The following is an overview of what is happening behind the scenes from the time you contract to buy your property until the day it closes.
Earnest Money – Typically, the listing agent will deposit your earnest money in an escrow (neutral) account. The disposition of any earned interest will be negotiated by the attorneys and the agreed upon terms will be included in the “Deposits” paragraph of your Purchase and Sale Agreement (P&S).
Document Review – If you are purchasing a condominium, your attorney will review relevant documents and information such as the Master Deed, Declaration of Trust (condominium by-laws), operating budget, financial statements, and meeting minutes (when available). For single and multi-family buildings, your attorney will review documents available at the Inspectional Services Department (ISD) in order to verify the legal use and occupancy of the property as it has been represented by the listing agent.
Mortgage Approval – There are two components of this process that will require facilitation by the participating agents. The first is the appraisal. Your lender will hire an approved appraiser who they consider to be a neutral third party. This appraiser will visit the property and prepare a detailed report determining its fair market value. The listing agent will provide access to the property, yet has no input or influence into the final outcome. In the case of a condominium, there is often a questionnaire to be completed by the Management Company or a trustee of the condominium association. Your attorney will be mindful of the mortgage commitment date as spelled out in your P&S and will prepare and send a written request for extension to the seller’s attorney if the commitment cannot be obtained by the agreed upon date.
Title Exam – The lender’s attorney (or buyer’s attorney when a buyer is paying cash) will hire a title examiner to ensure that the seller will be able to convey “a clear and marketable title” to the property as stipulated in the Offer to Purchase and reiterated in the P&S. This becomes the basis by which the attorney is able to certify title, thereby making it possible for title insurance to be purchased. Your lender will require that you purchase title insurance which will be arranged for you and appear as a closing cost on your settlement sheet (HUD1 Statement). I would be happy to discuss the importance and benefits of purchasing an owner’s policy as well.
Smoke and Carbon Monoxide Detector Certification – In order to comply with state law as referenced in the P&S, the seller must provide a certificate of compliance at closing stating that the property has properly installed smoke and carbon monoxide detectors. I will be in communication with the listing agent to arrange for the local municipality to inspect the premises in order to obtain the necessary documentation, which will be delivered to the closing attorney.
Certificate of Non-Assessment (6D Certificate) – When purchasing a condominium, you will need legal documentation that the current owner has no financial obligation to the association as of the closing date. To this end, and per the terms of your P&S, the seller will provide at closing, a notarized statement that has been signed by a trustee of the condominium association reflecting a zero balance.
Insurance – If you are purchasing a condominium, your attorney and lender will require proof that the association carries adequate insurance (the premium for which is included in the condominium fee). This proof comes in the form of a certificate of insurance which names you and (when applicable) your lender as loss payee. I will either coordinate this process or verify that your lender is ordering it directly. If you are purchasing a building, you will be responsible for purchasing your own hazard insurance, and if a lender is involved, proof of that policy must be provided to the lender or lender’s attorney prior to the closing.
Municipal Lien Certificate – The lender’s attorney (or buyer’s attorney when there is no financing involved) will order an MLC from the appropriate municipality. This certificate will reflect any outstanding taxes or taxes that have already been paid so that the proper adjustment can be included on the settlement statement at closing.
Final Water Reading – In the case of a single or multi-unit building, a certificate from the Boston Water and Sewer Commission, stating the account balance, is required at closing. I help facilitate the final reading and provide the information to the attorneys as soon as it is available.
Pre-Closing Walk-Through – The final walk through is usually scheduled within 24 hours of the closing. This gives the buyer a chance to ensure that the sellers have moved out and left the property “broom clean” and in substantially the same condition it was at the time the offer was made. If any repairs were to be done prior to closing, this gives the buyer an opportunity to confirm that they were completed before the property changes hands. In the case of new construction, there may be an additional inspection in order to generate a “punch list” which will usually result in a final walk-through just before closing.