Ask Realty Times - December 24, 2004
by Peter G. Miller
Question: I purchased a four-year old home nearly two years ago in northern California. At that time a home inspection was completed. After moving in I noticed that my coffee table in the living room sat at a slant. The slope is extremely noticeable and there is no way anyone living in the house could not notice it. I thought the slant was probably due to the poor quality of the carpet and its pad. Last week I pulled the carpet up intending to replace it with a laminate flooring. What I found was a huge crack in the concrete slab underneath that appears to be the result of settling. This crack is deep, runs the entire length of the living room and the difference in the floor from one side of the crack to the other is a depth of about one-half inch. This defect was obviously there at the time I bought the home. What recourse if any do I have? I feel the former owners bear some responsibility for not disclosing something that was obvious. Answer: If the crack and slope were "obvious" they would have been seen at the time of purchase. One possible reason these problems were invisible back then is that they did not exist. You have a four-year old home. As homes settle over time it's entirely possible for cracks to appear. Usually these are hairline cracks with little structural importance -- but it's rare to find such a large crack at anytime, much less after just a few years. Contact an engineer immediately. It's likely that work to shore up the foundation will be required. Also, check to see if there is a 10-year home warranty from the original builder. You may have coverage under that policy. Question: If someone passes away and they do not have a will, what is the proper procedure for multiple heirs to rent or sell the property? Answer: If someone passes away without a will the state will divide the property according to its rules. Thus there is nothing to rent or sell until it can be determined who actually owns the house. For details, speak with a probate attorney in the jurisdiction where the estate is being settled. Question: I have been told that the LIBOR interest index is tied to 33 European economies. Accepting that as being the truth; what would be the effect on the LIBOR if world war were to begin? Would we see these rates climb and if so how much would be your best guess? Answer: According to the Commodities Futures Trading Commission, the London Interbank Offered Rate (LIBOR) is the "rate of interest at which banks borrow funds from other banks, in marketable size, in the London interbank market. LIBOR rates are disseminated by the British Bankers Association." In the event of war no one knows what will happen to interest rates. The answer would be impacted by such factors as the value of currency (if any), the level of destruction, the form of government in place (if any) and who wins (if anyone). Question: About a year ago I went to get a second mortgage. A $6,000 lien against the previous owner was discovered. I have not seen or heard from the former owner since the closing, and I don't know how to get in touch with her -- it's been six years. I would like to refinance now. What can I do? Answer: Look at the sale agreement. Did it provide that you were to receive the property free and clear of all liens? Did you also obtain title insurance? If yes, contact the title insurance company -- title insurance is supposed to protect against such claims, including the costs of litigation. It may be that the lien has been paid off and that the property records are wrong. It may also be that the lien is real, needs to be repaid and was missed in the title search. In any case, the title insurance company should look into the matter. An existing lien is a problem for a new lender because it means there is a claim against the property which must be satisfied before the loan is repaid. A lien is also a problem for owners who wish to sell -- no doubt buyers will want a good, marketable and insurable title, a title without liens. Question: I lost my job. At the same time, my lender has offered to refinance my residence, a three-unit property. If I refinance the rate will fall from a 30-year loan at 8.3 percent to a 5.3 percent mortgage with a 15-year term. Is this a good offer since I only have 22 years remaining on the current loan? The mortgage balance is now $146,000. Answer: With a 22-year loan at 8.3 percent and a debt of $146,000 your monthly payment would be $1,205 for principal and interest. At 5.3 percent over 15 years the monthly cost would be $1,177. Since your current loan has been in place for eight years, the original debt amount and monthly payments are unknown, so the numbers here are just for purposes of example. More importantly, at 8.3 percent the total interest bill for the 22-year loan would be $172,161. The 15-year loan at 5.3 percent would have a total interest cost of $65,950 -- a savings of more than $100,000. As good as this loan seems -- and it seems very good -- there is the matter of the lost job. The lender must know that you are now unemployed. It may be that the lender will decline your application until you are again employed but it will pay to get a new position if only because a job is the key to a $100,000 bonus in the form of a better mortgage.
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. | 
