Articles by Thomas O. Fenn, Esq.
If you are considering selling income or investment property, you need to know about the "Like-Kind" Tax Deferred Exchange Transaction allowable under the Internal Revenue Code s. 1031. The policy behind the 1031 Like-Kind Exchange involves the desire to allow owners to dispose of their income or investment property and acquire replacements without incurring the Capital Gain Tax.
At the time of drafting an Offer and Purchase and Sale Agreement, language must be included informing a Buyer that it is the Sellers intent to complete a 1031 Exchange. Two simple but critical requirements are that the Seller acquire "Like-Kind" replacement property and the Seller holds no funds from the sale of the property.
A Qualified Intermediary is established to hold all proceeds from the sale of the Sellers property while the Seller has 45 days from the closing of the sale to identify a purchase property and 180 days to close on the identified purchase property. A number of simple steps and conditions are needed to complete a Tax Deferred Exchange and one should consult an Attorney regarding this process.
When looking for a new home or selling your home it is most important to have the support and good advice from professionals experienced in such matters. Real Estate transactions can be perceived to be easy, simple transactions not requiring an Attorney or Real Estate Broker. However, the reason these transactions can go so smoothly is due to the experience and guidance of these professionals. One shouldn't be fooled or lead astray by "arm chair" advice of those who say, " Its easy, you don't need a lawyer, why pay the extra cost", or, "Sell the home yourself, you don't need a broker, you'll save on the broker fee".
The offer and purchase and sale documents are like minefields waiting to explode when the unexpected happens and such costs can be devastating both emotionally and financially.
One Example of this "minefield" is the recent case of McCarthy vs. Tobin which resulted in a Seller being forced to sell their home to a Buyer based on the terms and conditions agreed to in the Offer, when, in fact, the Buyer and Seller hadn't signed the Purchase and Sale Agreement. This case tells us that the standard language generally added to the Offer document, "Subject to a Purchase and Sale Agreement satisfactory to Buyer and Seller", might not prevent such a sale if conditions change.
The language crucial to this case are the words printed on most boiler plate Offer forms, "NOTICE: This is a legal document that creates binding obligations. If not understood, consult an attorney". The legal struggle of the above cited case started in 1995 and was not resolved until 1999! That's a long time to live with uncertainty as to where you will be living and what schools your children will attend!
Buying and Selling a home is one of life significant events and one should not be penny-wise and pound-foolish. Consult your local attorney for assistance in real estate transactions before you sign.
All persons who own a home, are looking to purchase a home or who are in the process of refinancing their home should take a moment to learn about Massachusetts General Laws Annotated Chapter 188, Section 1, "The Homestead Estate".
Owners of a home which is their principal residence and who are under age 62 can protect their first $100,000.00 in equity from the laws of conveyance, descent, devise, attachment, levy on execution and sale for payment of debts or legacies. For those owners age 62 and over, their protection is $200,000.00, however each owner over age 62 needs to file separately.
An owner of a home includes a sole owner, joint tenant, tenant by the entirety or tenant in common, provided that only one owner may acquire an estate of homestead in any such home for the benefit of his family. An estate of homestead may be acquired on only one principal residence for the benefit of a family, with family meaning either a parent and child or children, a husband and wife and their children, or a sole owner.
As there are some restrictions with regards to the homestead and a proper method for filing this document with the Registry of Deeds is required, one should contact an attorney for assistance.
A landlord and a tenant could both benefit from reading M.G.L. Chapter 186, Section 15B, specifically that section which relates to security deposits and first/last months rent. Section 15B sets out in great detail the criteria and process for landlords to obtain and hold such deposits. For example, the landlord must provide the tenant with a written statement of the condition of the premises within 10 days of either the receipt of the security deposit or the start of the tenancy. This statement must also include specific language as stated in section 15B, 2(c).
The landlord is also required to give to the tenant, within 30 days of receiving the deposit, a statement identifying the name and the location of the bank located in Massachusetts in which the security deposit is being held, the amount being held and the specific account number of the deposit. A landlord who fails to comply could subject themselves to immediate loss of the deposit and a Court could order triple damages in favor of the tenant.
When landlord/tenant disputes arise, landlord violations of these strict guidelines for holding deposits is often used by the tenant as a bargaining chip to negate problems that may have been caused by the tenant. All landlords and tenants should know their rights and responsibilities when starting this relationship and can benefit from valuable information found in M.G.L. Chapter 186, and from consulting with their local attorney prior to the start of a tenancy.