There are certain responsibilities that the Seller has in a transaction, whether or not it is a short sale. If the property is serviced by a private septic system, the Seller is required under Title 5 of the State Environmental Code, 310 CMR 15.000 to provide Certificate of Compliance. The cost of the Title V inspection can range but typically runs several hundred dollars. In many cases, the seller on a short sale does not have the funds to complete the Title V. In this case, it is important to retain a knowledgeable attorney who will structure the transaction so that either the cost of the Title V is incorporated into the costs to the mortgage lender and included on the initial HUD submitted to the short sale lender for approval or have the Buyer agree to the payment of the Title V inspection as part of the Purchase and Sale Agreement. Most Title V inspectors will require payment up front so it may be necessary for the funds to be available prior to closing. These details must be addressed before an Agreement is finalized between the parties.
In addition, the Seller is responsible for providing a Certificate from the local fire department confirming that the smoke detectors and/or carbon monoxide detectors have been installed in accordance with Massachusetts and local requirements. A closing may not occur without this Certificate of Compliance. The cost of the Certificate of Compliance in most towns is $50.00 to $75.00. This cost does not include putting in smoke detectors and/or carbon monoxide detectors which are not installed properly (or at all). The cost of installation can be several hundred dollars and should also be considered at the time the parties are negotiating the contract. It is a good idea to check early on to make sure that you are in compliance or other wise risk a delay in the closing and possibly the loss of a short sale approval. Specific requirements for multi family property frequently differ from single family (most multi family properties require hard wiring) and the expense can be extremely high for installation. This is something that frequently gets overlooked by the parties to a short sale and can easily create problems when everything else appears to be in order.
Have your agent and attorney work together to make sure none of these important details are missed. It is important to hire experienced people who have a history of successful short sale approvals and closings.