Category Archives: Homeownership Tips

Court Decision Reminds Home Buyers to Read Seller Disclosures Carefully

wet floorIn most U.S. states, including California, home sellers must provide buyers with a written set of disclosures indicating what the seller knows about the property’s features, defects, history, and environment. A seller who hides a material defect can be sued later, when the buyer finds out about the problem (probably the hard way, for example when a piece of the ceiling falls on their head due to a leaky pipe).

Seller disclosures provide valuable information to buyers, and should be read carefully and followed up on with questions. Yet many buyers are so eager to close the sale and start planning for furniture and curtains rather than ongoing repair needs that they skim it, or leave it to their agent to look at. That may be what Joanna Peake did in buying a California home from the Underwoods in 2008.

The Underwoods’ agent, John Ferrell, provided Ms. Peake with, according to the court, “photographs and reports disclosing problems with the residence’s subflooring,” She went ahead and bought the house regardless.

Later, Peake says that she “became aware of the extent of the [water-intrusion] damage when her son’s foot . . . went through a bathroom floor.” Peake proceeded to sue the seller as well as the seller’s agent. In fact, she pressed forward with the lawsuit even after the agent’s attorney repeatedly sent her said reports and other evidence that Ferrell hadn’t breached any duties under California law, and asked her to withdraw the case.

The California appeals court not only dismissed Peake’s claim against the real estate agent, Ferrell, but ordered Peake to pay sanctions for having brought a frivolous lawsuit. Oops. (See Peake v. Underwood,Fourth Appellate District, June 25, 2014).

This case is, of course, drawing lots of attention from the real estate community, as agents heave a sigh of relief that they don’t have to become automatic deep pockets for disgruntled buyers.

It should also serve as a reminder to buyers that the disclosure information that they’re provided pre-sale isn’t just another form to review: It has important legal consequences. Once a home buyer is on notice regarding problems with the property, and doesn’t follow up with further questions or negotiations, it becomes a lot harder to sue over them later.

Chances Are, You’re Buying Into an Underfunded HOA

condoThe financial troubles faced by homeowners’ associations — those being the governing bodies of many new-home or condo developments — have gotten worse over the last decade, according to Association Reserves, and as reported by Sandra Block in the April, 2014 edition of Kiplingers.

A disturbing 70% of them are “underfunded.” That means they don’t have enough cash in reserve to handle a major repair or an emergency that’s not covered by insurance.

And that could be very bad news for the homeowners buying in. An HOA isn’t some remote group that’s meant to take care of the homeowners in a planned community — it IS the homeowners in the planned community. When and if a major need for cash arises, it’s the homeowners who will be asked to pitch in and cover it, in the form of “special assessments.”

Did I say “asked” to pitch in? I meant “required.”  As described by Beth Ross in Nolo’s article on “When HOA Associations Can Impose Special Assessments,” “A well-run HOA also sets aside a portion of the periodic dues in a reserve fund. This fund is meant to pay for the costs of larger, infrequent expenditures, such as replacing worn-out patio furniture around a common pool, or putting a new roof on an aging clubhouse. . . . [but if the] HOA’s reserve fund is inadequately funded, . . . the HOA won’t have enough money when it comes time to make repairs, so — you guessed it — a special assessment will probably be on its way.”

As described in the same article, HOAs don’t have unlimited power to impose these assessments. But assuming they act within their legal limits, they do have power to penalize nonpayment — for example, by placing a lien or ultimately foreclosing on the homeowner’s property.

All of which is to say that it’s important to do your research BEFORE buying a home in a development. See the articles on the “Buying a New Home or One in a Development” page of Nolo’s website for more on this.

Good Laws Can Make for Good Fences

broke fenceI’ve heard of at least three fence disputes among friends and neighbors within the last several weeks — enough to have me rushing to the Nolo website to see what we’ve got on the matter. A lot, as it turns out (see “Neighbor Disputes“).

The various stories have been good reminders that the law covers more of our everyday lives than we sometimes realize — but also that you’ve sometimes got to do the tough work of talking matters through with a neighbor when the law seems inadequate to deal real life.

At the “That’s easy, the law has the answers” end of the spectrum, I know of a neighbor who watched a ten-foot-high fence being built on the property next to hers, right up against the sidewalk. She rightly suspected that city ordinances prohibited anything of such a height without a permit. Her first conversation with the owners (who were new to this country) produced a “Who cares?” response. But soon after she placed a call to the city,  she watched the neighbors’ workers saw the fence down by about seven feet.

Also in my neighborhood, a homeowner who shared a fence with a neighbor decided she didn’t like the fence aesthetically — even though it was in perfectly good shape — and asked the neighbor to pitch in on a new one. That neighbor was unhappy about seeing the old fence go, and refused to foot part of the bill. Indeed, there’s no law that requires neighbors to pay for a replacement fence when there’s nothing wrong with the first one. (If the fence were falling apart, it might be another matter, as described in Nolo’s FAQ, “The fence on the line between my land and my neighbor’s is in bad shape. Can I fix it or tear it down?“) But the unwilling neighbor did end up offering to help with the work, simply for the sake of maintaining neighbor relations.

In another situation, a new homeowner replaced an old, worn fence that surrounded her property — without consulting the neighbor on one side, believing that, since that neighbor had none of the same style of fencing on the remainder of his property, and the “pretty” side of the fence faced her way, it must be her fence, to do with as she would. Angry neighbor reaction ensued! In this case, the law seemed to favor the angry neighbor, since “Boundary fences are owned by both owners when both use the fence.” In any case, a batch of homemade cookies helped restore neighborly relations.

Maybe I should start offering recipes on this blog, along with law links!

Perk of Homeownership: You Can Get a Dog!

pup snowDog adoptions went up over the holidays, according to local shelters. Probably even more people would adopt if they didn’t live in rentals with “No Pets” policies. But if you’re buying a home, now may be your chance to bring a new member into the family!

Other than the basics of care, training, and feeding, there are some important things homeowners should know about dog ownership. Fortunately, Nolo’s website offers a wealth of information on such topics as:

For even more practical and legal information, see the Nolo book Every Dog’s Legal Guide, by Mary Randolph.

 

 

Putting Your House on a Clutter Diet for the New Year?

Garage_01Are you among the many people I know (or pretend to know, on Facebook) who spent a goodly part of New Year’s Day going through closets and basements, figuring out what stuff can be gotten rid of?  I’ve now got a trunkload of stuff waiting to go to the Salvation Army, and more boxes yet to be examined.

It seems that bigger homes don’t always lead to more living space — they sometimes just become bigger repositories in which to pile stuff up!

One of the best articles I’ve found online for tips on how to sell, donate, or otherwise get rid of stuff is this one, “Declutter Your Life,” from last May’s Kiplinger.

An important point not to skip over with regards to donating goods to charity is where the article says, “be sure to get a receipt.” In my experience, charities that take donated goods are very casual about this — I often have to ask for a receipt, and they don’t fill in the blanks to say what you’ve donated. (Do it yourself before you forget!) You won’t need to actually send these receipts with your tax returns, but you will need to show them to any IRS agent who might show up to audit you.

What to keep around the house is also an important consideration for homeowners. Here are some Nolo articles to help with this:

Nolo’s also got a helpful product: “Get It Together: Organize Your Records So Your Family Won’t Have To,” by Shae Irving, J.D., and Melanie Cullen. Happy New Year, and happy decluttering!

Underwater No More, for Over Three Million Homeowners

floodJournalist Ken Harney calls the gains in homeowner equity the “biggest story in American real estate in 2013,” and I’m inclined to agree. For the past several years now, millions of Americans have felt trapped by owing more on their mortgage than the house was worth — thus making it nigh on financially impossible to sell, refinance, take out home equity loans, and so on.

But over the past year, more than three million have pulled themselves up above the water line, or watched as their homes’ values rose along with the economy. They have, according to Harney, added a total of $2.2 trillion to their net equity (from late 2012 to late 2013).

Let’s hope that news provides a glimmer of light to the 6.4 million homeowners who remain underwater on their homes . . .

Unpermitted Construction by Former Homeowner May Affect Current Owner

outhouseRemember last week’s blog post, “Of Mice and Moss: Tales of Unexpected Homeowner Expenses“? A significant number of people contributed tales of — to quote one of them — “stupid repairs and improvements of previous owners.”

This of course raises the question, why weren’t the issues revealed during the home buying process? My guess is that they’re precisely the types of issue sellers are least likely mention on the disclosure form mandated in most states. After all, the sellers think of disclosures as where they list and describe problems with the property,  such as an aging roof or a crack in the basement floor slab.

But that beautiful new tile that they installed in the kitchen? That’s not a problem, it’s a handmade masterpiece! (Never mind that it ripples in a few places.) And the new bathroom that Cousin Ed created where the back porch used to be? Perfection itself! So perfect that they didn’t bother taking out a permit for it! (The inspector might not have understood Cousin Ed’s avant garde pipe installation style.)

If the former owner could live with some slapdash construction, the current owner sometimes can, too. However, complications arise when it comes time to sell the place yourself. What do you tell the buyers? Do you have to fix the problems? To shed some legal light on these issues, we’ve posted a new article to the Nolo website, “Discovering Unpermitted Construction When Selling Your Home,” by attorney Allison Nash.

Of Mice and Moss: Tales of Unexpected Homeowner Expenses

beesI’ve been doing a little research lately on how much a homeowner should expect to spend on home repair and maintenance. The experts have actually come up with a number: They predict you’ll pay out 1% – 3% of your home’s purchase price amount each year.

Seriously? How can a two-bedroom California bungalow, bought for $700,000 because it’s in an area of inflated prices with a good school district, cost more than twice as much to maintain as, say, a five-bedroom mansion in Buffalo bought for a mere $300,000?

And then there’s the sheer unpredictability of homeownership. I asked friends whether their homes had thrown any surprises at them, and oh, did I get a flood of replies. Here are some choice ones, which I’ve tried to group thematically:

CRITTERS, CRITTERS EVERYWHERE

  • “Approximately $800 to hire a state-licensed animal trapper to capture and remove a squirrel, five raccoons, and an opossum from my backyard in urban Los Angeles. The raccoons had established a ‘latrine’ that was a horrible mess and a health hazard.”
  • “Beehive in the walls, which cost $600 to remove.”

WATER EVERYWHERE, TOO – OR WORSE:

  • “Plumbing line replacement for older home with tree roots growing into the pipes — $8,000 to replace the line from house to street.”
  • “Tree roots growing into the sewage system, sewage backs into house, must pay to replace carpet, furniture and to fix the issue into the street…$20K later….”
  • “Flat roof eventually leaks causing wood rot.”
  • “I was stunned to discover that my home in urban Miami was not connected to the sewer system but had a septic tank. It failed, and I connected, at a cost of thousands.”

CURSE YOU, FORMER OWNER:

  • “Undoing the stupid repairs and improvements of previous owners. Like the unpermitted second bath that cost us $8,000 to retroactively legalize (for mortgage purposes).”
  • “Added costs of normal repairs (say, replacing a toilet) and discovering the plumbing underneath is below code and has to be replaced as well.”
  • “Undoing the bad building from the first remodel – constantly finding out how the guy who did it really didn’t know what he was doing.”

THERE’S SOMETHING GROWING ON HERE:

  • “Moss removal from the roof cost us $1,100.”
  • “Tree maintenance. Holy cow, it’s expensive, especially if you have redwood trees.”
  • “Recurring mold on the roof that costs about $1,000 per year to power wash.”
  • “It’s costing us several thousands to get our palm tree trimmed. Now I tell my kids: You’re not just getting a house, you’re going to be responsible for everything around it.”

WHO WOULDA THUNK?

  • “Cast iron radiator had a crack in it and it cost us $$$ to have it replaced and a new one installed.”

Does that cover the scope of possibilities? Well, not really, because then there are situations where your own life takes an unexpected turn, as one friend’s did when her husband was hit by a car. She says, “Making [the house] accessible was a matter of ramps outside, and taking out a kitchen wall and repouring the bathroom floor inside. Well, and now we’re building a 2nd bathroom on the back . . . [and] we actually have had to hire someone to help with yardwork and minor fixes.”

There’s really nothing more to say, except, “Expect the unexpected.”

Floodwaters May Not Be Rising Yet, But Flood Insurance Rates Are!

floodNo one can say FEMA didn’t warn us. Its website offers pages of information about how flood insurance rates might go up in 2013 due to the Biggert-Waters Flood Insurance Reform Act of 2012. Every homeowner’s case is different, but in extreme cases, FEMA projected that individual premiums could go up to $20,000.

(By the way, could you get a more perfectly ironic name for a flood-related law? It’s named after its Congressional co-sponsors, Rep. Judy Biggert, a Republican from Illinois who is no longer in Congress, and Rep. Maxine Waters, a Democrat from California.)

Until recently, this law attracted little public attention. But October 1, 2013 marked its first actual effective date.

The results aren’t pretty. Nor are they surprising, given that the purpose of the law was to put the National Flood Insurance Program (NFIP) on a firmer financial footing by, among other things, raising insurance rates to reflect true flood risk levels. For example, homes whose lowest floor elevation is below the Base Flood Elevation (BFE) will no longer receive subsidized rates, and homeowners who were grandfathered in under old flood maps will no longer be able to take advantage of this.

Now we’re hearing that even Congresspeople who voted for the law are worried about how it will impact some homeowners. Homeowners themselves are complaining; The New York Times reports “rallies, petitions and concern among state governors.” And real estate agents report home deals falling through when the new owners get a look at the new price tag for insurance.

Some members of Congress are, in fact, looking into ameliorative or delay measures. (If there’s anything Congress is capable of doing effectively, it’s delay!)

In the meantime, if you’re buying a home, you might want to add an insurance contingency to your contract, specifying that closing be made conditional on obtaining acceptable insurance coverage. See Nolo’s Essential Guide to Buying Your First Home for details on contract clauses,  insurance and other aspects of home buying.

Or, You Could Paint Your Kitchen in Downton Abbey Colors

engravDon’t say I never brought you any useful information here. True, it’s not exactly in line with Nolo’s mission of putting the law into plain English, but how about painting your walls in plain English? Specifically, Amber Grey or Empire Grey, the colors created by the British company Mylands specifically for Downton Abbey based on century-plus-old recipes — and available to the public for online orders.

The Brits themselves will make fun of such obsessive adherence to tradition, of course, but they’ve got so much history all around them, they can take it for granted. Oh, but if you’re a devoted fan of the series, avoid reading about it in the British press — it’s already well into the next season, so spoilers abound.