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| Your Monthly Real Estate Newsletter |
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Articles and Advice |
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| Deck railings become fun and exciting By Paul Bianchina Deck railings can do a lot for the appearance and especially the safety of any outdoor deck. So when designing and building your new deck, there are a number of things to take into consideration. MEETING THE BUILDING CODES The first thing you want to determine is what building codes apply to your deck railing project. With most codes, a railing is required if the top surface of the decking boards is 30 inches or more above grade, and in some jurisdictions the height is even lower. If you are building a deck on sloping ground, only that portion that is higher then 30 inches is typically required to have a railing, but from the standpoint of both aesthetics and structural integrity, it is usually preferable to extend the railing around the entire deck. Another code consideration is the height of the railing itself, which typically is required to be 36 to 42 inches high. Where your railing falls within this range is a matter of preference, and while 36 inches is probably the most common, you might want to try hanging a piece of string at a couple of different heights to see if one height feels better than another. The last code consideration is the spacing between the rail's components. In order to protect small children from potential danger, most building codes now require that the spacing between rail parts such as the vertical pickets or between the bottom horizontal rail and the top of the deck be constructed so that a sphere no larger than 4 inches in diameter can pass between them. MATERIALS There are lots of fun and exciting possibilities for the materials you choose for your deck railing. As decks have continued to increase in popularity in recent years, more and more options have come on the market, and many are designed for quick and easy installation by pros and homeowners alike. You can also readily mix and match materials to get just the look you want. Wood: Wood of course is a perennial favorite. Cedar, redwood, teak and other woods are all great choices for a deck, and are readily available in sizes that include 4-by-4 inches for support posts, 2-by-6 and 2-by-4 for rails and caps, 2-by-2 inches for pickets, and 1-by-1 to 1-by-12 for trim. For strength, appearance and safety, look for wood that is straight and solid, with a minimal number of knots and other defects. Metal: Metal deck railing components can easily be found in a wide variety of materials, colors, sizes and shapes to fit the look of any deck. For example, there are aluminum deck railing components that allow you to construct an entire railing system out of easy-care aluminum in several different styles and colors. Or you might opt for aluminum tubes that fit into wooden upper and lower railings to create an attractive and very practical railing system. There are an increasing number of metal railing components that really let you dress up a deck. You might want to check out pre-bent balusters made from aluminum flat stock in various colors that simply screw to wood railings, or go all out with a complete powder-coated steel balcony panel featuring trees, elk and other designs. For a look at these and other components, try a visit to www.rockler.com. Cables: Stainless steel cables can be used with wood or metal supports to create a railing system that is both strong and attractive. The system is relatively easy to install for a do-it-yourselfer, following the manufacturer's specific instructions. You can check out the system on the Web at www.cablerail.com . Glass: Got a million-dollar view that you can't bring yourself to obscure with a deck railing? Glass, combined with wood or aluminum in various configurations, offers yet another option for creating a safe and solid railing system that keeps the view open and kids enclosed. Glass must be tempered, and needs to meet building code requirements for thickness and resistance to wind load, so be sure to check with your local building officials for all the specifics. |
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| The art of counteroffers By Dian Hymer Negotiation is back in style. It's not uncommon for buyers and sellers to have many rounds of counteroffering back and forth before they arrive at a contract that is completely agreeable to all involved. When this is accomplished, the contract is ratified. However, there is another important element involved in ratifying a contract. Until a residential purchase contract is completely signed, and the final signed documents are delivered back to the other party or that party's agent, the listing is not sold. Let's say you decide to offer the sellers less than their asking price. They don't accept your offer, but issue a counteroffer. Before you respond to the seller's counteroffer, another buyer makes an offer. If you haven't signed the sellers' final counteroffer and delivered it back to them, they can withdraw their counter and sell the house to someone else. Or they could decide to withdraw the counteroffer to you and issue a new one. This time it could be a multiple counteroffer if the sellers also decide to counter the other buyer's offer. You end up in a multiple-offer competition, which often means paying more or not getting the house at all. You can't rely on verbal negotiations when you're buying or selling real estate. To be binding on the parties involved, real estate contracts and the addenda to them must be written. HOUSE HUNTING TIP: Timing is critical. If the seller issues you a counteroffer you can live with and you want the house, sign the document as soon as possible, even if the seller gives you several days to think about it. During that time, another buyer could make an offer and your counteroffer could be withdrawn. After you sign the counteroffer, make sure that your agent delivers it to the sellers or their agent immediately. Whoever receives the document should sign to acknowledge receipt of the document so that there's no question that the contract is ratified. Then if another buyer wants to make an offer, you won't have to compete or risk losing the house altogether. Once you have a ratified contract in place, the sellers can negotiate with other buyers, but only for backup position subject to the collapse of your contract. Don't let yourself be lulled into thinking that because the housing market is generally slow there's no chance you'll end up in competition. The best listings -- ones in good condition and priced right for the market -- can sell quickly, particularly in areas where the inventory is low. Many buyers have busy work or travel schedules. Often you find the right house to buy at the least opportune time in terms of what else might be going on in your life. Make sure that your home purchase contract states that faxed signatures are binding. This could save you hours of driving in traffic to sign a critical document in time. Sometimes faxes aren't the answer. If you'll be available only by phone or e-mail, consider giving power of attorney -- one specific to buying a house in a certain area -- to someone whom you trust completely. This person should not be your real estate agent. It should be someone who will be available on short notice. Electronic signatures are becoming more popular. But, they haven't become standard in the home-sale business. If a seller who has had no experience with electronic signatures is considering a couple of offers -- one with electronic signatures and one that was signed in person -- he would probably feel more comfortable accepting the latter. THE CLOSING: That is, unless the price on the electronically signed offer is a lot higher. |
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| Condo owners disagree on dry rot repair By Benny Kass DEAR BENNY: I own a condo in a two-unit building. We always have split all common expenses 50/50 per our legal documents. Recently we discovered a leak in the common garage, and have established the cause and are embarking on repairs. This leak also caused dry rot in some of the hardwood floors in my unit. I considered this to be a common expense and expected the entire cost of the repairs to be divided 50/50. The other owner disagrees and claims that because the damage is in the interior of my unit I must bear the cost of those repairs myself. Your advice will be most helpful. –Sherry DEAR SHERRY: This is perhaps one of the most controversial issues in community association law. My first question: Have you filed a claim with the association's insurance carrier (called the "master policy")? If not, you should do so immediately, although many policies require that if claims are not filed within 30 days from the date of discovery, the insurance company will reject the claim. Although state laws may differ, in most situations these laws have been interpreted to mean that associations obtain what is known as "single-entity" property insurance. This means that the insurance coverage for an association would include not only the common elements, but also the individual units. My second question: Are the hardwood floors in your unit the original flooring, or did you (or someone who owned before you) add the hardwood? I ask this because typically the master insurance policy is responsible for covering all common elements as well as damage within units -- except for "betterments," which are those items that owners made to their unit, such as new kitchen appliances, parquet floors or wallpaper. My third question: Do you have your own insurance to cover any damage to your unit that is not covered by the master policy? This is known as an HO-6 policy and is insurance coverage that I believe every condominium unit owner should obtain. You -- or an attorney for your two-unit association -- should review your legal documents carefully. I suspect that the answers to your question will be found in those documents. I further suspect that if it can be determined that the dry rot is the direct result of the common element garage leak, this is an association problem, which hopefully your insurance policy will cover. DEAR BENNY: We read with interest your article on home titles. When my husband and I bought our house in Nevada, the title papers listed us as tenants-in-common. Are we able to change that to joint tenants or tenants by entireties? –Lorette DEAR LORETTE: It is a very easy and inexpensive process to change your title. But there are tax, estate and other legal ramifications involved, so before you do this I suggest that you consult a local real estate lawyer in your area who can give you the pros and cons. You also should understand that in community property states, there are different tax considerations, and that's why it is important for you to discuss this with an attorney. DEAR BENNY: I bought a house at an auction a few days ago. The house was sold "as is." I am a first-time home buyer. After I won the bidding, they took a $5,000 deposit (cashier's check) and $2,500 extra after the auction was done. They had me sign papers I did not know was a contract. It happened very quickly. They just said sign here and here, and I did. The next day I went to the office and got my copy of the contract and when I took my friend to see the house, we found out it has a lot of termites. We did not go to a title company yet. Can I back out and get my deposit back? Or can I ask them to fix the property because they did not disclose about the termites? –Said DEAR SAID: Why did you sign a document that you did not understand? Why did you buy a house without at least looking at it? I am not sure that you will be able to get your deposit back. The auction made it clear that you were buying the property "as is," which means that the seller was not agreeing to make any repairs or to deal with any termite issues. You should consult a local attorney to determine if there is any hope of getting your deposited refunded, but I seriously doubt that this will be possible. DEAR BENNY: Is there a certain age at which one is allowed to sell a home and avoid having to claim the profit made on the sale? –Patricia DEAR PATRICIA: No. Regardless of how old you are, if you have made a profit by selling real estate, you have to pay the applicable capital gains tax. If you have owned and lived in the house for two out of the five years before it is sold, you can exclude up to $250,000 of any profit you have made (or up to $500,000 if you file a joint income tax return). If your income is low, there are reduced tax breaks, and you should discuss these with your tax advisors. DEAR BENNY: We recently refinanced our home loan with the XX company. Within weeks, we received a letter from the ZZ company saying that our October payment was due to them. An October payment invoice was included. I contacted XX, and was told that the loan was not sold. They said if and when that happens, we would receive a "goodbye letter" -- which has not arrived. We now have October payment invoices from both mortgage companies, and only two weeks to go until the first payment is due. We contacted ZZ, which insists they own the loan now. In fact, both companies say they have our loan. What do you suggest we do? –Linda DEAR LINDA: Mortgage lenders often sell their loans to other lending institutions, and unfortunately it is confusing to the homeowner as to where the payments are to be made. However, several years ago, Congress attempted to solve this problem. If a loan is sold, the homeowner must receive a letter from both the old and the new lender, advising that the loan has been sold and where the new monthly payments are to be sent. This is the "goodbye" letter mentioned by your lender. The law further makes it clear that once you get those letters (or often one joint letter from both lenders), you cannot be penalized if within the first 60 days you send your mortgage payment to the wrong lender. I suggest that you immediately contact the consumer division of the Federal Reserve Board as well as your state Attorney General and Consumer Protection offices. Send copies of your complaints to both lenders. I suspect that your problem will be resolved promptly. But in the meantime, because you did not get the "goodbye letter" make sure that you send your check to the XX company -- your original lender. Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. |
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| Staging home for sale worth the cost By Paul Bianchina If you're selling your home, you obviously want to get it sold quickly and for the highest amount possible. One very important strategy to keep in mind is staging, which is simply the process of arranging the inside of your home so that it shows off to its full potential. Staging plays up your home's good features, such as enhancing a great view or drawing the buyer's eye to some spectacular wood floors. It also helps to minimize some of the home's drawbacks, such as making a small bedroom look larger. But also understand that staging does not in any way mean concealing structural defects, such as hanging a picture over a water stain or putting curtains over a broken window! Staging allows a potential buyer to visualize what can be done with the home, which is especially important with a house that's currently vacant. For example, some carefully arranged furniture in a room that would otherwise be empty can really help the buyer see the room's potential. And if you're in a neighborhood of tract houses that all look pretty much the same inside, good staging will set your home apart from the others for sale in the neighborhood. Finally, good staging makes buyers feel at home. It lets them really imagine themselves in the kitchen with friends, or relaxing in front of the living room fire, or even working on their car in the garage. Remove Clutter There are several things that go into staging a home for sale, and probably the single most important one is getting rid of all the clutter. No one wants to see several days' worth of mail and newspapers on the kitchen counter, or a kid's bedroom crammed with toys and games. The same applies to the garage, basement and even the backyard storage shed. Clutter is not just an overflowing magazine rack. It can be too many pictures on the wall, too many chairs wedged around the dining room table, or an oversized sofa that blocks the living room traffic patterns. It can be too many items of clothing crammed into a closet, or too many of grandma's dishes filling up every inch of a kitchen cabinet. When decluttering the house, stuffing everything into the closet or in boxes in the garage is not the answer. Remember that a potential buyer is looking in every nook and cranny of the house, and an overflowing closet doesn't make much of an impression. Instead, get the clutter completely out of the house. This could be a garage sale, some donations to a local charity, or simply a trip to the landfill. If you still have items that are cluttering up the house but they are things you'll want for your next home, then rent a temporary storage space and move them there. Let Buyers Envision Themselves There In addition to removing the clutter to make the rooms feel more open and the closets and cabinets feel more spacious, you want to always have an eye on what things you can do to help the buyers visualize living there. For example, lots of family photos on the wall will make it hard for the buyers not to feel like they're trespassing in someone else's home. Likewise, while you may be very proud of your religious affiliations, your choice of political ideologies, or your gun collection and the elk head on the wall, remember that not everyone shares your interests. If you can depersonalize the home to some degree, it will make it easier for potential buyers to see themselves making a life there. Your home should also be absolutely immaculate when you have it on the market for sale. Clean the counters and the cabinets and the fixtures and the flooring and every other part of the house until it shines. Wash the windows, let in the light, and make sure that beautiful view or that inviting backyard is clearly visible when a buyer walks through. A clean house also gives potential buyers more confidence that the structure of the house has been properly maintained and cared for as well. Hire professional stager It often makes good financial sense to hire a professional to do the staging for you. A professional home staging company will thoroughly understand the concepts of space and light and color, and they know how to make rooms show off to their full potential. They also don't have the same personal attachment to the home and its furnishings that you do, so they can make practical, impartial suggestions that you might otherwise overlook or simply not want to face. The cost of professional staging varies with the size of the house and amount of work involved, but a well-staged home should sell quicker and for more money, which makes that upfront expense a wise financial investment. |
| Miter saw great for DIY projects By Paul Bianchina If you're framing a new deck one weekend and then installing some intricate stain-grade crown molding the next, you might be wishing for one saw that could handle both those tasks -- and everything in-between. If so, then you don't need to look any further than one of the big and versatile 12-inch compound or sliding compound miter saws that are now on the market. Tough and powerful yet remarkably accurate, these saws can power through wet framing lumber or handle delicate cuts on fine trim. A compound miter saw is one that is capable of cutting a miter and a bevel on a piece of wood at the same time -- known as a compound cut -- making it perfect for anything from roof rafters to crown moldings. With a sliding compound miter saw, the head of the saw is mounted on single or dual rails to allow it to slide over the table, which increases its cutting capacity and adds the ability to cut overhead dados and rabbets. Several of the top tool manufacturers are now producing these saws, so you have a variety of different configurations, features and price ranges to select from. When you're in the market for one, look for a home center or tool store that has several different brands side by side, to allow you to make accurate comparisons. One of the top saws in the 12-inch compound slide saw field is the Bosch 12-inch Dual-Bevel Slide Miter Saw (Model 5412L, $629.95). This workhorse of a saw is beautifully designed and constructed, with a number of great features that add to its versatility. Perhaps the handiest of those features is the upfront bevel controls -- the only 12-inch sliding miter saw that has them -- which allows you to quickly and accurately set and lock the bevel angle of the head from the front of the saw, rather than having to reach around behind it. The saw head tilts to a maximum bevel of 47 degrees both left and right, and there are built-in stops at 0 and 45 degrees, as well as at 33.9 degrees for crown molding. The saw can bevel to 52 degrees to the left and all the way to 60 degrees to the right, with built in stops at 0, 15, 22.5, 31.6 (for crown molding) and 45 degrees. The Bosch saw also is well designed from a user's standpoint. The comfortable main control handle -- where you activate the motor and pull and lower the cutting head -- can be rotated and locked vertically, horizontally, or at 45 degrees in either direction, so it can be set where it feels most comfortable and also works well for both left- and right-handed operators. There are slide-out extensions on both the left and the right to extend the length of the table for better stock support, as well as a hold-down clamp and a stop for cutting repetitive lengths. The saw also has an arbor-mounted laser, and large, easy-to-read angle markings. One of the great things about the big 12-inch sliding miter saws is their capacity. You can cut lumber up to 4 1/4 inches high and 12 1/2 inches wide with this saw, and the 15-amp motor will power through wet beams. An adjustable stop holds the blade at variable heights above the table, so you can also cut dados at accurate and repeatable depths. The saw is not light -- 59 pounds -- but there are two carrying handles that are well located for lifting and carrying the saw in a well-balanced position, as well as a cord wrap to keep the cord out of the way. For a great saw that's a little lighter in both weight and cost, you might want to take a look at the Ridgid 12-inch Dual Compound Miter Saw (Model R4121, $333). Another big, tough, 15-amp saw, this nonsliding miter saw bevels to 48 degrees in both directions and miters to 50 degrees in both directions, and also has built-in stops for cutting the compound bevels required for crown molding. Even without the slide, the Ridgid saw will easily handle cross-cutting a full 2-by-10, and can miter a 2-by-6 at 45 degrees. The front miter locks are easy to use, and the quick, positive-locking feature lets you accurately set and hold any desired angle. The saw also features an adjustable laser and a big, quick-release hold-down clamp. At 46 pounds it's a rugged saw made for shop or job-site use, but it's still well balanced and easy to carry. And for nice smooth cuts, you might want to have a look at the Final Cut carbide saw blade ($74.95). This nicely engineered blade has a sanding disk on each side that is slightly wider overall than the width of the saw teeth, so the blade will cut the wood and then sand the cut smooth all in one operation. The result is a very clean cut with no kerf marks, and you get the added advantage of a reduction in kickbacks. The Final Cut blade will perform both rip and cross-cuts in hard or soft woods. It will work on your miter saw, table saw or radial arm saw, and the self-adhesive sanding disks are easily replaceable. You can check it out at www.finalcutblade.com. |
| As home ages, some defects unavoidable By Paul Bianchina Over time, many homes develop little nonstructural problem areas that need to be dealt with, and it seems like the older the house, the more of those little problems that occur. Here's some advice on fixing a few of the more common door and trim situations you might typically encounter. Out-of-square corners If you've tried installing trim in a corner and can't get the miter joint to come out right, it's probably because the corner is out of square -- meaning that it's not an exact 90 degrees. To rectify the problem, you need to get an exact measurement on the angle of the corner, then adjust your miter joints to compensate. The easiest way to do this is with an adjustable bevel gauge, which can be purchased inexpensively at any hardware store or home center. The bevel gauge has a wood or plastic handle with a metal blade that's held in place with a wing nut. To use the tool, simply loosen the wing nut and place the handle in the corner against one of the walls. Move the blade until it's flat against the other wall and tighten the wing nut, accurately duplicating the angle of the corner. Using a protractor, measure the angle between the handle and the blade then divide that number by two, giving you the angle of the miter cut you need to make. For example, if the angle of your wall corner measures 94 degrees, your miter cuts would each be 47 degrees instead of the standard 45 degrees (94 divided by 2 = 47). Doors that sag and won't latch Over time, a door's own weight will have a tendency to make the door want to sag down away from the frame at the top hinge. This can result in a door that rubs against the frame at the top corner, or that doesn't latch properly. To correct the sag, remove one or two of the screws that hold the upper hinge to the frame and replace them with 2- to 3-inch-long screws that will go all the way through the door frame and into the wall framing behind. Drill a pilot hole first to make it easier to install the screw. As the screw is tightened, you should see the entire door frame pull up tight against the wall framing, eliminating the sag. Removing the sag usually is enough to correct any problems with the door latching, since it pulls the latch on the door back into alignment with the metal strike plate on the door frame. If the door still won't latch, you'll need to make an adjustment in the strike plate. Coat the face of the latch where it protrudes from the door with lipstick or crayon, and slowly close the door. When you open it again, you'll see where the lipstick has transferred marks onto the strike plate, giving you a good indication of how much the plate needs to move in order to have the latch fully engage it again. Unscrew the strike plate, and use a sharp chisel to mortise the door frame enough to allow the strike plate to move. Drill out each of the old screw holes and insert a piece of hardwood dowel coated with glue into the holes -- this seals off the old holes so the screws won't wander back into them. Finally, place the strike plate in the adjusted position, drill two new screw holes, and reinstall the screws. Camouflaging defects Exposed ducts, surface-mounted pipes, and miscellaneous bumps and bulges are all items you might encounter that you'd like to put under cover. The easiest and cleanest solution in most instances is to simply box over them, and blend them into the surrounding area as well as possible. Start by measuring the protrusion at the widest point, and then figure how best to construct a cover. For example, if you have a piece of pipe sticking out of the wall an inch or two in one corner, the best solution is to build a small box that's open on one or two sides as necessary -- 1/2-inch or 3/4-inch plywood works well for this -- and slip it over the pipe, securing it with nails, screws or even adhesive, depending on the situation. If, on the other hand, you have a duct running along the ceiling for three quarters of the length of the room, you'll probably need to construct a framework from 2-by-2s or 2-by-4s to box in the entire duct. Oddly enough, it sometimes looks best to make the box larger than it needs to be -- in this example, the box will probably be less obtrusive if you make it the entire length of the room, rather than stopping it three quarters of the way across where the duct stops. After the plywood or 2-by frame is constructed, think about how best to cover it. There is often a temptation to cover things with inexpensive paneling, or to just leave the plywood as "good enough," but if the surrounding wall is drywall that's been painted or wallpapered, the new cover will look much better if you do whatever you can to match it to what's around it. |
| Not married? Buy home as tenants in common By Benny Kass DEAR BENNY: My daughter and her boyfriend are thinking about buying a house and she is putting more of a down payment than he. Is this a good idea? –Doug DEAR DOUG: I don't see any real problem with this arrangement, so long as your daughter and her friend enter into a written agreement spelling out their rights and responsibilities. Specifically, the agreement should contain at least the following: (1) how the mortgage payments and other house expenses will be made; (2) what will happen if one party cannot make those payments; and (3) what if one party wants out of the house -- will they sell? Finally, your daughter should consult an attorney without her boyfriend so that she can be advised as to the correct way that title will be held. I would recommend a tenant-in-common arrangement, with your daughter owning a greater percentage of the house based on the amount of the down payment that each party will pay. DEAR BENNY: Once a contract has been signed by both the seller and buyer of a house, does either party have an option to cancel the deal prior to the closing date? I am the buyer and my loan has been approved. An inspection has been conducted and there are several corrections and/or repairs we have submitted to the seller. I am, however, having second thoughts about the house and would like to know if I can legally back out at this time. –Alan DEAR ALAN: There is no "cooling-off" period in real estate as there is in other areas, such as buying a car. You signed a contract, which is a legal, binding document on both buyer and seller. Unless you have contingencies written into that contract -- such as financing, selling your own home, or getting a favorable inspection from a home inspector -- you will not be able to back out of the deal. You state that you submitted a number of repairs items to the seller. Do you have an inspection contingency? Does it give you the right to cancel the contract if the seller refuses to make those repairs? If you try to back out of the contract, the seller generally has three remedies. He can (1) keep your earnest money deposit; (2) sue you for any damages incurred as a result of your breach -- such as the house later sells at a lower price than your contract price; or (3) sue for specific performance. This means that the seller can take you to court and a judge can force you to buy the house. If you have second thoughts, you should have considered this before you signed the contract. DEAR BENNY: It seems that $2,500 to refinance a mortgage is too much. Do you agree? We have a 7-year adjustable-rate mortgage (ARM) with three years remaining; we have good credit and a very good payment history. The loan is with Chase and they want $2,500 to refinance to a fixed loan. Bank of America wants $3,000 to close on a new fixed loan plus $2,000 for escrow. The original loan was for $195,000 principal with $85,000 down, and our current principal is $188,000. Your opinion and any advice you can provide would be appreciated. We always read and enjoy your helpful articles on real estate. –John DEAR JOHN: Thanks for your kind comments about my column. Regardless of cost, you should seriously consider getting a fixed-rate mortgage as soon as possible. No one knows what rates will be three years from now when your ARM will require a change from your present rate. I can't comment on the closing costs, because there are differences in these fees in different parts of the country. You should shop around; discuss your situation with a number of lenders before you make your decision. I would also talk directly to Chase -- your current lender -- and try to go to the highest person in that company as possible. Explain that you want to refinance, and would prefer to stay with Chase, but that they should give you a discount on the closing costs. Some banks will do that just to keep a good customer. DEAR BENNY: Our mortgage payment is due on the first of the month with a 15-day grace period. All payments have always been made within the grace period. My wife feels that by not paying the mortgage on the first of the month we are paying more in interest when I make the payment later in the grace period. It is my point that as long as we make payments within the grace period it makes no difference as to the amount of interest we pay on our mortgage. Who is right? Please respond. –Eugene DEAR EUGENE: I did not know the answer so I submitted your question to Jack Guttentag, the "Mortgage Professor." Here's his response: "Only so-called 'simple-interest mortgages' accrue interest daily; most mortgages accrue monthly; and it does not matter when during the grace period you pay. But if they have a simple-interest loan, the wife is right." If you do not know what kind of mortgage you have (it should be spelled out in your promissory note), I suggest that you contact your mortgage lender and demand a response. DEAR BENNY: I am thinking about buying a couple of condos in a high-rise as rental properties. I have a solid background in rentals over the past 20 years, but my experience is all with duplexes and houses. The condos are extremely affordable, and in an area that rents well. So, I'm not concerned about cash-flow issues. The building has mainly been rental over the years. I am going in knowing that most of the occupants won't be owners, which usually is not a good thing, but in this case seems to work. I am concerned, however, about the security of my overall investment. Since the building is not selling very well at the moment, I have questions such as: (1) what happens if the building's developers go bankrupt? and (2) what recourse do I have if they fail to maintain the property before a condo board (not dominated by the developer) takes control of the building? Are there other pitfalls that I am neglecting to mention? –Allen DEAR ALLEN: You obviously are in decent financial shape, and are raising good questions in advance of committing yourself to the purchase. The first thing I would suggest is for you to consider whether it makes sense to own two condominium units in the same building. What's the old expression about putting all your eggs in one basket? In some states, the seller of a condominium unit is required to provide what is known as a "resale package," which contains the legal documents (declaration and bylaws) as well as current financial information, including the amount of any reserves that association has. If you are buying from a developer, you have the right to review the public offering statement, which contains this same information. If the developer goes bankrupt, its lender will take over the project. Again, state laws differ on whether the lender will become the successor developer and be bound by the same obligations as the original developer. You should discuss this with your personal attorney. You should also ask about what happens if the developer fails to maintain the property before an elected board of directors takes over control. Unfortunately, in today's economy, even those boards are struggling in many parts of the country. If a number of owners are unable or unwilling to pay their monthly assessments, the association will be in trouble. With all of the foreclosures happening around the country, many owners take the position, "I will lose my unit so why pay my association fees?" You have a lot of homework to do before you decide to buy. Make sure you read everything about the project, especially the financials, before you plunge into more investments. DEAR BENNY: My mom passed away two months ago and my father passed away eight years ago. She lived in her house for 30 years until the day she died. The house is still under my parent's name. She did not have a living trust or a will, and my parents have four children. The house is worth about $1 million. Is the city in which the property is located going to put my mom's house in probate? If so, do I have to hire a probate lawyer? Can the children just put the house on the market and sell it? –Mae DEAR MAE: I will give you a very short answer. The city does not take any action, but you need to retain a lawyer immediately. You and your siblings have a very valuable asset, and you don't want to lose it. Your family will have to start probate proceedings, and inheritance and estate taxes may be owed. Please consult with a lawyer who understands the probate laws in your state. Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. |
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