Sam Schneiderman, Broker-owner of Greater Boston Home Team continues his Monday series. One of my clients asked me about this yesterday!

Many years ago, I represented buyers that were buying from an estate. The final price included items like the washer/dryer, refrigerator, etc. The heirs wanted to keep other personal items (like furniture) that the buyers wanted. The Purchase and Sales agreement detailed all the minutia of the sale, and the buyers happily signed the Purchase and Sale agreement.

Prior to closing, I accompanied my buyer-clients to the final walk through. The wife, Elizabeth, was beside herself when she did not see the Peony plant by the front steps. She turned to me and asked what happened to the plant. Of course, I had no idea whether it was stolen by a plant thief or removed by the sellers, but it really didn’t matter because Elizabeth considered it a good luck omen when she saw on her first visit to the property. Now that omen was gone!

Whether it’s a Peony plant, lighting fixture, shed or stove, I’ve seen this story re-played numerous times. Sellers think that they can take what they want as long as they leave the house, and buyers expect that aside from furniture and art work, what they see is what they will get when they close.

Sam Schneiderman, Broker-owner of Greater Boston Home Team continues his Monday series:

Many offers and Purchase and Sale agreements contain the words "time is of the essence". Those words give legal teeth to the deadlines (also known as the "time for performance") in those agreements. If deadlines are missed by a buyer or seller, consequences are typically spelled out in the offer. For a buyer, consequences can range from losing the ability to request repairs after an inspection to losing one's deposit money and losing the ability to purchase the home, too, if the seller elects to exercise his legal right to collect on the consequences. For a seller, failure to perform on time can cause him to be sued or the buyer might be able to back out of the deal.

While some consequences may seem harsh, failure to meet deadlines can cause monetary and other damages to buyers or sellers. Therefore, most real estate contracts include consequences that should motivate the average buyer. For example, if a buyer comes to a closing a day late, the seller may lose his ability to purchase his new home with the proceeds of his sale. Therefore, consequences usually include the seller's ability to cancel the sale and keep the buyer's deposit.

Sam Schneiderman, Broker-owner of Greater Boston Home Team
continues his Monday series with the first part of a discussion about property rights and restrictions. This is a must read for anyone thinking about buying, building, renovating or adding onto their property.

Many people feel that when they buy property, they should have the right to do what they want with it. Sooner or later, most homeowners that try to modify their property discover that the use and possibly the design of their property is subject to municipal rules that can restrict their plans. This applies when building a new home on a vacant lot and even to simple modifications of existing property, like adding a deck, shed, or widening a driveway.

Over the years, communities have developed their visions of what their cities or towns should look like.
Municipalities designate areas for businesses and other areas are designated for residential uses, like single families, two families and larger multi-family property. Some communities have designated industrial areas, adult entertainment areas, hospital districts, historical districts, etc.

Sam Schneiderman, Broker-owner of Greater Boston Home Team continues his Monday series with a timely discussion about appraisers and the upcoming changes in the way they will interact with lenders.

Appraisers estimate the market value of property. They are supposed to provide independent, unbiased opinions of value based on their research and analysis of the market and property that they are evaluating. Appraisers are used by lenders to assure that the property that they are lending on is worth enough to secure the loan if the borrower defaults. Appraisals are also used for estate purposes, eminent domain and any other reason someone wants to know the value of a property.

A residential appraisal primarily involves surveying sold properties, then selecting the properties that are nearest, most recently sold and most similar to the property being appraised. Those properties are called “comparable sales” or “comps”. They are placed on a grid with details like size, condition, number of baths, parking, updates, etc. Appraisers makes adjustments to the sale prices of comps approximating the dollar value that the average buyer would pay for those features or subtract for missing features. For example, let’s say that a condo without parking is being appraised and a comparable condo with parking sold nearby. If parking is worth $10,000, that amount is subtracted from the sale price of the comp to arrive at the estimated value of the condo being appraised.

There are two ways to appraise property. The correct way is to do research and analysis, then figure out the value. The other way is to know the desired value and find recent sales to support it. Which one do you think takes less time and is more profitable?

I was an appraiser for 9 years, managing and training 40 appraisers and signing off on their appraisals as review appraiser. When property could not appraise for the sale price or the amount needed to refinance, some lenders questioned if we missed something in the process, usually because the owner, seller, or listing agent thought that the property was worth more than it appraised for. Sometimes the mortgage officer or lender was motivated by potential profit. Unscrupulous lenders would not order appraisal for a while after a property failed to appraise. Since I did not appraise to targeted values, eventually those lenders went elsewhere. Fortunately, there were lenders that wanted accurate appraisals and they became long term clients.

Some banks hired staff appraisers and others formed appraisal management companies (AMC) to have more control over the appraisal process. Some of them pressured appraisers for values, others did not.

Economist Bill wrote:

One could argue that it should be a violation of the Realtors Code of Ethics for any Realtor to take on an overpriced listing, knowing full well that it will not sell unless the price substantially lowered.

I have seen a number of homes where the Listing Agent sold the home to the Buyer and acted as a dual agent. No one can ethically represent both sides of a transaction of this magnitude, having inside knowledge of both parties. Lawyers can’t represent both parties in a law suit, so why should Realtors be able to do it? Any comments?

Thank you Bill. You bring up two important points. However, we’re not talking ethics here, we’re talking law. There are thousands of licensed agents out there that are not Realtors. All licensees are all bound by the law.

The seller’s agent’s job is clearly defined on the back of the Massachusetts Mandatory Licensee-Consumer Relationship Disclosure.

The agent must put the seller's interests first and negotiate for the best price and terms for their client, the seller.

I agree with Economist Bill. Agents who take an intentionally overpriced listing are not looking to get the best price for their client. I will remind you that the sellers have free will, which cuts both ways. Some sellers are flattered by such agents and accept the inflated price. Some sellers are told a real price, but insist on marketing their home for an inflated price in order to “test the market.”

The second issue, that of dual agency, is commonly misunderstood. Economist Bill doesn’t get it. Dual agency equals no agency. A dual agent is supposed to be a neutral party. The disclosure reads:

A dual agent shall be neutral with regard to any conflicting interest of the seller and buyer. Consequently a dual agent cannot satisfy fully the duties of loyalty, full disclosure, obedience to lawful instructions which is required of an exclusive seller or buyer agent. A dual agent does, however, still owe a duty of confidentiality of material information and accounting for funds.

One of my clients wrote me this email:

Dear Rona,

There might be a remote chance that we will move from this house, either to go to another state (California maybe) or to upgrade to a bigger place if we stay in the Boston area. In either case, I am thinking to keep this house as an investment and rent it. I know that there is lead paint in this house… Do you know if the house needs to be deleaded to be rented (or can the landlord have the tenant sign a release form in which the tenant acknowledges the presence of lead and relieves the landlord of any legal responsibility)?

First to answer the direct question:
Can the landlord have the tenant sign a release form in which the tenant acknowledges the presence of lead and relieves the landlord of any legal responsibility?
NO.
The owner of a property is responsible to anyone living there to provide a lead-safe environment for any children under the age of six. If a child is lead poisoned in the property, the owner is responsible.

In an effort to recognize renters reading this blog, today we discuss living with roommates. Some people need to stroll way down memory lane to locate their group living experiences. Some find them just around the corner. Some are there now.

I was pretty lucky in my roommate days. I only paid someone else’s rent once, for one month. He was a charming guy (aren’t all dead-beats charming?) who lost his job. Around Thanksgiving he told us he couldn’t pay December rent; we let him stay until the New Year. While he was looking for a new job, he turned into He-Man Suzy Homemaker. He painted, repaired, cleaned, cooked, and didn’t pay rent. He left all manner of debris in his room when he left, but actually improved the property in his last month. There were five of us in the house, so the share of his rent didn’t set anyone back irreparably. We replaced him in January. Did you ever pay someone else’s rent when you lived with roommates?

Janet Portman in Inman News gave some advice for tenants. It makes perfect sense. If you are living with roommates, you should have a written agreement about how the rent and bills are paid. You may have a lease with the landlord which holds each of you wholly responsible for the rent. So, if a roommate flees before paying, it’s all on you.

We have chatted about the many restrictions that property owners are subject to. There are condo rules; there are municipal rules; there are even development rules. These rules can restrict the color of you curtains, what you can keep on your porches, the rooms you can add on, or even the color you can paint your house or whether you can put up Christmas lights.

Many of you have had something to say about those rules.

There is another way to restrict the use of private property. It is called a restrictive covenant. The person buying the property must agree to the conditions written on the deed. Sometime the restriction made the property less valuable. Sometimes it was neutral. Sometimes it was intended to enhance the value (like zoning laws are supposed to.)

Restrictive covenants can include rules like what you see in condominiums and historic areas. You see things like limits on additions, paint colors and such. There are also covenants that say things like, “Alcohol cannot be sold on this property,” “This land cannot be built on for 99 years,” “The elm trees at the entrance cannot be cut down unless they are damaged or diseased,” “This land may only be sold to people who go to such-and-such church.”

There is a designation on the Multiple Listing System (MLS) of a little red contract and the letters ACT in red. It means, "the seller is accepting back-up offers." If an Offer to Purchase (or a Purchase and Sales Agreement) has already been signed, how can a Seller accept a different offer?

The Seller can’t. There is a problem with language. If there is an Offer to Purchase or a Purchase and Sale Agreement signed between the Seller and the Buyer, the Seller cannot unilaterally dump that contract to make way for the back-up offer. The Seller can collect other offers, but the Seller cannot accept one.

Landlords, where do you stand on choosing a tenant in these difficult financial times?
How do you separate the dead-beats from the struggling workers? Where do you draw the line on who is too much of a financial risk? Would you rent to a new college graduate who has no work experience and a new job? How about someone who is deep in credit card debt? How about someone who was bankrupt? Foreclosed upon? Out of work for six months last year? These are troubled times; how much of their problems are you willing to take on? Do you ask for first and last month’s rent, plus security to protect yourself?

Many landlords advertize in public sources like on-line lists, newspapers, and network sites. Most of the time, the would-be tenant is a stranger. If you don’t know the person how do you choose? Because of fair housing standards, it is important to treat everyone the same. So, no matter who comes through the door, good landlords ask the same questions, get the same background checks and ask for the same deposits. Once you make a rule, you need to stick to it or risk being accused of discrimination.

Roommates.com would have seemed to have found the perfect Internet niche.

But where does finding a roommate end and a new form of housing discrimination begin?

That is the thorny question the on-line roommate matching service is grappling with as it fights for survival amid a serious legal challenge.

Last week in the Voices section of The Boston Globe, Meredith Goldstein discussed disputes over who keeps the ring in the event of a failed engagement. She says the woman should give the ring back, since it was a binder for proposed marriage (which is a contract) more than it is a gift. If the recipient was not financially hurt or abused, the ring should go back. You should “be glad you didn’t marry the guy for 20 years.”

Making a real estate Offer to Purchase is a lot like proposing marriage. You need to have enough to offer and it hurts to have your offer turned down. Not all Offers to Purchase get accepted. I work to get the lowest price for my clients, so if they listen to me, they get out-bid more often than if they do their own thing.

If you make an Offer to Purchase and it is accepted, you have declared yourself. In real estate, you are still “engaged to be engaged .” The seller’s agent or attorney starts holding good faith deposits in escrow to bind the contract. But contingencies abound: home inspections, attorney’s review of tenancy or condo documents (if applicable,) the buyer getting their mortgage and the signing of an agreeable Purchase and Sales Agreement (P & S).

Dan asked me:

Hi Rona,

... I had a quick question regarding lead paint. I have 3 children under 6 years old and I am renting a home. I just found out the home was built before 1978 and the only mention of lead paint by the landlord was a paragraph in the lease that they have no knowledge of lead paint on the property. I did not think much of it at the time because most of the homes on the street were built in the 1980's and I (foolishly) assumed the home we were renting was as well.

We never received the state-mandated lead paint form from the landlord. I would like to terminate my lease and move into a newer rental home so I do not have to worry about my childrens' health and safety. Can I legally terminate my lease early because the landlord failed to disclose this information and ensure the house is deleaded?

I don’t know what your rights are in regard to your lease. That’s a lawyer question. Anyone know? Lawyers? Public health professionals?

In a recent conversation with a fellow exclusive buyer broker, I found that we had different ideas about what is best for our buyer-clients. We both have been working only with buyers for more than ten years. We both learned our trade from another exclusive buyer broker. We disagreed entirely.

The subject was whether it is worth it for a buyer should hire a separate attorney to write their Purchase and Sales Agreement and to review their mortgage paperwork (especially the HUD-1 Settlement Statement) before closing. A buyer can have one attorney do both the P & S and conduct the closing for the lender. Because this is a legal question, we had an opinion only about the practical aspects of this decision. We always send our buyers off to discuss the pros and cons with an attorney or two. (For the record, I work with attorneys whose opinions vary on this topic. Not just attorneys who agree with me.)

Here are the options:

WSJevons wrote about his quest for a "not white bread" neighborhood.

Rona,

Thanks for the info*. It is tough to find truly integrated communities in Boston.

Any readers (who are not real estate agents) have thoughts on communities that have a diverse mix of people?

* Is white bread a protected class?

Here's the answer I can give, as a broker. The rest is up to you, readers! Please! No bashing on anyone's race, religion or sexual preference!

WS,
These are the protected classes: Race, color, religion, national origin, ancestry, sex (gender), sexual orientation, marital status, veteran status, disability (mental or physical,) age (except elderly retirement communities that meet certain standards.)
There are additional classes in regard to rental housing.

"White bread" is not on the list.

I trust that when WS says “white bread,” he does not just mean Caucasian. I wouldn’t define it that way. You can figure out the "white bread" factor for yourselves, based on your personal definition. Look at the businesses an area supports, what kinds of cars are parked around, what bumper stickers are on the cars, what size is the average home there...There are many things that are not directly related to the color of the skin, the ethnic or religious origins, or who your neighbors choose as life partners. Look around you, the signs are everywhere!

Q: Why would agents not tell you about the great schools?

Answer number one: Unless the agent says the same thing to every customer or client, that agent may be seen as practicing “steering.” Steering violates fair housing laws. It is the attempt to encourage people to buy in areas with people “just like” the buyer. In the past, this practice maintained segregated communities.

Here’s an example:

Suppose Dullsville has a reputation for great schools and town service. It is more expensive than the town next door, Blahburg, known for mediocre schools and town services. Of course, Dullsville is more expensive.

If an agent assumes that a buyer will want Dullsville for the good schools because of who the buyers are, that agent is discriminating. If the buyer is in a protected class, that agent is breaking the fair housing law.*

If an agent says this, the agent is breaking the law:

To a heterosexual, white, couple: Since schools are important to you, it might make sense to look in Dullsville and buy a smaller house. Blahburg has lower MCAS scores and sends fewer kids to 4-year colleges.

and

To a couple with a foreign accent: You will find a bigger house in Blahburg. Schools? They have MCAS scores at about the State average and send about 30 percent of their students to 4-year colleges. You can’t get a house as big as you want in Dullsville.

and

To two married men: You can get more house for the money in Blahburg (assuming they do not intend to have children.)

Answer number two: Agents avoid subjective judgments.

Realtor AJS commented that this was LAW [his capital letters.]

I don’t think it is actually law. I think it is one of those things that agents are taught in agent-school. “It is best to keep your opinion out of things that you can’t quantify,” say the real estate instructors. The problem is that one person’s nice neighborhood is another person’s slum.

This should not stop an agent from knowing the comparative, measurable quality of the town(s) their client or customer is asking about. The objective measures should be quoted. Clients or customers need to ultimately make their own decisions.

*Protected classes: Race, color, religion, national origin, ancestry, sex (gender), sexual orientation, marital status, veteran status, disability (mental or physical,) age (except elderly retirement communities that meet certain standards.)
There are additional classes in regard to rental housing.

T. wrote to me:

Hi Rona, ... I have a general question about mortgage approvals in these tight economic times... 1. How does pregnancy effect a family's pre-approval, and later when buyer how does it affect the mortgage? 2. Can a bank discriminate against pregnancy? It seems as though this is a very unfair business practice. How can a buyer address these issues?

... I am pregnant and currently am the head bread-winner in our family. I am due this winter and my husband and I have been trying to buy a home for over a year and half with little to no luck. We are hopeful that we might have some luck with the slower winter market, but we have been told by a mortgage broker that my being pregnant will negatively effect our pre-approval and we might get denied a mortgage as well. This doesn't seem fair, or legal. Can you provide some insight? [emphasis mine]

My first thought was discrimination! My second was about income. Lenders look for steady employment. If she has been steadily employed and will be through closing, the lender should look favorably on the loan.

Please, let’s not talk about the candidates here today. There are other places to discuss them. Please no political party name-calling!

What I want to bring up is the intersection of housing and voter rights. There has been much made of disenfranchising citizens due to their homelessness and foreclosure. Whatever happens today, there will be people who believe their vote was taken away, and there will be people who believe that illegitimate people were allowed to vote.

Now let’s muddy the waters with some data sources:

In Massachusetts, if you were registered to vote and have moved, you can still vote in your old district for 18 months. You are permitted to vote for national and statewide candidates and ballot questions, but not for local candidates. This should help people in our state who were forced to move due to foreclosure. Here, too, there has been an effort to register homeless people through the shelter system. So, if you have registered, in Massachusetts, your housing status should not stop you from voting. If you are not on the voter rolls, you can try to vote with a provisional ballot. Here are the rules. You need suitable identification to get a provisional ballot. If your ID is verified, your vote will count. However, it is not clear what defines “suitable identification,” so bring anything and everything you have that shows your name and address.

Pop quiz:
Did America’s Constitution give the right to vote to all American citizens?
Of course not. No African-Americans, no women, no renters.

No renters?

Not until 1850 was the vote extended to men who were not property owners.

What was the logic of the founding fathers?
Was the idea that landowners were the big stakeholders, so their vote counted? Is it that landowners were responsible and established? Was landownership the sign of responsibility, maturity?
Or was it only one step away from the nobility system of England that we rebelled against?

We’ve come a long way, baby.

What do you think?
Are homeowners bigger stakeholders?
Did home ownership translate into ruling class membership in 1790? Does it now?

Last week, I mentioned the increased scrutiny that appraisals are now getting. Today, an attorney-colleague told me there is also a trend for underwriters to not accept unrecorded condo document drafts; they want to review only final, recorded documents. I am wondering whether the underwriters care whether the rules make sense to owners, or if they will just be checking that they are recorded.

I have seen some questionable condo rules in my day. I have heard of even more. I have seen rules that require:

The outward facing side of all curtains had to be white or off-white.

No flags, furniture or satellite dishes on balconies.

No dogs and cats. However, this was a change. The existing animals were grandfathered-in. (I showed a condo where the owner had to sell because his dog died and he got a new one -same breed- but was found out and fined.)

One of my clients was a trustee in a big condo association before he came to me in search of his single family home. He told me, I paraphrase:

A lot of readers don't understand what short sales and foreclosures are. I am getting comments and emails. This is foreclosure and short sale 101. Skip it if you know this stuff and have no advice fot those who don't.

Tim responded to Monday’s post. He is in a situation that has become more common since the sub-prime meltdown in the summer of 2007:

One of the problems we are facing is, when we tried to sell it, we asked if we could just pay off the difference to our mortgage holder, that was unsuccessful as they tried to push us into a short sale, which I didn't understand because we're current on our mortgage. We tried to take out a personal loan, however the amount was too much and exceeded personal loan limits. We've tried to refinance to make the mortgage lower - so we would actually want to keep it and maybe break even or make money off of the house (with the rental), but we cant refinance since the value has dropped so much we'd have to finance more than 100%, and banks just dont do that now-a-days. What does a person do!?

Tim

The very next day – I am not making this up! -- Another client wrote this:

BTW, I'm not sure I understand this business of tenants not letting prospective buyers into the house. If I had a house listed with an agent that couldn't get it shown, well, what's the point of putting it up for sale? (Or, less kindly, what's the point of using that particular agent?) Don't owners have clauses in their rental agreements requiring tenants to allow the house to be shown, given adequate notice? I don't get it...I know that if I was a tenant, I wouldn't be happy at the prospect of a new owner giving me notice to leave, but I'd let that person in since it's part of my rental agreement...and, I'd probably be seriously looking for a new apartment anyway...

And I answered:

About tenants. No, there isn’t a clause that says that they must allow the house to be shown. Tenants have the right of "quiet enjoyment" which means they have the say about who comes in and when. The sellers who do not empty a house for sale want to have their cake (sale) and eat it (rental income), too. If you have a house with problem tenants, they probably don't have the cash ahead to move (an extra month's rent can be hard for some people.)

So today’s sale and rental issue is about the people who rent a home while it is for sale.

A lengthy discussion about square footage was held here in March and again in May, led by Binyamin (remember him? Man, I miss him!) I chimed in.
Now it rears it’s head again. Katt is tired of house size inflation and thinks it does a disservice to sellers.

The only thing [broker name omitted *] is known for is inflating the square footage of the homes they have listed, along with sale prices.... .... Please add up the room dimensions and see for yourself. It's been under agreement 2x, and both times the deal has fallen through- I wonder why?? Could it be that the lenders are saying that the loan to value ratio is a little screwed up? Consequently, the realtor of this property will not admit that the square footage is grossly inflated, and the seller's will not come down on their price to a reasonable dollar amount for the size of the home....they will have to hope that someone has cash to pay in order to get ripped off by this [broker name omitted ], because I can't imagine a lender giving someone that amount of money for such a truly small home.... I could fit this home inside of mine, and mine is listed at 2700 sq. ft. Check out their other listings in the area- gross and overpriced, and stagnant. [broker name omitted ] needs to realize that they ain't in the driver's seat anymore, and they're doing the client's a great disservice.

I want to clarify:

The foreclosure entry that I wrote on September 9th is still drawing comments. Today this one came in from Polly:

I was a buyer in a short sale and today I got news the deal is off and the house is going into foreclosure. I paid for a home inspection and an attorney to review the P&S. (Wells Fargo was the Seller's lender.) Any advice for me? I really love the house and still want it.

My advice to Polly is the same as my advice so far for buyers who are trying to capitalize on foreclosed homes:

The time is not yet right for buying foreclosed properties. The lenders do not have their systems in order. They can’t manage the sales efficiently. The wait time is long; deals fall through for no reason. Prospective buyers end up wasting time and money. Sometimes they succeed, but the discounts that I have seen have been modest.

If you are going to deal with short sales and foreclosures, hire a lawyer who knows the ropes. Expect delays. Be prepared for the sale to fall through. Choose something that is worth the risk and bother -- or don’t buy that property. If you are expecting a normal deal in a normal time, you are dreaming.

***

I started in real estate during the last recession, in 1991. By that time, foreclosure sales were working for buyers. There was an agent who handled foreclosed properties who had good communication with her investor’s office. The investor was offering good financing options for the buyers. The management of foreclosure sales worked like a well-oiled machine.

One of the guys I work with is preparing to buy a home, so he has been researching buyer’s rights, etc., and he was intrigued when he read the disclosure law and came across the rules about “psychologically impacted” properties.

Seems in Massachusetts the seller’s real estate agent is under no obligation to tell prospective buyers if the house is believed to be haunted, or if the property was the site of a violent crime such as murder. State consumer protection law basically says that information isn’t germane to a property’s condition. The only disclosure that’s absolutely mandated under the law is whether the property contains lead paint or not, according to Mike McDonagh, an attorney at the Massachusetts Association of Realtors.

(To read the "psychologically impacted" property rule click here or for more information visit the state trial court's website.)

“But it’s very important to remember that if the buyer makes the inquiry, the broker and the seller must answer the question honestly,” McDonagh said. “They can’t make misrepresentations about the property.”

Monday, I got a robo-call from Senator Kennedy urging me to vote for Senator Kerry. Tuesday, I spent a few hours holding a sign for the candidate of my choice. It was primary day in Massachusetts. Here are my observations:

1. Many of the people working in the polling-place building did not live in the district.
2. There were a large number of people who were not citizens, or not registered, or both. One man said he was not a citizen, yet.
3. Young people are voting.
4. The turn out by mid-day was pretty anemic.

I got an email from a reader who signed a Purchase and Sales Agreement on a short sale. He was unhappy when his agent called to say there would be a two-week delay in closing. He was paying cash. He had no lawyer. What should he do?

First thing, if you don’t hire a lawyer you should read your Purchase and Sales Agreement. Most people don’t. They almost all have an automatic thirty day extension to perfect title (get liens and encumbrances off the title.)

I read an appalling story in In These Times. It was a little bit like a “News of the Weird” piece about a landlord. When I looked a little farther into it, I was even more appalled:

A man from Delaware drove his Hummer into a residential property. Even worse, the property belonged to him. Even worse, his tenants were inside. Even worse, as he was leaving, he alleged shouted “Tell the police that the landlord tore up the building.” But what really got me, was that his local paper’s blog quickly identified him as a local real estate agent!

I was emailed this story and asked what I thought of it, as a broker:

A house was listed as roof being 4 years old. My inspector said it’s 15-20 years old. After seller/agent repeatedly told us the inspector was wrong and we insisted on some evidence, they finally admit it’s 14 years old. The excuse being bad memory.

So is there any consequence for such false information? Should the
seller’s agent check the fact before posting? Thanks.

When a seller’s agent puts information on a listing sheet, it must be reliable. Seller’s memory and the public record are considered reliable sources of that information. Neither really are. Binyamin and this blog have talked about the inaccuracy of square footage on these sheets. That’s just one more glaring example of inaccuracy run rampant.

Did you see the Real Estate section in the Globe yesterday? If not, you missed an interesting story on the legal pitfalls of buying a home that is in any stage of the foreclosure process. As correspondent Dave Copeland reports, buying a home that has been foreclosed, is in the process of being foreclosed, or being sold in a short sale involves exponentially more paperwork than a routine sale. And closing can take up to six months longer.

Obviously, it’s not the type of deal one should go into blindly.

Some agents interviewed for the story say they are avoiding certain types of listings because of red flags that could drag out a sale. One agent said he avoids short sales where there is more than one lender involved and he also avoids any foreclosure listing that has a clause giving buyers only 48 hours to decide on the lender’s offer.

But even home purchases involving non-foreclosure properties can turn into legal nightmares. I know of a case where a couple unwittingly agreed to purchase a house that was tied up in a very messy divorce – it took almost a year for them to get into the house.

What other possible legal hazards should buyers be on the lookout for? And what advice do you have for approaching a possible legal tie-up?

I can’t seem to get away from real estate, no matter where I go. I played hooky one Saturday in June to attend a family event. There my cousin Bernice bent my ear about the two “McMansions” across the street from her on the north shore of Long Island. Across from Bernice, two houses sold at about the same time. Both ended up being torn down, replaced by houses that dwarfed the lot.

A young professional couple rented an apartment recently. It was in a two-family house in or near Boston. The landlords were long-time local residents who need their rental income to make ends meet. The tenants earned 6-figures. The landlords verified the tenants’ income and checked their references, as a good landlord should. Then tenants moved in. Everyone was happy.

A few weeks later, the tenants informed the landlords that they were expecting, due five months from that day. This means the landlords will be obligated to make the apartment lead-safe.

A reader asked me a question about lead paint and condos. What happens if a unit is lead-safe, but the common area is not? How does the liability work? Since IANAL, I asked a legal colleague. She told me this:

Last week, a landlord asked me to address the impact of the lead paint law on landlords.

The Massachusetts lead paint law is very clear: the owner of the property is responsible for making the property lead-safe if a child under six lives there. Once a child is born, that child has the right to a lead-safe environment. It is a health and safety law, just like a landlord must maintain a working toilet in a rental unit.
As a landlord, you must present this form to prospective tenants. Landlords may not discriminate against families with children. They cannot ask pregnant women or children to leave.

I am starting a series on bad behavior on both sides of the landlord-tenant relationship. Please write me an email if you have stories and want an opinion. If you comment here, please remember no naming names, no identifying properties.
Recently, I got this first-hand account of a landlord who tried to get a little more money before falling into foreclosure:

Real estate agents are required to show consumers the agency disclosure before discussing a specific property with a prospective client. Have you seen it?

.... the real estate agent represents the buyer. The agent owes the buyer undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality and accountability, provided, however, that the agent must disclose known material defects in the real estate. The agent must put the buyer's interests first and negotiate for the best price and terms for their client, the buyer.

Read about what happens when so-called “buyer’s agents” are in the pocket of builders. It led to “buyer’s agents” making it seem easy for a renter to turn homeowner. “Buyer’s agents” offered one-stop shopping for a loan; so easy. This led to buyers with a 17% default rate.

Not to get too political, but I do not think that “Don’t ask; don’t tell” is a good policy. It does not work in the military; it does not work in home buying.

The place where home buyers get hit with “Don’t ask, don’t tell” is in regard to lead paint. Lead paint was used in housing for a long time. Why? Because it lasts longer; it was the good stuff! It stopped being made in 1978 for housing. However, some of the paint was still around for years to come. Lead paint shows up on the exterior, the windows and on painted stairs and floors. Most disclosures presented to buyers at the point of Offer say the seller does not know if there is lead paint because the house was never tested. “Don’t ask; don’t tell.” The nicer the old house, the more likely there will be lead paint someplace.

The most successful foreclosure prevention program in the state of Massachusetts may be the rolling blockade orchestrated by City Life/Vida Urbana. Starting last fall, the Jamaica Plain activist group has undertaken the protection of a growing number of Bostonians living in foreclosed buildings, pledging to physically inhibit any attempted eviction.

With growing regularity, the group has sounded its trumpets, alerting supporters and the media that an eviction is scheduled. People and cameras muster outside the house in the early morning hours. And the eviction is canceled. The mortgage company backs down.

City Life's most recent victory came Tuesday, when city officials announced that Wells Fargo had indefinitely postponed an eviction of tenants from a foreclosed building on Norfolk Street in Dorchester.

Sometimes the cancellation happens the night before, and the blockade becomes a rally. Sometimes it's only clear when no constable comes to carry residents and possessions across the threshold.

What doesn't seem to vary is the result.

It has become increasingly clear that City Life/Vida Urbana -- and probably any other activist group -- effectively can prevent a given eviction simply by announcing that they plan to be in attendance.

It's the rare practical application of Heisenberg's uncertainty principle: Evictions apparently don't happen in the presence of spectators.

How do you choose a neighborhood when you don’t live there yet? As a licensed real estate broker, I can’t tell you where to live. Because if I told Italians to live in the Italian neighborhood and people in wheelchairs to only look at condos, I would be discriminating based on who you are. Therefore, I give the same advice to everyone:

If you do not know the area, spend some time there. Do what you normally do: Go grocery shopping, go to a playground, go to a movie, walk through town, and/or go out to dinner. If parks are important to you, then go to the parks, same for libraries, community centers, senior centers, schools, and little league games. If you do not like being there, you are in the wrong place.

When I wrote about local parking behaviors after snowfall, the discussion went to the inevitable “townies” do it this way and “newcomers” do it the other way. Well, the snow is falling again, so the cultural divide will soon be apparent at a curb near you.

Many years back, one of my buyers told a home-seller that he went to the local high school. After the offer was accepted and we were there for the inspection, we found a stack of high school year books on the kitchen table. The seller had checked to see if he really was a “townie.”

So who is a “townie”? Do you need to be born here? Go to elementary school here? Graduate high school here? Can a “newcomer” assimilate enough to be accepted as a “townie”? I moved here in the early eighties; what can I do the overcome my “newcomer” status?

I assume cheering for the Patriots is not enough; they are too easy to love!

Almost every time that the Massachusetts Association of Realtors takes a political stand, I find myself on the other side of the issue. Today, I got a “MAR Call to Action” to oppose mandatory energy scoring for single and multifamily homes at the time of sale that is included in energy legislation before the State Legislature.

As a buyer’s agent, I think having an energy efficiency score is a good thing for buyers (and owners.) The only thing I oppose is the “time of sale” part. I would much rather see that information required before advertising the home for sale (and if never advertised, then before closing.)

Those of you who have followed this blog since its beginning know that my father taught me how to understand the use of numbers found in newspaper articles.

In the Sunday Boston Globe, Trey Skehan explained the use (and misuse) of averages, medians and means in discussions of income.

A friendly competitor of mine spoke to me yesterday about a disturbing trend. Consumers do not realize that a contract with their agent protects them, as well as the agent. The practice of doing buyer agency without a contract has become common-place and it runs contrary to Realtor Code of Ethics.

He's a member of the Professional Standards Hearing Committee---which hears ethics complaints from the public and other Realtors, says that it seems as if many Realtors have never read the Realtor Code of Ethics and that, of those who have read it, far fewer keep up with its revisions.

It is a case in point that many buyer’s agents do not sign professional contracts with their clients. (Nearly all seller’s agents do.) There seems to be a perception that the relationship with a buyer client is somehow less important than one with a seller client.

The US Department of Justice, which has aggressively brought several high profile anti-trust actions against the real estate industry, has launched a new web site to educate consumers about competitive measures that could save them money.

The site contains a wealth of background material, pointers and encouragements for consumer. For example, one section has tables and a calculator to show how much consumers could save from some measures, such as getting rebates or selling the home without a broker.

The foreclosure auction was this morning. A third party was the high bidder. What happens next?

In a typical transaction, the buyer gets 30 days to finalize the deal. At that closing, the lender delivers a foreclosure deed to the buyer who then becomes the owner of the property.

Through all this time and beyond, the original homeowner-borrower is able to remain in the house. Technically, it takes an eviction order from a court to force the holdover owner out of the property.

Besides finding a new residence, the old homeowner is also likely to become a defendant in a deficiency lawsuit. In this proceeding, the lender seeks to recover the difference between the total owed on the mortgage and the amount realized at the auction. For example, if the balance owed on the mortgage was $350,000 but the winning bid at the auction was only $300,000, the borrower would still owe the lender $50,000. In some cases, these deficiencies might be written off immediately, but more likely, the lender will use the appropriate judicial process to scrutinize the borrower’s remaining assets and ability to pay on the judgment into the future.

The Federal Reserve Bank and other US lending regulators today issued a proposed disclosure form that would better explain to borrowers of adjustable-rate subprime mortgages the terms and conditions of these loans.

Coming amidst a enormous increase in the number of foreclosures of subprime mortgages, the regulators hope the new disclosure form will prompt potential borrowers to have a more realistic, clear-eyed understanding of the debt they're about to shoulder.

I think taxes are a good thing. Taxes pay for schools, police, fire safety, and infrastructure -- all these things make a community a good place to live. And, Lord knows, we need infrastructure! On August 8th, U.S. Rep. John Dingell revealed a plan to cut global warming by ending the mortgage tax deduction on homes larger than 3,000 square feet.

I say, “Bring it on!”

Michigan Democratic Congressman John Dingell is best known for his positions on the home-town auto industry, but his lastest suggestion to curb global warming and conserve energy is likely to roil the housing industry.

Dingell said he will proposed ending the mortgage interest tax deduction, an enormous bounty for homeowners, for properties larger than 3,000 square feet.

The federal Office of Thrift Supervision is soliciting public comment on what would constitute unfair and deceptive practices in lending and other activities. Though the words "subprime mortgage" are not mentioned in the OTS release, it's probably not an unfair inference to draw that the blowup in that end of the lending market is weighing on regulators.

Thursday, July 26, is the 17th anniversary of the Americans with Disabilities Act. This Thursday, the ADA Restoration Act of 2007 will be rolled out to the House of Representatives to help make the ADA more enforceable. Despite 17 years with a law to help disabled people have access to all aspects of American life, unfairness still reigns in our country. I see it here in the Greater Boston area real estate market.

A bill aimed at preventing foreclosures and cracking down on mortgage fraud is expected to fly through the Massachusetts Senate today.

The bill includes everything from making mortgage fraud a felony -- and tossing those convicted of it in prison for up to five years -- to creating a state system to rate mortgage companies on their lending practices, and a database to track foreclosure activity.

A recent edition of Massachusetts Lawyers Weekly (subscription only) contains an opinion piece by attorney Michael Collora who predicts that the collapse of the subprime market is likely to lead to state and federal criminal investigations of a number of attorneys, mortgage brokers, buyers and sellers.

Anyone who was around during the real estate collapse of the early 1990s is familiar with what can happen.

A story in today’s paper reports that a compromise bill that will give Massachusetts one of the most “proconsumer” statutes in the country regarding the prevention of identity theft will soon be enacted on Beacon Hill. While I haven't seen the final version of this bill, legislation of this type is of particular interest at the registry of deeds since our records contain thousands of social security numbers, a prime ingredient in identity theft. Social security numbers are contained in every state and federal tax lien and release, in many death certificates and in more than a few mortgages. As long as those document remain in a dusty book on a shelf in the courthouse, they're not much of a threat. But digitize those same documents and place them on the Internet as we have done with millions of records and they create much more exposure. To curtail this exposure, we’ve already made one pass through our records here in Lowell, redacting more than 65,000 social security numbers thus far. To protect the identities of innocent persons, government agencies should begin the task of removing social security numbers from online records, but such a project is a complex, costly and time-consuming task. In the meantime, if you discover that your social security number appears in an online record at your local registry of deeds, you should call that office, identify the document where the SSN is located, and ask that it be removed.

Financially stressed buyers often look to their brokers and mortgage professionals to help them make a deal happen. When they can't scrape enough cash together, creative solutions are often proposed. Here's a common scenario:

Buyer agrees to buy and seller agrees to sell. The purchase price is $300,000. Buyer has a down payment of $15,000, can get a loan with a 95 percent loan-to-value ratio, but can’t afford the additional closing costs. Buyer and seller agree to increase the purchase price by $5,000 and seller will give the buyer back a credit of up to $5,000.

The buyer can now borrow an extra $4,750 to cover closing costs at 95 percent LTV. Buyer gets house, seller gets money and the bank is fully informed. Creative financing, right?

Maybe not. Maybe, it’s fraud.

As quoted by Alison O'Leary Murray in her article on communities resisting Chapter 40B affordable housing projects, the Chairman of the Milford Board of Selectman, William Buckley, complained that "communities are being disproportionately challenged with 40B projects simply because of their proximity to . . . water, sewer, or access to a major highway."

Globe Correspondent Alison O'Leary Murray had an interesting story about growing community resistance to the state's affordable law, known as Chapter 40B.

Though these housing projects have never been wildly popular at the local level because the law allows developers to bypass some community oversight, the story had a neat bit of info about which towns are more likely to be targeted for such developments. Check it out.

Massachusetts law allows a homeowner to file a Declaration of Homestead at the registry of deeds to protect the family home from a forced sale by a creditor.

Many who already have homesteads often ask if they must record a new one after refinancing. The answer is unclear.

Technically, a mortgage is a deed and in homestead law, a new deed voids an existing homestead. So logically, if a mortgage is a deed and a deed voids a homestead, then a mortgage voids a homestead.

But logic doesn’t always work with property law. Many in the legal community contend that a mortgage is just a security interest and not a deed, so it has no effect on an existing homestead.

Why not record a new homestead, just to be safe? A homestead protects against debts that come into existence after the homestead is recorded, so you might have an unknown debt lurking about that would be covered by the old homestead but that would predate and fall outside the protection of the new one.

Since every case is different, the best thing to do is to ask the lawyer who is handling the closing for you before you leave the closing.

A provision of the pending Municipal Partnership Act would abolish an 80-year old law that exempts the phone company from paying an excise tax on the equipment it owns on the pole in front of your house.

Intended to promote the statewide deployment of the telephone in that technology’s infancy, the law’s objective was accomplished long ago. The electric company and your cable provider already pay this tax.

Proponents argue that repealing this exemption will help shift the burden of funding local government away from homeowners. Opponents contend that any increase will just be passed on to consumers.

I’m not sure that’s the case. Each month I pay two phone bills: one landline and one cell. I do that out of habit, I believe, because my cell phone seems to duplicate all of the functionality of my landline. Old habits die hard, but they do eventually die, so the next time my bill goes up, it might just be enough for me to forsake my landline phone and switch entirely to cell. I suspect the phone company realizes it has reached this tipping point and it will be very hesitant to raise its rates for any reason.

As an occasional conveyancing lawyer, I was intrigued by Richard Howe’s post The Paperless Real Estate Transaction .

Don’t get me wrong, the ability to file registry documents electronically will be a huge boon. But electronic filing does not a paperless transaction make.

Contractual documents between the parties to a sale will continue to be paper and pen, as will all of the typical closing documents. As Mr. Howe says, we will need to “transmit to the registry of deeds the scanned image of a document.” The document will need to exist and be executed before it can be scanned.

During the next real estate boom, perhaps this innovation will prevent the long lines at the recording desk, provide buyers instant gratification at closings, and save time and money on couriers and overnight mail.

I applaud and encourage the innovation. The paper, unfortunately, will continue to pile up around me.

In a recent article, Christine McConville cited an MIT study released last week shows that almost half of the so-called 40B housing developments proposed in Greater Boston has not been built because of community opposition, combined with a softer housing market.

Rona Fischman, in her blog entry, makes some notable suggestions about staying out of trouble, and staying out of foreclosure.

If “life happens” to you or someone you know, however, negotiating the foreclosure onslaught can be overwhelming. The most important advice I give clients to whom life happens is to deal with it – do not ignore it and hope it goes away.

After much debate, the townspeople of Hopkinton recently voted down the opportunity to purchase 708 acres from the bankrupt owners of Weston Nurseries. The land was protected under Massachusetts state law, Chapter 61A, as agricultural land and was paying lower taxes as a result.

Boulder Capital, a developer, will purchase the land and has presented plans to develop 940 houses and apartments, and 450,000 square feet of commercial space.

As anyone who recently borrowed money to buy a house or refinanced their mortgage can tell you, the stack of paperwork required by the banks is staggering. The “closing package” is so complete (and I use that term loosely), even the loan processors rarely understand what it all means. How then can regulators insure that borrowers understand the trouble they are getting into?