Here’s just one example: Who owns the architect’s drawings and plans? You might assume that you do, since you’re paying for them. But one of the most commonly used standard contracts says that the architect, not you, has all ownership rights (including copyrights) in any drawings, plans, or specifications that the architect creates.

What does that mean? It means that if the contract with the architect is terminated for any reason, you have to return all the documents to the architect, and you no longer have a right to use the plans for your building!

There is a provision that says that if the architect is “adjudged” to be in default, you can go ahead and use the plans – but having an architect “adjudged” to be in default can be very time-consuming and expensive.

This gives an architect tremendous leverage to have you settle any dispute in his or her favor, so that you can continue with the construction.

Instead of signing this standard contract, you might want to insist that the architect’s plans will be a “work for hire” – an arrangement that means you will own the plans, not the architect.

Some architects may be reluctant to agree to a “work for hire” arrangement, because they want to be able to legally use similar plans in the future for other clients. In such a case, you might be able to compromise by agreeing that the architect will own the plans, but you’ll have an unrestricted right to use them as long as the architect has been paid in full according to the contract.

Needham MA real estate lawyer, Attorney Alan Segal serves the Boston region in all real estate transaction matters including the communities of Acton Agawam Amherst Andover Arlington Attleboro Barnstable Belmont Beverly Billercia Boston Braintree Bridgewater Brockton Brookline Burlington Cambridge Canton Chelmsford Chelsea Chicopee Danvers Dartmouth Dedham Dracut Easton Everett Fall River Falmouth Fitchburg Framingham Gloucester Haverhill Holyoke Lawrence Leominster Lexington Lowell Lynn Malden Marlborough Medford Melrose Metheun Milford Milton Natick Needham New Bedford Newton North Andover North Attleboro North Reading Norwood Peabody Pittsfield Plymouth Quincy Randolph Revere Salem Saugus Shrewsbury Somerville Springfield Stoughton Taunton Tewksbury Waltham Watertown Wellesley Westfield West Springfield Weymouth Woburn Worcester.

New construction has a lot of advantages – but it can also be more complicated, and there are some potential trouble spots as well. You should definitely speak with your Massachusetts real estate attorney before you sign anything in order to make sure you’re protected.

There are three big advantages to new construction:

One, everything’s new! You get to enjoy a brand-new kitchen, brand-new bathrooms, brand-new appliances, etc. Plus, you can avoid paying for major common-area maintenance items that an older building might need, such as repainting or roof repairs.

Two, if you buy before construction is completed, you can often have the finish work done to your liking: You can choose paint colors, bathroom tile, kitchen surfaces and so on.

Three, you might get a good deal. Developers often need to “pre-sell” a certain percentage of the units in order to complete their construction financing. For that reason, they may be willing to offer very attractive prices to people who buy in early.

On the other hand, there are a lot of things you’ll have to worry about that aren’t a problem for buyers in more established communities. Here are some things to consider:

• The developer’s offering plan will contain the specifications for the unit, including exact size, the standard appliances or appliance allowance, what finishes to expect, and so on. This document can be dense and difficult. You’ll want to make sure you understand exactly what you’re supposed to be getting, and make sure the developer fulfills his or her obligations as the construction continues. (Don’t just rely on brochures and verbal promises, which might not be legally binding.)

• At the time you put down a deposit, the condominium documents might not yet have been finalized. You’ll want to look these over carefully as soon as they’re official, to make sure you agree with the rules for the association. Are you happy with the condo fees, any restrictions on pets, and other issues?

• If construction is delayed for any reason, will you have a place to live until the building receives a certificate of occupancy?

• Getting a mortgage for new construction can be difficult. For instance, Fannie Mae won’t back a mortgage unless a certain percentage of the units in the building are already under contract. That means that if you’re one of the earlier buyers, you might have trouble getting a loan. Even if you’re a later purchaser, Fannie might be reluctant to okay the building if a significant number of the units will be owned by landlords or investors, as opposed to people who actually live there. (Some developers try to solve this problem by having a “preferred” mortgage broker who is skilled at obtaining loans for a particular development. This might be useful, although some buyers don’t like the idea of using a broker who is working with the seller.)

• Another mortgage problem is getting a good appraisal. Appraisals are based on “comparable sales,” and with a new building, it might be hard to find comparable sales. An appraiser might have to rely on sales of units in older buildings, and this could result in an appraisal that comes in below your purchase price.

• Don’t assume that new construction always means high-quality construction. Developers have been known to cut corners, especially with last-minute details and especially if they’re having trouble selling units and need to reduce their costs. You could wind up with low-quality windows or tile, or problems with floors, ventilation systems, and so on. It’s vital to hire a good home inspector even for a brand-new home.

• While it’s true that a new building shouldn’t need any major repairs for a while, it’s also true that a new association probably won’t have built up a reserve fund, so condo fees might need to be higher to account for that.

• If a significant number of units in the building remain unsold, the developer might rent them. You might wind up with a lot of short-term neighbors who don’t share your level of interest in property maintenance.

• Buyers of new construction sometimes qualify for property tax abatements. You’ll want to make sure you understand what tax savings you’re entitled to, and how to obtain them.

• Closing costs can be higher for new construction, so be prepared.

Many people who buy a new-construction condo end up with a beautiful home at a reasonable price. Just be sure to consult with a knowledgeable Massachusetts real estate attorney first…so you can increase your chances of being one of them.

Boston Metrowest real estate lawyer, Attorney Alan Segal serves the Boston region in all real estate transaction matters including the communities of Acton Agawam Amherst Andover Arlington Attleboro Barnstable Belmont Beverly Billercia Boston Braintree Bridgewater Brockton Brookline Burlington Cambridge Canton Chelmsford Chelsea Chicopee Danvers Dartmouth Dedham Dracut Easton Everett Fall River Falmouth Fitchburg Framingham Gloucester Haverhill Holyoke Lawrence Leominster Lexington Lowell Lynn Malden Marlborough Medford Melrose Metheun Milford Milton Natick Needham New Bedford Newton North Andover North Attleboro North Reading Norwood Peabody Pittsfield Plymouth Quincy Randolph Revere Salem Saugus Shrewsbury Somerville Springfield Stoughton Taunton Tewksbury Waltham Watertown Wellesley Westfield West Springfield Weymouth Woburn Worcester.

The closing attorney for the sale of my home in Dedham, MA was aware of the necessity to payoff my FHA loan at a certain time to avoid additional fees. The payoff was rejected by my lender because it wasn’t a “certified check, cashier’s check, or bank wire”, as required by the lender’s Payoff Statement. After being contacted by the lender, he then sent a certified check which was received after the deadline and I was charged additional interest and fees. He admitted to ignoring the lender’s requirements, but refuses to reimburse me because he was not responsible for the payoff of my loan. What can I do?

ATTORNEY ANSWER:

You may have a cause of action against the closing attorney since he assumed the responsibility regarding the payoff of the FHA loan, including timeliness of correct payment. Having assumed the responsibility for payment of the payoff, he is now liable for any late fees or penalties that have resulted from his negligence or oversight. You should make a formal demand upon him for reimbursement.   If he fails to pay, you have a good cause of action against him and could seek multiple damages in court plus attorney fees and costs. 

Dedham Closing Attorney Alan Segal provides legal representation for all real estate transactions and serves individuals and business in Dedham, MA and the surrounding Greater Boston region including: Newton, Needham, Westwood, Dover, Natick, Wellesley and Weston.

We are buying a home in Needham, MA. The seller signed a purchase and sale agreement to pay for our closing cost, but he says he did not know that what he signed was actually to do this. The sellers now understand that what they signed is seller’s concession towards buyers closing cost but the sellers never intended to pay the buyers closing costs and they don’t even have their own seller’s agent in an attempt to save money and not pay a realtor commission. My question is, are they liable to pay for our closing costs?

ATTORNEY ANSWER:

Yes, the seller will be liable to pay for your closing costs. The purchase and sale agreement is a legal contract.  However, the maximum amount the seller can pay may depend on the loan program, and, in some cases the amount you’re putting down to purchase the home.  For example, for FHA and USDA loans, sellers can contribute up to 6% of the purchase price towards closing costs. For FHA loans, seller concessions will soon be reduced to 3%.

The Lender may decide to disallow a specific expense on the “Closing Statement”. The Government approved closing statement is called a HUD-1, and the buyer and seller are given one to approve at the closing on the sale. The HUD-1 lists the details of all expenses and payments in the sale, and it is on this document that the lender may disapprove of an item.

Since lender approval of the HUD-1 is the final step standing in the way of completing the sale, buyers often accept the lenders terms, even though it is their loss. However, if you are lucky enough that the seller contracted to pay the buyers closing costs, then the seller is liable and he will be responsible for covering the closing costs he contracted to pay for. If he refuses to proceed with the closing, you can sue him to complete the transaction.  That is called a suit for specific performance.  The alternative is to re-open the negotiations, which can be a quicker approach. 

Needham Closing Attorney Alan Segal provides legal representation for all real estate transactions and serves individuals and business in Needham, MA and the surrounding Greater Boston region including: Newton, Dedham, Westwood, Dover, Natick, Wellesley and Weston.

BUSINESS FORMATION

Alan H. Segal
Law Office of Alan H. Segal
175 Highland Avenue
Needham, MA 02494
Phone: 781-444-9676
Fax: 781-444-9974
Email: alan.segal@segallawoffice.com
Website: www.segallawoffice.com

Alan is involved in all aspects of business formation and entity selection for businesses throughout Greater Boston and Massachusetts. He has experience as a consultant with TV, Radio and the print media. He can assist in creating limited liability companies, sub S and C corporations, general partnerships and sole propriertorships. With over 30 years of Massachusetts business experience, Attorney Segal advises clients on which business entity will serve their long-term business needs.When buying or selling a business or when considering a merger with another company, Attorney Alan Segal provides the insight, knowledge and experience you need to make sound business decisions through each step of the process.

We are buying a house in Quincy, MA and the seller didn’t provide the Property Transfer Lead Paint Notification form before signing the Purchase and Sale Agreement.  This is a clear violation of MA law and Federal law. Can this be used as a negotiating point to lower the sale price?

ATTORNEY ANSWER:

It depends upon whether or not the seller knowingly violated the law. If you are unable to prove that the seller knew of the lead paint and knowingly violated MA and federal law by not providing the Property Transfer Lead Paint Notification, then you will not have a cause of action as the seller must be aware of his violation to be found liable. However, on the other hand, if you are able to prove that the seller violated MA and federal law by having knowledge of the lead paint and not providing the Property Transfer Lead Paint Notification, then yes, you may use this as a negotiating point.

A seller who knowingly violates the law shall be jointly and severally liable to the buyer in an amount equal to 3 times the amount of damages incurred by the buyer under federal law. Also under federal law, a court may award court costs to the buyer, together with reasonable attorney fees and any expert witness fees, if the buyer prevails. Under MA state law, real estate agents, property managers and certain landlords and sellers, where applicable, may be subject to civil liability under the Consumer Protection Statute, M.G.L. c. 93A, which allows award of up to two or three times actual damages and attorneys fees.

Quincy MA Real Estate lawyer Attorney Alan Segal serves the Greater Boston region and all of Massachusetts in real estate law, business law, and estate planning including Acton Agawam Amherst Andover Arlington Attleboro Barnstable Belmont Beverly Billercia Boston Braintree Bridgewater Brockton Brookline Burlington Cambridge Canton Chelmsford Chelsea Chicopee Danvers Dartmouth Dedham Dracut Easton Everett Fall River Falmouth Fitchburg Framingham Gloucester Haverhill Holyoke Lawrence Leominster Lexington Lowell Lynn Malden Marlborough Medford Melrose Metheun Milford Milton Natick Needham New Bedford Newton North Andover North Attleboro North Reading Norwood Peabody Pittsfield Plymouth Quincy Randolph Revere Salem Saugus Shrewsbury Somerville Springfield Stoughton Taunton Tewksbury Waltham Watertown Wellesley Westfield West Springfield Weymouth Woburn Worcester.

Now I’ve changed my mind. How do I get out of it?

ATTORNEY ANSWER:

Prospective homebuyers who want to escape a purchase contract should turn first to the agreement itself. Most states require that real estate contracts be in writing to be enforceable, and most real estate contracts include contingencies, or conditions, that must be met for the deal to close.

Contingencies offer various ways to cancel a contract up until the minute when the contingency is either met or its associated time period expires. Which contingencies are included in a contract depends on state law, local custom, and negotiations between the seller and buyer. Some examples of common contingencies include appraisals, home inspections, and an inability to get a mortgage and title. For instance, if the property isn’t appraised at the value that they agreed to, the bank isn’t going to give the buyer the money to buy the property, so that’s obviously a definite out.

If the contingencies don’t offer an out, another option is to breach the contract. Taking this step is a major decision because it could result in forfeiture of the buyer’s earnest-money deposit or a lawsuit brought by the seller as well as accusations of bad faith and loss of any sums the buyer has spent on an appraisal, title report and home inspection.

Some buyers try to finesse a contingency to create a loophole that doesn’t legitimately exist, so they can break out of a contract without a breach. An example would be pressuring the seller to make unnecessary or excessive repairs in a deliberate effort to kill the deal. This strategy is also an instance of bad faith.

Many real estate contracts contain a liquidated damages clause, which specifies how much the seller will get if the buyer breaches the contract. The sum may be equal to the deposit or down payment, but could also be some other amount. If you breach and don’t have an excuse that’s permitted under the contract, then the seller retains your down payment as liquidated damages. Liquidated damages compensates the seller for any lost opportunity during the time that the home was off the market.

If the buyer breaches the contract, the seller may resort to a lawsuit for specific performance. Essentially, specific performance means a court will force someone to go through with whatever he or she promised to do. This type of lawsuit is rare, perhaps because sellers realize the buyer may not have the money needed for a judgment. But if the seller can’t find another buyer and believes the one who breached the contract can complete the purchase, specific performance may be ordered.

Legalese aside, another option for buyers is to confess that they can’t or don’t want to purchase the house, perhaps due to buyer’s remorse, job loss, or other financial setback. However, this is contingent upon how empathetic the seller is to your disposition.

Newton, MA Real Estate lawyer Attorney Alan Segal serves the Greater Boston region and all of Massachusetts in real estate law, business law, and estate planning including Acton Agawam Amherst Andover Arlington Attleboro Barnstable Belmont Beverly Billercia Boston Braintree Bridgewater Brockton Brookline Burlington Cambridge Canton Chelmsford Chelsea Chicopee Danvers Dartmouth Dedham Dracut Easton Everett Fall River Falmouth Fitchburg Framingham Gloucester Haverhill Holyoke Lawrence Leominster Lexington Lowell Lynn Malden Marlborough Medford Melrose Metheun Milford Milton Natick Needham New Bedford Newton North Andover North Attleboro North Reading Norwood Peabody Pittsfield Plymouth Quincy Randolph Revere Salem Saugus Shrewsbury Somerville Springfield Stoughton Taunton Tewksbury Waltham Watertown Wellesley Westfield West Springfield Weymouth Woburn Worcester.