Since you’re reading this, you’re in one of two camps: either you want to buy a new home or sell one.
Either way, you need to sort out all the necessary legal documents to ensure that everything goes smoothly. Home purchases involve a lot of planning and thought, not to mention being replete with many potential problems. And you want to make sure that all your bases are covered, especially when you’re buying or selling a house in Massachusetts.
Whether you’re a buyer or a seller, you may have a million questions concerning the purchase and selling of the property. A home is a big responsibility, and you don’t want to put yourself in a situation where you’re getting the short end of the stick. You want the deal to be mutually beneficial for both parties for all intents and purposes.
So, let’s get to it. When buying or selling a house in Massachusetts, an important document to bear in mind is a legal document called the Purchase & Sale Agreement (P&S).
List of contents
- What is a purchase and sale agreement?
- What’s in the agreement?
- Title and Deed
- Sellers and buyers responsibilities
- How to Write a Purchase and Sale Agreement
- Disclosures
What is a purchase and sale agreement?
The Purchase and Sale Agreement is a legally binding document that lays out the terms of a home purchase.
It’s quite simple. You want to buy a property, so you speak or negotiate with the property owner about the price and terms. Once a mutual agreement on all counts is established, you make the deal. Of course, you don’t just do it verbally. For the agreement to become legally binding, a legal contract is required. This legal contract is called the purchase and sales agreement, sometimes called an agreement of sale.
The agreement has to be detailed enough so that the terms of the contract are clear. The terms must be structured to be mutually beneficial for both parties, ensuring that both will fulfill their ends of the bargain.
But before a P&S can be brought to the table, the buyer needs to issue an Offer to Purchase or OTP first (see sample form here). Once all terms are agreed upon, both parties can proceed with working out a P&S. Once approved, it will override the OTP.
Before we go any further, here’s some friendly advice. Don’t ever sign that dotted line without consulting a lawyer first. A professional attorney knows everything there is to know about P&S documents and can explain to you in plain English anything that’s giving you pause.
Okay, let’s face it: Understanding what’s written on the agreement can be confusing for most. It’s quite simple once you become familiar with its overall structure.
As to that, we got you covered.
But first…
What’s in the agreement?
For a contract to be legally binding, it needs details from both parties. The same goes for this agreement.
Here are what’s included in a P&S.
- Names of both parties
- Pertinent information about the property (taken from the current deed)
- Price of the property
- Mortgage commitment date (if the buyer is taking out a loan)
- Closing date
- Other properties included in the contract
- Seller credits
It goes without saying, but the agreement must be detailed as possible. It must include all information that may have a bearing on the home’s overall value.
For this reason, the seller must invite the buyer to inspect the property with the help of a professional inspector. Maybe the buyer finds major defects that the seller hasn’t disclosed following the purchase. The buyer may hold the right to renegotiate or cancel the contract.
Title and Deed
Since the agreement lays out the terms concerning the title and the deed, you need to recognize the subtle differences between the two before you proceed. Going over these terms is necessary even if you can tell the difference.
One important thing to remember is that any property owner has both a title and a deed in his or her possession.
Here’s the difference between the two:
The title is a legal document stating you are the property owner and have the incumbent legal rights attached to that ownership. As the property’s legal owner, you have legal access to the land. Therefore, have the right to make changes or modifications to it with the necessary permits. Being the legal owner also entitles you to transfer a portion of the property or interest to others.
The deed is a legal document showing that the title is being transferred from one person to another. In other words, it’s a document proving that a sale has been made. The deed is also otherwise known as the vehicle of the property interest transfer. In many states, the deed has to be recorded and signed in the courthouse or Assessor’s Office (or an equivalent) to be legally binding.
It bears noting that the new owner will inherit any outstanding lease or lien once the deed is finalized and signed. To protect the buyer, the seller is obligated to convey a “good clear and marketable” title before transferring the ownership of the property to him or her.
Sellers and buyers responsibilities
| Sellers responsibilities | Buyers responsibilities |
| Obtain a title insurance policy | Paying escrow fees |
| Pay escrow service fees | Paying notary fees |
| Pay notary fees | Paying deed recording fees |
| Obtain a smoke and carbon monoxide certificate | Buy an owner’s title insurance (as required in Massachusetts) |
| Pay county transfer taxes | |
| Pay for the drafting of the deed | |
| Pay the broker’s commission | |
| Pay for the drawing/recording of the reconveyance deed | |
| Obtain a 6(d) certificate for a condominium |
Disclosures
If you’re the seller, it’s only right that you lay all the cards on the table. After all, it’s unethical to withhold property information that may impact the home’s value and the buyer’s safety. For this reason, most states have ruled it illegal for a seller not to disclose any defects with the property. It’s with a focus on those that can compromise the new homeowner’s safety. It’s advised that they conduct inspections themselves before selling the property. It’s done to ensure that there are no known defects that haven’t been accounted for.
Massachusetts requires only two types of disclosures, in particular. This is why Massachusetts is often referred to as a caveat emptor or a “buyer beware” state. It’s recommended that the buyer perform a home inspection to check for any issues that may negatively impact his finances or quality of living once he’s settled in.
According to Massachusetts law, the seller must disclose only two things: the presence of lead paint and the existence of a septic system.
A buyer can request for the seller to add disclosures on other home fixtures, such as the welland underground storage tanks. It can cover asbestos and lead paint to name a few.
For this article, let’s go over the two types of disclosures they are required to provide buyers as stated by Massachusetts law.
Lead Paint
If you’re selling a home built before 1978, chances are it has lead-based paint. Lead is a substance that was often used as a base in paint. The problem with lead is that it’s a corrosive substance that poses health risks to those exposed to it. Massachusetts has a law stating the home seller’s responsibility to include an addendum confirming the presence of lead-based paint in the home before selling it to a potential buyer. It’s like most other states in that regard.
There are many ways for someone to confirm the presence of lead inside or outside his home. A popular method is using lead paint test kits. They are typically purchased in bulk to ensure that all areas that potentially contain lead are checked.
Septic System
Title 5 of the Massachusetts State Environmental Code requires sellers to disclose the presence of a septic system at their home to buyers. The statute specifically requires that the septic system be inspected not more than two years before the sale. A licensed inspector must conduct the inspection, and the results of that inspection must be included in the disclosure.
It bears noting that sellers are required to disclose the presence of a septic system. Massachusetts law doesn’t require them to fix any system’s issues. However, there will be buyers who will request sellers to bring the system into compliance before they agree to purchase.
Other Disclosures The State Requires
Most prospective buyers will want to ensure that the home they’re about to purchase is a good investment. They don’t want unpleasant surprises, and it falls on the seller’s shoulders to assure them that they’re getting their money’s worth.
While Massachusetts law doesn’t require much in the way of disclosures (except for the ones mentioned above), it’s still considered good practice for every seller to provide a disclosure on the following:
Well Disclosure
Most states (Massachusetts not included) require sellers to provide the buyer with information about the presence and condition of all wells on the property being sold.
This applies to all wells, whether the well is in good condition. It also applies if they’re abandoned or unused. This law has been passed to ensure that new homeowners are protected from possible contamination.
Additional Disclosures
Here are other disclosures you can include in your P&S Agreement:
- Pest damage
- Paranormal activity
- Personal interest
- Drainage system
- Radon gas
- “Emotional defects” (past occurrence of suicide or violent crime in the home)
