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| Sierra Times |
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Articles and Advice |
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| 'Creative financing' tactics to lure home buyers Retired seller moving abroad not looking to make big profit By Benny L. Kass DEAR BENNY: I recently retired and am planning to move out of the country. I own a single-family house in a desirable area. I owe only about $70,000 on my current mortgage. The value of the house before the recent market crash was about $470,000. Despite the current market, numerous people have looked at the house, but only one has made an offer (a very lowball offer). I am not desperate to sell, but I want to move on with my retirement plans. The house is older, but has recently had about $30,000 in improvements in order to appeal to buyers. Since I will not need the money from the sale of the house, how could I offer a very appealing owner-financed mortgage, perhaps with an introductory "teaser rate"? I called the bank that holds my mortgage, but it does not have anything in place to assist individuals with owner-financing. I could offer the house with a fair rate, but I do not want to have to fly back from another country to collect late payments, foreclose, make repairs or redo legal paperwork. Therefore, I am apprehensive about renting or offering a mortgage to anyone with less-than-perfect credit. Any suggestions you could offer would be appreciated. --Bob DEAR BOB: There are a number of ways that you can market your house with what I call "creative financing." First -- a land sales contract. Here, you enter into an agreement with your buyer that he or she will start making monthly payments. Your attorney will hold the deed to the property in escrow. When the buyer is able to obtain sufficient funds to pay the entire contract price, the deed will be recorded in the buyer's name. If the buyer does not make the payments, the agreement states that he or she will immediately move out, and you still own the house and keep the moneys that have been paid thus far. Second -- a wraparound mortgage. You sell the house and take back a mortgage (deed of trust). Since you already have a mortgage that has not been paid in full, this would be a second trust. Example: You sell the property for $470,000; the buyer pays you $20,000; and this second trust is for $450,000. Let's assume your current mortgage carries an interest rate of 5.5 percent, and the new mortgage is at 6.5 percent. You receive payments based on the higher mortgage rate, but pay off your lender at the existing rate. In my example, you will make 1 percent on the money you owe your bank, and 6.5 percent on the difference. Third -- a seller take-back. If you -- or your buyer -- can come up with the money to pay off your outstanding mortgage, then you can take back a first deed of trust at an interest rate to be negotiated. You can start off with a low rate for a couple of years, and have it increase periodically. You do not have to worry about flying back to handle these issues. You can appoint a bank or an attorney to handle all of these issues, including collecting the monthly mortgage payments or assessing any late fees, and you can enjoy your retirement wherever you are. DEAR BENNY: I am on the board of directors of a 112-townhome development. A new development is being built right next to ours, and the developer has requested permission to tap into our water line. I assume that since he asked we must have some rights. We have an attorney researching this. Our development is approximately 22 years old. What are the pros and cons for allowing this and should we charge a fee? Thanks for your advice. --J.D. DEAR J.D.: It appears obvious to me that your association has certain rights; otherwise, the developer would not be asking for your permission. The very first thing I would have your attorney do is contact the water authority in your county, which must be involved in any discussion and decision that is made. It concerns me that your water line will be used by another development. Is this only a temporary request (which under certain conditions would not bother me as much) or is this a permanent situation (which in my opinion is not acceptable)? Yes, if the association and the developer enter into a written agreement, the developer should pay for the use of your water. But I am not sure how this can be determined. I suspect that a submeter will have to be installed, which must be at the expense of the developer and subject to the approval of the local water authority. Bottom line: It's not a good idea. DEAR BENNY: My daughter and her boyfriend are thinking about buying a house, and she is putting a larger down payment. Is this a good idea? --Doug DEAR DOUG: There are ways to protect your daughter should they end up separating before marriage. As you no doubt recognize, that is always a possibility. There are two ways they can take title -- either as tenants in common or joint tenants with right of survivorship. Under the latter arrangement, should one of the owners die, the other owner will automatically -- by what is known as "operation of law" -- become the owner of the entire property. Unfortunately, very few states (to my knowledge) allow a disproportionate interest with such a tenancy. Basically, both parties own the entire property equally. So there is no guarantee that your daughter's investment in the property will be protected. In a tenants-in-common arrangement, ownership can be based on the amount of money that each party invests in the property. So, for example, if your daughter is putting up 75 percent of the down payment, title can be held as tenants in common, 75-25. With that arrangement, should one of the parties die, his or her interest will be distributed in accordance with that person's last will and testament, and probate is required. So if your daughter has a larger interest, her share will go by way of her will. Accordingly, at least until the couple gets married, I would recommend a tenant-in-common arrangement. Once they get married, if they so desire, they can change the title into tenants by the entirety, which is reserved for husband and wife. I also suggest that they enter into a "partnership arrangement," which would spell out such matters as what happens if one party wants out of the deal, dies or cannot afford to assist with the house payments. DEAR BENNY: My husband and his mother bought a commercial property as joint tenants seven years ago. His mother has developed a mental illness and has announced that she wants to file bankruptcy. What are his legal options? His mother's business is located in the building, which she is going to include in bankruptcy. She has quit making mortgage payments but will not agree to sell. --Leigh DEAR LEIGH: This is obviously a difficult problem for you and your husband, especially since his mother is involved. I am not a bankruptcy attorney and suggest that you immediately consult an attorney with that expertise. Did your mother-in-law ever give anyone her power of attorney? That should be investigated. If there is such a document, the holder of that power may be able to take appropriate action and resolve the situation. If there is no such power, you may want to consider going to your local court to have a conservator and guardian appointed to act on her behalf. Your mother-in-law will have to be in court, if she is able to do so, and the judge will have to find that she is incapacitated -- meaning that she does not have the capacity to make financial or personal decision on her own. Again, your attorney should be able to assist you. Depending on what conditions the judge puts in the court order, a conservator will have full authority to investigate the matter and take all appropriate action. However, the conservator must act in the best interests of your mother -- and not your husband. |
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| Neighbor disputes erupt when trying to sell home By Dian Hymer There are few certainties in the home-sale market. However, there's one thing you can count on. If your neighbors have been harboring a concern about an issue affecting your property, you will surely hear about it when the for-sale sign goes up in front of your house. Soon after a home in Oakland, Calif.'s Montclair district was listed, the seller's agent received a call from a neighbor asking if she was aware of the pending lawsuit affecting the property. This was the first she'd heard about it. It turns out that the sellers and their neighbors were in dispute over a minor encroachment involving a deck. In addition, their relationship was so acrimonious that they had restraining orders against one another. California home sellers are required by state law to disclose material facts that affect a property to prospective buyers. Given this law, the sellers in the above example were obligated to disclose the possible encroachment and legal problems they had with their neighbors. Ducking such a responsibility could have serious consequences. Neighbors often know what's going on in their neighborhood. Some neighbors enjoy getting to know new homeowners and bringing them up to date on the local gossip. So, it's best to assume that the buyers will become aware of the problems. It's far better to truthfully disclose problems before the closing than it is for the buyers to receive the news secondhand. This is an extreme example and was sorted out only with the help of real estate attorneys. The sale was delayed a few weeks. However, a reasonable resolution to the problem was reached and the sale went through. HOME SELLER TIP: Disclosure laws vary from state to state. Even so, it makes good sense to get any potentially bad news out in the open before a property is listed for sale, or at least before it hits the market. Most buyers would rather not buy into other people's problems. Ideally, any lingering disputes should be resolved before selling. And, in fact, the buyers might insist on it. In another situation, a homeowner blew the whistle on his neighbor who had installed an air-conditioning system in violation of building-code requirements. The condenser had been installed too close to the neighbor's house, creating a noise nuisance. As soon as the seller's house went on the market, the neighbor spoke up and demanded that the condenser be moved. The seller had paid a licensed AC contractor to install the system. The company had not taken out a permit to do the work, unbeknownst to the seller. Fortunately, the negligent company corrected the violation before close of escrow, at no cost to the seller. Common and sometimes serious problems between neighbors involve easements and encroachments. Unfortunately, sometimes these problems date from before the seller's ownership of the property. However, that doesn't mean that the new buyers will accept the situation "as is." For example, occasionally oversights occur when properties are subdivided. In more than one instance, a portion of a property through which the sewer line ran was split off and sold without reserving a sewer easement in favor of the seller's property. In a worst-case scenario, a future owner of the property that's left without a sewer easement could either have to pay to buy an easement from the adjacent homeowner or have to relocate his sewer line entirely. THE CLOSING: Neighbor issues can often be resolved amicably between neighbors or with the help of the real estate agent involved. However, it's wise to hire an attorney with expertise in residential real estate matters to assist with the resolution of more serious problems involving legal issues, property boundaries, encroachments and easements. |
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| Pro's guide to painting home's exterior Three-coat approach recommended By Bill & Kevin Burnett Q: In an article on restoring a Victorian, you mentioned exterior painting using three coats: a coat of primer, a second coat of one-half primer and one-half coat of finish paint, and a final coat of finish paint. Is this your suggestion for all exterior painting? A: Yes, especially on older wood homes. We also recommend the three-coat approach when painting trouble spots -- such as windowsills -- that are subject to the ravages of sun, wind and rain. Wood siding on Victorian houses in the San Francisco Bay Area is usually clear heart redwood. A century ago, when the siding was applied, building paper and insulation were unknown. As a result, the wood dried from both sides. Even if the house was painted regularly, today the siding is as dry as a bone. A paint job on this type of house has to be done right to get the longest possible life from the new paint. It's time consuming if you do it yourself or very expensive if done by a professional. From time to time we've described the painting process in varying levels of detail. Now it's time to go through it step by step. The painting process can be broken down into three basic steps: preparation, priming (including caulking and filling voids) and finish painting. A paint job is only as good as the preparation. Prep is a boring process, but if you invest the time and effort, a good prep job will pay lasting dividends. Usually, the first step is to clean the surface to be painted by pressure washing. However, sometimes an older home's buildup of multiple layers of paint requires stripping the paint to the bare wood. If this is the case, use a propane torch or electric heat gun to strip the old paint before pressure washing. If you use a propane torch, also use extreme caution. Dry wood and open flame do not get along well. Kevin spent a month or so burning the paint off one side of his Alameda Victorian. Good thing he did, too; the paint lasted at least 10 years before the new owners needed to repaint. Let the building dry out a full week after pressure washing to ensure that any excess water evaporates. The next step is to use a disc or belt sander to feather the edges of the remaining paint. This way the transition from paint to bare wood is less noticeable. Be certain to dust away any residue after sanding. Now it's time to paint. To spray or not to spray? An airless sprayer gets the material on quickly but is susceptible to leaving thin spots and to overspray. There's nothing quite as tacky as overspray on a roof. But brushes and rollers are slow. We've always compromised. We use the sprayer to get the material on the siding, then back brush or roll to ensure an even coat. This method works for all three coats of paint. Whatever application method you choose, the next step is to apply the primer coat. Use a high-quality primer. We've always used an oil-based primer for exterior work. We recommend that you purchase the paint at a paint store rather than at one of the big box stores. Salespeople at paint stores cater to the trade and generally are very knowledgeable and ready with helpful tips. Ask about adding extra linseed oil to the primer to replace some of the moisture lost in the wood over the years. Also ask them to tint the primer toward the finish color for a finish that fully hides the undercoats. Allow the primer to dry thoroughly. Then caulk and fill all voids in the building. This is critical. The better the caulking, the less chance of moisture penetration and of the paint failing. Joints should be caulked using an acrylic latex caulk. Nail holes and small divots in the siding should be filled with a good-quality exterior Spackle. For more extensive repairs, Bondo works well. The split coat is next. Back in the day, when all paint was oil-based, painters mixed equal parts primer and finish material to get the "split" coat. Today, if the primer and the finish are compatible (oil and oil or water and water), this is the way to go. If not, apply a second coat of primer and have the paint store tint it a shade lighter than the finish coat. The primary purposes of the split coat are to add an extra coat of protection and to eliminate "holidays" visible in the final coat. Depending on the color, even a full finish coat can show impressions through a white primer. After the split coat dries, inspect the job for any defects. Now is the time to fix them. Perhaps a little more caulk is required or a nail hole needs to be touched up. Finally, apply a full finish coat. Follow these steps and you should have a handsome and long-lasting paint job. |
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| Keep concrete, asphalt safe from water intrusion Best sealers for the job By Paul Bianchina It seems like something as tough as your concrete or asphalt driveway would be able to easily stand up to something as small as a drop of water. But the effects of rain and snow, especially if that moisture gets into cracks in the surface and then freezes, can do a surprising amount of damage to a driveway, walkway, wall, or other concrete, masonry or asphalt surface. So, before winter hits again this year, fight back by sealing those porous surfaces against water intrusion. There are a number of sealers that are formulated specifically for this purpose, and they are easy to apply without special equipment. CONCRETE AND MASONRY SEALERS For a tough finish on concrete, you'll want to use a specific concrete sealer. Not intended for brick, block, stone and other masonry, concrete waterproofing sealers penetrate deep into the surface of the concrete -- up to one inch of penetration on previously unsealed concrete -- and forms a very tough barrier against moisture. Some sealers are formulated for specific applications. If you have a concrete slab, for example, that is subject to a lot of grease and oil on a regular basis, selecting a sealer that is specifically made for that will greatly simplify your cleaning. There are also sealers formulated for underwater concrete, such as ponds and pools, for sanitary surfaces, and other applications. For most masonry surfaces -- brick, stone or ceramic tile -- a masonry sealer is the proper choice. Depending on the type of masonry sealer, some will also work to seal concrete slabs. Masonry sealers will penetrate into the pores in the surface of the masonry and seal them against moisture. The sealer also helps to protect against buildups of dirt, oil, grease and markings from automobile tires. Masonry sealers are not intended for use on asphalt, glazed ceramic tile or on wooden surfaces. Sealers also come in different surface "sheens," depending on the look you want. While all of them are clear, some types dry to a completely flat sheen and leave the surface looking unsealed. Other types dry to a glossy "wet" look, and the depth of the gloss increases with each application. There are also semi-gloss sheens that are in between flat and glossy. The choice of how glossy you want the finished surface is typically one of personal preference; however, with some types of sealers the glossier the product is the more abrasion-resistant properties it has. APPLYING CONCRETE AND MASONRY SEALERS As with the application of most coatings, you need to start with a surface that is clean and dry. That may be as simple as a good sweeping or blowing off of the surface with a leaf blower, or it may involve pressure washing or spot scrubbing to clean off heavily soiled areas. If you do end up having to use water or other liquid cleaners, be sure that the surface is allowed to dry completely before applying the sealers -- application over a wet surface will almost guarantee that the sealer will fail. If efflorescence is visible -- a chalky white coating on the masonry or concrete that occurs as salts leach out of the cement during drying -- that needs to be removed as well. You can clean efflorescence with a diluted mixture of muriatic acid, but most sealers require that the acid then be neutralized -- a 50/50 mixture of water and ammonia is a common neutralizer. The sealer can usually be applied using a brush, roller or spray. Pump-up garden sprayers work well for some types of sealers, as do some types of paint sprayers. Some sealers are formulated for a single-coat application, and others require a buildup of multiple coats. ASPHALT SEALERS Like concrete and masonry, asphalt is also subject to the effects of wear and tear as well as the detrimental effect of heat, rainwater and freeze/thaw cycles. Left alone, the asphalt will begin to deteriorate over time, and the periodic application of an asphalt sealer will help prevent the much more expensive alternative of having to remove and replace the asphalt completely if it begins to break down. You can apply asphalt sealers yourself if desired. Large cracks need to be patched first, using a cold-application asphalt mix or an asphalt crack sealer. After that, the surface needs to be cleaned, and then allowed to dry if necessary. Depending on the size of the area, the sealer can then be applied using a special mop, a rough-surface roller, or an asphalt brush. For this project, you might also want to consider having the work done by a company that specializes in asphalt sealing. Get two bids from reputable, licensed, local companies, and remember that the low bid is not necessarily the best bid. The bids should include patching any large cracks, as well as a complete cleaning of the asphalt prior to application of the sealer. Sealers are available at some home centers and hardware stores, but your best bet for expert advice and a wide selection of products is to check with a store that specializes in masonry or asphalt products. Each product will have specific uses, application methods, weather and temperature application restrictions, and safety precautions, so be sure you carefully read and follow ALL of the manufacturer's specific recommendations. |
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| Desperate plan to keep home after falling behind on property taxes Why loaning father-in-law money is better than him quitclaiming ownership By Ilyce R. Glink and Samuel J. Tamkin Q: My father-in-law owns property with his sister. He lives on the property, but she doesn't. They each own an equal share of the property, but he now can't afford to pay the expenses. He wants to quitclaim his half of the property to me and my wife, and I'll take over his property taxes plus pay all past-due taxes. Do I need a lawyer to help fill out the forms or is this something we can do ourselves. Also, I should tell you that the property is mortgage-free. A: You certainly can try to do it yourself, but you would probably be wise to talk with a real estate attorney to know what you are getting into. While paying past-due real estate taxes might sound simple, in some cases it can be cumbersome. Also, if your father-in-law has paid all the expenses on the property and has lived there, does his sister still want to own her share of the property? If she dies, her share of the property will go to whomever she has listed in her will. If you or your wife are listed as the heirs to her share of the property, that will help. But if you are not named the heir of the property and there are other siblings or relatives, you should know that you may be setting yourself for a big problem by taking over your father's share of the property. You should sit down with your father-in-law and his sister to discuss the property and what they really want to do with it. There are other ways to handle this situation other than with a quitclaim deed. If your father-in-law still wants to or needs to live on the property, you may want to help him with his expenses or even loan him money for the payment of those expenses. He and his sister can then give you a mortgage in return for the loan. You would protect your money and your father-in-law could continue to live on the property. In many states if you own the property and live there as your primary residence, you get substantial tax benefits, such as the homestead exemption. You might lose these benefits if your father is no longer on title. Furthermore, if you take title of the property now by a quitclaim deed, your father-in-law would effectively be gifting you the property prior to his death. The value of the gift would be your father-in-law's share of the value of the property when he purchased it plus any improvements made on the property. If the property has appreciated in value substantially, you will end up paying taxes on the appreciation. If you and your wife were to inherit his share of the property, you would inherit the property at its value at the time of your father-in-law's death. There is more to your question than just the transfer of the title to you. There are tax consequences and estate-planning issues you should consider. The best thing you can do is to consult with an estate attorney or real estate attorney who can help you think through these issues and decide what course of action to take. Q: I hired a builder to build a custom home. We had ordered some upgrades and two weeks prior to closing I asked the builder for the final price of the home to secure financing. He gave me the number and said we would be fine. So we closed with that purchase price. Two weeks later, he said some more bills had come in and that we owe him an additional $14,000. Is this my responsibility or is he out of luck because we have already closed? A: There are multiple variables that would determine whether you owe the builder the amount he now claims. If the builder made an honest mistake and you recognize that he made this mistake, it would seem unfair to deprive him of the money he is owed. However, your purchase contract should govern the transaction. Some contracts have language in them that would permit the parties to revisit an error like the one you are describing. If the contract has no such language, the builder may be out of luck. The price he set at closing would be the price for the sale. First, you need to determine whether the builder is right about the numbers and whether he may be entitled to reimbursement. If you think he is, you should sit down, read over the contract, then talk to a real estate attorney and decide whether you will use the terms of the contract to shield yourself from paying the builder. If you clearly recognize that the builder is owed the money, you might decide to pay him anyway. It would be a good-faith gesture, and in so doing you might be able to get the builder to extend the warranty on the home or get something else in return. |
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| Home seller quandary: Fix up house or offer credit? By Dian Hymer Sellers who anticipate losing money if they sell their home may wonder why they should spend a dime fixing the place up for sale. Isn't this throwing good money after bad? Even sellers with plenty of equity in their homes often figure the way to get the most out of the sale is to cut sale costs to a minimum. This attitude is directly contrary to the notion that the way to make the most money on the sale of a home is by pricing the property appropriately for the market, and by making cost-effective improvements that will result in a higher sale price in a shorter time. Job applicants don't show up for an important interview in tattered old clothes if they want to make a good impression, particularly if there were plenty of other qualified applicants. Likewise, if you wanted to get top dollar from the sale of a car you would have the car detailed so that it looked its best. The same principal applies to selling single-family homes. Today, many housing markets have plenty of homes for sale and far too few buyers. For years, buyers competed with one another in order to buy a house. Now, in general, sellers are being forced to compete with other sellers in order to get their home sold. Consider the competitive nature of the market when deciding if you're going to improve your home before selling it, and how much you'll invest. Keep in mind that the point of fixing up a home to sell is to maximize your return from the sale. Don't waste money on improvements that have little or no value to buyers. HOUSE HUNTING TIP: Ask your real estate agent or a staging decorator to walk through your home with you for the purpose of determining what fix-up projects you should ideally complete before marketing the property. For example, you might be inclined to replace worn-out carpet. Your agent, however, might advise otherwise. An agent who specializes in the sale of older homes in the area might recommend refinishing the hardwood floor that is hidden underneath the carpet instead. Buyers looking for charming older homes usually prefer hardwood floors to carpet. A common opinion expressed by sellers is that it's pointless to fix up a place for someone else whose decorating preferences might be quite different. For example, why not just offer a credit to the buyers so that they can either change the carpet or refinish the hardwood floors -- whichever they prefer? The problem with this approach is that most buyers have a difficult time imagining how a home will look fixed up. They remember what they see, not what the house could look like with this or that improvement. Imagine there are five homes listed for sale in an area, all similarly priced, but not all in the same condition. Three houses have old, worn carpet covering most of the floors; one has linoleum over the floor; and the fifth has pristine, recently refinished hardwood floors. Most buyers will gravitate to the home with the beautiful hardwood floors. The best houses in the best condition and offered for the best price usually sell quickly. A fast sale is important to some sellers in this market. The sooner your home is sold, the sooner you stop paying mortgage payments, property taxes and various maintenance costs. THE CLOSING: In areas where prices are declining, a quick sale can result in a higher price than might be attainable in a few months. |
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| Sellers list right to avoid price reductions By Dian Hymer In most areas of the country, 2007 marked a change in the residential home-sale market. Buyers gained clout for the first time in over a decade. Inventories of homes for sale grew to record levels in some places. Price reductions, which carried a negative stigma when listings were easy to sell, came to be seen as a necessary part of the home-sale process. That is not to say that price reductions are a good thing. They are not. The initial marketing effort is a prime opportunity to attract attention to a new listing. When the merchandising and pricing are on target, a timely sale occurs. If the opportunity is missed either due to poor planning and preparation, or to a price that's too high for the market, the only hope for success is to lower the price quickly to an acceptable level. Many sellers balk at the notion of reducing the list price soon after the property is listed. However, the timing of a price reduction is critical. If you wait too long, hoping for the impossible, it could be difficult to kindle enthusiasm for the property. This is particularly so in an area where there are a lot of new homes coming on the market and where the sales volume is low. This means that the competition from other listings grows as you wait for the unlikely: a knight in shining armor to appear and pay the asking price or more. HOME SELLER TIP: The best time to make a price reduction is as soon as you discover that your home is priced too high for the market. Waiting too long to lower the price can cost money in the long run if the market is moving lower. Reducing too little, too late can lead to a series of further reductions and ultimately to a lower selling price. Ideally, you should avoid such an unpleasant downward spiral. The goal is to sell without having to reduce the price. To do this, you must accept current market conditions. You also need to recognize that no matter how wonderful you think your home is a buyer will find fault with it. To be a successful seller in this market -- and to some extent in any market -- requires separating pride of ownership in the property from the task as hand, which is to sell for the highest price possible. It's not easy for most sellers to put their emotional feelings about their home on ice. It helps to stop thinking of the property as "home" and to start looking at it as a commodity you want to sell. Before listing a property for sale, sellers should seriously consider their motivation. Successful sellers in today's more difficult marketplaces have a compelling need to sell. They don't simply want to sell if someone will make it worth their while. Many of today's prospective home buyers have a wait-and-see attitude about the market. They are looking, but it will take a fabulous home offered at a great price before they'll commit to buy. Sellers should also check out the temperature of the local market. Residential real estate is a localized business. Even if you live in a city where prices are down, that might not be the case in your neighborhood. The supply of homes for sale and demand for housing are critical variables, as is the local employment picture. There is a common theme to the listings that sell well now. These listings look great, are in good condition, don't have incurable defects and are priced right for the market. THE CLOSING: Being realistic about what to expect is half the battle. |
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| How to divvy up mortgage-interest tax deduction Couple seeks fair way to reward each one's share of loan payments By Benny L. Kass DEAR BENNY: I purchased a townhome in January 2005 with a very low, interest-only loan, and have been paying approximately 20 percent extra towards the principal each month. My fiancée moved in about 15 months ago and has been paying $600 a month. The monthly interest-only payment is $1,600. Recently we decided to double the monthly payment in addition to paying an extra $10,000 towards the principle to lower the interest portion of the monthly payment. My fiancée has asked about taking advantage of the interest deduction on her tax returns. What is the best way (if any) for us to divide fairly the interest towards our yearly tax returns? I am thinking about giving her a quitclaim deed with her name on it in addition to mine. Is that a viable option? –Chuck DEAR CHUCK: Even if your fiancée is put on title, since she is not named on the mortgage document (also called deed of trust), she will not be able to legally claim any deductions. According to the IRS, "to be deductible, the interest you pay must be on a loan secured by your main home or a second home." The word "secured" means that the mortgage was recorded among the land records in the county where your house is located. So, the only way that she will be able to claim any deductions is to put her name on title and refinance your existing loan. That may not be a bad idea, depending on whether your favorable interest-only loan will someday become an adjustable loan with much higher monthly mortgage payments. Too many people who obtained interest-only loans are now waking up to learn that their favorable loan will not last forever. And while I do not want to get involved in your domestic situation, if you decide to put your fiancée on title before you get married, I strongly recommend that you enter into a form of "partnership agreement." This agreement would include provisions on what to do with the property should you decide to break up, what happens if one of you is not able to pay his or her share of the house expenses, and how to divide the proceeds should you decide to sell the house. DEAR BENNY: I put my home (paid for) into a limited liability company (LLC) on the advice of an attorney for asset protection. I have since been told by other lawyers that doing so provides no protection. How do I transfer it back into my name, and do I need an attorney to do so? –David DEAR DAVID: I would be curious to learn why these other attorneys claim that the limited liability company does not provide you with protection. One of the primary reasons that LLCs became so popular in recent years is to provide protection. Oversimplified, most state statutes authorizing the creation of an LLC specifically state that the member (or members) of that organization have no personal liability should there be claims against the LLC. In order to hold the member responsible, lawyers have to "pierce the corporate veil," and that is not always easy. If you keep separate books for the LLC, do not commingle your personal funds with those of the LLC, and always sign documents by adding the word "member" after your name; you should be personally protected. One problem that does arise is when two or more properties are put into the same LLC. Both properties are now subject to any liability associated with either of the properties. My recommendation: If you own more than one investment property, put them into separate LLCs. I suggest that you get another opinion from a real estate attorney. But if you do want to transfer the property back into your name, it would be a simple deed from the LLC to yourself. However, there may be steep recordation and transfer taxes imposed by your state, and there may also be tax consequences. You do need a tax advisor to guide you before taking any further action. DEAR BENNY: I have a current 1-year-old mortgage with a balance of about $197,000 at 6.5 percent fixed for 30 years. I desperately need about $60,000 for repair/remodeling! Is it a good idea to refinance at 6.375 percent fixed for 30 years, or what else might you suggest? –Adrian DEAR ADRIAN: You did not tell me if you have enough equity in your house to pull out another $60,000. If you do, then I would think it's a no-brainer to refinance at the lower interest rate. Your alternatives will most likely cost you more money. For example, if there is equity in your home, you can take out a home equity loan, but the interest rate will probably be higher. You may find some local or state government program that will lend you low-interest money if you are doing some environmentally sound improvements. You may also be able to take out a straight bank loan, but if it is not secured (i.e., recorded among land records) you will not be able to deduct the interest you pay. I suggest that you contact three or four mortgage lenders and see what they have to offer. My guess is that the refinance would make the most sense. However, you must also "do the numbers" to determine what closing (escrow) costs you will have to pay for that refinance. Homeowners do not always understand that a refinance -- for all practical purposes -- is treated as a brand-new loan, and you will have to pay all associated costs -- such as appraisal, underwriting, loan preparation, lender's title insurance, and settlement (or escrow) fees. DEAR BENNY: I've a question that I hope you can answer: Who owns the strip of land between the sidewalk and the street? Can the residential property owner prevent you from letting your dog do his business on that strip of land (provided you comply with the ordinance to clean up after the dog)? –Robert DEAR ROBERT: That's a great question and I don't have an answer. In my area (District of Columbia) that strip of land is owned by the city. You would have to check with your local authorities to confirm ownership. When you bought your house, you may have obtained a survey. If so, the survey will give you guidance on where your property lines are. If the property in question is owned by the local government, my guess would be that the property owner cannot stop you from letting your dog "do his business." But putting legality aside, why do you want to do this if a neighbor objects? Put yourself in your neighbor's shoes. Clearly, you would object if someone did that to you. DEAR BENNY: My neighbors have a large, old tree that is just feet from my garage, and whose roots have caused the concrete floor of the garage to crack and become uneven. Lately, however, it has gotten so bad that dirt is pushed up through the cracks and needs to be shoveled out every few months. The garage is almost to the point of being unusable and dangerous. I want to ask the neighbors to remove the tree but I am certain that they will ignore my request. Do they have any legal responsibility for the damage their tree is causing? –Carrie DEAR CARRIE: Tree law differs from state to state. In some states, the so-called "Massachusetts rule" applies, which basically means that your only remedy is to trim any overhanging branches and cut the tree roots on your side of the property line. Other states have adopted the "Hawaii rule," which states "while it may be an inconvenience for the neighbor if the trees 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 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 law is evolving. Recently, the Virginia Court of Appeals reviewed the issue, and adopted the Hawaii rule. Their reason was simple: We are no longer an agricultural society but an urban one, and the Hawaii rule is more suitable for today's homeowners. I would find out from your attorney what law applies in your case, but in any event, I would not hesitate to ask your neighbors to inspect the damage their tree is causing and request that it be removed. |
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| Install crown molding like a pro Job easier with second person, carpentry book By Paul Bianchina Q: I am remodeling my living room and would like to install a wide cove molding at the ceiling, but I need help in mitering the corners. Do I cut them at a 45-degree angle? Do I cope them? Any information would be greatly appreciated. --Steve H. A: Crown molding is one of the most attractive and interesting molding features you can add to a room. It is also, however, one of the more difficult finish carpentry tasks to undertake. Crown molding sits at an angle to the wall, as opposed to a base molding that sits flat against it. Therefore, you have to deal with a compound miter -- one that angles in two directions at once -- as opposed to the standard miter used on a baseboard. You have several options open to you for how to do this, and I would recommend that you purchase some inexpensive, paint-grade crown molding to practice with until you get the hang of the techniques. Some of these techniques are also very difficult to explain in words, so your best bet is to purchase a book on finish carpentry (or get one from the library) that has illustrations of the various step-by-step procedures that follow: Compound miter saw: If you have access to one, the easiest way to cut crown molding is with a compound miter saw. These saws have the ability to be set at an angle relative to the back fence as well as having the head of the saw set at an angle, allowing you to cut both angles at the same time. Full instructions for the proper angle settings are included with the saw (they differ with the type of crown molding being installed). If you have a lot of molding work to do you may want to invest in one, or they can also be rented. Table or radial arm saw: You can also make compound miter cuts on a table saw by tilting the blade and then holding your molding against a miter gauge that's set at an angle. Table saws, however, tend to be awkward for handling long pieces of molding. You can also use a radial arm saw by angling both the arm and the blade, but I've found the cuts on these to be somewhat rough. Standard miter saw and miter boxes: You can use a standard miter box or miter saw to cut crown molding. The trick is to cut the molding upside-down, and with both of the rear faces in perfect contact with the fence. In other words, the molding is upside-down and facing you, with the ceiling edge down and against the bottom of the miter box and the wall edge up and against the back of the box. You can then make the cut with the blade set at 45 degrees. Coping: This is done by first square cutting the end of one piece of molding and running it all the way into the corner, then cutting the end of the intersecting one in a pattern that matches the face of the first piece. This is not as difficult as it may seem, but it does require some patience and the use of a relatively inexpensive hand tool called a coping saw. Corner blocks: If you don't want to mess with angles at all, you can install decorative corner blocks at each inside and outside corner, then simply square-cut the molding and butt it against the flat sides of the blocks. Corner blocks are not a stock item at most stores, so ask to see a molding catalog to find out what's available. By the way, with whatever technique you decide on, crown molding is considerably easier, safer and more accurate to install if you have the help of a second person. Q: I own a small commercial building, which has a flat roof that was recently asphalted. However, there is a low spot where water still accumulates, and I don't know how to correct the problem. Does this water accumulation pose a problem? How do I get rid of this constant puddling, and can a repair wait until summer? --Jon K. A: No flat roof is truly flat, since it has to be sloped slightly to allow the rain water to run off, typically to a gutter or scupper where the water is collected and directed to a drain. In your particular case, there are a couple of things you'll need to determine: 1. Is the low spot you mention right at a drain of some sort? If it is, it may have been intentional to have the roof slope to that point, but it may be that it was never constructed correctly in the first place. In other words, the design or construction of the roof isn't allowing the water to get to where it was intended to go. 2. Did this low spot exist before the roof was redone recently? It's possible that the roofer made a mistake during the asphalting process that actually created a low spot where one didn't exist before. 3. When you step on this area, does it feel structurally solid? If there is "give" in the sheathing underneath the roofing at this point, there could be a structural problem -- dryrot, broken or overspanned framing, etc. -- that needs to be repaired in order to eliminate the low spot. Whether this can wait until summer is dependent on what the problem is. If it's simply a low spot in the asphalt but the roof is structurally solid and the roofing is not leaking, then you can wait for better weather. Structural problems or any situation where water is getting below the roofing -- even if it isn't entering the building -- needs to be dealt with right away. |
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| Not everyone's keen on fluorescent lights Some say CFLs consume extra energy when turned on By Paul Bianchina Q: I have a question about fluorescent bulbs and power usage. I have been told that fluorescents draw the most power when they are turned on and almost no power to keep on. Therefore, they should be turned on and left on, and should not be turned on and off during the day because it would end up using more power in the process. Is that true? --Richard C., via e-mail. A: A fluorescent light does consume some additional energy when first starting up. This is known as "inrush current," and is equal to about five times what the operating current is. However, with today's rapid-start bulbs, that initial surge only lasts for half of one cycle. Electrical current is 60 cycles per second, so the initial startup surge lasts only for approximately 1/120 of a second. In other words, you would have to turn the lamp off only for a couple of seconds to save the equivalent amount of energy that it takes to turn it on again. With any type of light bulb in your home -- incandescent or the new compact fluorescent lights (CFLs) -- it's best to live with the old rule of thumb of turning off the light whenever you're going to be out of the room for more than just a couple of minutes. Q: We have some stucco houses on our street. A couple of them had dry rot, and they had to remove the siding and some of the wood. We were wondering if there is a way to check to see if our stucco house has dry rot. --Art W., via e-mail. A: There can sometimes be some telltale signs. Since water runs downhill, if moisture has been getting behind the stucco it will often migrate down to the bottom of the wall. On some older stucco houses you may be able to see or feel soft spots at the very bottom of the exterior walls, where they meet or overlap the foundations. Also, examine the stucco carefully for signs of discoloration and cracking, and press on those areas to see if there is any movement in the stucco or if the wall underneath feels soft. You can examine the wood around window and door casings, both inside and outside, for signs of rot or water intrusion, and examine baseboards and flooring around the inside of the exterior walls to look for softness or water stains. Finally, you can check under the house at the exterior walls, looking for the same indicators. You mentioned that a couple of the houses on your street had dry rot problems. I would also suggest that you stop by and chat with neighbors who have had work done and see what occurred with their homes. They can tell you exactly where and how extensive the rot was, and if the homes were all built around the same time and by the same builder, that should also get you a few additional tips on where to search. If you do suspect dry rot or other moisture problems, you can contact a contractor who specializes in insurance-related home repairs. These specialized contractors typically have moisture meters that are capable of detecting moisture inside walls. You can also see if any contractors in your area have thermal imaging cameras, which can "see" inside walls for differences in heat patterns that can indicate moisture problems. Q: I have a microhood that has to be replaced. I'm not a big do-it-yourselfer person, but I'm OK with most straightforward projects. On a scale of 1 to 10, how difficult is it? Can you give me some basic instructions? --Michael T., via e-mail. A: If you are replacing the microhood with one that is the same size and type, with the same venting arrangement, then the replacement should be pretty easy. There could certainly be some variables with your installation, but in general the steps should be as follows: 1. Unplug the old microhood, and remove the tape that seals the vent duct to the transition on top of the hood. 2. Remove any bolts that hold the microhood to the bracket, and slide it out of the bracket (you may need two people for this). 3. Remove the old mounting bracket, unless it's identical to the new bracket. 4. Install the new mounting bracket, slide the new microhood into the bracket, reconnect the vent, and plug the unit in. Complete installation instructions are included with the new hood, and because it just plugs in there is no electrical wiring required. As long as there are no alterations to the vent -- which there shouldn't be if you're using the same make and model -- then on a 1-to-10, simple-to-difficult scale, I would rate the job about a 3. You can always give it a try on your own, then hire someone to complete the project if you end up not feeling comfortable with it. |
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| A lesson in safe tree-trimming Take precautions when using chainsaw By Paul Bianchina Q: I am a female homeowner; I love trees and have many all around my yard. I would like to use a chainsaw for some of my pruning; however, my guy friends caution me about using it, telling me stories about how dangerous they are. I don't want to be all girly about this, but what's your opinion? I've never really had any safety lessons on chainsaw use. Is there something safer that would do the job? Right now, I just hire the pruning to be done every year. --Jillayne S. A: Chainsaws, like any cutting tool, are dangerous if not handled properly. That doesn't mean you need to be afraid to use one, just that you need to exercise caution and common sense -- whether your are male or female! Chainsaws have an exposed cutting chain with highly aggressive teeth, and their length and weight can throw an operator off balance. Cutting often takes place in wooded areas or other areas with unstable footing, adding to the danger. The other thing about chainsaws is the unpredictability of the material that you're cutting. Limbs can twist and bind the chain; trees can tip or fall in a direction you don't intend; and the saw can occasionally kick back. Safe operation is not a gender issue, although the stronger a person is, the easier it is to control the saw. I don't see any reason to steer you away from using a chainsaw, but I would instead offer the following suggestions: Purchase your saw from a reputable dealer who specializes in these products -- avoid the home centers and department stores for this one. Don't get a saw that is bigger than you need or that is bigger than you feel comfortable with in terms of weight and balance. Ask the dealer for a complete operating and safety lesson, which many specialty retailers are set up to offer. Make sure you understand how to start and stop the saw, how to operate the chain brake, how to service the engine, and the basics of safe cutting. Your saw will come with an instruction and safety manual. Be sure you read through it carefully, and pay attention to the safety tips. Purchase -- and use -- additional safety equipment, such as safety glasses, chaps and ear protection. If your pruning tasks are relatively small, consider an electric or a cordless chainsaw instead of a gas-powered one. While still dangerous if handled improperly, their smaller size and lighter weight make them a little safer. Above all, when operating a chainsaw -- or any cutting tool -- use a lot of common sense. Don't overextend your reach, don't climb up in the tree or balance precariously on a ladder, don't cut when you're off balance, and always know what direction to move in if a limb begins to fall or act in a manner you weren't expecting. Q: We are planning to sell our home soon, and the outside of our house is painted a cardboard-colored tan with burgundy trim. Do you think painting it a lighter color would improve our chances to sell with the market the way it is? And do you think it is something we could do ourselves? It is hardboard siding (not the bad stuff), and it is 24 by 40 feet. Thanks! --Jesseca H. A: When you're considering selling a home, you want to use colors that will appeal to a wide range of buyers. I would suggest that you drive through your neighborhood and see what looks clean and fresh, or ask your real estate agent for advice on your particular market. Be sure and clean up front landscaping and overhanging trees as well. If you're patient and reasonably handy, you should certainly be able to undertake the painting on your own. Q: I'm considering painting my kitchen cabinets until I can have my kitchen remodeled in the distant future. Before reading your article I had not known of TSP. At what type of store would I purchase that product? --Claudine H. A: TSP -- trisodium phosphate -- is available at most paint stores and hardware stores. Due to growing environmental concerns about phosphates, there are also several phosphate-free, biodegradable "TSP substitutes" on the market as well, although I have yet to try one and can't vouch for how well they remove grease. TSP is a very powerful cleaner, so be sure to follow all of the manufacturer's instructions for mixing, clothing, safety precautions, etc. Also, when you buy the TSP, be on the safe side and request an MSDS (Material Safety Data Sheet) from the retailer. |
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| The lure of the fixer-upper One persistent myth in real estate is that anyone can make money by buying a fixer-upper or foreclosure property at low cost, doing the renovation work themselves, and then reselling at a profit. Many experienced contractors and career renovators do just that, but first-time buyers can get caught in a web of cost overruns, contractor disputes, and resale problems. For many first-time buyers, a fixer is the only option, and sometimes the best option. Follow these basic rules of thumb when you consider buying fixer-uppers, foreclosure properties or other real estate "bargains": ü Look for fixer-uppers with only cosmetic problems. Exterior additions or major defect repairs can be costly, and the expense of correcting major structural defects may not add a penny to the market value of the house. Fixers that have only cosmetic problems, such as ancient shag carpeting or bad wallpaper, are ideal for first-time buyers. Cosmetic repairs can be relatively inexpensive, and some fixer-uppers will pay back double their cost. Always have a fixer-upper carefully inspected before you buy. ü Don't pay too much, especially if you want to resell quickly. If you overpay, you may suffer a loss when you sell. In terms of investment potential, the best time to buy a fixer is when the market has bottomed out and is turning around. The worst time to buy is when the market has peaked and is starting to decline. Estimate the value of the property you want to buy. Research the potential market for the restored fixer-upper, and make sure that your plans for the house don't result in an over-improvement for the neighborhood. ü Estimate renovation costs accurately before you buy. If you miscalculate, your profit will dwindle. Ask your contractor for a detailed bid or do your own calculation. Have the property inspected as a condition of the purchase, particularly if you buy it in "as is" condition. You'll reduce the chance of having to fix unanticipated defects. ü Evaluate the floor plan. With a good basic layout even the most hideously decorated house is an ideal fixer-upper. On the other hand, a house that seems a maze of rooms may have a defective floor plan that no amount of paint and paper will remedy. ü Renovate wisely. In planning your remodel, keep resale value in mind--even if you plan to live in the house for some time. Kitchens, bathrooms and storage spaces are important to today's buyers. Curb appeal sells houses, so concentrate on improving the landscaping and front entry. Also, stick to neutral color schemes. TIP:You may be able to get a seller to pick up all or part of the cost of home improvements if you negotiate for them as repairs required after a home inspection. Many sellers prefer to lower their asking price and sell the property "as is" instead of financing the repairs. This presents fewer problems for the seller and the buyer can close the deal easily. Other Bargains: A Short Course Some real estate investors make a career out of buying and selling foreclosure, probate and short-sale properties, but it's a dangerous business for the inexperienced. If you're a first-time buyer, consider working with an agent or lawyer who has experience in such properties. Foreclosures If a buyer can't keep up with loan payments, their lender will foreclose on the mortgage and put the property up for auction. If the auction fails to produce a buyer, the property reverts to the lender, which then offers it for sale. You can purchase other foreclosure properties through the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Check local legal ads and, in the case of FHA and VA properties, the Internet. CAUTION If you buy a foreclosure property, you may have to agree to an all-cash deal with no contingencies and buy the property "as is." Always get an inspection to avoid buying a house with major defects. You may also have to deal with eviction proceedings if the current owner hasn't vacated the property. Probate sales Probate property is sold to settle the estate of a deceased owner. These properties may be listed with an agent, though some sales take place at a court hearing. Because the estate's executor or a court administrator coordinate the sale, you may or may not get a bargain price. Their interest is to get the best price they can. If the heirs dispute each other over who has the legal right to the property, it may not be saleable until estate matters are settled. Always get an inspection to avoid buying a house with major defects. Short sales A short sale occurs when a lender reduces the amount of the loan payoff on a home, which it may do for a seller who can't cover the mortgage due and closing costs in order to sell. Many lenders prefer to clear such a loan from their books, even at a loss, to avoid the cost of foreclosure or having the house in their inventory. This can make for an attractive deal for a bargain-hunting buyer. Make sure your purchase contract includes a time frame (30 days) for the seller to obtain written permission from the lender to conduct a short sale. Prepare for a tough negotiation. As always, get an inspection to avoid buying a house with major defects. |
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