivorship rights between tenants in common.
  2. Each co-tenant has a right to possess the whole property and owns an individual part (that is freely transferrable).
  3. The ownership interest may be equal or unequal.
  4. If you want your ownership interest to pass to your heirs at law, and not the crazy person you just bought the house with, this is the option for you.

Joint Tenants with Rights of Survivorship:

  1. The term “rights of survivorship” means precisely what you think it would. If Boyfriend-Girlfriend own the house and Boyfriend dies, Girlfriend owns the house automatically by operation of law. Boyfriends interest does not pass to his heirs at law.
  2. All joint tenants hold title together.
  3. A joint tenant can sell or transfer his/her interest at any point. The resulting effect is that the buyer becomes a tenant in common with the non-selling owner/tenant.

WARNING: Do not read this next section unless you are married. 

Tenants by the entirety:

  1. Each spouse owns an undivided whole of the property.
  2. Includes rights of survivorship (discussed below)
  3. Creditors of one spouse may encumber that spouses share, but cannot defeat the rights of survivorship.
  4. Arises presumptively in any conveyance to married people unless stated otherwise.
  5. In the case of same-sex couples, a clear statement that the tenancy by the entirety is intended is required.
  6. Neither owner, acting alone, can defeat the right of survivorship by the unilateral conveyance to a third party.
  7. Divorce, death, or agreement by the parties are the only ways to sever this form of tenancy.

Jack O’Donohue, Real Estate Attorney at Dalton & Finegold, LLP
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Pre-Paying Homeowners Insurance

First-time homebuyers are often confused about homeowners insurance and the initial expense involved.

Mortgage lenders require that the first years premium is paid in full. If you chose to escrow the annual insurance premium, expect to pre-pay an additional 2-3 months up-front to fund your escrow account.

Some of this extra money is referred to as a “cushion”. The concept also applies to property taxes. This money covers unanticpated expenses such as an increased policy premium or higher property taxes. So when you close on your house in mid-October with the first payment to the bank due December 1st, there will be enough money available next fall to pay the annual premium when it comes due.

Be on the lookout at your closing for an initial escrow disclosure statement. This will account for all monies in the escrow account.

P.S. “Homeowners Insurance” is also known as “Hazard Insurance”. This name trickery often confuses people…It’s not a different insurance. The two are one in the same.

Jack O’Donohue, Real Estate Attorney at Dalton & Finegold, LLP
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Buying A Foreclosure? Order the Title Exam Before You Sign

Buying a foreclosed property can be an excellent investment in today’s economic climate.  Roughly 3% of all real property for sale in Massachusetts is bank owned, down from approximately 8% in October of 2010.  There is still plenty of inventory to chose from.

The sellers obligation is to convey the property to the buyer with good and clear record and marketable title. Many banks (and counsel) have been sloppy with the requisite paperwork these last few years.

In a typical situation, Buyers uncover title mistakes weeks or months after the purchase and sales agreement is signed by all parties. What a waste of time!

If you have located a bank-owned house that you want to buy, research the title to the property before you sign the purchase and sales agreement. Don’t be pennywise and pound foolish. Preliminarily review the land records and if you don’t have any experience reviewing a real estate title, hire an attorney to review the title for you.

The $200-$350 expense will be well worth it.

Mark J. Kiklis, REALTOR® at Kiklis Real Estate, LLC

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Why Buy Real Estate Now? Interesting Question

I’ve discussed mortgages with many prospective first-time homebuyers. Many don’t quite understand mortgage interest. They can’t comprehend why low interest rates are so great for them. There is nothing like a specific example to drive the point home…so here we go!

If you were in the market for a $400,000 home in the fall of 2008, interest rates for mortgage loans were offered at approximately 6.0%. If you had an $80,000 down payment and were looking to finance 80% of the purchase price ($320,000), your monthly debt obligation for a 30 year fixed rate loan was $1918.56.

Today, with interest rates at approximately 3.25% for purchase loans, the same prospective home buyer from the example above would only pay $1,392.66 per month for a 30 year fixed rate loan.

That is an interest savings of $525.90 per month and $189,324 over 30 years. Wow!

Jack O’Donohue, Real Estate Attorney at Dalton & Finegold, LLP
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The Other Housing Crisis: Unaffordable Rent

We all know its expensive to live in this part of the country. The average rent in greater Boston has risen twice as fast as the national average.

The lack of affordable housing has continually challenged lawmakers and residents. Massachusetts has the 8th lowest home ownership rate of any state and the 7th lowest vacancy rate.  The median rent is the 10thhighest of any state.  One in three renters earning less than $64,081 annually pay more than half of their pre-tax income on housing related costs.

The demand for state and federal housing assistance programs far exceeds the supply of vacant rental units.  Applicants are challenged each month saving money for transportation, food, insurance, taxes, debt payments, clothing, household goods, long-term savings, and other expenses.

We need to re-zone and construct more affordable housing units in the Commonwealth.  Many public and private lending institutions recognize this need in our communities.

If you have considered investing in Massachusetts real estate, affordable housing is a win-win for all parties.  The taxpayer’s burden is lifted, investors make money, and lower income people receive adequate housing at anaffordable cost.

Jack O’Donohue, Real Estate Attorney at Dalton & Finegold, LLP
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