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Multi-Family Disclosure

New Connecticut Fair Housing Notice Disclosure for Purchase or Sale of Multi-Family Real Estate

CT Multi-Family Purchase Disclosure Requirement

Connecticut Creates Mandatory Disclosure Place Buyers of Multi-Family Real Estate On Notice of Equal Opportunity Housing Laws

We live in a heavily regulated legal landscape. Often we perform a task we think is relatively simple, but it may expose us to a host of legal issues, some of which we may not even be aware of. However, as the old saying goes, “ignorance of the law is no excuse”.

In an attempt to weed out some of the lack of understanding in housing laws, the Connecticut Senate passed Public Act No. 16-16, AN ACT CONCERNING THE DISCLOSURE OF HOUSING DISCRIMINATION AND FAIR HOUSING LAWS, which went into effect on September 1st, 2016.

The law creates a mandatory disclosure that must be PROVIDED BY THE SELLER and SIGNED BY THE BUYER any time a multifamily property is bought/sold.

What is a Multi-Family Property?

A multifamily property is any piece of residential real estate containing two or more units. These are very popular in cities and big towns such as Danbury, Waterbury, Stamford, Norwalk, etc. They are often bought by real estate investors who rent the individual units out to tenants.

What is in the Multi-Family Disclosure?

The disclosure places the Buyer on notice of State and Federal fair housing laws. It notifies the Buyer that race, color, national origin, ancestry, sex, creed/religion, disability, family status, source of income, sexual orientation, gender identity and expression, age and marital status are all Protected Classes for which it is illegal to discriminate against in the housing market.

Further, it gives examples of fair housing violations based on those protected classes:

  1. Refusing to rent, sell or show the dwelling;
  2. Steering towards certain neighborhoods;
  3. Increasing security deposits;
  4. Requiring “employment” when other legal sources of income exist;
  5. Failure to negotiate or refusal of rent based on source of income;
  6. Refusing to waive “no pet” policies for tenants with disabilities; and
  7. Refusing to allow tenants with disabilities to build a ramp.

What needs to be done with the Multi-Family Disclosure?

Idealy, the Multi-Family Disclosure will be attached by the Seller to the Purchase and Sale Agreement, Exchange Agreement, or Lease with Option to Buy. The Multi-Family Disclosure is then signed by the Buyer when signing the agreement/contract. However, the Public Act specifically protects the validity of Agreements where the Seller does not attach the Multi-Family Disclosure; those contract with still be enforceable.

If the Multi-Family Disclosure is not attached to the contract, it must be signed before or at closing on the multi-family property.

Where Can Realtors and Sellers get a copy of the Multi-Family Disclosure?

The Multi-Family Disclosure can be found on the Commission for Human Rights and Opportunities website, and is also attached hereto in JPEG format.

land record documents

Validation of Defective Documents Recorded on the Land Records

Can Land Records Documents be Valid if Defective?

The land records of a town or county contain the relevant documents in regards to land ownership in the that location. Whenever buying or selling property, a title search must be performed to make sure the seller is giving the buyer clean title. Sometimes during these searches, attorneys come across documents that are defective, or missing something require by Connecticut law to make that document effective. One of the common areas where we have seen this is when individual attempt to create or manage their on trusts, but it happens in other situations as well.

The good news is, Connecticut General Statute 47-36aa can validate certain defects in recorded documents, as long as those documents were recorded 2 or more years earlier and have not yet been challenged in court.

What Kind of Defective Documents Can Be Validated?

CGS 47-36aa, known as the Validating Act, can cure defects in a multitude of common land records documents. The documents which can be validated if defective include:

  • Deeds
  • Mortgages
  • Powers of Attorney
  • Releases
  • Notices of Lease
  • other documents affecting real estate

What Kind of Document Defects Can Be Cured?

When searching land records, it is not simply enough that the document is there. Documents must be drafted in a specific manner, contain specific information, must be executed via specific procedures and be recorded in a specific manner; all of which is regulated by Connecticut law. While it is impossible to go over every type of defect that can occur in land record documents, here are the types of defects that can be cured by the Validating Act:

  • defective or non-existent acknowledgement (the person signing the document did it wrong or forgot to do it)
  • lack of a witness or witnesses
  • missing, incorrect or conflicting dates
  • where a business or trust entity is the grantor, but an individual signs the document in their individual capacity
  • where a business or trust entity is the grantor, but an individual signs without disclosing their authority to sign
  • a document signed under a power of attorney, but signed without referencing the power
  • if a document is signed under a power of attorney which is effective but not recorded until after
  • a document transferring property to a recipient who does not have the legal capacity to hold interest in real estate

What Kind of Defects CAN NOT be Cured?

The validating act does not cure any and all defects in documents that have been recorded yet unchallenged for 2 or more years. The following defects are NOT cured by the Validating Act and therefore make their documents invalid:

  • errors in or missing property description
  • errors in the names of relevant parties
  • Incorrect references in deeds, mortgages and releases (to other land record documents)
  • documents not signed by the original signature of the grantor
  • unrecorded or missing documents
  • defects in foreclosure proceedings
  • gaps in chain of title

How Do You Stop Defective Documents from Being Validated?

If you want to make sure that a defective land records document is not cured and validated, you must challenge the document by bringing a court action and recording a lis pendens within 2 years of the document being recorded.

real estate closing attorney danbury ct

Do I Need a Real Estate Closing Attorney to Sell My Home?

Selling a Home in CT? You Need a Real Estate Closing Attorney

If you are looking to sell your home, you may or may not want to hire a real estate agent, but you will definitely want to hire a real estate closing attorney. While the marketing of your home to potential buyers is something you might be able to handle yourself, the services of a seller’s real estate closing attorney are essential to a legally compliant real estate sale.

What does a seller’s real estate closing attorney do?

A seller’s real estate closing attorney provides many services to the Seller that legally legitimize the sale and make it binding, while at the same time protecting the liability and financial interests of their client. A seller’s real estate closing attorney performs the following closing tasks:

  • Reviews Exclusive Right to Sell Agreement and Dual Representation Waiver with real estate agent/broker (if hired early enough);
  • Reviews and assists with Listing and Mandatory Disclosures (once again, if hired early enough);
  • Negotiates with buyer’s attorney and drafts Purchase and Sale Contract;
  • Works to resolve any inspection, appraisal or title issues to meet buyer’s needs;
  • Prepares closing documents such as power of attorney, Deed and affidavits;
  • Obtains payoff statements for outstanding liens or mortgages;
  • Attends the closing with, or on behalf of, the client;
  • Handles cash flow in escrow, receiving purchase funds and making any payments or disbursements; and
  • Secures and records releases for mortgages after closing.

When issues arise in real estate deals it is the attorneys that defuse situations and save deals by coming up with solutions that are acceptable to both parties. A seller’s real estate closing attorney can save a seller of real estate property a lot of stress and worry.


 

If you are looking to sell a house or condo in Connecticut, let us handle your real estate closing matters. We charge flat rate fees on closings, and we offer FREE phone consultations, so you can make sure we are the right attorney for you.

SCHEDULE A CALL WITH OUR REAL ESTATE ATTORNEY

delays in real estate closings

Hazard Insurance Delays Real Estate Closings Under New TRID Laws

Hazard Insurance may Delay Your Real Estate Closing

Under the new TILA/RESPA Integrated Disclosures (“TRID”) real estate settlement practices, consumers (those taking out a mortgage to buy a home) must receive and acknowledge the Closing Disclosure, a document showing where all the money is going, a minimum of 3 business days before the actual closing can occur. This means that if any dollar amount changes on the Closing Disclosure, and it has to be acknowledged again, the closing will be delayed for at least another 3 days.

How is Hazard Insurance delaying closing?

One of the biggest issue is old custom. Prior to TRID, it was common for hazard insurance quotes to be obtained a day before closing or even the night before closing. This is because previously there was some leeway regarding dollar amounts and time tables, but not anymore.

So, if the the realtor or real estate attorney do not remind the client to get hazard insurance lined up, the closing could be delayed until a quote is received, updated on the Closing Disclosure, received and acknowledged by the client and a new closing date can be arranged between all parties.

Conversely, I have also seen a closing delayed because the hazard insurance quote was obtained TOO EARLY. Due to changes in the purchase price, the appraised value, or issues discovered during inspection or the walk through, the cost of hazard insurance could change. If the insurance salesman or broker does not take the proper steps to keep everybody informed of any such changes delays may occur.


With the change in laws and the addition of stricter requirements and guidelines, it is more important than ever to hire an experienced real estate attorney to handle your closing. Do problems happen? Sure they do. But you want somebody with the experience and the know-how to limit problems, to spot them when they occur, and to resolve them in a quick and painless manner.

If you are looking to buy a house or condo in Connecticut, let us handle your real estate closing matters. We charge flat rate fees on closings, and we offer FREE phone consultations, so you can make sure we are the right attorney for you.

SCHEDULE A CALL WITH OUR REAL ESTATE ATTORNEY

 

ct real estate title law

Title Search and Title Insurance When Purchasing or Refinancing Residential Real Estate

Title Search and Title Insurance in a Purchase or Refinance of Residential Real Estate

Lender Requirements and Buyer Protections

When you are buying residential real estate, you are paying money in exchange for title to the property. It is in the interests of the buyer, and the lending institution giving the buyer a mortgage, to make sure that title is clear and “marketable”. The buyer wants to make sure they are actually being buying the property rights as promised by the seller. The lender wants to make sure that the collateral on the mortgage is as promised; the property has marketable title and is clear of other encumbrances, such as mortgages or liens. So, how do the buyer and lender make sure that title is clear and marketable?

Title Search

The buyer will need to hire a real estate attorney to perform and/or review a title search. A title search reviews the history of the property by looking at the land records. The title search will provide the legal description of the property, showing exactly what the buyer is buying.

For purchases, all conveyances, mortgages, liens and releases are reviewed going back 40 years (called the “chain of title”). By reviewing the title search, the real estate attorney for the buyer will be able to tell if the seller owns the property, how the seller or sellers hold title, do they have the right to sell it, are there any liens or mortgages on the property that must be paid off to make title marketable, and if there are any relevant powers of attorney relating to the property.

The Buyer may also choose to do a municipal search, which reviews all zoning and building permit for compliance with local laws.

For a refinance, only a current owner search is necessary. Through a current owner title search, the real estate attorney performing the refinance closing will be able to see if the borrower is truly the owner, and what mortgages and liens must be paid off to give the new lender first priority.

Title Insurance

Lenders are not willing to rely on title searches and attorney opinion when it comes to making sure they have actual collateral when making mortgage loans. Therefore, Title Insurance was invented to cover losses in the case that a title defect is discovered after the closing on the property. Title insurance is available to protect both the Lender and the Buyer from title defects that could result in loss of property value, or even loss of ownership of the property. In Connecticut, real estate attorneys act as title insurance agents and will prepare and secure the policy on the Buyer’s behalf.

For a purchase, the Lender will demand that the Buyer purchase title insurance to cover the Lender. The Buyer will also have the option to purchase additional coverage that will protect their interest in the property.

For a refinance, the Lender will similarly demand title insurance to cover their interest, but no Buyer policy is necessary. The homeowner will still be covered by the title insurance from their purchase. It should be noted that even if the refinance mortgage lender is the same as the purchase mortgage lender, a new title insurance policy will need to be purchased.

What does title insurance cover?

  1. Insures against anyone else making a claim that he or she is the owner of all or part of the property;
  2. Insures against liens or other encumbrances that were missed by the title search or misindexed by the town clerk;
  3. Can offer protection of ownership even where defects in title marketability exist (such as old unreleased mortgages);
  4. Insures a legal right of access (though this may be just by foot);
  5. Insures against violations of government regulations, but only those violations listed on the land records;
  6. Insures against the exercise of eminent domain in certain situations;
  7. Insures against fraudulent conveyances in the chain of title;
  8. Any defect in title that arises from the date of the policy (the closing date) and the date the deed and mortgage are recorded;
  9. For the Lender, it insures the enforceability of their lien created upon the title of the property by the mortgage;
  10. For the Lender, it insures the priority of their insured mortgage lien against other liens or encumbrances;
  11. For the Lender, it insures the priority of their mortgage lien against liens for services, labor or materials for work done on the property (in conjunction with an Owners Affidavit signed by the Seller);
  12. For the Lender, it insures the assignment and assignability of any mortgages that are assigned to and assumed by the Buyer;
  13. Pays attorneys fees and costs of defending title and the insured mortgages.

There is also available an expanded title insurance policy; which is a good idea for Buyers and may be necessary for the Lender in certain situations. In addition to the protections of a standard title insurance policy, the expanded title insurance policy also covers:

  1. Correcting or removing existing violations of restrictive covenants;
  2. The inability to obtain building permits due to existing violation of subdivision regulations;
  3. Removal of existing structures that were built without proper building permits;
  4. Removal of existing structures due to non-compliance with zoning laws;
  5. If the property cannot be used as a single family home due to zoning regulations;
  6. Removal of an existing structure that is then found to encroach upon the land of a neighbor;
  7. If a neighbor builds a structure that encroaches upon the property of the insured;
  8. For one to four family homes that have a valid certificate of occupancy and no recent boundary line changes, offers survey coverage even without a survey.

What does title insurance not cover?

  1. Government regulations for which a violation was not recorded on the land records;
  2. Rights of eminent domain where a notice of exercise was not recorded on the land records;
  3. Defects, liens or encumbrances that:
    1. were created or agreed to by the insured;
    2. known by the insured but not disclosed to the title insurance company;
    3. that do not result in any loss to the insured;
    4. were created or attached after the date of the policy;
    5. resulting from the Buyer’s lack of “bona fide purchaser” status.
  4. For the Lender, enforceability issues created by the Lender’s inability to meet Connecticut business practices requirements;
  5. For the Lender, enforceability issues created by the Lender’s lack of compliance with consumer protection or truth in lending laws;
  6. Any liens for services, labor or materials for work performed after the date of policy and not paid for by mortgage proceeds;
  7. Any claim arising from bankruptcy or other creditors’ rights laws.

How much does title insurance cost?

The cost of title insurance is set by statute and controlled by the legislature. With that said, title insurance premium are set increase beginning January 1, 2016 for the first time in decades.

With that said, we will look at the pricing structure at the time of the writing  of this article, even though we are only weeks away from the increase.

Let’s use the example of a house that will cost $200,000 (the amount of Owner coverage) and where the mortgage will be for $170,000 (the amount of Lender coverage). A standard lender title insurance policy will cost $607.00. If the Buyer decides to purchase a standard owner policy in addition to the standard lender policy, the total for both is $750.00. Expanded coverage for both Buyer and Lender would cost $825.00 for both policies. This is money well spent for the Buyer, as the title policy remains in effect until the property is sold.

In a refinance, there is no need for an owner policy as the owner is not conveying the property and will be covered by the title insurance policy from their purchase. The Lender policy will need to be purchased to cover the new mortgage, even if the refinance lender is the same as the purchase lender. The good news is that policy is discounted so that a $170,000 lender policy for a refinance would only cost $400.00.

At any time you can get a title insurance quote from the Connecticut Attorneys Title Insurance Company on CATICulator.com.

The Bottom Line on Title Insurance

The title search and title insurance are sometimes unanticipated and unwelcome expenses when the Buyer is presented with their closing costs. However, the Lender policies are required by the mortgage companies and banks, and the Owner policy is a relatively cheap addition that provides a lot of protection. Expanded policies offer buyers the peace of mind that they will not have to incur costs of compliance with violations that were not discovered before the purchase, and even some issues that arise after the purchase. If the Lender MANDATES title insurance to cover its investment, shouldn’t the Buyer similarly protect themselves?