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| Formaldehyde By Paula Hess Formaldehyde. The word alone recalls memories of the Hurricane Katrina victims housed in FEMA trailers and sickened by the “off-gassing” or vaporization of formaldehyde gas from the plywood and pressboard used in the trailers’ construction. If you think only trailer park residents are affected by off-gassing, guess again. Formaldehyde is found in pressed wood (plywood, particle board, and medium-density fiberboard), cosmetics, permanent-press clothing and draperies, glues and adhesives, and some paints and coating products. Furniture and housing construction materials are the biggest source of formaldehyde exposure, so there’s a good chance that your child’s crib, your low-cost bookshelves, and countertops, and cabinetry all contain formaldehyde. While older furnishings may contain formaldehyde, the good news is that the majority of off-gassing occurs in the first two years of product life and older furnishings and materials do not pose a health threat. The bad news is that formaldehyde is recognized as a carcinogen by the International Agency for Research on Cancer and the Environmental Protection Agency (EPA) recognizes that exposure to high levels (above 0.1 parts per million ppm) of formaldehyde can cause watery eyes, burning sensations in the eyes and throat, nausea, and difficulty in breathing; the EPA notes that in homes with significant amounts of new pressed-wood products, these levels can be greater than 0.3 ppm. In July 2010, President Obama signed into law The Formaldehyde Standards for Composite Wood Products Act. This act establishes standards for formaldehyde in composite-wood products. The EPA now is writing the rules for the law and sorting out how to enforce the law, which will comply with California’s standards. California stores can sell furniture and cabinetry with formaldehyde limits that surpass the legal limits until Dec. 31, 2011. Some manufacturers are complying in advance of the law and their products are marked as meeting “sustainable” standards. Meanwhile, as you stare around your home and at all the pressboard furniture, the following tips may prevent or mitigate exposure to off-gassing: * Look for products endorsed by third parties, such as Green Seal, a non-profit that promotes the manufacture of environmentally responsible products (http://www.greenseal.org/). * Use “exterior-grade” pressed-wood products in your remodeling and do-it-yourself projects and avoid the use of bare pressed-wood products made with urea-formaldehyde resins. * Use air conditioning and dehumidifiers to maintain moderate temperature and reduce humidity levels; high humidity increases off-gassing. * Increase ventilation, particularly after bringing new sources of formaldehyde into the home. If possible, allow new furnishings to off-gas outside for several days or weeks. * Seal existing composite wood/particle board furniture with a non-toxic sealant. If you want to test your home’s formaldehyde levels, a passive formaldehyde monitor, can be used. The monitor is placed in the home for a set time and mailed back to the vendor for analysis. Search the Internet for “formaldehyde test kit.” More Information http://www.usatoday.com/money/industries/environment/2010-07-18-formaldehyde-free-furniture_N.htm http://sierraclub.typepad.com/scrapbook/2010/07/success-in-sierra-clubs-fiveyear-formaldehyde-fight.html http://online.wsj.com/article/NA_WSJ_PUB:SB10001424052748703816204574487412817324226.html |
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| Playing the real estate waiting game By Dian Hymer Buyers often are reluctant to make an offer to buy a home they find early on in their search. After looking for months and not finding anything comparable, some buyers regret not having moved quickly on a listing even though they saw it early on. In most cases, you should consider yourself lucky if you find the home you want to own for years relatively quickly. It's not uncommon in some low-inventory markets for buyers to look for a year or more before they are able to buy. For the last few years, sellers who haven't had a pressing need to sell have been waiting for a better market before putting their homes on the market. In one case, the inventory was so paltry that buyers who purchased in the Upper Rockridge area of Oakland, Calif., looked for four years before finding the house that would work for them in the long term. In high-demand niche markets, there can be a shortage of listings and a lot of buyers waiting for the same kind of home. A couple who purchased in the Oakland Hills looked for more than a year in an area where not much that suited their needs was available. They made two offers during that time and ended up losing in multiple-offer competitions before they were finally able to secure a new home. HOUSE HUNTING TIP: Buyers who find the right home soon after starting their search need to get a quick education about the local market in order to be able to keep from making a bad decision. You don't want to pass on a house and kick yourself later for doing so. You also don't want to buy a house that doesn't work out for you, particularly in the current market. You'd be unlikely to sell the home again soon and break even. Find out how often a listing like the one you're considering comes on the market. High-quality, well-located homes in coveted locations come on the market infrequently in some areas. Ask your real estate agent how many listings like the one you're interested in came on the market in the last six months or one year. How long did it take them to sell? Were there multiple offers? In other areas that have lots of homes for sale similar to the one you like, you have the luxury of shopping the market awhile. If someone else buys this home, you'll be able to find another in a reasonable period of time. There's no urgency, unless interest rates are rising and locking in a low rate is key to being able to afford the home you want. To ease your concern about buying a home before you've seen many, scour the Internet for other similar homes for sale in the area. Ask your agent to show you any other homes currently on the market that might work for you. This is how to determine the range of housing options in the area as well as understand local pricing. Buyers from out of the area are at a disadvantage if they are not familiar with the housing market in the new location. The Internet helps buyers gain information about what kinds of homes and how many are available in the new location. THE CLOSING: Although no one likes to make an interim move to a rental before buying, it does have the benefit of letting you live in the new community and decide which neighborhood will work best for you. Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist. |
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| Loan modification “blackmail” By Benny L. Kass DEAR BENNY: My wife and I received from our lender a repayment agreement for our original mortgage. This was a result of the bank initiating a foreclosure sale, which was temporarily suspended because we agreed to enter the Home Affordable Modification Program. But the bank is asking us "to acknowledge that they are the legal holder and owner of the Note and Security Instrument and further acknowledges that if Lender transfers the Note, as amended by this Agreement, the transferee shall be the 'Lender' as defined by the agreement." It should be noted that this is not the original bank we signed the mortgage with. We obviously won't sign this amendment and supplement to the original mortgage until we have an attorney review the documents. What do you think we should do? --Brian DEAR BRIAN: Your lender is trying to protect itself by having you sign that document. Over the past several years, lenders sold their mortgage loan papers in bulk to such groups as Fannie Mae or Freddie Mac who "securitized" those loans and resold them to investors all over the world. No one knows the whereabouts of the original promissory note that you initially signed.. And many judges throughout the country have told lenders, "If you cannot show me the original note, I will not let you foreclose on the property." So, your lender is basically "blackmailing" you. If you want the loan modification, you have to sign the agreement. You really should get a lawyer to assist you. The lawyer will determine whether judges in your state require the original note. If they do, you may be in stronger bargaining position with your lender. It should be noted that not all courts have adopted this position. The bottom line: You don't want your house to be foreclosed upon. Only you can make the decision, but get some legal advice before you sign that agreement. DEAR BENNY: In 2006, the assessed value of my house had climbed to $756,000 and then dropped to $714,000, trailing the declining market. I filed an abatement based on erroneous information that my town was using, and was successful. My house was reassessed at $531,300, very close to my suggested valuation. About the same time, I refinanced my house based on a bank appraisal of $678,000. Since then, my house valuation has decreased each year and it now has an assessed value of $442,600; our area is being re-evaluated this year. Here is my dilemma: I firmly believe, based on almost daily research, that the market value of my house is somewhere in the low $500,000s. I think by filing this abatement, I shot myself in the foot. I know buyers look at the assessed value, which is easily accessed on our town Web site. In my case, this differs dramatically from two years ago as well as the appraisal I had during the same month my abatement went through. Can I realistically list my house at what I consider to be market value and expect a real estate agent to explain these events to potential buyers, or am I stuck with an asking price closer to the current assessed value? --Karen DEAR KAREN: I don't think you shot yourself in the foot; in fact, you have been paying real estate tax on the lower assessed value. You can list your property for any amount you feel it is worth. Some real estate agents may balk if your valuation is too high, but if you have the research (comparables) showing what other similar houses in your area are selling for, you should be able to convince the agents of the value of your house. From my experience, assessments in many parts of the country are not consistent with a home's true value. Many older homes are not carefully inspected, so the government assessor does not always know what kind of improvements have been made. Keep in mind that based on today's economy we are in a buyer's market. Regardless of the price you set for your house, potential buyers will lowball their offers. Obviously, you do not have to accept any offer and have the absolute right to counter with a higher price. When an offer is made either to a seller or a buyer, the recipient has three alternatives: you can accept it, you can counter, or you can reject it outright. One suggestion: Because most buyers do not pay all cash, they will need to get a mortgage. Lenders will obtain an independent appraisal before committing a loan, and appraisers are coming in very conservatively with their valuations. So, to satisfy yourself, I suggest that you consider obtaining your own appraisal before you sign up with a real estate agent. It will be worth the $300-$500 dollars that most appraisers will charge you. DEAR BENNY: I own a condominium unit in a fairly large association. Over the years with good management, we have amassed a sizable reserve account. Recently, the board announced that because we are earning only a very small amount of interest on this account, it wants to start investing these funds in the stock market. The announcement stated that with interest rates starting to increase, the board believes that the stock market will be a good place to earn more money for our association. Can the board do this? --Charles DEAR CHARLES: If absolutely every owner in your association agrees to go to Las Vegas and gamble with your reserve account, I would reluctantly have to say this would be legal (although clearly inappropriate). Notice that I said that every owner must affirmatively agree. Your board of directors has a fiduciary duty to all of the owners who elected them to their positions on the board. If they want to spend their own money on the stock market -- or in Las Vegas -- that of course is their business. They certainly have the right to spend their own money as they see fit. But your reserve account does not belong to the board; it belongs to every owner in your association. The clear obligation of the board of directors is to invest your money in secure, insured investments -- even if that means that your money may not be earning as much as everyone would like. Reserve accounts are very important to the well-being of any community association. If, for example, your elevator or your roof needs replacement, and if the association does not have enough money in reserve to pay for these matters, each owner -- including you -- may be faced with a special assessment. This may cost you a lot of money. More important in today's market economy, lenders are insisting that a condo association have adequate reserves before they will commit to a mortgage loan. Indeed, the FHA loan -- which today is probably the most important mortgage around -- requires associations to have a minimum reserve requirement of 10 percent of the annual budget. For example, if your association's budget is $400,000, you have to allocate $40,000 annually for future reserves. A reserve simply means that the association should have money set aside "in reserve" to cover the cost of future emergency or major repairs. Reserves are (or should be) an essential part of every community association. Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. |
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| Avoid house-rich, cash-poor pickle By Benny L. Kass DEAR BENNY: I am 58 years old and married. I have 22 years left on my 30-year mortgage, which is at 5 percent. I have a Roth IRA. I have some extra money to invest. In this current economy, what might you suggest? Should I pay money toward the principal on my mortgage? Put it in the Roth? I lost money in the stock market (bank stocks), so please don't suggest that I go back into stocks. Thanks in advance for any knowledge you might share. --Tommy DEAR TOMMY: Your question is perhaps one of the most difficult ones I have received. I have two crystal balls on my desk and, unfortunately, both are cloudy. I don't recommend paying off your mortgage, but you may want to consider sending in extra money every month. This will dramatically reduce your loan balance and shorten the paydown period. If you decide to send in additional money, please make sure that you write "extra payment toward principal" on your check as well as on the payment statement you send to the bank. I know that readers will challenge me on this; many homeowners believe firmly that it makes a lot of sense to pay off the mortgage so that you do not have to pay all of the interest that accrues. I understand this position, but too many of my clients end up "house rich and cash poor" at age 65 or older. I believe it makes sense to invest your extra cash rather than pay off the mortgage. Keep in mind that mortgage interest is tax deductible, so the "bite" is not a dramatic as the monthly payment. OK! Now readers will send me e-mails asking "Where can I invest?" Banks are currently paying less than 1 percent on most deposits. That's true, but I believe that by the end of the year, banks will start paying more for long-term CDs (certificates of deposit). In the meantime, I would: 1) Start sending in extra money every month to your mortgage lender. Take your monthly payment (only for principal and interest and not for any escrows) and divide it by 12, and that number should be the minimum of any additional payment; 2) Yes, you should consider increasing your Roth investments, but first you should talk with a financial advisor to get assistance as to how much to invest; 3) Have you considered buying real estate for long-term investment? Prices are low, and while investment money is hard to locate, it's not impossible, especially if you can put up a sizable downpayment. If you are not interested in real estate, invest the balance of your additional cash in laddered CDs. This means that you open several accounts with staggered due dates. As the date approaches for each account, you roll over that CD for another period of time. And try to get CDs that allow you to withdraw without penalty at any time. DEAR BENNY: My husband purchased a condominium 20 years ago as an investment and has rented it continually during the course of ownership. A few years back the condominium board voted successfully to eliminate all renters. They gave all rental units five years to cease renting. Additionally, they voted that all condominiums must be occupied by the legal owner only. I can understand the desire to eliminate rentals for all new purchases. Can the association force us to cease renting -- thereby affecting our income -- and force us to sell in a down market? --Susan DEAR SUSAN: This is a very serious issue facing condominium associations and unit owners throughout the country. There is the perception among associations as well as mortgage lenders that somehow tenants are going to create problems within the community. Lenders such as Fannie Mae, Freddie Mac and even the Federal Housing Administration (FHA) impose caps on the percentage of absentee owners. Perhaps there is some truth to this perception, but from my experience some tenants make better "owners" than the owners themselves. Be that as it may, however, this issue has been litigated in many states. The courts have been fairly unanimous in holding that if the association follows the proper rules and requirements, the courts will uphold rental restrictions. What are these proper procedures? First, the restriction must be done by an amendment to the association bylaws; it cannot be accomplished merely by a rule promulgated by the board. Why an amendment? Because to amend your legal documents, it requires a super-majority vote of all unit owners. Second, the amendment process spelled out in your legal documents must be carefully followed. Was there proper notice? Was there a quorum at the meeting when the amendment was approved? Is the language of the amendment the same as was provided in the notice of the meeting? While these are technicalities, they are important. You and your husband should review the process by which the rental restriction was adopted. If, however, it was done properly, you have no case. Condominium law is very clear that all owners are legally bound not only by the rules and regulations as they were when the unit was first purchased, but by any future amendments properly enacted. Here's a thought, however. Talk to your board about getting an extension based on market conditions. But if they don't agree, discuss your situation with your attorney. You may want to consider doing a Starker (Section 1031) exchange and swap that condo for some other real estate investment. DEAR BENNY: For medical reasons, I anticipate outliving my wife. If I remarry (or get involved in a long-term relationship), how do I keep my new bride (or significant other) from inheriting the house when I die? --Thomas DEAR THOMAS: You are an optimist, but I wish you good health and a long life. Although your question sounds simple, the answer is somewhat complex. You should have a last will and testament, which would spell out your intentions with regard to the house on your death. But a will is not necessarily the controlling factor. For example, if you and your new bride (or significant other) hold title as joint tenants with rights of survivorship (or in many states as tenants by the entireties), then your house will pass automatically on your death to the other person on title. This is true even if your will states some other disposition. If, for example, you want to leave your house to a child, you can add that child to your title as "joint tenants." But caution: There are tax consequences to this and you should consult a local attorney for more details. Alternatively, you can keep the house in your name only, and the will you create will be effective. However, in many states, a spouse has rights to take property -- even against the clear intentions stated in the will. Again, you have to consult your attorney about the laws in your state. Finally -- and this is always a touchy topic -- you can have your new spouse (or friend) sign a "prenuptial agreement" whereby she states in writing that she will make no claim to your house on your death. DEAR BENNY: We are planning to sell our vacation home in Virginia and then purchase another one as soon as possible. How long do we have between the sale of the first vacation home and the purchase of the second vacation home to avoid paying taxes on the profit from the sale of the first? Is it necessary to strive for a "double-closing"? --Colin DEAR COLIN: Unfortunately, unless you do a Starker (Section 1031) "like-kind" exchange, where you literally swap one investment property for another, you will have to pay capital gains tax. Your vacation home is not your principal residence, and the up-to-$500,000 exclusion of gain (for married couples, or $250,000 if you file a single tax return) applies only to your main home. If you want to do a Starker exchange with your vacation home, there are a number of specific rules that you must follow. First, you must own the property for at least 24 months before the exchange. Next, during the two years before the exchange, you have to rent the property to another person at a fair rental price for 14 days or more. More important, your personal use during each of the two years before the exchange cannot exceed the greater of 14 days or 10 percent of the number of days the property is rented. And finally, the exchanged property, which we call the "replacement" property," must similarly be used the same way. In other words, it must be investment property instead of merely a second, vacation home. Accordingly, in your case, since you call it your "vacation" home, you will not qualify for the 1031 exchange. You will have to pay capital gains tax on the sale of the first property, and it makes no difference when you settle on the second home. Benny L. Kass is a practicing attorney in Washington, D.C. and Maryland. No legal relationship is created by this column. |
| Is “do it yourself” in your DNA? By Paul Bianchina In many ways, this is a tough time to be a homeowner. Finances might be tight, but that doesn't stop the roof from wearing out, or the plumbing from starting to drip. Or perhaps you're thinking of selling your home, and you need to add a deck or replace some windows or siding in order to be competitive in a tough real estate market. But you can't really afford to hire a pro. That may have left you giving some serious thought to undertaking some do-it-yourself projects that in the past you might not have considering tackling. There are some pros and cons to that. Doing things yourself saves money and adds value to your home. It can also bring a lot of personal pleasure, and a definite sense of pride. But there are risks. A poor job can actually detract from the value of your home. In some cases, you can even end up paying more for wasted materials and correcting mistakes than you would have paid to have a contractor do it right in the first place. So before you break out your tools and head to the home center for a stack of lumber and paint, take a moment for some honest assessment. Do you know how to do the work? This is the obvious first thing to ask yourself. Do you know what steps are involved in the project? All of the steps? There are lots of great columns (you're here, right?), books, videos, TV shows and other sources of information that will help tell you how to get from point A to point Z in a project. Take the time to check out a few of those sources. Understand what's involved. Then ask yourself if you know how to do those things. If you don't, can you learn them? Do you have the right skills and abilities? OK, you figured out the steps involved. Now, do you have the skills and the physical abilities to accomplish those steps? Remember, they're two different things. You might easily read about how to re-roof a house, and fully understand all of the steps involved in doing it. But if you're not able to handle the rigors of working for hours at a time on a steep roof, then understanding the theory of how to do it won't be enough. Can you commit the necessary time? This is a tough one for a lot of homeowners. For one thing, it's really hard to understand just how long some of these projects are going to take -- especially if you've never done them before. For another, the time commitment to the project means time that's going to be taken away from something else. It may be that re-siding the house takes the entire summer, simply because you can do it only on the weekends. Will that work for you? Will that work for your family? If the purpose of doing the re-siding work is to sell the house, will you end up missing the prime selling season? Time creates other risks, as well. Take re-roofing, for example. If you can commit only small chucks of time to the project, you may be leaving your home vulnerable to sudden rain storms if the roof isn't adequately protected. Or your home may not be secure if you're taking windows or doors out, but temporarily replacing them with plywood or, worse yet, sheets of plastic. Have you thought about the physical side? Most building projects, even the simple ones, require some amount of physical labor. Are you up for that? Climbing, crawling, lifting, carrying and all the other things that go along with getting the work done? Then there'll be those times when, despite your own willingness to do the work, another set of hands is going to be necessary. Do you have a helper you can call on? What about getting the materials? Can you pick them up at the home center or the lumber yard by yourself? Can you get them delivered? Once they get to the house, can you get them where they need to go: onto the roof, into the house, or into the basement, attic or crawl space? And don't forget that once things get under way, there's the obvious need for tools and equipment, which you'll need to buy, rent or borrow. You might want to go back to the first question, and look at all of the steps involved in the project. That might help you better understand the physical side of things, as well as those times when a helper might be needed as well. Do you want to do it? Be honest here. Your real estate agent may have said that your house will show better with a fresh coat of paint. You can't really afford to hire a painter, so you decide to do it yourself. Unfortunately, you hate painting more than root canals, and the only thing you want to do is hurry up and get it over with. Do you really think that the appearance of the finished product is going to help you sell your house? None of this is meant to dissuade you from tackling a do-it-yourself project. Just the opposite. Taking responsibility for their own homes is something I encourage people to do every day. But so is honest assessment. So just take a moment before you start, and make sure your eyes are open before you get started. You'll end up with a better finished project as a result. |
| Hot Links |
| City of Palmdale http://www.cityofpalmdale.org City of Lancaster http://www.cityoflancasterca.org Search For AV Homes For Sale http://ekenzer.repav.com HighDesertWind Blog http://www.edkenzer.com Greater Antelope Valley Economic Alliance http://www.aveconomy.org |
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