Law Office of Jennifer L. DiCarlo, PLLC

Monthly Archives: August 2013

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In the World of Real Estate, Timing Is Everything

Interest rates are up, and then they go down.  Prices fall sharply then, almost overnight, they’re on the rise again.  For some, it’s all just a matter of timing.  You took the time to save up your down payment, now you’re ready to find your dream home.  The money’s in the bank, you’re prequalified and you’re working with an agent.  Will your dream home be out there now that you’re ready?

The same holds true for the inner workings of a real estate deal – it’s all just a matter of timing and sometimes timing is everything.  Having been involved in hundreds of real estate transactions, the one thing I’ve found to be consistent with the smoothest ones is the fact that the timing from submission of an offer to passing papers at the closing table has been calculated with some level of precision.  The buyer wasn’t succumbing to pressure to close the same month their lease was expiring or some date fixed by the seller to accommodate their vacation schedule and the lender wasn’t promising to deliver according to some unrealistic deadline just to get the loan.  Instead, a set of very achievable deadlines was chosen for each of the major steps of the process after consultation with all of the necessary parties and consideration of all that must be accomplished before a closing can occur.  This is the way real estate transactions should always be handled.  But, that’s rarely the case.

Often when an offer comes across my desk for review, it’s already been accepted and that was after some negotiation back and forth.  The first thing I always look at is the timing of the transaction.  When is the home inspection deadline?  When do the parties need to execute the Purchase and Sale Agreement?  What date did the buyer’s agent include for the application and mortgage contingency deadlines?  When are we closing?  Is there enough time to get the tax and title information, resolve title issues and prep for closing?  Or, are we going to be requesting extensions of all of the deadlines right out of the gate?

If there was some back and forth between the parties, it’s typically not because of timing but more a matter of pricing or inspectional issues.  The parties hash out their differences and the offer gets modified with a new price, or some seller concession.  But, the parties never bother to revisit the dates of the original offer and now it is one week, two weeks or even longer since it was first submitted.  Those original deadlines have now been shortened and we’re not even at the Purchase and Sale Agreement stage!  Furthermore, the buyers may not have even had a full conversation with their lender about how much time it will take to process their mortgage application, order and review an appraisal, review title issues and so on.

The agony that ensues because of poorly chosen dates is difficult for any of the parties to deal with.  Often a title examination requires additional work because of possible defects or a complicated history.  This then delays the issuance of the mortgage commitment, which in turn holds up the lender from clearing the loan to be closed.  If there are true title defects, it can take weeks of discussions to come up with possible resolutions.  Not only can this slow the mortgage process, but it can drive the whole transaction to a screeching halt.  The ramifications go on and on.  Imagine the scenario where the seller has already gone and put a replacement property under contract with the intention of using the proceeds from the sale of their existing home, which may or may not close in the near future!

So, what is the answer?  There are three actually:  planning; diligence; and flexibility.  When making and accepting offers, the parties must plan well by reviewing their needs, the lender’s needs and those of other affected parties as well as considering how much time is needed to complete the various tasks.  The parties, especially the buyer, must be diligent in responding to document requests from their lender, timely completing inspections and other due diligence and maintaining constant communication with their attorney, agent and lender.  Sellers need to be diligent about making negotiated repairs or vacating the property.  Finally, the parties must be flexible.  They have to understand that despite negotiated deadlines and best efforts, some transactions just can’t close on time as originally planned due to issues that could not be foreseen or resolved as quickly as desired.  If the parties contract with each other installing these three attributes into their transaction, a successful closing will not be too far off.

 heir

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When and how can a Massachusetts landlord charge a tenant for water?

According to Massachusetts General Laws Chapter 186, Section 22, a landlord must follow very specific procedures before they can require a tenant to pay for water.  When a unit is not directly connected to a meter installed by a water company, the law requires installation by a licensed plumber of separate submeters for the individual units and the common areas as well as a primary meter for the building so that all water being used in the building is measured by the primary meter and the individual submeters serving particular units or common area.  So, for example, if a building contains 4 dwelling units and a basement where water is utilized for the entire building, a landlord would need to have 5 submeters installed in addition to the primary meter that measures the building’s water use in its entirety.  But that’s not all.  A landlord must also have a licensed plumber install low-flow showerheads, faucets and toilets meeting statutory flowage requirements.  The installation and subsequent maintenance of the equipment are solely at the landlord’s expense.  When the metering and water conservation devices are in place, the landlord must certify to the local board of health or health department that they have complied with the statutory prerequisites.   Once a building has been retrofitted with the proper equipment and the landlord has given their certification, a tenant may be charged for water usage subject to a few more requirements.  First, a landlord may only begin charging a tenant for water usage at the commencement of a new tenancy.  They cannot start charging a tenant for the first time mid-tenancy.  Further, the landlord and tenant must enter into a written rental agreement that unambiguously discloses how the tenant’s water usage will be measured and details the billing arrangement between the parties.   If a tenancy begins in the middle of a billing period before the landlord has received a bill from the water provider, the landlord must take a reading on the unit’s submeter on the first day of the tenancy and mail it to the tenant.  The tenant’s first bill from the landlord for water usage must take into account this initial submeter reading.  Each bill must include the current and last submeter readings with dates for each, the amount of water used by the tenant since the prior reading, the cost per unit of water, the total due and the payment due date.  A landlord cannot recover from the tenant any additional servicing, administrative, establishment, meter-reading, meter-testing, billing, or submetering fee or other fee whatsoever, however denominated, that is charged to the landlord by the water provider.

If a landlord bills the tenant for water usage on a monthly basis, payments are due from the tenant 15 days after the mailing date of the bill; if billed at intervals greater than a monthly basis, a tenant has 30 days after the mailing date of the bill to pay.  While service cannot be shut off or refused to a tenant on the basis that they have not paid their bill, landlords can find some solace in the fact that a tenant’s failure to pay for water usage when due is a material breach of the parties’ written rental agreement subject to judicial action.  A landlord who engages in self-help by willfully failing to furnish water or directly or indirectly interfering with the furnishing by another of water, or transferring responsibility for payment for water to the tenant without their knowledge or consent, is punishable by a fine of not less than $25.00 nor more than $300.00 , or by imprisonment for not more than 6 months and is liable for actual and consequential damages or 3 month’s rent, whichever is greater, and the costs of the action, including a reasonable attorney’s fee. If a tenancy terminates in the middle of a billing period for which the landlord has not yet received their water bill, the landlord must take a reading on the unit’s submeter on the last day of the tenancy and provide a final bill for water usage that starts with the prior reading and ends on the last day of the tenancy. The rate charged in the final bill, which is immediately due and payable by the tenant, shall be the same charged in the prior bill.  If not immediately paid by the tenant, the landlord may deduct the final billing amount from any security deposit paid by the tenant so long as procedures set forth in the security deposit law, and not discussed here, are followed.  If, when the landlord is finally billed by the water provider, a lesser rate is charged, the landlord shall refund the difference to the tenant.   Any landlord considering charging a tenant for water usage should carefully consider the ramifications of doing so.  While this article is an overview of the subject, it is in no way comprehensive.  Obtaining legal advice is recommended for any landlord considering submetering in light of the stiff penalties imposable for failure to follow the law’s burdensome requirements.