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Should You Waive Your Home Inspection?

by Joshua Blumen on Monday, July 30th, 2018

Another popular strategy that can make your offer stand out in a competitive market is waiving your home inspection contingency.

What Does it Mean to Waive the Inspection Contingency?

The inspection contingency is a standard part of typical Offers to Purchase real estate in Massachusetts. If your home inspection turns up deal-killing problems, the inspection contingency gives you the right to back out and recover your offer deposit.

In other words, the inspection contingency gives you the time and opportunity to verify the condition of the house or condo before you sign a Purchase and Sales Agreement and are required to put substantial down payment money on the line.

When you waive the inspection contingency you are agreeing to accept the property in “as is” condition. You agree to own whatever problems come with the property.

What Are the Risks?

A licensed home inspector can assist you in identifying potential problems with your new home. For example, your inspector may uncover evidence of water damage or mold. A professional home inspection may be able to tell you that your new home will need a new roof in a few years. Or that your water heater or A/C needs to be replaced.

These findings are not uncommon. And if these problems — or worse — turn up on your home inspection report, the standard inspection contingency gives you an opportunity to negotiate with the Seller.

Typically, when both parties want to make a deal, these kind of issues are resolved with the Seller agreeing to make repairs or credit the Buyer with a reduction in price. And if you can’t come to an agreement, the inspection contingency allows you to walk away with your deposit.

When you waive your inspection contingency, you assume all financial risk for whatever condition the property is in — and whatever repairs are required. Sometimes the fix is relatively simple and inexpensive. But if your problems are serious, what you don’t know can add thousands, and in some case, tens of thousands to the true cost of buying that property.

I’ve seen it happen. Take, for example, the Buyer who discovered (as they were moving in) that not all the electrical outlets worked. They ended up paying for an electrician and building permits to rewire a good portion of the house. Or the couple who found a major structural crack in the foundation after the Sellers moved out.

Were these clients happy about having to deal with these problems? Of course not. But they were happy that waiving the inspection contingency helped them craft a winning offer. The additional cost of making repairs was a risk they understood and a price they were willing and able to pay.

How to Minimize Your Risk

Waiving the inspection contingency can be an effective offer strategy, if you know what you are doing. Here are some tips to help minimize your risk:

  • Make sure you have the financial means to play this game. In a competitive market, waiving the home inspection contingency makes sense if you are a well-funded buyer. If you aren’t, this isn’t a strategy. It’s gambling.
  • Pay for a professional home inspection before you sign the Purchase and Sales Agreement. Waiving the inspection contingency doesn’t prevent you from having a home inspection. It just means you won’t be able to use results from an inspection to negotiate remedies or price with the Seller.
  • If the inspection turns up something that makes you want to walk away, you still can. Yes, you’ll forfeit your offer deposit, but it’s a much smaller loss than forfeiting the down payment you’ll be required to make when you sign the P&S.

Buying a home in Massachusetts? Get the legal help you need. For more information, contact the Law Offices of Joshua Blumen, P.C. 781-784-2500.

Owner’s Title Insurance: What is it and why do you need it?

by Joshua Blumen on Wednesday, April 25th, 2018

You’re about to close on the sale of your home. The buyer has lined up financing. You’ve lined up the movers and the final walk-through. Everything is on track and on time.

Until you get a call from your attorney. There’s a problem with your title — and it’s complicated. The bottom line: You aren’t closing on time. In fact, until you solve your title problem, you aren’t closing, period.

Now what? Well, that depends. If you have an Owner’s title insurance policy, all the costs of fixing your title defect are covered.

If you don’t have Owners title insurance, you’re on the hook for all costs to get your title free and clear. That can easily add up to thousands in out-of-pocket legal fees — if you’re lucky. Complex cases can easily run to tens of thousands. And in extreme cases, you could lose your equity and your home.

What is Owner’s title insurance?

It’s an insurance policy that protects the integrity of your title, the legal document that says you are the rightful owner of your home.

When can you buy Owner’s title insurance?

The time to buy Owner’s title insurance is at the closing when you buy your home.

Why do you need Owner’s title insurance?

As part of the closing process, a title search is performed that goes back at least 50 years to verify that the title is “free and clear” from claims. But what if the title search misses something? Or one of the documents you relied on to establish clear title turns out to be a forgery? And what if — like most homeowners — you don’t discover this problem until you go to sell your home?

That’s the value of Owner’s title insurance: It protects you from things that may have happened before the property became yours. If there’s a claim against your rightful ownership, title insurance will protect and defend you – with letters and lawyers (and court, if necessary). Find out there’s a long-lost heir who says your house is his house? Covered. Forged signature from a prior owner’s deed? Covered. Old tax liens that should have been paid before closing? You’re covered.

Title problems don’t discriminate. They pop up in titles for single family homes, condos, and investment properties. I’ve found title problems in new construction. And I’ve discovered title problems in a property that was in a client’s family for as long as anyone could remember. Where there’s title, there is always the risk of unforeseen problems.

Aren’t I already paying for title insurance at closing?

If you are buying your home with a mortgage, the answer is yes. Your lender will require you to buy a Lender’s title insurance policy. But the Lender’s policy only protects the lender’s interest in your home — not yours. To protect your interest, you need an Owner’s title insurance policy.

Here’s the good news:

  • Unlike homeowner’s or auto insurance, which you pay each and every year, you only pay for Owner’s title insurance once.
  • The cost is paid at closing as an item on your settlement statement.
  • The one-time premium is based on the purchase price of your home.
  • Owner’s title insurance lasts as long as you own the property.

Your home is going to be one of your most expensive investments. Make sure you protect yourself with an Owner’s title insurance policy at closing. It’s an easy, one-time payment for long-term peace of mind.

Buying a home in Massachusetts? Get the legal help you need. For more information, contact the Law Offices of Joshua Blumen, P.C. 781-784-2500.

The Homeseller’s #1 Closing Nightmare — and How You Can Avoid It

by Joshua Blumen on Monday, April 16th, 2018

You know the expression “It ain’t over till it’s over?” Well, it applies to selling your home, too. Things can and do go wrong at the last minute. And it’s not always a bolt from the blue that derails your closing.

In fact, the most common closing day nightmare for sellers isn’t something dramatic, like the buyer’s financing falling through. It’s failing to leave the house in “broom-clean” condition.

I know it’s hard to believe that such a mundane phrase can cause such chaos. But I’ve seen it happen time and again.

Broom-clean condition,” which is the exact phrase likely to be used in your Purchase and Sales Agreement, means that you have agreed to leave your home for the buyer as if it has been swept with a broom.

To meet the broom-clean requirement, you don’t need to hire a professional cleaning crew (but that’s not a terrible idea if you want to be really sure). You don’t even have to sweep it with a broom. But you do have to get all of your stuff out. And that means all of your stuff. Cabinets and storage spaces in the house and the garage should be empty. All trash and debris should be removed. Nothing should be left behind for you to come back for later – because later this won’t be your house.

What should you leave behind? Only those items listed in your Purchase and Sales Agreement, such as keys and garage door openers, and anything else you have specifically agreed to leave, like a refrigerator or washer and dryer.

Don’t assume your buyer wants those extra roofing shingles or your old gas grill propane tanks, either. Unless it’s on the “agreed to leave” list, that stuff goes.

Not cleaning the house isn’t the only way sellers fail to leave the home in broom clean condition. Sometimes in the mad dash to get those last few things into the car or moving van, you scratch a floor or crack a tile. Or break a window. Or you (accidentally!) put the leg of a chair through a wall. Like I did. Twice.

How can you avoid this entirely avoidable closing nightmare?

  • Take the “broom clean” requirement on your P&S Agreement seriously — because your buyer will. Buyers are nervous enough as it is. Why give them any reason to be suspicious about your attention to detail — and any reason to look more carefully for what else isn’t the way it’s supposed to be?
  • Plan ahead. Don’t wait until the last possible moment — the buyer’s final walk-through — to broom clean your house. Buyer’s don’t want to see your old stuff in their new home. And not just because it feels intrusive. They want to make sure there are no problems hiding behind any of your stuff. (Like a couple of chair leg holes in the wall, for instance.)
  • Keep your agent and your attorney in the loop. If you even THINK there’s a chance you won’t have your house broom clean in time, tell them — and the sooner the better. In nearly all cases, your agent and attorney can help negotiate a solution that will allow you to close on time. But they can’t solve problems they don’t know about.

Selling your home in Massachusetts? Get the legal help you need. For more information, contact the Law Offices of Joshua Blumen, P.C. 781-784-2500.