Wednesday, April 14, 2010
Tax Relief for Distressed Property Owners
Good News! Life just got a little brighter for over 100,000 distressed homeowners. CAR officially reported there will be no more California state income tax on debt forgiven in a short sale, foreclosure or loan modification. Borrowers will now be exempt from both Federal and State income tax consequences!
For a distressed borrower to qualify the forgiven debt must be on one’s “qualified principal residence”. The California exemption is for indebtedness up to $800,000. and forgiven debt up to $500,000. The Federal exemption is applicable up $2 million.
A“qualified principal residence” indebtedness is defined as debt incurred in acquiring, constructing or substantially improving a principal residence. It includes both first and second trust deeds. It also includes refinance loans to the extent the funds were used to pay off a previous loan that would have qualified.
The tax exemptions apply to mortgage debts that were forgiven or discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing Form 540X amendment.
Taxpayers with second homes or investment properties may qualify under certain circumstances. Taxpayers who are bankrupt are exempt from income tax on debt relief. Taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.
The full text of Senate Bill 401 is available at www.leginfo.ca.gov. or www.seehometown.com.
Life will definitely be brighter for those taxpayers that have lost their homes in foreclosure or have sold them in short sales.
The only thing better would be a blanket moratorium against lenders attempting to pursue deficiency judgments. A deficiency judgment is a judgment lien against a borrower whose foreclosure or short sale did not produce sufficient funds to pay the entire mortgage.
Lenders now have the right to pursue deficiency judgments against borrowers if the loan against the property is a re- course loan as opposed to a non-recourse loan. Non-recourse loans are the original loans made to purchase the property. They are known as “purchase money” loans. In a non-recourse loan the property is the security for the loan and lenders can’t go after borrowers for any deficiencies.
I strongly recommend that you consult a tax or legal professional to see if you qualify for the new tax exemption under Bill 401! It could be a matter of good home dollars and sense!
For a distressed borrower to qualify the forgiven debt must be on one’s “qualified principal residence”. The California exemption is for indebtedness up to $800,000. and forgiven debt up to $500,000. The Federal exemption is applicable up $2 million.
A“qualified principal residence” indebtedness is defined as debt incurred in acquiring, constructing or substantially improving a principal residence. It includes both first and second trust deeds. It also includes refinance loans to the extent the funds were used to pay off a previous loan that would have qualified.
The tax exemptions apply to mortgage debts that were forgiven or discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing Form 540X amendment.
Taxpayers with second homes or investment properties may qualify under certain circumstances. Taxpayers who are bankrupt are exempt from income tax on debt relief. Taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.
The full text of Senate Bill 401 is available at www.leginfo.ca.gov. or www.seehometown.com.
Life will definitely be brighter for those taxpayers that have lost their homes in foreclosure or have sold them in short sales.
The only thing better would be a blanket moratorium against lenders attempting to pursue deficiency judgments. A deficiency judgment is a judgment lien against a borrower whose foreclosure or short sale did not produce sufficient funds to pay the entire mortgage.
Lenders now have the right to pursue deficiency judgments against borrowers if the loan against the property is a re- course loan as opposed to a non-recourse loan. Non-recourse loans are the original loans made to purchase the property. They are known as “purchase money” loans. In a non-recourse loan the property is the security for the loan and lenders can’t go after borrowers for any deficiencies.
I strongly recommend that you consult a tax or legal professional to see if you qualify for the new tax exemption under Bill 401! It could be a matter of good home dollars and sense!
Wednesday, March 31, 2010
New Housing Plan Assists Unemployed
Dear Sue,
I was on track with my retirement plan when I foolishly took out a very large line of credit on my house.
Of course at the time my equity was increasing steadily with the rising market.
I thought it would be a no-brainer to pull equity from my current residence to buy a smaller retirement home in Nevada. I was going to let my current residence continue to appreciate, and eventually sell and move in a couple of years.
Needless to say I am now stuck with two homes both with mortgages that are higher than the homes’ values.
I continued to pay both mortgages until last month. My employer, an engineering firm, has suddenly laid me off.
I am willing to let the Nevada property go but I would love to save the home that I am in. I just need a temporary modification to my loan.
Some people say that I can’t qualify on unemployment income. Some people say that’s not true. They say the President’s new housing plan helps people on unemployment.
Who do I talk to? I need the help now!
Unemployed Ed
Dear Ed,
I don’t know the details but I have heard that Obama’s Making Homes Affordable plan is being expanded to include temporary assistance for the unemployed.
At the moment, eligible homeowners for modifications under HAMP (Home Affordable Modification Program) must live in an owner occupied residence, have a mortgage balance of less than $729,750.00, owe monthly mortgage payments that are greater than 31% of their income and must be able to demonstrate a financial hardship. It looks like you qualify.
The expanded guidelines include an FHA refinance option. The voluntary program for lenders and homeowners, allows the lenders to refinance and forgive the negative equity for upside down homeowners who qualify and are current on their existing loans.
The president’s goal is to assist between three to four million struggling homeowners. The Administrations goal is to stabilize households, neighborhoods and communities. To see if you qualify go to: www.FinancialStability.gov.
It’s a matter of good Home $$s and Sense.
I was on track with my retirement plan when I foolishly took out a very large line of credit on my house.
Of course at the time my equity was increasing steadily with the rising market.
I thought it would be a no-brainer to pull equity from my current residence to buy a smaller retirement home in Nevada. I was going to let my current residence continue to appreciate, and eventually sell and move in a couple of years.
Needless to say I am now stuck with two homes both with mortgages that are higher than the homes’ values.
I continued to pay both mortgages until last month. My employer, an engineering firm, has suddenly laid me off.
I am willing to let the Nevada property go but I would love to save the home that I am in. I just need a temporary modification to my loan.
Some people say that I can’t qualify on unemployment income. Some people say that’s not true. They say the President’s new housing plan helps people on unemployment.
Who do I talk to? I need the help now!
Unemployed Ed
Dear Ed,
I don’t know the details but I have heard that Obama’s Making Homes Affordable plan is being expanded to include temporary assistance for the unemployed.
At the moment, eligible homeowners for modifications under HAMP (Home Affordable Modification Program) must live in an owner occupied residence, have a mortgage balance of less than $729,750.00, owe monthly mortgage payments that are greater than 31% of their income and must be able to demonstrate a financial hardship. It looks like you qualify.
The expanded guidelines include an FHA refinance option. The voluntary program for lenders and homeowners, allows the lenders to refinance and forgive the negative equity for upside down homeowners who qualify and are current on their existing loans.
The president’s goal is to assist between three to four million struggling homeowners. The Administrations goal is to stabilize households, neighborhoods and communities. To see if you qualify go to: www.FinancialStability.gov.
It’s a matter of good Home $$s and Sense.
Labels: Making Homes Affordable, unemployed mortgage help
Friday, March 26, 2010
Placer County Finances Green Improvements
I live in a 1600 square foot single level ranch style home. It was built in the late 70”s. All of the ceilings are 8 ft except for the living- room, which has a vaulted ceiling.
When I bought the old place I spent thousands of dollars in an attempt to make it energy efficient. I replaced the single pane windows with dual panes and weatherized it to keep the winter drafts from coming in. I had the attic insulated to R30. The old HVAC system was completely replaced ducts and all.
I chose function over aesthetics by installing an extra efficient Country woodstove insert into the opening of the old rock fireplace. I almost cried when they cut out the old flu. My home is heated entirely with wood. The new $13,000.00 furnace has never been turned on.
In the summer the AC is used probably two months out of the season. An irrigation pump from my pond runs a minimum of an hour per day from June to August. The irrigating creates more maintenance but it keeps things cooler.
The spa is a new efficient Sundance model that runs on an energy saving timer. The endless pool is heated with propane. The filter and circulating pump run on a timer.
Having said all of this, my average monthly PG&E bill still runs approximately $360.00.00 per month. That doesn’t include the cost of propane or firewood. The PG&E rate continues to increase by an average of 4-41/2 % per year. Try as I might, I can’t seem to get my PG&E bill down.
I have considered solar as an alternative energy source over the last five years or so. My first bid was $100,000.00. My last bid was $65,000.00. I kept doing the math and kept coming up with the same conclusion. It’s cheaper to pay the PG&E bill.
I considered financing a solar system over 20 plus years. If I sold and moved in three to five years, the new buyers would have the benefit of being PG&E free and I would still be paying for it. The Solar guys insisted that it would be worth it because I would get my money back in the sale because of the increased value of my home. I wasn’t convinced.
Last week I read a notice in the Auburn Journal. Placer County has a new financing program for property owners. I was really excited about it so I attended yesterdays meeting. Placer County Treasurer, Jenine Windeshausen, along with her lovely assistants, gave a very informative Power-Point presentation. Details, including how to apply for the financing, can be found on line.
The program known as PLACER mPOWER allows placer county homeowners to apply for financing for water and energy efficiency improvements as well as power generation improvements like solar photovoltaic and other alternative energy generation systems.
The financing can be used for a number of improvements including but not limited to tank-less water heaters, Smart irrigation systems, whole house fans, HVAC systems, duct replacement, dual- pane windows, doors, skylights, attic fans, and even lighting.
The financing is extended to commercial, residential, industrial and agricultural properties. A Placer County property owner is allowed to apply to finance more than one property. For example I own an industrial building that I lease out. Under the program I can apply to finance a solar system and charge the tenant for power as part of the lease agreement.
The financed debt is on the property tax bill. I love it. It’s payable twice a year at a current rate of 7.25%. The financing term is based on the useful life of the improvement, 5, 10, 15 or 20 years. A list of financing qualifications and financing terms can be found on line.
If one finances a water system with a five- year life span the financing is for five years. If one finances a solar system that has a projected twenty- year life span the financing is for twenty years. Very smart!
If I decide to sell and move on the debt stays with the property. The unpaid amount stays on the property tax bill and the new owner assumes payment of the balance on the property tax bill each year. That makes perfect sense to me.
I am very proud of the fact that Placer County is the second County after Sonoma to initiate this program. Furthermore, as a resident, I really appreciate the economic boost while gaining energy independence. mPOWERS motto: Save money. Conserve Energy. Create Jobs.
It’s a matter of good Home $$s and Sense.
VIsit me at:
http://www.seehometown.com/
When I bought the old place I spent thousands of dollars in an attempt to make it energy efficient. I replaced the single pane windows with dual panes and weatherized it to keep the winter drafts from coming in. I had the attic insulated to R30. The old HVAC system was completely replaced ducts and all.
I chose function over aesthetics by installing an extra efficient Country woodstove insert into the opening of the old rock fireplace. I almost cried when they cut out the old flu. My home is heated entirely with wood. The new $13,000.00 furnace has never been turned on.
In the summer the AC is used probably two months out of the season. An irrigation pump from my pond runs a minimum of an hour per day from June to August. The irrigating creates more maintenance but it keeps things cooler.
The spa is a new efficient Sundance model that runs on an energy saving timer. The endless pool is heated with propane. The filter and circulating pump run on a timer.
Having said all of this, my average monthly PG&E bill still runs approximately $360.00.00 per month. That doesn’t include the cost of propane or firewood. The PG&E rate continues to increase by an average of 4-41/2 % per year. Try as I might, I can’t seem to get my PG&E bill down.
I have considered solar as an alternative energy source over the last five years or so. My first bid was $100,000.00. My last bid was $65,000.00. I kept doing the math and kept coming up with the same conclusion. It’s cheaper to pay the PG&E bill.
I considered financing a solar system over 20 plus years. If I sold and moved in three to five years, the new buyers would have the benefit of being PG&E free and I would still be paying for it. The Solar guys insisted that it would be worth it because I would get my money back in the sale because of the increased value of my home. I wasn’t convinced.
Last week I read a notice in the Auburn Journal. Placer County has a new financing program for property owners. I was really excited about it so I attended yesterdays meeting. Placer County Treasurer, Jenine Windeshausen, along with her lovely assistants, gave a very informative Power-Point presentation. Details, including how to apply for the financing, can be found on line.
The program known as PLACER mPOWER allows placer county homeowners to apply for financing for water and energy efficiency improvements as well as power generation improvements like solar photovoltaic and other alternative energy generation systems.
The financing can be used for a number of improvements including but not limited to tank-less water heaters, Smart irrigation systems, whole house fans, HVAC systems, duct replacement, dual- pane windows, doors, skylights, attic fans, and even lighting.
The financing is extended to commercial, residential, industrial and agricultural properties. A Placer County property owner is allowed to apply to finance more than one property. For example I own an industrial building that I lease out. Under the program I can apply to finance a solar system and charge the tenant for power as part of the lease agreement.
The financed debt is on the property tax bill. I love it. It’s payable twice a year at a current rate of 7.25%. The financing term is based on the useful life of the improvement, 5, 10, 15 or 20 years. A list of financing qualifications and financing terms can be found on line.
If one finances a water system with a five- year life span the financing is for five years. If one finances a solar system that has a projected twenty- year life span the financing is for twenty years. Very smart!
If I decide to sell and move on the debt stays with the property. The unpaid amount stays on the property tax bill and the new owner assumes payment of the balance on the property tax bill each year. That makes perfect sense to me.
I am very proud of the fact that Placer County is the second County after Sonoma to initiate this program. Furthermore, as a resident, I really appreciate the economic boost while gaining energy independence. mPOWERS motto: Save money. Conserve Energy. Create Jobs.
It’s a matter of good Home $$s and Sense.
VIsit me at:
http://www.seehometown.com/
Labels: green improvements, Placer mPower
Monday, March 22, 2010
Divorces Require Arms Length Market Evaluation
Dear Sue,
I am in the middle of a divorce. My wife and I have agreed on everything so far. We now have to decide how we are going to put a value on our last remaining asset, our home. I would like to keep it and buy my wife out of her half.
My wife’s real estate friend prepared a market analysis for us. She estimated the value a lot higher than I think it’s worth.
I think we should get an appraisal from a qualified appraiser and not rely on an estimate of value from a real estate agent who is my wife’s friend.
A co-worker said that I should just look for one in the yellow pages. He said that choosing a random appraiser would keep it “arms length”.
Do you think this is the right approach?
Divorcing Dan
Dear Dan,
The right approach is whatever you both agree on.
Discuss your doubts with your wife. Ask her to put herself in your shoes. It sounds as if the two of you have been reasonable so far. She will probably understand.
If your wife agrees to an appraisal make sure that she/he is qualified and state certified as a residential appraiser. I would suggest that the appraiser be local and preferably be referred by someone you respect, your attorney perhaps. To even the playing field, the referral could even be from your wife’s attorney.
The appraiser will get her/his market data from the local multiple listing service, local tax assessor’s records, local real estate professionals, courthouse records, private public record data vendors and her/his own personal knowledge and office files from previous appraisals.
The appraiser’s evaluation will be far more comprehensive than a Realtor’s market analysis, unless, of coarse the Realtor performs a complete Brokers Price Opinion aka a BPO.
It’s wise to consider an “arms length” appraisal. You want whoever does the appraisal to be completely independent. You want to avoid an appraiser that has any connection or relationship to you or your wife.
Your appraiser will most likely use the market value approach. Market value will be the probable price that your property should sell for under certain conditions. Without going into detail, those conditions or assumptions are that both parties are informed and well advised, a reasonable time is allowed for open exposure to the market, the buyer and seller are motivated, payment for the purchase is cash or its equivalent and that there are no financial or special concessions that would potentially impact the value.
Finally, it’s important that you both realize that your home is usually the last connection between you and someone that you chose to spend the rest of your life with. Your home represents your entire married life with each other. The severing of this important tie will bring up many memories and emotions and will make your negotiations difficult in the best of circumstances. Be patient and easy on yourselves during these hard times.
Working out an equitable agreement that serves both parties is a matter of good Home $$s and Sense. Good luck to both of you!
Visit my homesite at:
www.seehometown.com
Dear Sue,
I am in the middle of a divorce. My wife and I have agreed on everything so far. We now have to decide how we are going to put a value on our last remaining asset, our home. I would like to keep it and buy my wife out of her half.
My wife’s real estate friend prepared a market analysis for us. She estimated the value a lot higher than I think it’s worth.
I think we should get an appraisal from a qualified appraiser and not rely on an estimate of value from a real estate agent who is my wife’s friend.
A co-worker said that I should just look for one in the yellow pages. He said that choosing a random appraiser would keep it “arms length”.
Do you think this is the right approach?
Divorcing Dan
Dear Dan,
The right approach is whatever you both agree on.
Discuss your doubts with your wife. Ask her to put herself in your shoes. It sounds as if the two of you have been reasonable so far. She will probably understand.
If your wife agrees to an appraisal make sure that she/he is qualified and state certified as a residential appraiser. I would suggest that the appraiser be local and preferably be referred by someone you respect, your attorney perhaps. To even the playing field, the referral could even be from your wife’s attorney.
The appraiser will get her/his market data from the local multiple listing service, local tax assessor’s records, local real estate professionals, courthouse records, private public record data vendors and her/his own personal knowledge and office files from previous appraisals.
The appraiser’s evaluation will be far more comprehensive than a Realtor’s market analysis, unless, of coarse the Realtor performs a complete Brokers Price Opinion aka a BPO.
It’s wise to consider an “arms length” appraisal. You want whoever does the appraisal to be completely independent. You want to avoid an appraiser that has any connection or relationship to you or your wife.
Your appraiser will most likely use the market value approach. Market value will be the probable price that your property should sell for under certain conditions. Without going into detail, those conditions or assumptions are that both parties are informed and well advised, a reasonable time is allowed for open exposure to the market, the buyer and seller are motivated, payment for the purchase is cash or its equivalent and that there are no financial or special concessions that would potentially impact the value.
Finally, it’s important that you both realize that your home is usually the last connection between you and someone that you chose to spend the rest of your life with. Your home represents your entire married life with each other. The severing of this important tie will bring up many memories and emotions and will make your negotiations difficult in the best of circumstances. Be patient and easy on yourselves during these hard times.
Working out an equitable agreement that serves both parties is a matter of good Home $$s and Sense. Good luck to both of you!
Visit my homesite at:
www.seehometown.com
Thursday, March 11, 2010
Are e-Signatures Legal in Real Estate?
Dear Sue,
I am in the middle of buying a new house. My Realtor e-mailed several documents for me to sign.
In my work electronic signatures are common practice. I was wondering if electronic signatures are used in real estate transactions. Is it legal?
A friend of mine said that in order for real estate contracts to be legal they needed to be signed in blue ink.
If it isn’t legal to use electronic signatures, the real estate industry should get into the 21st century!
Electronic Ed
Dear Ed,
Electronic signatures are legal in a real estate transaction. They have been legal since President Clinton signed their use and guidelines into law 9 years ago.
In fact, the National Association of Realtors is in the 21st century. NAR just unveiled an exclusive Realtor electronic signature service called DocuSign. It is an exclusive on-line eSignature service designed specifically for Realtors.
The Realtor edition allows agents, buyers and sellers to electronically sign agreements. The new product includes on-line signing from an iPhone, Blackberry, Windows Mobile, Google Android and other mobile devices.
According to NAR there are already over 20,000 Realtors using DocuSign.
The new e-signing service is a win-win all the way around! It frees up the back and forth faxing of documents that often end up illegible. The less paper that is used, the greener the transaction. It also allows buyers and sellers the time to calmly and thoroughly review documents from the comfort of their own homes prior to signing them. Agents can now spend more time with clients and less time processing paperwork.
In today’s real estate climate time is really of the essence. Multiple offers and counter offers and returned contracts with electronic signatures will take a matter of minutes instead of hours and sometimes days.
Transactions can be done from anywhere. One client completed his real estate purchase by transferring his funds to close his escrow while he was 30,000 ft in the air. If you forgot to pack your blue ink pen, no worries. Use electronic signatures. They can be a matter of good Home $$s and Sense!
I am in the middle of buying a new house. My Realtor e-mailed several documents for me to sign.
In my work electronic signatures are common practice. I was wondering if electronic signatures are used in real estate transactions. Is it legal?
A friend of mine said that in order for real estate contracts to be legal they needed to be signed in blue ink.
If it isn’t legal to use electronic signatures, the real estate industry should get into the 21st century!
Electronic Ed
Dear Ed,
Electronic signatures are legal in a real estate transaction. They have been legal since President Clinton signed their use and guidelines into law 9 years ago.
In fact, the National Association of Realtors is in the 21st century. NAR just unveiled an exclusive Realtor electronic signature service called DocuSign. It is an exclusive on-line eSignature service designed specifically for Realtors.
The Realtor edition allows agents, buyers and sellers to electronically sign agreements. The new product includes on-line signing from an iPhone, Blackberry, Windows Mobile, Google Android and other mobile devices.
According to NAR there are already over 20,000 Realtors using DocuSign.
The new e-signing service is a win-win all the way around! It frees up the back and forth faxing of documents that often end up illegible. The less paper that is used, the greener the transaction. It also allows buyers and sellers the time to calmly and thoroughly review documents from the comfort of their own homes prior to signing them. Agents can now spend more time with clients and less time processing paperwork.
In today’s real estate climate time is really of the essence. Multiple offers and counter offers and returned contracts with electronic signatures will take a matter of minutes instead of hours and sometimes days.
Transactions can be done from anywhere. One client completed his real estate purchase by transferring his funds to close his escrow while he was 30,000 ft in the air. If you forgot to pack your blue ink pen, no worries. Use electronic signatures. They can be a matter of good Home $$s and Sense!
Monday, March 8, 2010
Landlord Can Recover Money for Damages
Dear Sue,
Our handyman, Al, has a rental in Sacramento. His last tenant left the place filthy and damaged.
What does one do to lessen that kind of thing from happening?
Luckily Al is able to do his own repairs, but it seems that an owner ought not to have such things happen without some way of recovering the expense. Am I just thinking, “pie-in-the-sky?”
Al’s Agitated Friend
Dear Friend,
You are asking a two-part question. First you ask what can a landlord do to keep from renting to tenants that leave the property filthy and in disrepair.
I don’t have a 100% solution but I can recommend a few strategies that will certainly help.
First, a thorough screening is a must!
Do a credit check. FICO scores are not only used as indicators for loans, they are currently being used as indicators for certain employment. They can also be used for tenant screening.
A credit check of all occupants responsible for paying the rent should be done. If you have roommates as potential tenants, I recommend that all of them sign the rental agreement. It’s not uncommon to rent to roommates that eventually move out during the rental period and are replaced by occupants that are not on the rental agreement. Generally speaking the higher the FICO score the better the tenant.
Calling a previous landlord is not nearly as effective as calling the previous to the present landlord. The present landlord may give a glowing recommendation just to get rid of the tenant. The previous landlord has nothing to lose by telling the truth.
Some landlords actually pay a visit to the tenant’s current residence. This method by far is the most revealing.
I had one old timer tell me that how a tenant keeps their car is probably the way that they will keep their home. This old timer made sure that he got a peek of the inside of his applicant’s car. He said that over the years it proved to be a pretty good indicator. This old timer owned and managed 30+ properties.
My best advice would be to not go against your instinctive judgment. Some landlords are so eager to get a property rented that they rush into a rental agreement only to regret their decision. I guarantee that it is better to have a vacancy for a month or two than to go against your better judgment and select a questionable tenant!
The second part of your question was about recourse for repairs.
A tenant must repair all damage caused by his failure to use ordinary care in the use of the premises.
A landlord can recover the cost of repairs made to correct excessive wear and tear by deducting the cost of repairs from the security deposit and demanding payment for any deficiency in the deposit to cover the expenses.
If the tenant fails to pay any charges remaining unpaid after deductions from the security deposit, the landlord can file an action against the tenant to recover amounts not covered by the security deposit.
In cases like these, I suggest legal counsel. It can be a matter of good Home $$s and Sense.
For more articles and real estate news visit:
HomeTown Realtors
Our handyman, Al, has a rental in Sacramento. His last tenant left the place filthy and damaged.
What does one do to lessen that kind of thing from happening?
Luckily Al is able to do his own repairs, but it seems that an owner ought not to have such things happen without some way of recovering the expense. Am I just thinking, “pie-in-the-sky?”
Al’s Agitated Friend
Dear Friend,
You are asking a two-part question. First you ask what can a landlord do to keep from renting to tenants that leave the property filthy and in disrepair.
I don’t have a 100% solution but I can recommend a few strategies that will certainly help.
First, a thorough screening is a must!
Do a credit check. FICO scores are not only used as indicators for loans, they are currently being used as indicators for certain employment. They can also be used for tenant screening.
A credit check of all occupants responsible for paying the rent should be done. If you have roommates as potential tenants, I recommend that all of them sign the rental agreement. It’s not uncommon to rent to roommates that eventually move out during the rental period and are replaced by occupants that are not on the rental agreement. Generally speaking the higher the FICO score the better the tenant.
Calling a previous landlord is not nearly as effective as calling the previous to the present landlord. The present landlord may give a glowing recommendation just to get rid of the tenant. The previous landlord has nothing to lose by telling the truth.
Some landlords actually pay a visit to the tenant’s current residence. This method by far is the most revealing.
I had one old timer tell me that how a tenant keeps their car is probably the way that they will keep their home. This old timer made sure that he got a peek of the inside of his applicant’s car. He said that over the years it proved to be a pretty good indicator. This old timer owned and managed 30+ properties.
My best advice would be to not go against your instinctive judgment. Some landlords are so eager to get a property rented that they rush into a rental agreement only to regret their decision. I guarantee that it is better to have a vacancy for a month or two than to go against your better judgment and select a questionable tenant!
The second part of your question was about recourse for repairs.
A tenant must repair all damage caused by his failure to use ordinary care in the use of the premises.
A landlord can recover the cost of repairs made to correct excessive wear and tear by deducting the cost of repairs from the security deposit and demanding payment for any deficiency in the deposit to cover the expenses.
If the tenant fails to pay any charges remaining unpaid after deductions from the security deposit, the landlord can file an action against the tenant to recover amounts not covered by the security deposit.
In cases like these, I suggest legal counsel. It can be a matter of good Home $$s and Sense.
For more articles and real estate news visit:
HomeTown Realtors
Thursday, February 25, 2010
Home Inspection Report not a Honey Do List
Dear Sue,
I am under contract to purchase a mobile home. I had a termite report and a home inspection.
I could accept the termite report because it was minor. The pest inspector found signs of termites but he said that it would only cost about $200.00 to get rid of them.
However, the home inspection was a different story. The inspector found missing breakers in the electrical panel, dead plugs and uncovered switch plates. The hall light switch didn’t seem to work at all.
The hot water heater wasn’t strapped properly and the smoke detector was missing. There were more items on the list that the inspector said needed to be repaired.
When I told my real estate agent that I wouldn’t buy the mobile home unless the seller fixed everything she got upset. She said that a home inspection was a disclosure not a “honey do” list.
She said that the seller wasn’t going to do any repairs.
I couldn’t believe it. I thought that sellers were required to take care of safety issues when selling a home.
Could you please shed some light on this? No pun intended!
Fix- it Frank
Dear Frank,
Your agent is right! Home inspections are a form of disclosure. They are not “honey do” lists.
The California Association of Realtors purchase agreement is as an “as-is” contract. Sellers are not obligated to do any repairs requested by the buyer. On the other hand, buyers are not obligated to complete the purchase if they are dissatisfied with the inspections.
From a practical stand- point, market conditions will dictate the seller’s motivation. If the property is in high demand and the seller is receiving multiple offers it’s doubtful that he/she will be willing to make repairs. If the property has been sitting on the market the seller is likely to be more eager to meet the buyer’s requests.
I don’t think that it’s unreasonable to expect the home you are buying to be safe. Two of the safety issues you mentioned are actually mandated by state law. California requires seller’s to properly strap the hot- water heater and install working smoke detectors in the appropriate locations before transferring title.
I would suggest that you get estimates from a contractor. Get an idea of what the repairs would cost. Ask for a cash credit from the seller and consider tackling some of the smaller items yourself. Be prepared to negotiate it. It could be a matter of good Home $$s and Sense.
For more real estate matters:
www.seehometown.com
I am under contract to purchase a mobile home. I had a termite report and a home inspection.
I could accept the termite report because it was minor. The pest inspector found signs of termites but he said that it would only cost about $200.00 to get rid of them.
However, the home inspection was a different story. The inspector found missing breakers in the electrical panel, dead plugs and uncovered switch plates. The hall light switch didn’t seem to work at all.
The hot water heater wasn’t strapped properly and the smoke detector was missing. There were more items on the list that the inspector said needed to be repaired.
When I told my real estate agent that I wouldn’t buy the mobile home unless the seller fixed everything she got upset. She said that a home inspection was a disclosure not a “honey do” list.
She said that the seller wasn’t going to do any repairs.
I couldn’t believe it. I thought that sellers were required to take care of safety issues when selling a home.
Could you please shed some light on this? No pun intended!
Fix- it Frank
Dear Frank,
Your agent is right! Home inspections are a form of disclosure. They are not “honey do” lists.
The California Association of Realtors purchase agreement is as an “as-is” contract. Sellers are not obligated to do any repairs requested by the buyer. On the other hand, buyers are not obligated to complete the purchase if they are dissatisfied with the inspections.
From a practical stand- point, market conditions will dictate the seller’s motivation. If the property is in high demand and the seller is receiving multiple offers it’s doubtful that he/she will be willing to make repairs. If the property has been sitting on the market the seller is likely to be more eager to meet the buyer’s requests.
I don’t think that it’s unreasonable to expect the home you are buying to be safe. Two of the safety issues you mentioned are actually mandated by state law. California requires seller’s to properly strap the hot- water heater and install working smoke detectors in the appropriate locations before transferring title.
I would suggest that you get estimates from a contractor. Get an idea of what the repairs would cost. Ask for a cash credit from the seller and consider tackling some of the smaller items yourself. Be prepared to negotiate it. It could be a matter of good Home $$s and Sense.
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Labels: home inspection
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