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| Southern California Real Estate Update |
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| Southland home sales plummet By DataQuick Information Service Southern California home sales remained at their lowest level in more than 20 years last month, the result of market uncertainty and a continued drop in "jumbo" mortgage financing. Prices have dropped back to spring 2005 levels, a real estate information service reported. (click here for more) |
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| Short Sales Basics Lawrence interviewed for California Real Estate Magazine By Elyse Umlauf-Garneau Recently, Lawrence was interviewed for California Real Estate Magazine regarding the complicated Short Sale process. [Click here to continue] |
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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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| What to look for in a final walk-through inspection Property should be in same condition as day you signed contract By Ilyce R. Glink Most home buyers will have at least two opportunities to inspect their property before closing on the purchase. First, most buyers will include a contingency in the contract that allows them to do a professional home inspection by the home inspector of their choice. This inspection typically happens right after the sales price has been agreed to, usually within a week or 10 days. If the home inspector finds anything wrong in the property or decides further inspections (perhaps for radon, heating and air conditioning systems, or mold) are called for, the home buyer will be able to hire specialists to figure out if there is an insurmountable physical problem with the property. Assuming those inspections go well, the second opportunity to inspect the property is just before the property closes. The preclosing inspection, or final walk-through, as it is often referred to, is a home buyer's last opportunity to walk through the property before closing. What you're looking for here is not at the same level as the initial professional home inspection. In a preclosing inspection, you simply want to make sure that the property is in the same condition as it was on the day you agreed to buy it. To avoid getting burned, you schedule the walk-through as close to the actual closing as possible, certainly within the 24 to 48 hours prior to closing. If possible, the sellers should have already moved out. The whole point of the walk-through is to protect yourself and your future property from sellers who aren't as nice as they seem to be or who are actually as nasty as they appear. By inspecting the premises, you're making sure the seller has lived up to his or her agreements in the sales contract. And if he or she hasn't, you want to know about it in advance of the closing so remedies (both monetary and otherwise) can be agreed upon before money changes hands. What should you look for in a preclosing inspection? To start with, you want to make sure that the condition of the home hasn't changed since you signed the contract several months earlier. Believe it or not, a lot can change in the ensuing weeks. To make sure the home is in the same condition, you'll want to turn on every appliance, open every door, make sure nothing's broken (lights, fixtures, windows, etc.), be certain everything the seller agreed to leave is actually there and in good shape, and be certain that when the sellers moved out, they did no damage to the home. Sometimes movers can accidentally scrape a wall or pull up carpet in the process of packing up the contents of a house. If you do your preclosing inspection while the movers are there, you'll have a harder time getting around them to make sure that the property is in good shape. If you get there before the sellers have packed anything up, you might wind up with some nasty surprises on the day you move into the property. I learned the hard way that sometimes sellers just don't want you to find out certain things until you've closed on the property. Nearly 20 years ago, my husband Sam and I bought our first place. It was a vintage co-op built in the 1920s. Our sellers were seniors, and they were a bit quirky. The property hadn't been touched in years. When we did our final walk-through, we noticed that the water was turned off in the kitchen sink. We wanted to run the dishwasher, which was really old, but didn't want to turn on the water if it was off. Looking back, it's hard to imagine why this wasn't a red flag for us. But we were really happy to be buying our first place, which was taking just about all the money we had in the world. We didn't question it. We just bought it and moved in. The first night we unpacked the dishes and decided to run a load in the dishwasher. At well past midnight, my husband turned on the water and we put in the dish soap and turned on the machine. We went to bed. We were awakened early the next morning with pounding on our front door. Our downstairs neighbors came into their kitchen and noticed that the liquid contents of our dishwasher had dripped down through the ceiling into their kitchen, ruining their window shade. My husband and I looked at each other and we knew why the water had been turned off. Too bad we didn't find that out ahead of time. Still, the damage could have been worse. As I recall, it cost us $600 to fix the damage in our neighbor's apartment. |
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| Is improving home's basement wise during soft market? Value of completed renovations can vary from region to region By Dian Hymer Should you invest a good sum of money in your home if housing prices in your area are flat or declining? When home prices are escalating, adding more money to an asset that's increasing rapidly in value is a no-brainer. But given current market conditions, it's more important to consider the financial ramification of a renovation before giving your contractor the green light. First, find out how much the anticipated project will cost. Then add 10 to 20 percent for cost overruns. The next step is to figure out how much your home would be worth after you complete the improvements. The market value of renovations varies from one area to the next. According to Remodeling magazine's Cost Versus Value Index for 2006, a mid-range basement renovation -- in terms of cost and finishes -- returned on average approximately 80 percent of the cost when the home was sold. For comparative purposes, the basement renovation used in the Remodeling report consisted of a 20-by-30-foot entertainment room with a wet bar and bathroom. To determine the return on investment, Remodeling, in conjunction with the NATIONAL ASSOCIATION OF REALTORS®, relied on data compiled from a survey of REALTORS®. Even though the national average return on the basement renovations was only 80 percent, a comparable job in San Francisco returned 112.7 percent of the cost. So consult with a knowledgeable local REALTOR® to determine how much the improvement you are contemplating will increase the market value of your home. Investment potential is just one variable to consider when weighing whether to improve your home and how much to spend. Quality of life is a major consideration. Generally, the longer you plan to stay in your home, the more it makes sense to make improvements that will make your home more user-friendly. However, keep in mind that a basic rule of investing in real estate is to avoid overimproving for the neighborhood. HOMEOWNER TIP: To get the most out of a major renovation, make sure that the work is done with building permits. Sellers and contractors often proceed with major renovations without taking out the appropriate permits, either to save time or money. This might not matter to you if the work is done well and in accordance with building-code requirements, but it could come back to bite you when you sell. Appraisal standards have tightened recently along with credit standards. Today, an appraiser might not count a basement conversion as livable square feet unless the homeowner could show that the work had been done with permit. This in turn could result in an appraisal for lower than the buyer agreed to pay if you represented that the den added value as livable square feet. When the market is racing upwards, a low appraisal won't necessarily cause a deal to fall apart. But, in today's environment, an appraisal for less than the purchase price could cause a buyer to renegotiate the price, or back out, if the seller isn't willing to take less and the purchase contract includes an appraisal contingency. It's quite common to find basements that were finished without permits. Sellers should take care how they market such improvements to a prospective buyer. In California, state law requires buyers to disclose if work was done without permit. Misrepresenting livable square feet can have serious legal consequences. Rather than take that risk, make sure the buyers know exactly what they are buying. THE CLOSING: It's prudent to be conservative when representing the livable square feet of your home. Sellers have ended up in court over disputes about square footage. |
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| Security deposit too small to cover pet, smoke damage Can landlord raise deposit or is he stuck paying repair bill? By Robert Griswold Question: I have a rental unit that I have leased out with only a $200 security deposit. I inadvertently rented to a smoker with a small dog. I was aware of the dog, but not the smoking. The tenant seems to be a chain smoker -- when I enter the unit to do repairs it smells like an ashtray. He never leaves the door open and the windows are always closed. He hardly lets his dog out and I also noticed that his dog pees on the carpet. I feel that by the end of his lease the carpet will be totally trashed and the smell unacceptable. The deposit is not enough to cover the replacement of new carpets. In the meantime, is there anything I can do? James McKinley, an attorney for landlords, replies: Since neither the dog nor the smoking is prohibited by the lease, there is little that you can do at this time. However, in order to avoid further damage to your property, you should give your tenant notice that you do not intend to renew the lease 30 days before the lease expires (or a longer notice if required). After you give your tenant notice of termination of the tenancy, you are required to notify your tenant, in writing, of his option to request an initial inspection of the premises and his right to be present at the inspection. You should also consider meeting with the tenant prior to the end of the lease to give your tenant an opportunity to remedy the identified deficiencies, in order to avoid deductions from the security deposit. After the inspection, you are required to give your tenant a statement specifying repairs or cleaning that need to be completed in order to avoid deductions from the security deposit. After the tenant vacates, you should to give an itemized statement showing how the security deposit was applied to rent, cleaning and/or damages, as required by state or local law. The tenant is still responsible for the costs of cleaning or repairs not covered by the security deposit, but you will have to commence a small claims action or general civil action to recover those damages. Steven Kellman, an attorney for tenants, replies: While you are bound by the lease in allowing the tenant to live there with his dog and his cigarettes, you are not forced to allow the continuing damage to your property. Tenants are entitled to many rights, but they must also act responsibly to earn those rights. I would suggest considering taking a course of action now rather than waiting for the tenant to move out. Pet owners and smokers must conduct themselves in such a manner so as not to cause material damage or create such a significant interference with the quiet enjoyment of the other tenants at the property. If this tenant allows his dog to damage the carpet and if he smokes in such a manner as to cause "smoke damage" to the unit, you may demand that he stop both activities right away. This is in the best interests of your property and the neighbors who do not want to be impacted with offensive smells or increased rent to cover damage costs. You may view the tenant's behavior as a breach of the part of your lease that requires the tenant to maintain the unit without damaging it. In that case, you would give him a legal notice to cure that behavior thus saving the property and his tenancy. If you feel the damage is significant, you may then try to view the conduct as a nuisance, which may result in a termination of the tenancy with a different legal notice. In either case, the appropriate legal notices can be tricky so advice from an experienced local tenant-landlord attorney is recommended before taking such action. If you are forced to wait to the end of the lease, you should be sure to terminate the lease without renewal and handle the deposit as James advises. Property manager Griswold replies: The attorneys seem to have covered what to do at the end of the lease, but I think you are also asking what can you do now and I would like to give you an option. While it isn't popular with many tenants, you do have the legal right upon proper notice to increase the security deposit from the current $200 to an amount that would be more likely to cover your anticipated costs of repairing the damage that may be caused by the pet and/or the tenant. Make sure that you comply with any local restrictions or maximum amounts, but in most jurisdictions you can simply raise the security deposit upon lease renewal or by giving written notice if the tenant is on a month-to-month rental agreement. The purpose of the security deposit is not just to have funds to cover damages but it can also be an effective incentive for tenants to maintain the property during their tenancy as well as make efforts to leave the property in good condition. Most tenants really want and need those funds when they move. If you ever want to see what damage can be done to a rental unit, rent your property to a tenant and don't charge a security deposit or, better yet, offer a $99 move-in special! |
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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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