This started out as one of those "dream engagements" for all concerned. A lifelong friend, whose real estate transactions I have always taken care of, was selling his spectacular home on a private way, where there were eight or nine other beautiful homes, and purchasing a town home in Boston's South End. My friend's children were all grown-up, and he and his wife have recently spent a considerable amount of time during the winter in Florida.
My friend's listing agent was also a friend, and probably the most competent and through Realtor in Milton, Massachusetts, where I reside and the location of my friend's home. I suggested that my friend obtain his mortgage from a Private Bank in Boston, with whom I have recently referred many satisfied custmers. The Purchase and Sale Agreement for my friend's home was completed in early March, 2011. The closing was scheduled for May 6, 2011. All the dates lined up, and I spent a lot of time preparing for the sale, on the one hand, and the purchase, on the other.
The purchase moved like clockwork, and my friend, who is in the financial industry, uncovered a LIBOR based mortgage for a rate that you wouldn't believe. There are some "pre-pay" restrictions, and the LIBOR indices could move up, but history says they are remarkably stable, and my friend's interest rate scenario is, shall we say, very competitive. All of us have spoken before about the real advantages a Borrower can receive from dealing locally for his mortgage.
The person who bought my friend's home is a person whose name many people would recognize, He has a business agent, and the business agent chose a national Lender for the Buyer. The property in question appraised out to higher than the purchase price. That should have been enough in this scenario, no? Regrettably, the more than satisfactory appraisal was not enough.
The person underwriting the file insisted on obtaining a written agreement from all of the abutters which indicated that each of them agreed to bear a pro-rata share of snow removal, maintenance and repair costs for the common driveway that they all lived on. For the past almost forty years, this responsibility has been stewarded by one abutter, who arranged for the various services, and periodically presented a bill to the abutters for their share. Evey abutter paid promptly, and there was never an issue about how this informal approach worked. It worked flawlessly, and all abutters have been satisfied.
Counsel for the Lender drafted a rather simple agreement for the abutters to sign. My motivated Sellers went door-to-door to each of the abutters to obtain signatures, Most agreed readily. Two wanted their attorneys to review the proposed agreement. Two flat out refused. The deal was in jeopardy, because I could not get what the national Lender required. We were at an impasses.
There is a happy ending here, but really because this was a "high-end", sale to a "highly visible" Buyer. There were big commissions, and big fees, involved, and so, at the eleventh hour, the national Lender waived the requirement.
I am not at all sure that the same result would have obtained if the property was a $300,000 starter home, and the Buyer someone with relative anomymity. The lesson learned here is "forewarned is forearmed". If you have a listing on a private driveway, or in a development with neighborhood association language in the deed, get started, right away, in understanding how things actually have been managed in the past. If that data can be presented to the Appraiser, it may be enough to avoid the really traumatic issues my friend, and I, experienced.
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