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Question (CA): I recently bought a mobile home. I hired a home inspector to check out the mobile home. He found a couple of things wrong. One defect he found was the kitchen floor had a lot of water damage. I asked the seller to fix it, but it was never fixed right. That floor is still spongy.

The owner signed the normal disclosure saying he has never lived in the mobile home and to the best of his knowledge everything is okay. About 2 days ago I ran into the local park handyman who has many years of experience working on mobile homes. I asked him what he thought of my mobile home because I know he had worked on it before I owned it.

He informed me that in one of the bedrooms the floor is sagging 3 inches, and that I should be worried about the electrical wiring because it's all shot. He replaced 9 blackened electrical outlets. He also mentioned how bad the plumbing is, and that all the stairs outside the trailer are not by code and will have to be replaced (cost around $5000.00).

He also told me that the seller knew all about the problems. He stated that he will go to court for me and will testify. If all this had been disclosed to me I wouldn't have purchased this mobile home. The question I have for you is this: Did the seller break disclosure law and should I go see an attorney?

Answer: "Yes," the seller misrepresented material facts about the trailer in his disclosure to you, and "yes," you should see an attorney to hold this seller accountable provided the seller has the means to pay you.

Question (NC): My husband and I are looking into buying a condo in North Carolina. It is in the process of breaking ground. We spoke with a sales rep and he told us that we first needed to give a deposit of $1,000.00 to secure one of the condos and that we needed to give him 20 percent of the sales price within 3 months. This project will not be completed until April 2008. Is this legal? How can you give the payment before you do the closing? When you buy a home you pay at the closing not before the closing. Thank you for your help in this matter.

Answer: When you and your husband signed the purchase and sale agreement with the sales representative for the builder, you entered into a contract. It is presumed that by signing the contract you understood what it said or that you would have consulted an attorney to explain the meaning to you. That contract contains all the terms and provisions that are applicable to your purchase of the yet-to-be-built condominium unit. You were apparently not represented by a North Carolina real estate licensee nor a North Carolina licensed attorney. Had you been represented, the licensee and/or the attorney could have reviewed the business aspects of your agreement and perhaps pointed out some changes, and/or other modifications you might have considered.

The bottom line, though, is that almost anything you and the builder agreed to in your contract is legal providing the contract complies with applicable North Carolina statutes. Having an attorney review your contract at this point is like closing the barn door after the horses have already left the barn, but it is certainly an option. Perhaps the builder's rep forgot to "dot an i" or "cross a t" in his preparation of the contract, or forgot to get your signature on a required document. Is there a provision for return of the money if the condo isn't built? Who is holding the money? These are questions your attorney may ask if you choose to have an attorney provide professional help. However, what you'll more than likely discover is that you should have had representation BEFORE you signed the contract.

Question (NV): My mortgage was sold to EMC on Nov. 2006. My January's taxes were never paid. I informed EMC in February when I was made aware of the issue. They made a payment in February for the current taxes due, but the payment was applied to the missed January's payment. I made several calls, sent several letters, and sent copies of my property taxes from the county's website showing the taxes were past due. They sent generic letters stating they received my letters, etc. Finally, in April, they mailed the late tax payment. It shows they took it out of my account on April 20, 2007. The county never received the payment and it's still showing past due as of May 22, 2007. I informed EMC and sent delinquent notices. The response I got was that you need to contact the county, as if it's my responsibility.

What should be my next step in getting my property taxes paid? I've been assessed late fees and other fees even though I had sufficient funds in my escrow account. It seems like this was a simple problem that should have been easily fixed.

Answer: You're correct; EMC should have properly handled the disbursements from your escrow account. However, to obtain the complete closure you wish to obtain regarding this matter, we recommend that you do one of two things:

  • Go down to the county tax office in person with all your documents, and show the individual to whom you are assigned your evidence; or
  • Pay the taxes and take the lender to small claims court if your claim is under $5,000; or,
  • Place a conference call between the tax office and EMC. You will need to inform both entities what you are going to do to make sure you have people on each end who can take appropriate action.

Remember, however, that EMC has already "washed its hands" of further involvement, so this recommendation is a distant second to our first two suggestions.

Question (TN): Help! We were so excited when we started investing in real estate in 2005. We bought one nice house and sold it locally and made some profit. Then we invested in two condos at Myrtle Beach, SC. We sold one for a $50,000 profit. In the meanwhile we bought another due to the success of the first. We also bought two houses in the Southport area, which was appreciating 30 to 40 percent at the time. We also invested in a house at Cape Coral in what we and many others thought was a no lose proposition.

Last April we could have sold the second of the first pair of condos for $89,000 profit, but we wanted to wait a year which would have been May 2007, for tax purposes. You can probably guess what happened after that as to our situation with the market. What make matters worse with the Florida house is that it was supposed to be a construction-to-perm loan but the lender changed its mind as the appraisal was inflated about $100,000.

What is your advice when we know we can't sell anything for what we paid for it, and it is driving us down even more by trying to keep up with the mortgage payments, HOA assessments, and other carrying costs. Due to the market it is hard to even get renters or renewals and if we do, the renters are not willing to pay as much as this time last year.

We would appreciate any help. What we thought was going to give us financial freedom has drained us to the point I have had to use the money that my mother left me which is devastating to me.

Answer: This will not be much consolation to you, but many investors are now facing the same financial problems you are facing. This comes from charging ahead with real estate purchases based upon hearsay and one or two huge profits made from sales without paying attention to sound, professional investment advice from folks who are paid to exercise caution when dealing with your assets.

If you can, we suggest that you hold on to the real estate until the market shifts and you can sell without booking a loss. If, as you state in your email, you are not able to do that, then one or more of the following are your choices:

  1. Hire a professional financial advisor to provide advice based upon your total financial picture (you should do this anyway);
  2. Rent out the real estate even for a reduced amount that you can afford in order to protect the drain on your cash;
  3. Sell and cut your losses;
  4. Look into declaring bankruptcy.

As general rules regarding any kind of investment of discretionary income or inheritance, we suggest the following:

  1. In the stock market or in real estate, the Bears sometimes win, and the Bulls sometimes win, but Pigs always get slaughtered;
  2. Never invest more than you can comfortably afford to lose if the market should fall precipitously; and,
  3. Always base your investment decisions upon demonstrable facts not marketing hype.
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