Q. I have heard about some new financing rules that will take effect in 2014 and could impact buyers. What are these new rules?
A. In 2010 Congress passed the “Dodd-Frank Wall Street Reform and Consumer Protection Act.” One result of this law is the new Qualified Mortgage, or ability-to-repay rule, as promulgated by the Consumer Financial Protection Bureau (CFPB). The QM rules will largely determine the underwriting standards that the majority of lenders will use to qualify prospective borrowers. The rules will take effect January 10, 2014 and you should be aware of the impact they may have on some homebuyers’ ability to secure financing. Some of the main provisions of the rules include:
- Points and fees must be less than or equal to 3% of the loan amount for loans greater than $100,000
- Loans must have a debt-to-income ratio of 43% or less
- Qualified Mortgages can no longer have risky features such as negative amortization, interest-only or balloon loans and the maximum loan term must be less than or equal to 30 years
With the help of NAR advocacy, a safe harbor was created in the QM rules exempting loans underwritten to the standards required by Fannie Mae/Freddie Mac, the Federal Housing Authority, Veterans Administration and Rural Housing Service (within their respective loan limits) for up to seven years. This safe harbor will ensure the wide availability of affordable mortgage credit for qualified borrowers. Borrowers will still be able to get a private loan as long as the loan does not have risky features and the borrower’s total debt to income (DTI) isn’t over 43%. For additional information about the new rules, please visit http://www.realtor.org/topics/qualified-mortgage.
Q. My seller-client is preparing to sell her home. She is concerned and has questions about a very large tree in her yard that she thinks straddles the boundary line with her neighbor. Who is responsible for maintaining the tree?
A. Generally, under Massachusetts law, where the trunk of a tree stands wholly on the land of one property owner, he or she will be deemed the owner of the entire tree. In this situation, a neighbor has the right to trim branches that overhang over their property or to remove roots that extend into their land. Both should only be done with reasonable care. Alternatively, where the trunk sits across the boundary line more difficult questions arise. A Massachusetts case, Levine v. Black, suggests that each neighbor has title to only that part of the tree on his or her side of the property line, but has a right to prevent a neighbor from acting unreasonably or in a way that would damage the whole tree. To be sure, reasonable care should be taken to not destroy or harm the entire tree. It would be in your client’s best interest to consult with an attorney to accurately determine the ownership interest of the tree.
Q. My client owns a multi-family and insists that he has no responsibility for removal of snow except for clearing the sidewalks as required by municipal ordinance. Is he correct?
A. No. The landlord is responsible for removing snow on the property. Many landlords attempt to pass this responsibility onto their tenants by writing a provision into their leases; however, this practice may not protect the landlord from liability.
The Massachusetts Sanitary Code provides that the “owner shall maintain all means of egress in a safe, operable condition” and that all “exterior stairways, fire escapes, and egress balcony, shall be kept free of snow and ice.” Massachusetts law also provides that any provision in a rental agreement that waives the protections given by the Sanitary Code is void, as it is against public policy. Taken together it would appear that the landlord cannot assign this responsibility in a lease. However, the law remains unclear.
It should also be noted that the Sanitary Code does not cover driveways or sidewalks; therefore, logic would suggest these could be assigned into a lease. If a landlord decides to form a side agreement with a tenant to compensate them for snow and ice removal they should carry workers’ compensation insurance as these tenants could be classified as employees of the landlord. Again, clients that have specific questions regarding their duty to clear snow should consult with their attorney.
The Massachusetts Association of REALTORS® (MAR) Legal Hotline offers Designated REALTORS®, office managers, and other authorized callers access to staff attorneys who can assist members with questions about current state and federal laws and regulations, permissible business practices, and important court rulings affecting real estate practitioners. To take advantage of the Legal Hotline service, members must first complete and sign a Memorandum of Understanding with the MAR Legal Department. Once approved as an authorized caller, MAR members may access the Hotline by: The hours of operation are Monday-Friday, from 9 a.m. to 4 p.m.