in subdividing land have affiliated with this division and are making an exhaustive study of conditions over the entire country, in order that a more efficient public service may be rendered through its members. The subdivider, in years past, from lack of an intimate knowledge of proper requirements covering all phases of subdivision work, has failed at times to do many things necessary to make the subdivision a success for the home owner or in the way of civic betterment. Conditions have changed rapidly and new demands are constantly being made by the public. Many things associated with home life which are now regarded as necessities were, not many years ago, regarded as luxuries to be enjoyed only by those at least moderately rich.

Personal Qualifications of Subdivider. The subdivider should be a man of vision and should plan for the future. His work is of first importance because the subdivision of today should be planned for the prosperous community of tomorrow. It is a link in the chain of the city's growth, and whether or not the entire chain is strong depends on every link. A repair to a link of the chain at some later date is usually expensive, and should be avoided if possible.

CHAPTER XV

FINANCIAL ADJUSTMENTS IN CONNECTION WITH A TRANSFER OF REAL ESTATE

By JOHN D. DRUM1

After an agreement of sale, or exchange, has been executed, and delivered, there are many, and varied steps to be taken by the parties interested in the transaction, both before, and at the time of the passing of papers. The scope of this chapter does not embrace a discussion of the essential terms of such an agreement, except in so far as necessary to explain these steps.

Importance of the Agreement.-It might not be out of place at the very outset, however, to call attention to the importance of securing a properly drawn agreement, for by it the respective rights and duties are fixed. After the written contract has been delivered, it is seldom possible to vary its terms, except by mutual consent, and this oftentimes is impossible of attainment. The time to consider and study the provisions of the agreement is before its execution, and not afterwards. By so doing one may be saved serious financial loss and much worry.

Arrange to Give Marketable Title. The seller is presumed to have already assured himself that his title is marketable, and to be familiar with the outstanding encumbrances, both those that are to remain, and those that are to be re

1 John D. Drum, Boston, Mass., graduated from Boston College, 1890 and Boston University Law School, 1895. Admitted to Suffolk County Bar, 1895. Has specialized as conveyancer and solicitor in probate since he became associated with the firm of Kern & McLoud, in 1899. Member of the Boston Bar Association and Massachusetts Conveyancers' Association.

Mr. Drum makes acknowledgement to Henry W. Savage, Inc., for the form used in the chapter.

moved prior to the passing of papers. As to the former, he should be prepared to present satisfactory evidence of their present status; as to the latter, he should make immediate arrangements for their removal either in advance of, or at the time of, fulfillment of the contract.

Much valuable time will be wasted, and sometimes a postponement will be necessary, if the seller neglects to take proper measures to provide himself with the data and the papers required on his part for the proper carrying out of the agreement. Moreover, in the event that the wording of the contract is such as to call for its completion not later than a given date, a seller, so negligent, runs the risk of losing his bargain. Should the buyer, for any reason, desire to withdraw from the deal, it is possible for him, with the aid of skilled counsel, to take advantage of such a situation. In many localities real estate brokers advise and assist their clients in such preliminaries. This is a commendable custom, as it frequently results in adjusting misunderstandings in advance, and always prevents waste of time.

Preparing to Transfer Title.-The seller should bring to the meeting place his copy of the agreement of sale; a deed properly drawn and executed (signed by husband and wife); the requisite amount of documentary stamps; all insurance policies-fire, liability, etc.—all leases, or a list of the tenants, with a statement of the rents and dates to which they have been paid, also a letter notifying the tenants of the transfer; current tax bills, receipted or otherwise; any unpaid bills for special assessments; written evidence of any payments on account of the principal of any mortgage or mortgages that are to stand, and receipt for last interest payment on same; also the latest receipted water and light bills, unless he has previously arranged to have the meters read, which is a more satisfactory way of adjusting these items.

Preparing to Take Title. The buyer should forthwith engage a competent attorney to examine the title to the property for the purpose of ascertaining, not only whether or not it is marketable but also whether or not the encumbrances, rights and easements affecting same correspond with those mentioned in the contract of sale.

Occasionally a prospective purchaser will find it to his advantage to have the title examined prior to entering into an agreement of purchase, to discover whether the title is in satisfactory shape for the use to which he contemplates putting the property. This is rarely done, however, as the buyer prefers not to assume this expense until he is assured of a binding contract of sale.

Survey. It is sometimes advisable to have a survey made before taking title. This is especially so where the sale involves valuable mercantile property in long settled districts of large cities. Such a survey oftentimes discloses serious encroachments or variations in measurements and areas. This is seldom done until after the transfer has taken place, and then only when the purchaser is planning to rebuild or to make substantial alterations. The discovery of such variations, under these circumstances, sometimes brings financial losses due to delay in operations, and not unfrequently leads to expensive litigation.

The purchaser, through his attorney, having assured himself of the status of the title, should come to the meeting place prepared to complete the transfer. He should bring his copy of the agreement, also the purchase price in the form of a certified or banker's check, or cash. It is advisable to bring some additional cash to take care of adjustments. Should the agreement call for a purchase money mortgage, or any supplementary agreement or other document, these should be made ready in advance and the required documentary stamps provided.

Passing Papers. Upon assembling for the passing of papers, the first step is to examine the documents to ascertain whether they conform to the provisions of the contract and are properly drawn and executed. This will include a perusal of the leases, if any. While the deed itself will usually operate to assign all the important covenants of a lease, a careful attorney will, in important transactions, secure a formal assignment of the lease, with a covenant on the part of the purchaser to save the lessor harmless under the covenants of same.

The next step is to examine the conditions of the encum

brances that are to remain, such as mortgages, municipal liens and assessments, tenancies, etc., and ascertain:

(a) Mortgage. Whether it is overdue, or will run for the period called for by the contract; whether, if there has been a reduction of principal, the purchaser has proper evidence of same, as well as proof that interest has been paid in full to the last due date. A written statement of the facts should be obtained from the holder of the mortgage.

(b) Municipal Liens and Assessments. Whether the amount of same, if determined, conforms with the terms of the agreement.

(c) Tenacies. Whether they are at will or at sufferance, the amount of the rent and the other terms of the tenancy. Financial Adjustments.-As a general rule the working out of the financial adjustments between the parties runs along with the consideration of the foregoing matters. When the parties are experienced, and meet fully prepared, this phase of the transaction gives little trouble and is completed expeditiously; but very frequently much time is needlessly consumed because of failure of the parties, or their agents, to provide the necessary data or papers.

Ordinarily the seller credits himself with the purchase price, and the value of the various insurance premiums for the unexpired term of the policies, i.e., in case the contract calls for a transfer of the existing policies, as is usual. In this connection the buyer, or his attorney, should examine the policies to make sure that they are in proper form. The policies must also be formally assigned to the new owner, and made payable, in case of loss, to the new mortgagee, if any. The written assent of the companies to these transfers of interest must later be obtained. The fire insurance policies should then be delivered to the first mortgagee.

The seller usually credits himself with his pro rata share of rents not yet due, but sometimes it is more satisfactory to authorize an agent to collect the current rents when due and subsequently to apportion them among the parties.

If taxes for the current year have been paid, the seller credits himself with so much of the annual bill as corresponds to the fraction of the unexpired period.