Ask Realty Times - April 1, 2005 - 4/1/2005 - Real Estate Home House Condo

Ask Realty Times - April 1, 2005
by Peter G. Miller

Answer: What you have here is essentially a shared-equity arrangement with a resident owner and a non-resident investor. To make this work, you need an equity-sharing agreement, prepared by an attorney, that can be used to determine who is responsible for what, who gets the tax benefits, what happens if the place burns down, how profits and losses are to be divided, the fair market rent on your 50 percent interest in the property, etc. The lender will want to review this document with care.

Before going further, both you and the purchaser should independently obtain tax and legal advice.

Follow-Up: A few weeks ago we had a question involving leaky dishwashers in Florida. Based on experience, with a faulty connection, I suggested drying out the machine and checking the hoses -- the solution to my leak.

However, Ken Stazer, a licensed real estate broker and a certified home inspector in Fort Pierce, FL, suggests that a more common source of leaks might be the seals: "During long periods of non-use," he says, "the seal in the dishwasher tends to dry out and shrink, causing the leak. If anything, a small amount of clean water should be left in the dishwasher. Please check with a manufacturer to confirm."

Our thanks to Ken for the suggestion.

Question: My lender has hired a third-party company to handle all of their mortgages for them, the part that involves harassing phone calls to the homeowner.

During the last two years I have spent both hours on the phone, sending email messages and writing letters requesting that they stop, but all I receive in response is more harassing phone calls without any merit. What can I do?

Answer: Are your payments in full and on time? If yes, call your state attorney general and see if they have a consumer affairs department. They can review the matter in detail.

Question: I am a real estate agent and I showed a home offered for-sale-by-owner who agreed to pay a brokerage fee. The customer put in an offer, and we went back and forth on negotiations. Meanwhile, the owner listed the property with another broker. Am I now required to put in the offer through the listing broker?

Answer: If there was a binding sale agreement, the property could not be listed. Bargaining back and forth by itself does not obligate either the buyer or the seller to conclude an agreement.

Has the property been listed on an exclusive or open basis? If exclusive, you must go through the listing broker.

A related question is this: Do you have a written buyer brokerage agreement with the prospective purchasers? If not, what is to stop them from dealing directly with the listing broker? Please discuss this with your broker for details.

Question: I am thinking of buying my very first house in Southern California. But I can only afford a house or condo under $300,000. There are basically none in that price range in my local area. Another option is to instead buy houses in other states as an investment. Houses in Texas and similar states are cheap enough that I may be able to buy two. Then I can rent them out for a few years, sell them for a profit, and then buy a home in California. What is the best strategy for my situation?

Answer: The idea of investing a thousand miles from home in a lower-cost area assumes that prices will rise in Texas and that they will also rise at a faster rate than California. However, such assumptions may be wrong.

It's important, of course, to consider precisely where you would buy and which particular property. On a general level, metro-area figures from the National Association of Realtors show that between the fourth quarters 2003 and 2004, Texas home prices rose in Amarillo (6.7 percent), Corpus Christi (11.5 percent), Dallas (1.6 percent), Houston (1 percent) and San Antonio (6 percent) -- but fell in Austin/St. Marcos (-2.1 percent) and Beaumont/Port Arthur (-1.3 percent). Meanwhile, during the same period, metro prices in California soared, just look at: Orange County -- Anaheim/Santa Ana (19.1 percent), the Los Angeles area (23.7 percent), Sacramento (31.5 percent), San Diego (24.8 percent), and the San Francisco Bay area (14.3 percent).

In other words, in the past year at least, investing in Texas would have put your further behind if your goal is to ultimately buy in California. In some cases, you would actually have lost money.

Of course, past performance does not guarantee future results. However, rather than investing long distance, perhaps it would be best to take a different approach: See if duplex, triplex, or four-unit properties are affordable in your area. Live in one and rent the rest. Speak with brokers and lenders for specifics.

Question: My father has signed a contract to sell his farm and now he says he will not sell. He is 80 years old and there is a question if he is competent or not. How is competence determined and could that make a difference in the contract?

Answer: One must have "capacity" to enter into a contract. A reasoned belief that a seller lacks capacity could cloud a title for decades, thus a possible buyer also wants a clear resolution to this issue.

If you believe your father lacks full capacity, that he may be senile (non compos mentis), then you'll need to see what the legal requirements are in your state to first show incapacity, and then to establish a guardianship. You'll need an attorney and statements from one or more physicians.

This is a difficult and profoundly emotional matter for all concerned. An attorney who specializes in elder law may be especially helpful.

Question: We are a family of five children and a working mom and dad plus an aunt. The aunt wants to help mom and dad by becoming a sort of "tenant" and paying rent, but the aunt wants separate living space. Is there a term that is used for such a living arrangement?

Answer: You might be thinking of such expressions as "accessory apartment," "English basement," "in-law suite," "granny flat," etc. Generally such areas have separate entrances, kitchens, baths and sleeping areas.

Before building or remodeling, check to see if such accommodations are permitted under local zoning rules.

This column is designed to provide accurate and authoritative information in regard to the subject matter covered. It is made available with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services. If legal services or other expert assistance is required, the services of a competent professional person should be sought.