LEGAL LINE

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To Have and To Hold

"The transaction is almost complete. The broker has found a ready, willing, and able buyer at the listing terms. The lender’s attorney is completing the paperwork at the closing. Just one question for the buyers...TITLE SHALL VEST AS FOLLOWS...suddenly an impass. The buyer says "I don't know too much about tenancies but I do know that I want my darling Susan to get this house when I die." The broker recommends that the husband and wife take title as tenants by the entirety since this will achieve the desired result of the surviving spouse obtaining title to the entire property immediately upon the other's death. With no further discussion of the consequences of this act, the buyer directs the attorney to fill in the deed with the words "tenancy by the entirety."

There are two major problems in the above situation. First, a broker who recommends how a buyer should hold title to property may be guilty of the unauthorized practice of law. The broker does have a responsibility to advise the buyer of the principal features of the various forms of ownership. Beyond that, however, the broker can only recommend that the buyer consult an experienced tax advisor, such as an attorney or accountant.

Second, in a great many cases, holding title jointly can create consequential tax disadvantages which could be avoided with proper tax counseling and estate planning. A common misconception about holding title in joint tenancy (including tenancy by the entirety) is the avoidance of paying certain kinds of taxes. Quite the contrary, a joint tenant is fully subject to the payment of gift taxes, income taxes and Federal and state taxes." This article is taken in part from one written by John Reilly, Attorney At Law for the Hawain Lawyers Weekly Magazine.

Environmental Hazards

Lead Paint

Massachusetts require that whenever a property is occupied by a child under the age of 6 years old, the owner has an obligation to remove, cover or encapsulate the paint up to a level of 5 feet . The landlord will be strictly liable for harm even if the landlord did not know lead paint was present.

If a homeowner does not have children under the age of 6, but the prospective buyer of a home does, it will become the new owner's obligation to abate the hazard. A safety net period of 90 days exists after the transfer, during which an owner will not be strictly liable, but only liable for negligence. In addition, owners need not abate lead hazards immediately. A less costly short term solution is a letter of interim control where an inspection reveals no chipping or peeling paint. By statute, brokers and seller each have an affirmative duty to disclose knowledge of concerning the presence of lead in paint, plaster or other material and provide copies of test reports.

If a property was built before 1978 sellers and brokers must provide information prepared by the Dept. of Public Health concerning the hazards of lead paint to prospective buyers and tenants. There is also an obligation to offer the prospective buyers the right to take 10 days to test for the presence of lead. If present, buyers may wish to renegotiate or withdraw or proceed with the sale. ( Reprinted in part from Baystate Realtor article called Environmental Hazards by Robert Kutner, Esq. Nov/Dec 1997 issue.)

WHEN IS AN OFFER A CONTRACT?

THE FOLLOWING ARTICLE BY KAREN CURRAN APPEARED IN THE BOSTON GLOBE MARCH 1, 1988 AND IS REPRINTED IN PART HERE.

"Finally.....you have found the right house. You decide to make an offer. The Real Estate agent presents your offer to the seller on the standard "Offer To Purchase Real Estate" form published by the Greater Boston Real Estate Board. You sign it and the seller signs it.

Do you have a contract to buy the house or can the seller back out and accept another offer up to the time both of you sign the purchase and sales agreement? Contrary to what may have been understood by buyers, an offer to purchase must be taken very seriously as a contract with far-reaching legal and financial implications. You may not want to sign an offer without consulting your attorney.

The standard offer form typically contains the following: purchase price, a description of the property, expiration date of the offer , the date by which both partis must sign the purchase and sales agreement, when the parties shall close and who shall hold the deposit. Space is provided to include any additional provisions. In 1975 a line was added to the bottom of the GREB form that states: Notice: This is a legal document that creates binding obligations. If not understood, consult an attorney.

Here are some facts on the recent Appeals Court decision: a buyer made an offer on a condo in Boston. Five days later the seller accepted and signed the offer and language was added to the offer which "stated subject to a purchase and sale agreement satisfactory to both buyer and seller." The parties were required to sign by August 16, by 5:00 p. m. The seller's attorney did not fax the 1st draft until after 5 p.m. of the due date. The buyer's attorney made some changes and by August 25, both attorneys agreed over the phone that the terms were acceptable. The buyer delivered a signed agreement on Monday August 28 with an additional deposit. In the meantime the seller received another offer and signed a second offer on August 26 for $49,000 more. The buyer filed a lawsuit. The Massachusetts Superior Court ruled that the offer was not a contract but that ruling was overturned last month by a higher court on appeal by the buyer.

What does this case say? It tells us that the addition of language in the offer that the offer is subject to signing a mutually satisfactory purchase and sales agreement is not enough and is outweighed by the Notice clause according to the buyer's attorney."

In any event, you should always consult with an attorney prior to purchasing property.

The role of an attorney in a real estate transaction.  

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