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Ask Gary Landau

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Question: I am selling my house “as is.” The buyers hired an inspector who found all kinds of needed repairs. Do I have to make them?

Answer: A typical “as is” contract gives buyers the right to hire an inspector who must perform his inspection within a certain number of days from the contract’s signing. (You must still disclose to the buyers major defects you know about before the contract is even signed.) It also allows the buyers to back out of the deal by sending the seller notice in writing within a short period if they are unhappy with what the inspector discovers. So if your contract defined the sale as “as is,” you are not legally obligated to make the repairs. However, if the buyers feel there are too many fixes needed for them to go forward, you may want to renegotiate the terms of the contract. You could agree, for example, to make some of the repairs or to credit the buyer for having to make them after closing. Or you could decide to hold your ground, letting the buyers choose if they want the house in this condition. Although “as is” contracts have become quite popular in South Florida strong seller’s market of the past year, as the tide shifts more to buyers we may see a return to “repair clauses,” where sellers agree to fix flagged items up to a certain percent of the sales price, typically two percent.

Question: My mother is elderly and owns her own home. Can I get a document to sell her house later if she becomes ill?

Answer: If your mother agrees that she would like to give you the authority to take care of her legal affairs when she can no longer do so, a lawyer can draft a power of attorney with specific language that will enable you to later sell her home. Be sure the lawyer knows exactly what your mother wants to do because not all powers of attorney would allow you to handle all parts of a real estate sale.

Question: I was looking over the deed to my house and noticed it has my social security number on it. Isn’t this available for anyone to see?

Answer: Absolutely. In this age of identity theft, it is critical that your social security number not remain on the recorded version of this document, which is easily available to anyone online. A 2002 law prohibited closing agents from putting the number on newer documents. But if you have an older deed, I recommend that you check that deed at the county records website (in Broward, it is Broward.org/records). If you find your social security number is listed, you can download a request form and send it to the county recorder who will have the number removed at no fee.

More of Your Real Estate Questions Answered

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Question: My mortgage broker tells me there are many mortgage options. How do I know which to choose?

Answer: In recent years there has been an explosion in the number of mortgage types available. You must work with a lender or mortgage broker to determine the loan that is best for you; however, there are some general pointers to keep in mind. Loans come in many varieties: fixed rates (for 15, 30 or sometimes now 40 years) or adjustable, where the rate is often low for a few years then can change, going up or down. If you choose an adjustable loan, be sure that you can afford to make payments if the interest rate rises. One popular loan these days is the interest-only loan, where you defer payment of your principal for a set period of time. Do know, however, that when that period expires, you typically will pay both the regular and the deferred principal, upping your monthly fee substantially. Some lenders tell you you do not need to put up any money to get the loan; this may be true, but in my experience, underwriters sometimes balk at these deals, and your closing could be in jeopardy, which is why I often tell my seller clients to beware of buyers with little cash. Watch, too, for prepayment penalties in your prospective loan; if you have one and refinance your home (and in some cases, even sell it), you will have to pay a hefty surcharge to the lender. Finally, lenders vary widely in their fees and closing costs. Ask any lender for a “good faith estimate” before you sign on, which will document their expected charges.

Question: My wife and I moved to Florida and bought a home in November. I heard we are eligible for a Homestead exemption. How do we get one?

Answer: Homestead exemptions are a reduction in your property taxes for a primary residence. If you bought your home in 2013, you must file for an exemption by March 1, 2014. To qualify, you will need a Florida driver’s license with your new address, plus other documents. For details, check out the Broward County Property Appraiser’s office at bcpa.net. You can also call them at 954-357-6830, but it is often difficult to get through.

Question: I fell behind in my maintenance payments and found a person willing to lend me the money in a complex transaction. Now that person says he owns my house. I think I have been the victim of a scam.

Answer: There are a number of scams out there that homeowners must be wary of, or you can indeed lose your house even if you owe only a relatively small amount of money. In one scam, the “lender” agrees to pay your back maintenance and current monthly mortgage and fees for a certain time-period if you write the monthly check to them by a specific date each month. Miss that date even by a minute, and they take the title to your house that they are holding as collateral for the loan. If you are indeed behind on your monthly maintenance payments, try to work out a plan with your association or contact only a reputable lender.

Real Estate Questions Answered by Gary Landau

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Question: My real estate agent is urging me to use the title company she recommends. Is there a benefit – or a risk – in doing so?

Answer:  Sometimes real estate agents push buyers to use a specific title company to handle the closing. Buyers often don’t know that many of these title companies are actually owned by or have a financial relationship with the Realtor’s office. A recent article in Money magazine reported that buyers often pay more for their closing than they have to, because they go with the company recommended by the Realtor without shopping around. The firms of these real estate agents “frequently get a cut of premiums,” the article warns. Money’s advice: “Don’t just use your broker’s in-house title agent…who has little incentive to compete on price (and may get undisclosed commissions).” Know, too, that in Florida, buyers have the choice between using a title company or an attorney who writes title.  While both can handle the paperwork and create a title policy, only an attorney represents your interests in the deal.

Question: I want to add my son to my deed so when I die he will already have the condo. Are there any implications that I am not aware of?

Answer: Putting a child on your deed can be a good form of estate planning – one that I do sometimes recommend to my clients. But there are some things you need to be aware of: First, you need to check the documents of your condo association. Although many exempt immediate family members, others require that anyone added to the deed go through an approval process – which requires time and money. Second, be aware that any financial judgments against your son, now or in the future, can become a lien on your condo, and that later, should you decide to sell, he will likely need to sign all documents. (If he is skiing in Switzerland, that could hold up your closing.) If you do add him, one probate avoidance way is to add him as “a joint tenant with rights of survivorship.” That way the condo will automatically go to him upon your death as you desire.

Question:  I have an adjustable rate mortgage. Should I consider refinancing to a fixed rate?

Answer: This is an individual decision, but in these times when fixed rate mortgages aren’t carrying much higher rates than adjustables (known as ARMs), it may be worth looking into, especially if you plan to stay in your home for at least a few years and your loan rate has already or will soon start adjusting upward. Crunch the numbers to see if it makes sense for you at Bankrate.com. Be sure to shop around for the best loan terms, and also for the attorney or closing agent who will handle the closing.

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Question: My recent closing on a home I was buying was scheduled for 5:00 pm. At 4:00 pm when my bank was closing for the day, I still did not know how much money I needed to bring. I was unnerved and furious. Why couldn’t my closing agent get me a figure hours, or even days, earlier?

Answer: Most likely, you can blame your lender for creating this common, yet stressful situation. A closing agent (an attorney or title company) cannot put together the final settlement until they receive all the charges and fees from your lender. Lenders often send those figures (which include bank loan origination fees, daily interest charges, appraisals and more) at the very last minute. If you must go to your bank before you get the final figures, I recommend to my clients that they get about $1,000 more than the estimate amount received from the bank early in the loan process. If that turns out to be more than you need, the closing agent will typically refund you on the spot. To avoid the problem, consider asking your closing agent before you pick a lender which ones are better at providing the figures early.

Question: I am selling my house “as is.” Do I have to tell the buyer about the leak in the roof?

Answer: Yes. Even though your contract says the sale is “as is,” which means you do to have to make any repairs to the property, the law requires you to disclose all the major defects in your house which can’t be obviously seen. You don’t have to point out every paint chip or carpet stain, only problems, as the law puts it, “materially affecting the value of the property.” It is best for this disclosure to be in writing so that later the buyer cannot say you never told him.

Question: I recently sold my home in Palm Beach County and am about to close on a home in Coconut Creek. I know that I paid the owner’s title insurance when I sold my place, but the closing agent says I will be paying again when I buy. How can that be?

Answer: Each county has its own customs, and in Broward as in many other Florida counties, the buyer typically pays for the owner’s title insurance (which protects buyers from claims on the ownership of the property). In Palm Beach County, however it is customary for sellers to pay the title insurance premium. (Legend traces this practice to a fire years ago where many county real estate documents were kept, so sellers didn’t prove their property’s chain of title.) Owner’s title insurance premiums can be pricey – the higher the purchase price of the home, the more the insurance costs – but it is well worth the money. Do know, however, that like everything else in a real estate contract, it is possible to negotiate which party will bear this cost.

Your Real Estate Questions Answered

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Question: I am selling my house and the closing is set for Friday afternoon. The buyers need to move out of their home Friday morning and want to move their things into my house before the closing.  Since we are closing that afternoon, it seems fine to me. Is there a downside?

Answer: It is never a good idea to allow a buyer to move into – or do remodeling work in – a house they do not yet own. While is all likelihood the closing will go as smoothly as everyone desires, there is always the possibility for last-minute glitches (the loan doesn’t go through, the buyer’s closing on the sale of another house for which they were depending on money doesn’t proceed on schedule, etc.). Plus, there is the rare buy real chance, especially if they are moving heavy objects or doing major remodeling, that the buyer will injure himself in your home; as the owner, you will be responsible. I always tell my clients to make me the bad guy; tell them you would love to accommodate their wishes but your attorney will not let you.

Question: When I moved here four years ago, we rented out our old house rather than selling it. I went to see an accountant recently, and he tells me that I will owe capital gains on the house when I sell. I thought you didn’t get taxed on capital gains when selling your primary residence, which this was for 14 years. Am I really out the tax break?

Answer: Alas, you have fallen into a trap increasingly snaring South Florida homeowners who have hung on to their old properties. Federal law allows homeowners an exclusion of up to $250,000 if single, $500,000 if married, from capital gains on the sale of a personal residence. However; the law states you qualify for this exclusion only if you have lived in the house for two of the five years. Had you sold three years after you moved, you likely would have been able to claim this exclusion. Now that it is four, however, the property is no longer considered your primary home for this purpose.

Question: I made an offer on a townhouse that I love. The seller accepted it. But when I told the real estate agent I wanted to make a few changes to the contract, she told me it was already a done deal. Is this true?

Answer:  In some other states, you make the offer, it is accepted, and then you negotiate the contract to the satisfaction of both parties. In Florida, it is typical to make the offer by presenting a signed contract. Many people don’t understand that this is a binding legal document. You can still ask the seller to agree to your requested changes, but he is under no obligation to do so. Next time, avoid this problem by writing “subject to review and possible amendment by my attorney within three business days” at the bottom of the contract, then have your lawyer look at it.