Ask Realty Times February 9, 2007 - 2/9/2007 - Attorney Lawyer Legal Building Codes Zoning

Ask Realty Times February 9, 2007

by Peter G. Miller

Answer: Across the country there are a number of local markets which are now in flux. Given the marketing efforts of your broker, I'd stick with them. I'd also take several other steps.

You immediately need a new competitive market analysis (CMA) from your broker. The original data provided when your home was first listed may no longer be relevant. In particular, you need to look at like homes in your neighborhood which are currently on the market, home prices for like properties sold during the past three months, the number of homes now on the market versus a year ago and the percentage of listing prices which are actually being obtained.

Also, you likely need to re-think pricing -- regardless of what "everyone" says the results speak for themselves. What about the structure of your offer? For instance, are you offering a closing credit to buyers? Additional commission for brokers who locate a purchaser. Etc. For specifics, sit down with your broker.

Question: I have my house listed for sale and found out a month ago that someone wants to change the zoning from residential to general business. They want to build a self-storage facility between my property and a major highway. How will this affect my property value?

Answer: Property values often reflect zoning classifications. If you can obtain a zoning status which allows for commercial development then your home may be substantially more valuable.

I can understand why someone would want to change the zoning of their property, but why would they want to change your zoning? Perhaps their idea is to combine your property with their property to build a larger facility. Speak with your broker -- maybe you want to wait to see if the zoning change actually takes place.

Question: How long can a deed be valid before it's recorded with the county's recorder's office? I mean can you keep a deed that was signed two years ago and record now?

Answer: The reason to record a deed quickly is to assure that your claims have priority over other lienholders. For instance, suppose the property was refinanced last year. Without your deed on the record how would anyone know title had been transferred? Please take your deed to a local real estate attorney for review and filing.

Question: Is there a correlation between the cost of HOA fees and home values? Does increasing HOA fees run the risk of impacting the value of properties in a planned community?

In our community we have 77 homes with an average value of $250,000. The current fees are $15 a month. Homes here move slowly, averaging about one year to sell. The HOA board is proposing an increase of 44 percent in fee (from $15 to $21.67 per month per lot). This is to adjust for increasing costs and because prior management operated in the red.

Answer: HOA fees are not related to property values, they are related to the costs required to run the HOA. If the HOA provides a lot of services, then fees should be higher. If the HOA provides few services, then the fee should be lower.

In your example, the HOA fee is being increased by 44 percent. This would be a meaningful statistic if we were talking about a lot of money. Instead, we're talking about an extra $6.67 per month for properties valued at $250,000. If it takes less than $10 a month -- regardless of percentages -- to have a functioning HOA and a better community, pay the fee and protect your investment.

Question: I understand that home ownership is public information and everyone can look it up through the property records office. Is there a way to maintenance the privacy of the ownership?

Answer: Yes. You could, for example, buy in the name of a corporation or partnership. You could have a nominee purchase on your behalf.

However, none of these are things to do without legal and tax advice. For instance, can you get a homestead exception if the owner is a corporate entity? How will an estate be impacted if property is not directly in your name? What if there is a divorce? Etc.

Question: Aloha: I am the owner of a single family residence that is part of a condo association with eight other single family residences in Hawaii. My residence is the only lot in the development that has access to the main county street -- the other eight residences have to access from a driveway next to my residence.

The driveway is owned and maintained by the condo association. Since the driveway does not benefit me in anyway, is there anyway for me to withdraw from the association so that I do not have to pay for the driveway maintenance? Or, am I locked into paying for expenses that do not benefit me in anyway?

Answer: When you purchased your unit you had an opportunity to review all the paperwork associated with the condo. You knew that your unit was one of nine that were joined together for various purposes. You agreed, in buying your unit, to certain obligations.

For instance, your condo association no doubt has money in reserve for certain repairs. If your unit has storm damage, and if the condo association is responsible for exterior repair, then the association will fix your roof if necessary. Your neighbors, of course, won't directly benefit.

To get out of the driveway cost you will have to secede from the condo association. That would likely require a unanimous vote by all property owners to accomplish, followed by massive legal bills to redefine your unit and the condo association.

Keep up you part of the bargain and pay for the driveway. That's no less than you promised when you bought the unit.

Question: My husband and I own a house. I'd like purchase another house as a primary residence under my name only (in a different state). Is it possible to buy another property without having to legally separate from my husband?

Answer: With sufficient cash and credit either spouse may buy independently. However, check with a tax professional to determine the impact of your decision to establish a different principle residence -- you may be losing significant tax advantages if the first property is sold at some point and you have no longer lived in the property for two of the past five years. As well, other tax issues may emerge.

Question: I am forced to file bankruptcy due to the failure of my small business for which I had refinanced my home. If I try to sell the house it will result in a short sale. My attorney recommends I let the house go into foreclosure. My concern is the affect on my future ability to obtain a mortgage. Is a foreclosure worse on my record, or a bankruptcy. Or is there no difference?

Answer: Neither a bankruptcy nor a foreclosure will make lenders happy. But why not speak to the lender (or have you attorney speak to the lender) about a workout of some type -- perhaps there could be some forbearance until your finances improve? Maybe the loan could be refinanced? Or, perhaps an investor would like to do an equity-sharing deal with you?

Question: I paid for my home for many years, but there is no record because the property belonged to my parents. The home was in my mother's name, my stepfather's name and my name. When I separated, I put the house in my parents name only. In 2001 my home was returned to me in my name only. A living trust was made and stated that the home would go to me in the death of my mother. It was already transferred when she died. I want to sell my home and relocate. Am I due the exclusion of capital gain? I have resided in my home for 17 years.

Answer: What happened to the ownership interest held by your step-father?

If you have lived in the home for two of the past five years, if you have been on the title for the last five years, you should generally be entitled to a capital gains write-off.

"To exclude gain," says the IRS, "a taxpayer must both own and use the home as a principal residence for two of the five years before the sale. The ownership and use periods need not be concurrent. The two years may consist of 24 full months or 730 days. Short absences, such as for a summer vacation, count as periods of use, but longer breaks, such as a one-year sabbatical, do not. The taxpayer also must not have excluded gain on another home sold during the two years before the current sale."

There is a lack of documentation regarding payments, but what about ownership? What do the public records say?

You need to sit down with a tax professional -- this may be very easy if ownership shows in the public records, and not so easy if it doesn't.

Question: I'm looking to sell my three-story townhome soon. The townhome is seven years old and has a few minor issues which I have fixed. A crack going through the garage was filled in via the home warranty and now I am working on getting a leak fixed because of a faulty siding installation which is also being covered by warranty. When I asked the individual that represents the builder about having to disclose these items on the seller's disclosure, he informed me that the items, once fixed through the warranty, need not be on the disclosure.

My intention is that there be no glaring issues with the house when it goes up for sale. My question is whether the items that have already been fixed should show up on the seller's disclosure.

Answer: If they've been properly fixed they're not problems anymore. You should certainly hang onto all receipts and proof that the work was done in case problems arise again in the future.

What to disclose is a debatable matter. Some would argue that you should mention the repairs, others say they are irrelevant. Still others say if you mention a bunch of repairs and miss one that you might then be accused of hiding something, even though that's obviously not your intention.

One of the best ways to resolve such problems is to list major repair work and require as a condition of the sale that the buyers obtain a professional home inspection by the inspector of their choice.

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.