Relo Sport

Get overlooked code violations fixed

admin — Thu, 17 Nov 2011 03:19:48 +0000

If it’s a new home, the builder may be responsible
Barry Stone Inman News™
DEAR BARRY: Last year, we purchased a newly built home. Before closing we hired a home inspector, and no defects were reported. But now we’ve learned that there were code violations. How could the house be sold if it didn’t meet code, and why weren’t these things found by the home inspector or the city building inspector? How do we find out who did the code inspections during the building process? What do we do next? –Sandy
DEAR SANDY: Without knowing the nature of the code violations, it is hard to say why these defects escaped the attention of the home inspector and the city building inspector. But here are some general perspectives.
When a home inspector says that a new house has no defects, there is good reason to question the thoroughness of the inspection. There simply are no homes, new or used, without a small or large list of defects. The defects may be minor, but they are definitely there.
In most cases, they do not mean that the house is substandard, but they reaffirm that all things made by hands are imperfect. A truly qualified home inspector would probably have found those imperfections.
Liability for home inspectors is limited according to the standards of practice for the industry and the terms of the contract that you signed when the inspection was done.
When a municipal inspector signs off on a newly built home, this is not a guaranty that everything is built to code. It simply means that remaining code violations were not observed during the inspection. Municipal inspectors do what they can with limited time and constraining circumstances, such as cramped bureaucratic budgets, limited personnel and heavy work loads.
Liability for municipal inspectors is specifically disclaimed in the building code itself.
With a brand-new home, liability for undisclosed defects resides with the builders. It is their responsibility to guaranty the quality of construction for a time span specified by state law.
To obtain a comprehensive list of the inherent defects for which the builder is responsible, a second inspection by a highly qualified home inspector is recommended. This second report should be submitted to the builder, along with a request for repairs.
DEAR BARRY: Last year, when I bought my home, the adjacent property was being prepared for construction. The lot had just been regraded, and this caused a drainage problem that became apparent with the first rains. Water from that property now runs into my yard. Are there any laws that require developers to avoid drainage onto other properties? –Angie
DEAR ANGIE: When builders and developers alter the drainage characteristics of a construction site, they assume responsibility for the effects such changes have on adjoining properties. However, laws governing these situations vary from one state locale to another.
Therefore, you should consult your local building department, and possibly a private attorney, to determine your legal position and the liability of those who regraded your neighbor’s lot. If they are legally responsible, then drainage improvements should be made to divert water flow away from your property.
To write to Barry Stone, please visit him on the Web at www.housedetective.com.

Assume mortgage with transfer-on-death deed

admin — Thu, 17 Nov 2011 03:19:23 +0000

Daughter worries bank will call loan due before she can find a job
Benny Kass Inman News™
DEAR BENNY: My mother died in February of this year. About a month before her death she executed a beneficiary deed leaving the home to me, her daughter. I was also the sole beneficiary of her will. She had no other assets (only debt) and so there was no probate.
My son and I have lived with her in this home for the past 18 years. I’ve been making payments since her death (she had them set up to be deducted from her checking account with the exception of her equity loan). I did not tell them of her passing, but she apparently requested information about refinancing just before her death and they found out.
Two months ago they sent a letter asking what her estate planned to do with the house. My attorney sent a letter indicating that her relatives would make a decision within 60 days. That time is almost up and I’m afraid they are going to take the house away from us.
As I’ve been unemployed since her death, I’m barely able to make the payments, but want to keep this house. I don’t think there is any way I can get financing on my own at this time. I was hoping to be able to just continue to make the payments, but I think they are going to want me to finance it in my name, which is not possible at the moment.
Can they just allow me to take over the payments and not get a new loan? If so, how do I go about making that happen? Just to be clear, she had a mortgage and an equity loan, and the payments are current on both and have never been late.
I’m desperate not to lose our home, but can’t see a way to keep this house unless they will allow me to take over payments and then hope that I get a job soon that will allow me to do that. I have some savings left to make the payments a while longer until I can find a job. –Ann
DEAR ANN: There is a federal law on the books called the Garn-St. Germain Depository Institutions Act. Among its many provisions there is a section dealing with “due-on-sale clauses.”
Such clauses are generally found in most deeds of trusts (mortgages). Basically, they state that if you sell your property, your borrower cannot assume your existing mortgage but must obtain one on his or her own. The objective was to prohibit buyers from taking over a very-low-interest-rate loan that the seller may have had.
However, the law spells out a number of situations in which lenders are specifically prohibited from exercising the due-on-sale clause. One such exception is where there is “a transfer to a relative resulting from the death of a borrower.”
You can find a lot of information on the Internet, merely by typing in “due on sale” on your favorite search engine.
Tell your attorney to rely on this law, and tell the lender it has no right to call your loan.
DEAR BENNY: In a previous column, a homebuyer had a problem concerning a warranty he never got, and you gave him a few good ideas. I just do not understand why you did not instruct him to contact his lawyer who represented him at his closing. Is this not one of the reasons we have our own lawyer at closings? –Bill
DEAR BILL: You are referring to an earlier column where a reader had warranty issues with his developer. I did not instruct him to contact the lawyer who represented him at the closing for several reasons.
First, my column is carried in many papers throughout the United States, and settlement procedures differ from state to state.
In New York, for example, I understand that the settlement is often held in the office of the bank’s lawyer, although buyers are instructed to have their own attorney present also. In the Western U.S., the settlement is called “an escrow closing,” and often there is no attorney present on either side.
And in many jurisdictions, such as Washington, D.C., or Maryland, where I practice law, settlements take place either in an attorney’s office or at a title insurance company where lawyers may not be present.
Clearly, however, if the buyer has his or her own attorney, and is comfortable with him, that attorney can be consulted on any warranty claims, or any other legal issue for that matter.
DEAR BENNY: Can you please tell me how to file a claim for property damage against a property that is in a land trust? The trees on that property have roots that are overgrown and have spread into my yard and destroyed the concrete. –Debra
DEAR DEBRA: All I know about “land trusts” is that they started in Illinois in an effort to hide the names of owners of commercial property. You will have to talk with an attorney in your state about how and where to file complaints.
However, the law in all states regarding tree roots and branches is that you have the absolute right to cut down branches overhanging on your property. You also have the right to chop off roots that are creeping onto your property.
You do not have the right to trespass on your neighbor’s property, however, to take this self-help.
The laws involving trees and damage to property differ dramatically throughout the country. Here’s a brief summary:
The Massachusetts rule: Even if damage is done to the neighbor’s property, that neighbor is limited to self-help. That is the exclusive remedy. Many judges have called this rule the “law of the jungle” because “self-help effectively replaces the law of orderly judicial process as the only way to adjust the rights and responsibilities of disputing neighbors.”
The old Virginia rule. Until the Virginia high court reversed itself, the law there was that the injured landowner is limited to self-help “unless the encroaching tree or plant is noxious and causes actual harm to the neighboring property.”
But several years ago, the Virginia court acknowledged that it was difficult to determine exactly what is meant by “noxious.” Accordingly, the law in Virginia now states that if a neighbor’s tree causes actual harm or poses an imminent danger of harm to an adjoining owner, the tree owner maybe held responsible.
The Restatement rule: The American Law Institute — a prestigious organization composed of lawyers, judges and professors — periodically issues “Restatements of Law” on various topics. While such statements are not legally binding on the courts, they do assist lawyers and judges in understanding and interpreting cases.
The Restatement of Torts, promulgated in 1979, determined that the tree owner has an obligation to control encroachments when vegetation is artificial — i.e., planted or maintained by a person — but not when the encroachment is natural.
In other words, if you planted your tree, and it causes damage to your neighbor, you may be financially responsible for this damage.
Most states rejected this theory, simply because it is often impossible to determine whether a tree is “artificial” or “natural.” If you just moved into your new home, you have absolutely no way of knowing the origin of your trees.
The Hawaii rule: In 1981, the high court in Hawaii further modified the self-help rule. Normally, said the court, living trees and plants are not nuisances. While it may be an inconvenience for the neighbor if the trees next door cast shade, or drop leaves, flowers or fruit, this is not actionable at law.
However, “when they cause actual harm or pose an imminent danger of actual harm to adjoining property,” the neighbor may require the tree owner to pay for the damage and to cut back the endangering branches or roots. And if this is not done within a reasonable period of time, the neighbor “may cause the cutback to be done at the tree owner’s expense.”
The current trend seems to be following the new Virginia rule, but you have to consult your own attorney to determine what the law is in your jurisdiction.
DEAR BENNY: I was widowed last year and have decided to move to another state where my daughter lives. I have put my house up for sale. I don’t owe anything on it. Unfortunately, I found my perfect house in the other state and signed a contract to buy it before mine is sold.
I am 62. I have savings and some investments but am hoping not to drain those. My house is not selling fast enough to keep me from worrying myself to death. If it doesn’t sell by the time I close on the new house, what would be the best thing for me to do? When the contract with my real estate agent expires, should I advertise it as rent to own or lease to own, or what? –Judith
DEAR JUDITH: I assume you can afford to buy the new house without having to sell your present one. If that’s the case — and if you are satisfied with the activities of your real estate agent — I would continue to advertise the house. But I would consider advertising it either (a) renting it out (with or without an option to buy) or (b) for sale.
From my experience, if possible, it’s always nice to be able to buy another property before selling your current one. This gives you flexibility to fix up the new place without having to move all of your furniture and belongings immediately into the new place.
Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com.

Desperate sellers swindled out of home equity

admin — Thu, 17 Nov 2011 03:18:59 +0000

What homeowners can do to protect against scams
Tom Kelly Inman News™
Homes are taking longer to sell and foreclosures are taking longer to process.
Unfortunately, crooks are taking advantage of both of those extended time frames.
Scammers are involved in foreclosure rescue schemes, loan modification stings and in just about every conceivable angle of “equity skimming” that wipes out any remaining positive dollars in a person’s home.
What makes the practice of equity skimming so cruel is that it typically happens to older persons desperate to sell their home and move to a smaller space or a facility that will better accommodate their needs. And the dwindling value of their home often is their only asset.

One of the challenges with equity skimming and other forms of criminal fraud is that it is difficult to prove in court. In most cases, intent to defraud must be proven at the time the deal was made.
One purchasing scheme, sometimes referred to as basic rent skimming, involves older homeowners who need to sell, can’t find buyers, and attempt to move on by deeding the property to an investor who would assume the payments on the original loan.

The investor then rents the property and never makes payments on the loans. When the lender eventually begins foreclosure proceedings, the original owner is targeted because the investor never paid the loans. The investor pockets the rent money and/or the down payment or security deposit. While due-on-sale clauses have curtailed the practice, random incidents still are being reported.

Some states have introduced legislation that deals specifically with equity skimming where such acts are punishable as a felony, not unlike securities fraud. Securities fraud is regulated somewhat differently than criminal fraud.
Prosecutors believe securities violations are easier to prove because a person does not have to affirmatively lie in order to be criminally liable for his actions. Simply not providing full disclosure could be a violation.
However, other states have not been as vigilant on equity skimmers. Scammers land there because there’s not much to lose; present laws haven’t put them in jail, and financial penalties haven’t served as much of a deterrent.
Until the mortgage meltdown began three years ago, most foreclosures occurred only when a major problem hit the borrower — i.e., serious injury, divorce, loss of job, etc. Credit checks and qualification procedures were designed to sort out those capable of assuming the responsibilities of a home loan. When qualification measures were lessened (some would argue dropped altogether), the easy money came back to haunt.

Some foreclosures, however, have been sparked by the deliberate actions of fast-talking salespeople not associated with established banks, savings and loans (S&Ls), or insurance companies. Typically, their aim is to take the equity out of a seller’s home, a residence owned free and clear by an older person.
In another popular residential scheme, a buyer would give the seller a sizable down payment. The seller then would agree to carry a second mortgage for the balance of the purchase price.

Once in possession of the trust deed to the property — which gives the buyer title — the crafty buyer would go to a lender and mortgage the property again, putting the lender “in first place” if the buyer defaults on the loan. The total of the loans then exceeded the market value of the house.
The buyer recovers his down payment money from the cash raised in the new mortgage, pays commissions and closing costs, pockets the balance and defaults — or makes no payments — on the loan. The lender eventually forecloses on the property to collect the cash the buyer owed on the loan.

The sellers never see the money promised in the second mortgage and now must pay the lender the balance of the loan just to get the house back. In effect, the sellers have given up their home for a down payment. One case involving 12 properties in the Eugene, Ore., area wasn’t discovered until long after a smooth-talking 30-year-old left the state with $184,000 in cash.

Again, the most difficult and frustrating aspect of the entire scenario is that it is difficult to prove there was intent to defraud at the time the deal was made.
Be wary of investors willing to take over your payments or attempting to persuade you to subordinate your position on a loan. Times are tough but doing so could make them tougher.

Tom Kelly’s new e-book, “Bargains Beyond the Border: Get Past the Blood and Drugs: Mexico’s Lower Cost of Living Can Avert a Tearful Retirement,” is available online at Apple’s iBookstore, Amazon.com, Sony’s Reader Store, Barnes & Noble, Kobo, Diesel eBook Store, and Google Editions.

Reader tips for sticky deck problem

admin — Thu, 17 Nov 2011 03:18:39 +0000

Some ‘green’ ways to remove excess sealer
Bill and Kevin Burnett Inman News™
Recently, we published a response to a reader who had a problem with a sticky deck. It seems her handyman didn’t read the instructions on the sealer can and got carried away. In this case, more was not better. The sealer pooled and dried to a sticky film.

We told our reader to give the spots a good scrubbing with acetone (lacquer thinner), rinse and then finish with a light sanding. As often happens, a question begets more questions and different answers.
Here’s what this column generated:
Q: You mention redwood in your article. Our deck is cedar, which splinters a lot. I have had it power-washed in previous years, but I think that might have made it worse. How would you treat a cedar deck?
A: The same as a redwood deck. Power washing with no sealer makes for dried-out wood and splinters. Power-wash the deck, let it dry, and apply a sealer. As we’ve said many times before, we’ve had good luck with Duckback and Preserva Wood products.
Q: I saw your article and have a question: My deck is made from pressure-treated wood. In the past, when I have applied deck stain, it looks great for a few months but then starts to wear off. By the next summer it looks as if it never penetrated the wood. Is that because the wood is pressure-treated? Will the Preserva Wood or Duckback product do a better job than the product I have been using?
A: If the product you have been using is deck stain, the answer is yes. Stain will not penetrate pressure-treated wood. Pressure-treated wood is infused with a chemical preservative under pressure to prevent fungus and insect damage. If you cut a piece of pressure-treated lumber and look at the cut end, you’ll see 1/16 inch to 1/8 inch of penetration of the preservative. This prohibits water and stain from penetrating. If you continue to stain, count on a yearly project.

An old salt offered this suggestion:
“An old boat trick for too much sealer (tung oil or urethane) applied to teak decks: Apply 90 percent rubbing alcohol with bronze steel wool. It couldn’t hurt to try it on a small patch. Rubbing alcohol is cheap.”
We agree. It sure won’t hurt, and if it works, you won’t have to glove up and use a respirator, which you’ll have to do if you use acetone.

Finally, a manufacturer of wood stain pitched his product for cleaning up mistakes:
“I believe I have a safe and environmentally friendly solution to his predicament. We manufacture Penofin, a wood stain that is similar to Preserva Wood. A few years ago we launched a line of cleaners to help consumers prep their wood prior to staining as well as solve the more common problems associated with overapplication.
“A sticky or tacky deck is usually due to overapplication or failing to wipe the excess stain from the surface of the wood. We recommend our Penofin Pro-Tech Cleaner Step 2. This is a product that comes in powder form. You mix 1 cup to a gallon of water, wet the wood and apply the solution to the wood surface. Agitate lightly with a stiff bristled nonmetallic brush for approximately 15 minutes. Rinse thoroughly with a garden hose and spray nozzle, and let the wood dry. This removes any tackiness or residue.”

We haven’t used this product, so for us it’s neither a pick nor a pan. We would probably give it a try. If it works, it’s a good “green” way to go. If you would like more information, the website is www.penofin.com.

3 must-knows about prelisting inspections

admin — Thu, 17 Nov 2011 03:18:16 +0000

REThink Real Estate
Tara-Nicholle Nelson Inman News™
Q: Recently, I read an article of yours in which you told a seller to have her home inspected before putting it on the market. I will be putting my mom’s house on the market, and in watching many of the real estate TV shows, I had never heard or seen this idea before.
Can I really obtain the home inspection in advance? The process always seems to have problems after the prospective buyer gets the mortgage and then pays for his or her own inspection. It would seem like a good selling point if the property already had a clean inspection or the indicated repair were already taken care of. –Albert W.
A: You absolutely can — and possibly should — obtain an inspection on your mother’s home before you put it on the market. Given the way mortgage lending guidelines have tightened up and the fact that appraisal and condition issues are killing a larger number of transactions than at any time in memory, obtaining prelisting inspections differentiate your home from the overwhelming competition and boost your home’s chances of selling by helping satisfy prospective buyers that the property will:
* pass the lender’s and appraiser’s condition guidelines; * not have surprise condition issues arise midtransaction; and * be in a condition that maps to the price they’ve agreed to pay for it.
Here are some things you should think about as you decide whether to move forward with obtaining prelisting inspections and figure out a plan around how to leverage the reports.
1. Prelisting inspections won’t make the deal, but they can help optimize your chances of closing the deal. Buyers are not going to buy a house they wouldn’t consider otherwise because it has reports, but if they are debating between your mother’s home and another property, a clean bill of house health, documentation that needed repairs have been completed, or even reports showing what needs doing and a corresponding discount can help push buyers off the fence.
As you noted, many homes fall out of escrow because of condition issues not discovered until the transaction is partially underway. Sometimes, advance inspection reports can surface issues, allow you to get repairs completed and thus avoid that issue.
However, at other times, prelisting inspections show issues too big for you to have repaired that will be deal-killers for almost any mortgage lender. In this case, you do yourself the favor of forgoing even bothering trying to get it past a mortgage lender and empower yourself to list it as a cash-only sale for a fixer-upper price.
2. Having prelisting inspections may change your disclosure requirements. You don’t mention whether your mother has passed away, but if so, and you are selling her home on behalf of her estate, you could very well be exempt from many disclosure requirements, depending on your state’s law. (Consult with a local real estate agent to find out.)
However, once you obtain prelisting inspections, you will have a legal duty to provide information about any defects turned up to prospective buyers. That still might make sense, especially if the home is in great shape or you do elect to invest in necessary repairs. Just be aware that by obtaining the inspections you might heighten your own legal duties vis-à-vis making disclosures about the condition of the home.
3. Your prelisting inspection won’t replace the buyer’s inspections. To be clear, whatever inspection(s) you obtain won’t be the inspection — it will just be an inspection. You’ll want to expressly advise the buyer that the prelisting inspections — and I would encourage you to consider a pest inspection, property inspection and a roof inspection — are for his information only.
You don’t want the buyer to rely totally on it and forgo his own due diligence for liability reasons; your aim is to either verify the place is in good shape, clear the place of major repairs or brief them on why the property is being priced in that way and what they’ll need to do (or won’t need to do) later, assuming you can negotiate an as-is offer.
But you also want the buyer to still obtain his own inspections, so he can attend, ask questions, select the inspector and not fault you for anything that is missed. And you should work with your listing agent to require that the buyer sign your written advice to get his own inspections, as well as to make the property available to the buyer for just that purpose.
Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

Is your rent hike illegal?

admin — Thu, 17 Nov 2011 03:17:58 +0000

Rent it Right
Janet Portman Inman News™
Q: After weeks of trying to get our landlord to make a repair to the roof, we decided to withhold rent. We followed our state’s rules, and the landlord got the idea — he repaired the roof. But then he served us with a rent increase. Isn’t this illegal? –Dori and Tom T.
A: Most states that allow tenants to withhold rent and/or use “repair-and-deduct” also prohibit landlord retaliation when tenants invoke these remedies.
The reason is clear enough: It would defeat the purpose of these remedies if landlords could turn around and raise the rent, withhold services, or terminate the tenancy. If such responses were legally tolerated, few tenants would take the risk of asserting their rights.
However (Isn’t there always a “however” in the law?), a rent hike or even a termination following a tenant’s exercise of rent withholding or repair-and-deduct isn’t necessarily an instance of illegal retaliation. Landlords always have the opportunity to argue that their act had nothing to do with the tenant’s invocation of his or her legal rights.
For example, if the landlord raises everyone’s rent once a year, without fail and with respect to every tenant in the building, he may be able to convince a judge that the hike would have happened irrespective of the tenant’s action, and was not motivated by it.
Also, most antiretaliation statutes provide for a wash-out period of a few months after the tenant has invoked the remedy — after that period ends, the usual retaliation rules will not apply. For example, Connecticut and Michigan specify 90 days; Arizona and Washington, D.C., six months; Iowa and Kentucky, one year.
If you suffer a rent hike or other negative action after the wash-out period has come and gone, you may not be out of luck, depending on how your state has structured the law.
A tenant-friendly statute will presume that the landlord’s act was retaliatory if done within the time specified by the law, which makes the landlord responsible for providing evidence that will convince the judge or jury that his act was not retaliatory.
If the time period has passed, it becomes the tenant’s duty to convince the judge or jury that the act was retaliatory. But not-so-friendly statutes may provide that once the time period has passed, your ability to raise the defense has also gone away.
Q: We just got around to reading the fine print in our lease, and buried in the “no illegal activities” clause, we discovered to our astonishment a sentence that says we are prohibited from “conducting vocal or instrumental practicing or instruction.” Our middle-schooler has signed up for the band and will need to practice his flute daily. Can our landlord prohibit this? –Jackie and Walter
A: Your question is a good example of the dangers of fine print … and of failing to read it. Perhaps you glazed over the clause, after seeing the prohibition on illegal activities, something few tenants would argue with, and as a result, a part of the lease that they don’t ponder too much.
It’s only human nature — that’s why seasoned real estate lawyers, who deal with leases that run to dozens of pages, always review them from the bottom up, literally, as well as from the start. What you miss as your eyes travel familiar text might jump out at you when you come at it from a different angle.
I’m afraid that a prohibition like the one you describe is not illegal. The landlord doubtless had some bad experiences in the past with loud practicing or many hours of instruction.
To be fair, if the quarters are close, hearing scales or a tune played repeatedly, let alone a practice session of the band, could be very disturbing to other tenants. Because players of musical instruments are not a legally protected class, singling them out for negative treatment is not illegal.
You might approach the landlord and ask him to vary the rule, but I wouldn’t count on success. If the landlord makes an exception for you, it will soon become evident that the rule can be bent, and he may be approached by others.
And that’s where his legal troubles might begin — those whom he turns down may think that they’re being treated differently than you because they are a different ethnicity than your family, or because of their age, or because of (substitute any legally protected class here).
If the disappointed musician files a complaint with a fair housing agency, the landlord will have to defend himself, and even if he prevails, the experience will not be a nice one.
Have a talk with your son’s middle-school music teacher and explain the problem. There may be a way for your boy to practice at school, after the school day ends (or before it begins), or during lunchtime. Or perhaps your child can accompany another child to that child’s home for practice sessions. These aren’t ideal solutions, but given the restriction you’re under, they may be the best you can do.
Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of “Every Landlord’s Legal Guide” and “Every Tenant’s Legal Guide.” She can be reached at janet@inman.com.

Franchisors offering buyers ‘Home Price Protection’

admin — Thu, 17 Nov 2011 03:17:38 +0000

Payouts tied to market index instead of individual properties
Steve Bergsman Inman News™
Declining home prices and the foreclosure backlog are not the only obstacles to a housing recovery. There is also the psychological factor: Potential homeowners have lost confidence in the asset class.
It’s easy to understand why. After decades of relatively steady, mostly upward movement in prices, home price appreciation soared during the boom — until the recession brought prices crashing back to the trend line.
First-time homeowners and even families already in single-family residences who would normally move up to a bigger home have become fearful that the asset class is essentially unstable and could easily behave like the stock market with wild swings in pricing. Why move into a home bought at a certain a price, when tomorrow the value of that same house could be less than it was at move-in?
That’s the issue T.J. Agresti, CEO of Greenwood Village, Colo.-based EquityLock Solutions, has tried to address with a program called Home Price Protection, which essentially offers buyers a chance to recoup dollars if home prices in their local market declined at the time they sell their homes as compared to move-in date.
“The only way to overcome revulsion to an asset class is for people to have faith and confidence in it again,” Agresti said. “At the time of the bailouts, Federal Reserve Chairman Ben Bernanke talked about this type of product, but when asked why doesn’t the government back a private company to provide insurance, he said flat out this has to be a private-sector answer.”
The concept of using insurance or contracts to protect housing prices has been around since the 1970s, but with home prices very strong and then the advent of the bubble at the turn of the century, it wasn’t something anyone was even considering because the thought that home values could fall as well as rise seemed like an impossibility.
After the mortgage crisis, recession and the flood of foreclosures trampled the housing market, the concept of home-price protection once again looked like a reasonable idea.
“In 2009, about a dozen companies formed to try and bring this product to market,” Agresti said. “These included undercapitalized concept companies looking for funding.”
The problem was, there were two different approaches: an insurance product that would protect homeowners from loss or a non-insurance product that would protect homeowners from risk.
Agresti chose the latter route.
“We were the first to market in May of this year,” Agresti boasted.
Apparently, Home Price Protection filled a need because by midsummer, EquityLock Solutions finalized agreements with RE/MAX International, Keller Williams Realty and Prudential Real Estate. In addition, Stonecrest Homes, an Atlanta homebuilder, will include Home Price Protection on all of its completed homes and plots under development.
This is not insurance, but a financial agreement to pay the homeowner upon resale if the House Price Index (determined by the Federal Housing Finance Agency) declined in the marketplace. The contract is not purchased to insure against the loss of value in a particular real estate parcel. Instead, the contract pays out based on declines in the relevant market index, regardless of whether the home sells for a gain or a loss.
The minimum period for the contract is two years and the maximum is 15 years. There is a cap on the payout of 20 percent of the contract price.
Real estate companies have become interested in home-price protection because it provides an incentive to get buyers in the door. It also helps sellers. Generally, a price stalemate happens when a buyer wants a certain price cut, but the seller will go only so far down in the offering. Now the seller can say, “I won’t reduce my price anymore, but I will pay for market protection.’”
Chris Brown, CEO at RE/MAX Connection Realtors in New Jersey, is involved with the Home Price Protection pilot program for RE/MAX in his state, which went live on July 26. When I spoke with Brown a few weeks afterward, his company already had eight commitments to contract, including one sale.
“In New Jersey, a normal seller has to compete with property values that are depressed because of foreclosed homes,” Brown explained. “Sellers have to sacrifice equity to match up with price competition. Home Price Protection is a mechanism that will allow the seller to have the property stand out among all other properties and the seller doesn’t have to reduce prices to match up with foreclosed homes.”
Brown gives this example: Prices in certain neighborhoods have fallen 5 percent and the Realtor tells the homeowner, maybe he should cut his offering by 6.5 percent to be competitive. The homeowner has to ask himself: Do I really want to drop the price another $12,000 on a $200,000 house?
“The other option is, the Realtor can offer up to 1.7 percent compensation to a buyer to purchase Home Price Protection,” Brown said. “To make it even more competitive, the Realtor said, ‘Let’s just cut the home price 1 percent.’ Now they are looking at a drop of 2.7 percent as opposed to 6.5 percent and they have something tangible to give to the homebuyer.
“This particular product answers the challenge of consumer confidence,” Brown said.
EquityLock Solutions is not trying to promote a product that allows people to game the system or make a bet on the market, Agresti said. “What we are trying to do is provide people with the stability that said, ‘I want to move into this house. I’m going to stay in the house a normal amount of time. And, I’m not going to do that unless I get some protection from another market correction.’”
Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, “Growing Up Levittown: In a Time of Conformity, Controversy and Cultural Crisis,” is now available for sale on Amazon.com.

Exempt building permits from subjective design reviews

admin — Thu, 17 Nov 2011 03:17:07 +0000

How bureaucracy is killing the American dream
Arrol Gellner Inman News™
Editor’s note: This is the last of a three-part series.
In the last two columns, I recounted the true story of Daniel Ludwig, a Romanian immigrant who came to America essentially penniless in 1955, yet was able to buy a home, build himself a woodworking shop, and establish a thriving cabinetmaking business within six years of his arrival here.
Then, by way of example, we magically transported Dan into the present to see how his immigrant story might fare in today’s America. One immediate difference: Today, the likelihood of Dan ever affording a house was virtually nil. But even supposing he’d been able to buy some property, today’s tangle of zoning, building, aesthetic and environmental regulations would likely have foiled any attempt to set up his own woodworking shop, much less make a success of it. Hence, the classic American immigrant story of 1955 becomes the classic dead-end road of 2011.
What has gone wrong in America?
One problem is that, rather than encouraging working-class people like Dan Ludwig to succeed through their own initiative, local government now does its very best to impede them. Virtually every city hall is a hornet’s nest of regulations attempting to micromanage every aspect of what private property owners can and cannot do with their own land. While large, well-connected applicants such as developers can afford to negotiate the intricacies of zoning, building, aesthetic, noise and environmental regulations, people of lesser means often cannot.
If we’re serious about cultivating today’s Dan Ludwigs — the small-business owners who are, after all, the backbone of our economy — city governments need to clear at least a small path through the regulatory minefield they’ve created. One simple way to do this is to make all regulations strictly quantifiable: As long as an applicant meets clearly prescribed, quantifiable standards — whether regarding building size, noise, green material content, or what have you — he or she would be assured of approval.
There’s nothing new about this idea. Building codes have consisted of quantifiable regulations for over a century: Comply with them, and you’re good to go. Regulations for zoning, noise abatement, environmental protection and practically any other area worth enforcing can be framed in the same way.
However, this standard would quickly weed out the sort of capricious building and design regulations whose uncertain outcomes only further increase a private applicant’s risk. It would, for example, immediately and deservedly obliterate all civic design review regulations, those utterly subjective, so-called aesthetic “guidelines” that have nevertheless come to be enforced with the power of law. Quantifiable regulations would also do away with the circus of planning commission meetings, in which any neighbor with a grudge or too much free time can torpedo months or years of careful and conscientious planning on an applicant’s part.
We still think of America as the land where anything is possible, but in truth, many things are a lot less possible than they used to be. If Dan Ludwig were still around — and I wish he were, because he was my uncle, as well as my inspiration for becoming an architect — I’m sure he would wonder why our government bedevils the very people it needs the most.
Read Arrol Gellner’s blog at arrolgellner.blogspot.com, or follow him on Twitter: @ArrolGellner.

Avoid legal trouble when terminating tenant’s lease

admin — Thu, 17 Nov 2011 03:16:47 +0000

Nonrenewal must be based on legitimate business reasons
Robert Griswold Inman News™
Q: We have an unmarried couple renting a one-bedroom apartment for the past 4 1/2 years. We have always had trouble collecting rent in a timely fashion, and every time we have been there for a repair we found the apartment was dirty and messy. It doesn’t seem like they have any system for keeping the unit clean, as they both seem to be always at work.

My wife and I decided that at the end of their current lease we are not going to renew it, and we are going to give them a written notice that they will need to find a new place. So, naturally, this year they have paid on time. I gave them a six-week notice that I am not going to renew their lease. They say they will not move! What can I do?
A: You certainly have the right to not renew the lease based on legitimate business reasons. So the fact that the tenant consistently pays the rent late or fails to properly maintain the apartment would be proper reasons to advise the tenant that you are not renewing their lease. But you also mention that they are an unmarried couple and constantly at work. Now you certainly rented to them in the first place so it would seem that you do not have any policies against unmarried couples. But the fact that you mention this in your question leads me to feel it is important to discuss this further.
The fact that they are unmarried may or may not be the reason that the apartment is messy and constantly dirty, but I want to remind you that under federal fair housing laws that would not be an appropriate basis upon which to not renew their lease, as marital status is a protected class.
In my experience, there is no correlation between marital status and the cleanliness and housekeeping standards of my tenants. I find good examples and bad examples of tidiness and apartment hygiene regardless of any specific factor other than some people just don’t seem to care. If the tenants don’t enjoy doing their own cleaning or just don’t have time (whether it is due to work or any other reason), there are services that can do this work for them.
So at this point I would suggest you send them a written letter following up your notice and their response outlining that you will not accept any rent past the end of the lease and that you will move forward quickly with an eviction and seek the cost of the legal fees.
Of course, if their only fault is poor housekeeping, you could renew their lease and raise the rent by an amount that would cover a biweekly or monthly cleaning service. In many areas, it is not easy to find good tenants that will stay nearly five years so you might actually want to consider this or at least explain to them your reasons and give them a short-term extension of the lease to see if they can keep the property clean.
I will also tell you that you are not being unreasonable in asking that the tenant properly clean and maintain the property, as often it is poor housekeeping that later leads tenants to complain about the habitability of the rental unit and blame you as the landlord when it was at least partially the fault of the tenant. Also, when a rental unit is filthy it may be more difficult for the tenant (or even repairmen or workers) to identify legitimate maintenance issues. A messy or dirty apartment can also attract pests, which the tenant may expect you to eradicate. So, all in all, you are certainly justified in terminating the lease of this tenant, but you may want to explore some other alternatives with them short of an eviction.
Q: Last winter, my car was parked at the house that my brother rents. He does not have renters insurance. Ice and snow fell off the roof and shattered my back window. While I have basic liability and collision car insurance, I do not have glass coverage. The cost to replace this back window was nearly $1,000. At the time, I went ahead and just paid for it. But recently I was talking to a friend in the property management field and he thinks the property owner is responsible and I should sue the owner before the one-year statute of limitations expires in a few months. Who do you think is responsible for paying for my new rear window damaged by ice and snow?
A: As a longtime rental property owner and manager, it is my opinion that you would be responsible unless the landlord was somehow negligent. Ice and snow during the winter is certainly a natural occurrence, and the landlord cannot be responsible for such incidents. In the insurance field, these types of claims are often denied as being “acts of God.” But I am a property manager and not an insurance expert. So I would suggest that you talk with your auto insurance agent.
Just because you don’t have coverage under your auto policy for this type of damage doesn’t mean that your insurance agent won’t be able to help you. You don’t indicate whether you are a renter or a homeowner, but maybe there is coverage under a homeowners policy if you have one. Your insurance agent may be able to get more details about exactly what happened and the coverage that the property owner carries and can creatively find a way to find coverage. The coverage may be on one of your policies or it may be the property owner’s policy, or your insurance company may pay for your loss and then possibly subrogate the claim. In simple terms, subrogation is when your insurance company pays you on your claim directly and then seeks reimbursement from another insurance company. In this case, it would be the insurance carrier for the property owner.
This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of “Property Management for Dummies” and “Property Management Kit for Dummies” and co-author of “Real Estate Investing for Dummies.”
Email your questions to Rental Q&A at rgriswold.inman@retodayradio.com. Questions should be brief and cannot be answered individually.

Hello world!

admin — Thu, 17 Nov 2011 03:13:10 +0000

Welcome to WordPress. This is your first post. Edit or delete it, then start blogging!