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.

Selling Your Home in Massachusetts? Don’t make this classic legal mistake.

by Joshua Blumen on Friday, April 6th, 2018

“What is the biggest legal mistake a seller can make?”

As a real estate closing attorney, that’s a question I hear a lot from listing agents who want their clients to avoid legal landmines.

The answer is easy: The biggest legal mistake sellers make is taking a piecemeal approach to getting the legal support they need.

Instead of hiring an attorney to handle all the legal paperwork and negotiations that are part of every closing, sellers end up patching together legal documents and services from different sources. And they do it without the full benefit of advice and guidance from an experienced real estate attorney.

Why is this dangerous? Because sellers who take a patchwork approach to legal services often put their interests — and their closing — at risk. The closing process can be overwhelming for sellers. There’s a lot of paperwork. There’s a lot of numbers. And it’s easy to miss details that can delay or derail your sale.

Just ask the sellers who thought that completing a purchase and sales agreement was a simple matter of filling in the blanks. Or the sellers who thought that the phrase “broom clean” was just a figure of speech. Or the sellers who discovered that their agent wasn’t allowed to give them the critical legal advice they didn’t think they’d need.

Important: Your listing agent is an expert at marketing and selling your home. Your agent may be seasoned and supportive. Your agent has a fiduciary responsibility to protect you. But your agent does not provide the same services as an attorney and they cannot provide legal advice. Experienced agents know that crossing this line isn’t worth the liability. They also understand the value of expert legal advice to keep everything moving forward.

This is why experienced agents urge sellers to retain a real estate closing attorney to represent the seller’s interests.

What’s the best way to find a real estate attorney for your closing?

Ask your listing agent for a recommendation. And keep these tips in mind:

  • Start looking for an attorney when you first list your home — not when your closing is 24 hours away. You want an attorney managing the process and working in your best interests long before the actual closing.
  • Experience matters. Choose an attorney who focuses on real estate closings. Ask for references from other seller clients. Did the attorney return calls quickly? Did they help solve problems — or point fingers? Would they work with the attorney again?
  • Look for an attorney who offers a package of essential seller representation services for a flat fee. Are these services clearly defined? Does the package include preparation and negotiation of all documents? Does it include legal advice and representation up to and through closing?

The closing process can be challenging. Make sure you have an experienced real estate closing attorney on your team to give you the legal support you need — and the peace of mind you deserve.

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.