Ask Realty Times March 2, 2007 by Peter G. Miller
Question: I helped a friend out a year ago to buy a house. I put the house in my name and the deal was that this friend would live in the house and pay the mortgage and in return I would benefit from owning a house and in six months we would refinance and I would get out of the loan and $5,000. Well a year later he's managed to pay the mortgage late every month, almost causing us to go into foreclosure. I've even paid the mortgage twice just so that wouldn't happen. Because of this my credit has gone significantly down and we cannot refinance. I really want out of this bad deal and I understand I am going to be financially responsible for any loss. The thing is that I cannot get this "friend" to return my phone calls or agree to sell and the worst part is he is on the title and deed so I am really not sure if I can legally sell without his permission. Is there any advice you can give me to help me out of this situation? Answer: If you bought the property why is his name on the title? Is his name also on the loan? By any chance, did your loan application say that you intended to occupy the property as a prime residence within 30 days of closing? Was your original loan application and the loan application provided by the lender at closing the same? Does this arrangement make any sense? You have debt without full ownership and the potential for foreclosure. Already your credit has been impacted. In addition to the $5,000 will your monthly mortgage payments be repaid? You need to speak with an attorney or legal clinic. A lawyer may well advise that you contact your state attorney general. Question: Do you know of a reliable lender who can provide instant loan approvals for homeowners? I may have the need for a reputable lender since I work in the home improvement industry and need to know if a homeowner qualifies for financing. Answer: No doubt any number of lenders can quickly qualify applicants. However, such qualification letters are conditional and depend on factors in addition to the borrower's credit, such as the value of the property. Also, for the protection of the consumer lenders often require that no payments are made directly to any contractor. Instead payments are made to the borrower or require the borrower's co-signature to assure that funds are not disbursed until all work is done. Question: I have been taken by a real estate company who approached me to buy two condos and used their own appraiser to inflate the appraisals on the properties. I am now going into foreclosure and need help. Do you think the FBI will help me? Can you refer me anybody else. I have been left without any money and can't afford an attorney. Answer: Were these units financed? If yes, did the lender have it's own appraiser? Did you use a real estate broker? For zero dollars you can contact your state attorney general or the nearest office of the FBI. Question: I live with my mother in her house, but I own a condo that I rent out. I originally paid $108,000. I refinanced and received a $200,000 loan. I used the extra cash to buy another condo. I plan to live in the new property when construction is complete. The old property is becoming a headache and I'm thinking of selling it. Ignoring such costs as marketing and renovations, if I sell it for $208,000, do I owe taxes for the $8,000 or the $100,000? Answer: Neither. The amount of debt does not determine your taxable profit. To figure your profit or loss you have to look such factors as the purchase price, closing costs to buy, renovations, sale price, selling costs, etc. For specifics, see a tax professional. Question: My husband and I purchased a house in 2004 from a co-worker. She told us to forego the inspection because the home, being built in 2002, had perhaps only minor defects, and she would not consider a bid if we decided to get one. We had a major leak in 2004 winter. We then found out that a report had been made detailing implements necessary to fix the roof. Many repairs were not done. We called previous owners and the contractor. Everyone acted very surprised. The contractor paid for repairs and said it would never happen again. Our purchase agreement, by the way, has no "as is" clause and we did not get a disclosure statement as the owners said they thought everything was fine. In 2005 we did not have another leak, but we did have terrible ice on the roof. We sat down many times with the builder and first owner, and finally came to an agreement that they would pay for more insulation. They agreed to pay as long as they would then be off the hook. They have not paid yet and estimated repairs costs are well into five figures. What can we do? Answer: Why would you buy a home where the seller will not accept an offer that requires a home inspection? It doesn't matter what a seller says about the condition of a property. A seller may not know about problems or defects. As a buyer you need to get an independent evaluation of condition. As to the various agreements which have been made, unless they result in promised repairs and improvements they're worthless. Stop handling this by yourself. Hire an attorney to get all obligations on paper and to assure that repairs are in place before the next freeze. Question: We are living in post-Katrina times and have to pay huge prices for homeowners insurance. Consequently, no one is selling houses. I have been looking at a home for the past year because it's beautiful and close to work. It has been for sale and not sold in all that time. I would have trouble selling my present home. I was considering renting my home for almost twice the monthly mortgage payment (which is fair market in the current situation). I thought perhaps I could get the seller of the new home to agree to a lease purchase, hoping in two years the insurance rates may go down. Then I could sell my home for a good profit and put that down on the new house. Does this make good financial sense? Answer: The general idea seems attractive, but what about the details? For instance, does your current mortgage cover insurance costs? That is, would that big rent cover all your ownership expenses? On the other side of the transaction, if you lease would you not pay a premium rental rate? Rather than a lease purchase, why not run the numbers and see how much it would cost on a monthly basis to own the second house, assuming that you purchased with little or nothing down -- cash you might raise with a home equity loan on the first house. Could you lease the first home for a sufficient rent to off-set some or all of the monthly cost for the second property? As to prospective insurance rates, it's anyone's guess how homeowner policies in hurricane areas will be priced in the future -- or if such coverage will be available from private firms. It might be best to think of today's insurance costs as an ongoing expense. Question: We are buyers. We never received a copy of the completed contract with the effective date. We have just found out from our broker that all parties did not sign. Apparently, according to the seller's agent, the husband has a court order allowing him to enter into the contract without the wife's signature. As far as we know the only person who's seen this court order is the seller's agent. As the buyer, shouldn't we have been privy to this? Answer: Do you have a contract? If you have not seen a counter-signed offer how do you know that a contract exists? What are you showing to the lender and title agent? Has your deposit been accepted? For what? Where is the deposit money right now? In a real estate transaction both parties have a right to reasonable assurances that a contract can be completed. Sellers want a deposit and, often, a letter from a lender attesting to the buyer's basic financial capacity. Buyers, in turn, typically want a home inspection, appraisal, title search, etc. In this instance the most basic question concerns the issue of who, if anyone, has the authority to sell the property. If the husband has a court order allowing him to sell the property without his wife, that's great -- and as a condition of the purchase you could require a copy of documentation satisfactory to you to prove this point. Imagine if the husband does not have the right to sell the property and it somehow closes. How would you be able to sell it in the future? Also, check the real estate regulations in your state. What do they say about the prompt delivery of documents? For specifics, please speak with a local real estate attorney.
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