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  HAROUTUNIAN LAW OFFICE

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What is a Trust?

10/30/2018

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Question: I am interested in estate planning, but most lawyers go off the rails when discussing the use of trusts. Can you explain "trusts" in real world terms?
 
Answer:  I understand the mental haze formed by a single word.  Whenever my computer technician mentions a "server", my mind fogs up.  I am happy to explain a trust in its most basic form.
 
There are two major functions of a trust: 
 
1. A trust is like a rule book for your ownership of property.  For example, let's say you own your home individually. There are no rules to your ownership. You can sell anytime while you are alive, and leave the home to anyone in your Will.
 
However, if you wish to take advantage of certain tax or Medicaid laws, or if you just wish to avoid probate - a trust will impose certain rules on your ownership, which benefit you.  
 
Trusts aren't only for the 1%.  In fact, Medicaid avoidance trusts are primarily used by the middle class to ensure government funding for potential nursing home care.
 
2.  A trust can split ownership of property so one person manages and one person benefits.  This split usually occurs after you pass away.  For example, let's say my wife and I should pass away early.  Our two children will benefit by my meager assets - which will be managed by my brother.
 
If a lawyer struggles to properly explain these concepts, or if this column doesn't work for you, keep searching.  You need to understand your estate plan. 
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When Extending Closing Date, Don’t Forget About Extra 30 Days

10/25/2018

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Question:  The builder of my new home experienced delays.  Through our realtor, we agreed to extend the closing date.  When the new closing date arrived, the builder was still not ready.  We refused to extend further, but he was able to use a special clause in the contract.  Apparently, he had 30 more days to get ready.  We were surprised about the special contract clause.  Is this common?

Answer:  Yes, most purchase and sale contracts have a 30-day extension clause.  It can be a good thing for both parties.

For a buyer, the extension clause can prevent a seller from refusing to sell, by taking advantage of a minor title or condition issue.  For your seller, he was able to have extra time to get the property finished.  Overall, the clause is intended to keep the parties working together in good faith if the property is not ready to sell.
​
It is important for attorneys and brokers to remember these extra 30 days, when agreeing to extend closing dates.  Here is the common scenario: A seller is not ready to close, so the parties simply amend the contract’s closing date.  Instead, buyers’ attorneys or brokers should consider “burning off the additional 30 days”.  This may give a buyer leverage against further delay.  However, a buyer risks losing the deal, if a seller still can’t close at the end of 30 days. 

During contract negotiation, this 30-day extension clause is often altered to a) limit the number of days, if a buyer’s mortgage rate is affected by the delay, and b) limit the amount of money a seller must pay to comply with the clause.  These “what if” scenarios are important to consider in each deal, and represent the value a real estate attorney provides.  
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Notarizing Not a Family Affair

10/23/2018

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Question:  I am a notary in Massachusetts.  Can I notarize my spouse’s signature?

Answer:  Though it may be possible in other states, Massachusetts does not allow notarization of a spouse’s signature. Similarly, you cannot notarize for your parent, child, or sibling, including in-laws, step, or half siblings.  This rule may be restrictive.  But in researching this answer I learned of a much looser standard for notaries.

A notary can notarize for “friends of friends”.  What does this mean?

If a signer has no identification, and is not personally known to the notary, there may be hope.  Notarization may be allowed if the signer can be identified on the affirmation of a “credible identifying witness”.  The word of a credible identifying witness is satisfactory evidence of identity and similar to personal knowledge.

The credible identifying witness must personally know the signer and must be personally known by the notary. An effective chain of witnesses is created.  The credible identifying witness should not be involved with the document or have any financial interest in the matter.   
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Confidential Septic Assessment Offers Solution

10/18/2018

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Question:  I am selling my deceased parents’ home in “as is” condition.  I cannot make any representation about the home to the developer buying.  I know nothing about the home’s septic system, and the buyer is willing to waive Title V requirements that I repair any defects.  However, the buyer still wants to know about the system before closing.  Any thoughts?

Answer:  Your buyer is willing to buy the home whether or not the septic system passes the requirements of Title V – a state law requiring sellers to pass an inspection of a septic system before selling.  This is good, because, a system repair could cost you tens of thousands of dollars.  Moreover, you want to remain in the dark about knowing the condition of the septic system.  You can satisfy the Buyer’s curiosity, by allowing their confidential assessment.

With a confidential septic system assessment, the buyer will hire a professional to review the septic system – similar to a formal Title V inspection.  This glimpse informs the buyer if the system will pass or fail Title V.  Importantly, the results of the assessment will be confidential on the Buyer’s side.  Your contract can obligate the results to be held in confidence, while keeping the buyer in the deal regardless of the results. 

This way, the buyer gets his or her answer early, and you remain uninformed in the future in case this deal falls through.
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When Extending Closing Date, Don’t Forget About Extra 30 Days

10/16/2018

0 Comments

 
​Question:  The builder of my new home experienced delays.  Through our realtor, we agreed to extend the closing date.  When the new closing date arrived, the builder was still not ready.  We refused to extend further, but he was able to use a special clause in the contract.  Apparently, he had 30 more days to get ready.  We were surprised about the special contract clause.  Is this common?
Answer:  Yes, most purchase and sale contracts have a 30-day extension clause.  It can be a good thing for both parties.
For a buyer, the extension clause can prevent a seller from refusing to sell, by taking advantage of a minor title or condition issue.  For your seller, he was able to have extra time to get the property finished.  Overall, the clause is intended to keep the parties working together in good faith if the property is not ready to sell.
It is important for attorneys and brokers to remember these extra 30 days, when agreeing to extend closing dates.  Here is the common scenario: A seller is not ready to close, so the parties simply amend the contract’s closing date.  Instead, buyers’ attorneys or brokers should consider “burning off the additional 30 days”.  This may give a buyer leverage against further delay.  However, a buyer risks losing the deal, if a seller still can’t close at the end of 30 days. 
During contract negotiation, this 30-day extension clause is often altered to a) limit the number of days, if a buyer’s mortgage rate is affected by the delay, and b) limit the amount of money a seller must pay to comply with the clause.  These “what if” scenarios are important to consider in each deal, and represent the value a real estate attorney provides.  
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