Ask Realty Times - January 28, 2005
by Peter G. Miller
Question: I recently refinanced my house. After all was said and done the title company deposited the cash in my bank. Then they deposited a second check in my account. Yep, they deposited the amount into my checking account two times, the second three days after the first. I contacted the title company and the mortgage company and they really were clueless and said that they would look into it and thanked me for reporting the error. The problem is that the money is still in my checking account. It is messing up my record keeping and I keep waiting for it to be gone one day but it's been over a month and it's still there. After repeated calls I am fed up with telling them to get their money. Does there come a time when they lose the right to retrieve the money? Answer: You are entitled to the proceeds from settlement -- but no more. The money belongs to the lender. Do not touch the money, "borrow" it or spend it. Send both the lender and title company a letter by certified mail with a return receipt required explaining that a second deposit was made in error. Among what seems like thousands of documents signed at closing there should have been a form which says that in the event of a settlement error you will cooperate in good faith and help resolve the problem. Now is your chance. Eventually some bright person will notice that their accounts are missing thousands of dollars and will be in touch. The real problem here is that you did not get a physical check, you received an electronic deposit. If lenders can make two deposits to your account, can they also make an unauthorized withdrawal? Now that's a problem.... Question: My wife and I are about to buy our first home in a high-priced housing market. We have overcome our concern regarding a possible future price drop because we will be living in this home for 10 or more years and in that time the housing market should go up. My concern is this: If we purchase the home now, and later the housing market takes a dip, will our property tax still be based on the purchasing price we originally paid or the lower value? Answer: You have hit a gold mine of political intrigue. The logic of your question is unassailable: If you buy a home today for $500,000 and the value declines to $400,000, should not the property tax also fall by 20 percent? In a reasonable universe the answer is "yes" but don't count on it. Here's why. Let's say that the property tax rate is $6 per $1,000 of value. For a $500,000 home the tax bill would be $6 x 500 or $3,000. If the value falls to $400,000 then the tax bill should drop to $2,400. In practice, what's likely to happen is this: State and local governments, no matter what party or ideology is in power, will magically determine that they cannot possibly reduce their budgets, thus the tax rate will rise. Instead of $6 per $1,000 in value the new rate might be $8. The result is that home valuations will decline but property taxes will actually rise -- in this case $8 x 400 = $3,200. Question: I would like to start a contest to sell a small hotel. How can do I do this? Answer: From time to time you see that someone offers to sell a property by conducting a contest. Such efforts often get a lot of attention, but whether the property would have fetched more money had it simply been sold by a local broker is uncertain. To start you must have a "contest" with a test of skill and not simply a raffle or other form of gambling. You also need to ask a number of important questions, including but not limited to: - How will entries be judged?
- Who will do the judging? (You want independent judges.)
- How much will you charge per entry?
- Will you have an escrow (trust) account to hold all entries?
- If you charge $100 per entry and two entries are received by the deadline, will you sell the property for $200 or have you established a reserve price?
- If the reserve price is not met, will contestants get their money back in full? When?
The list goes on but you get the idea. For details speak with a local attorney. In addition to state issues, be sure that your contest also conforms with postal regulations. Question: We are buying a home, had a property inspection and now want to withdraw our offer. How can we do this? Answer: First, you need to read the contract: Does it give you the right to have an inspection or does it give you the right to have an inspection and then withdraw your offer if the inspection is not satisfactory to you? The difference is that the right to have an inspection does not necessarily mean an automatic right to withdraw from an agreement. If you have a right to withdraw, then see if the offer form has a section for "notices." It will explain how notice is to be given -- by certified letter, hand delivered, etc. For details, speak with your broker or a local attorney. Question: Our listing agreement does not expire until August but we want to end it now. What is the proper procedure? Answer: To end a contract you need the agreement of both parties. Thus the right approach is to speak with the salesperson and his or her broker or sales manager. Explain that you wish to discontinue the current arrangement. A broker at this point could insist on continuing with the agreement or obtaining full compensation (because the opportunity to sell the property has been lost). Most brokers, however, will ask only to cover their costs to date. Why? Because brokers are local business people, they want to maintain a reputation for fair dealing, they understand that not every transaction works out and they're in business for the long term. Bottom line: It's best to limit ill feelings and move on.
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. | 
