Prepare for the sale of your home
The most disconcerting call a home seller can receive is one advising him or her that their closing must be delayed. As a lender’s attorney over the past twenty years, I have had to make such a call too many times. At best, everyone’s schedule is turned upside down. At worst, deals fall apart entirely, with disastrous results.
Most of these delays could have been avoided if the Seller and listing broker had been aware of the issues that typically cause last minute postponements. In this article I will briefly outline some issues which should be addressed before the property is listed for sale. If they are properly addressed ahead of time, everyone will avoid much unnecessary stress.
To begin with, I recommend that Sellers take care of Title 5 compliance at the time their property is put on the market for sale. Title 5 is the septic system inspection and certification law in Massachusetts. Now a Title 5 Certification is valid for a full two years, or three years if your septic system is regularly maintained and pumped. There is no reason to delay the Title 5 Inspection and repair work, if necessary. I have seen a number of closings unnecessarily delayed because Sellers have waited until the last minute to even start the process and then run into difficulties, such as the need for a variance or an Order of Conditions from the local conservation commission. A valid Title 5 Certification is not only a good sale aid, it will help assure a smooth closing.
If a Seller is a surviving joint owner of property, he or she may have to secure an estate tax release form from the Estate Tax Bureau of the Department of Revenue. In Massachusetts, when an owner of property dies, an automatic lien is placed against the property by the Commonwealth of Massachusetts. Even if no estate tax is payable, the lien must be released. If a Seller is the Personal Representative of an estate, the lien must not only be released, but the Personal Representative may also have to go to Probate Court to secure a license to sell the property. All this work should be started in a timely manor to avoid needless delays. For deaths occurring after January 1, 1997, an affidavit from the legal representative of the estate stating that the estate is not a taxable estate will most likely suffice.
If a Seller has made any additions to the footprint of his or her house such as an addition or a deck, it should be certified that these additions comply with local zoning bylaws. If there is any question about this, a land surveyor should be contacted to assure zoning compliance. If a problem is found, the Seller can seek a variance with the local Board of Appeals, a process which usually takes 60-90 days.
In my practice, I have found that private non-institutional mortgages have been a continuing source of problems. If a Seller has given a mortgage to a non-institutional lender, such as a friend, family member, the Seller of the property, or a private money lender, there could be problems securing a proper discharge of the mortgage. It is crucial to make arrangements well ahead of time. If a private mortgage lender has died, filed for bankruptcy, or decided to take a four month trek through the Himalayas, it could be very difficult and time-consuming to obtain a discharge of the mortgage. Arrangements should be made well ahead of time to secure a discharge of the mortgage which could be held in escrow by the Seller’s attorney, the mortgage holder’s attorney, or the lender’s attorney.
While unavoidable legitimate title problems do arise from time to time, most problems can be resolved if they are addressed in a timely manner. In these cases an ounce of prevention is truly worth a pound of cure. It is up to the Seller, listing broker, and the Seller’s attorney to anticipate these issues and deal with them. If that is done properly, the only call the Seller will receive from the lender’s attorney will be the call to schedule the closing.