Selling a Residential Property in Worcester? The Custom of Seller Providing Title Examination for the Benefit of Buyer and Buyer’s Lender
Attorney’s with real estate practices outside of Worcester take note, if you ever find yourself with a client wishing to purchase or sell a home in Worcester or contiguous towns, it’s the seller’s obligation to pay for a title examination of their own property for the benefit of the buyer.
I recently represented a seller in the sale of a home in Shrewsbury, MA. While going over the buyer’s proposed addendum to the purchase and sale agreement, my eyes found the following text: “Seller shall pay for and provide title certification from recognized title company with certification running to the Buyer and Buyer’s Lender.” I read it again, just to make sure I didn’t miss anything. I scratched my head and thought ‘So the seller has to hire someone to certify that he in fact, does own the property he is trying to sell?’ I called the other attorneys representing the bank and the buyer and inquired as to why this should fall on the seller? The response, “that’s just the custom in Worcester.” When I protested, buyer’s attorney advised that he did not want to get into a ‘pissing match’ over who knows more about real estate law. To be fair, I wasn’t going to let a few hundred dollars spoil the deal. It was small money for the title search in comparison to the overall contract price. As a side note, you can guess where buyer’s suggested “recognized title company” was located.
3 Reasons why this Custom is Problematic
#1 It is silly to make a seller, whose name is on the deed to the property, certify that he is indeed the person on the deed and holds good title. There are plenty of remedies both statutory and in a purchase and sale agreement should the seller have an issue with title. In truth, almost all lenders will do their own title certification prior to granting a mortgage to buyer. This makes seller’s title certification duplicative and wasteful. As mentioned above, the lender’s attorney will suggest the title certification provider preferred by the lender but does not require it.
#2 If there is some forged or fraudulent document involved in seller’s claim to title, it is likely that same seller would also forge the title certification. There are literally sample forms available for download would accomplish this via a copy and paste job.
#3 Having seller certify their own title essentially tries to shift the liability of the buyer’s/lender’s attorneys to the seller’s attorney in the event there is a title issue. This seems to create the possibility for a conflict of interest while also running afoul of the plain language of MGLA 93, section 70 which reads in part:
“In connection with the granting of any loan or credit to be secured by a purchase money first mortgage on real estate improved with a dwelling designed to be occupied by not more than four families and occupied or to be occupied in whole or in part by the mortgagor, an attorney acting for or on behalf of the mortgagee shall render a certification of title to the mortgaged premises to the mortgagor and to the mortgagee.”
“Willful failure by an attorney to render a certification to the mortgagor as required by the provisions of this section shall constitute an unfair or deceptive act or practice under the provisions of chapter ninety-three A.”
It seems pretty clear that the obligation to provide title certification is owed by the buyer’s or lender’s attorney, not the seller’s, at least in the case where there is a mortgage as defined by section 70. The seller’s attorney could not be said to be acting for or on behalf of the buyer and the lender and also representing the seller. In most cases, the seller’s attorney is in no way involved with the mortgage process, nor the lending of the purchase money, knowledge of which is a prerequisite of section 70.
Because the obligation is clearly on buyer’s and lender’s attorneys, farming out the title certification to seller’s attorney and with it, perhaps liability under section 70, is a willful failure to render certification in violation of 93A. Just as an attorney cannot represent the buyer, seller, and lender at a residential closing, a buyer/lender’s attorney cannot transfer its duties owed to its client to an adverse party.
As a seller or seller’s attorney in connection with the sale of a home in Worcester or contiguous towns, you should expect that buyer’s will ask you to have the title examined at your own expense for the lender and buyer’s benefit. At least now you are prepared for the pissing match.