Real Estate and Probate Disputes

It Will be a Happy Year, Just Not a New Year

2007-12-28T11:37:00.000-08:00

I'm looking at today's report of November home sales, a 12-year low, and can't help but think that 2008, compared to 2007, will be a happy year. Notice I didn't say Happy NEW Year. Because I don't see anything good happening while 2008 would be considered new. In fact, it may be Happy Old Year if anything. Perhaps we start seeing inventory move better in the third quarter and by this time next year, it will be a Happy New Year 2009? Hang in there folks. Optimism lives!!!

A Tenant's Due Diligence in Today's Market

2007-12-22T17:35:00.000-08:00

The latest twist in the housing market downturn, at least in my mind, revolves around landlord/tenant relations. It's common practice for the landlord to do a credit check on a prospective tenant. With many tenants being evicted as a matter of process, following a bank's foreclosure, a common occurence nowadays, it's a matter of time before some tenants begin asking for a landlord's credit report as a condition of putting his or her living situation in the landlord's hands, so to speak. I was watching Fox 40 news last night, and a story about tenants' and their dilemna was presented. A quote from a tenant really caught my attention; she said something to the effect that, is this what it has come to, us tenants have to get the landlord's credit report?

I don't really believe it will come to us, but the irony is not lost. Even tenants can't be too careful anymore.

The Fluffy Mortgage Bailout

2007-12-06T21:23:00.000-08:00

Fluff. That's all it really is. I'm not talking, of course, about the federal bailout agreement. You know, the one that applies to the drop-in-the-bucket of distressed homeowners out there. I didn't expect much from it, so I guess I'm not surprised that it turned out to be politics as usual. The best spin I have for this development is that it will have some kind of psychological effect on the market. I think the smart money will be on a continued slump until some real adjustment is allowed to take place, most likely without any real help from the feds.

Housing Discrimination and Sex Offenders: A Conflict Remains Unsolved

2007-11-26T18:27:00.000-08:00

In February of this year, California Assemblyman Greg Aghazarian (R) introduced a bill which addressed the conflict in the law as it relates to sex offenders and housing discrimination. AB 1197, as written, would recite the legislature's intent that the Unruh Act, and housing discrimination protection, would be reflective of the laws protecting children from sex offenders (such as Megan's Law).

The bill died in committee but I hope that Assemblyman Aghazarian brings it back again. If he does, the safety of our children dictates that his fellow legislators support the law.

The protection of children is most important. But the law as it stands puts landlords in a bind. If the Dept. of Justice (D.O.J.)identifies a sex offender, shouldn't a property owner be permitted to recognize this in deciding who rents his or her property and lives next to other tenants? The ACLU and some special interest groups have opposed this bill, of course. Even the disability advocates oppose the bill because some sex offenders are disabled. But where do the rights of property owners come in? And, where does the safety of California's children come in?

I'll keep you posted if I hear more. Until then, you can call Assemblyman Aghazarian or your legislator and get this issue resolved before the problem is magnified....

One Thing Doesn't Change: Construction Defect Lawsuits

2007-11-23T22:15:00.001-08:00

Stop the presses! Buyers are suing homebuilders! The latest in a line of reasons why builders earn every dime they make is evident in an MSN article about disgruntled homebuyers.

The article makes it sound as if the rush to courtroomsm has something to do with the credit/mortgage crisis. It doesn't. Nothing has changed in one respect: unhappy homebuyers are still using the courts to get their builder to pay up. Sometimes the builder deserves this. Often, they don't, nor do the agents, title companies, and everyone else drawn into the mess. Nevertheless, there will always be lawsuits directed at construction defects, credit crisis or not.

Happy Thanksgiving!

2007-11-22T07:34:00.001-08:00

Happy Thanksgiving to everyone. This is one of the few days of the year where you can sit back and reflect on the market and where it's going to go. Watch some football, eat some turkey and pumpkin pie, and let your thoughts clear up a little. There are some great transactions lying ahead; we need to make sure we can spot them clearly.

Home Equity Law to Watch Out For

2007-11-20T08:29:00.000-08:00

Wrote about the Mortgage Foreclosure Consultants Act earlier. A similar law is also in effect in California which regulates the transfer of real estate by "equity purchasers". This is distinguished by law from loan transactions. Main issue is whether the seller was unfairly coerced into transferring his/her property to a lender. Key point is that a five-day cancellation period is in effect, and not much can happen during that period. There's also an attorneys fees provision if a suit is brought, as well as a provision for possible criminal penalties. Every person who helps distressed homeowners should know this act. It doesn't say you can't help someone out, or do it for a profit. You just have to do it in a manner which the law allows.

The Mortgage Foreclosure Consultants Act

2007-11-16T09:42:00.000-08:00

I spoke at a real estate seminar yesterday. Intelligent group of people asked some great questions. Two of the main issues we discussed were short sales and foreclosures. Much of the discussion centered around two California acts which regulate the practice of assisting distressed owners. One of the acts is known as the Mortgage Foreclosure Consultants Act. I've linked to the language of that act for anyone who wants to read it. A couple of things of note: the act requires a three-day cancellation period; and the act restricts the lender's ability to take an "interest" in the title of the property. The act does have some teeth, meaning it has some penalty provisions for violating the act. See 2945.4 for a list of violations. It should be taken seriously by professionals who make a living helping homeowners.

Some Foreclosures Hit a Federal Snag

2007-11-15T09:04:00.001-08:00

The N.Y.Times published this article about a federal court ruling which limits the ability of some "investors" to foreclose on properties. If a mortgage is in foreclosure, and that mortgage has been pooled with other mortgages and sold to a bank, the bank likely cannot prove ownership at the time of foreclosure, which is a requirement of enforcing a mortgage. Usually this is a non-issue to the homeowner since the homeowner doesn't have the resources to defend, and pick apart, the lender's case. But in Ohio, the court took a stand against this established practice, and from the comments I read in the article, was quite ticked at the arrogance of the banks.

You Can't "Short" the I.R.S.

2007-11-14T14:28:00.000-08:00

A lender may have an incentive to approve a short-sale of unproductive (and expensive to maintain and sell) property, especially in today's market. Our good friend, the IRS, does not have such incentive. It's important that sellers of property take that into account when they decide to do a short sale. There are some huge benefits to the short sale, i.e. avoiding larger credit problems, but there is also the disadvantage of having to justify the numbers to the I.R.S. For the seller, find out if it is a recourse loan or a non-recourse loan. I.R.S. Publication 544 talks about the differences in potential gain where the loan is recourse. In that case, the fair market value of the property plays a significant role in determining gain, or loss.

The Missing Notary Stamp

2007-11-14T14:03:00.000-08:00

I've seen many real estate fraud cases which include a notary who either was negligent or just plain fraudulent. This case in L.A. involving a short sale fraud is the first time I have heard of fraud committed by way of a stolen notary stamp. I agree with the agents who wrote this story, how in the world a scammer thinks he or she can make money by recording fraudulent deeds in a foreclosure context, is beyond me. The only way someone could steal a stamp, record a deed (or a deed of trust, depending on their motive) and make money off fully-leveraged property, would be to also scam the lenders who have valid deeds of trust. Nevertheless, I believe as long as the title company properly searches title records, as most do, there won't be much damage. The new buyer will need to go to a court to have the fake deed reversed.

Notices, Notices, Notices!

2007-11-13T17:51:00.000-08:00

Notices are everywhere. I'm talking about Notices of Trustee Sale. Have you looked at your local paper's legals? Sometimes I wonder if there is enough ink to publish all of these trustee sale notices. It's true that more and more lenders have become resigned, or should I say, open, to the option of a short sale. My guess is that either there are more defaults than even I imagined before, or many of these homeowners are not being aggressive enough with their lender to workout a solution. This wiki that I've linked to above describes a style of approach that many homeowners should consider when faced with a tough payment situation.

Another Lender Writes This One Off

2007-11-13T09:00:00.000-08:00

* Taking the art of blogging seriously, I attended a blog trade show this weekend in Las Vegas. Called Blogworld, this show had a few seminars and some interesting exhibitors. Look for a much-improved blogsite in the next couple of weeks!

* The news today was that Bank of America is taking a $3 billion hit on its books due to bad debt. They're doing what most lenders are doing, large or small. My thought is this needs to be done so that the books can get cleaned up. They are calling their losses "manageable". That simply means that this won't take them down. But we assumed that.

A Visit to the County Recorder's Office

2007-11-05T10:54:00.001-08:00

I must admit I've made a few trips to the county Recorder's office where I was just lost trying to figure out how to research property information. Every single time, I asked for help, and every single time my questions were answered. Not only that, unless the staff is extremely busy, they will help you learn how to work the machines like a pro.

The Recorder's office is easy to use, and a quick way to get copies of certified deeds or other recorded information. Looking at getting preliminary information about some property you're interested in buying? Ten minutes in front of a computer, and you'll probably find out more than you want to know. (That can be a good thing!).

Many people end up signing up with these companies that offer to provide certified deeds for a big fee, when they really don't have to. I wouldn't call this a scam in the true sense of the word, but an unnecessary service that is thrown at consumers en masse, hoping that a few consumers will unnecessarily give in.

The Value of Your Home, in Perspective

2007-11-01T16:20:00.000-07:00

I enjoy listening to a great radio show in the mornings on ESPN Radio. The host is Colin Cowherd (did I spell that right?). In addition to his great style of getting his point across, he also throws out a lot of great thoughts to ponder. Many have little to do with sports in fact.

Today, he mentioned a great quote: Buy for memories, lease for fun. He was talking about spending your disposable income. Better to spend it on something that you'll remember when you're 80, such as a trip to Tahoe (his example) than on a jet ski or some material possession. I fully agree with that premise. Maybe that's why I don't have that 22' boat I've been eyeing!

When it comes to real estate, there is some truth there, too. Find a home that you build great memories with, and put your disposable income in that direction. There's nothing wrong with filling the garage with a new Harley, which I'm sure is a great escape toy. But once you find a place you can enjoy coming home to or spending your free time on the weekends at, the fluctuating value of that property just doesn't matter too much.

The Husick Couple Selling Strategy

2007-10-31T18:32:00.000-07:00

I've seen some great real estate sales techniques, but this one ranks up there with the best. A couple in Pennsylvania has offered to sell their house with a special covenant: the money will be returned to them when the couple dies. What's more, there's another option for the buyer--take care of the couple and you get a bonus. A home in Arizona.

For us probate minds, one must wonder: what if the buyer elects to rescind for some reason, the sellers fight this election, and the sellers both die before the court rules on the rescission?

A Transfer Disclosure Statement Example

2007-10-30T16:33:00.000-07:00

I wrote about the TDS, or transfer disclosure statement, yesterday, and I'd like to provide an example, just one example of many in my mind, of why it's important to follow-through on these.

I was involved in a case a few years ago where the seller didn't properly list the items in the kitchen which weren't properly. In the lawsuit against the seller, the buyers added this failure to disclose to their laundry list of fraud causes of action.

The case primarily centered on fraud in non-disclosure of inadequate support for the house (an older house) and pest problems. When that part of the case essentially fell apart a few months later, the buyers were faced with whether to proceed or not. Lots of money in attorneys fees were at stake. Their case didn't support this risk. BUT, they also had this failure to disclose in the kitchen, which, if they took to trial and won, they may get their attorneys fees, or some of them, back. They could take a chance on the big one, and if they lose, they can still fall back on the small ones. The buyers ended up settling with my clients (the sellers) on the eve of trial, for very little money. But it was touch and go for awhile there, and their attorney kept harping on these small items.

If I remember correctly, the dishwasher didn't work properly, the stove didn't work properly, and there were some exposed wires in the kitchen. Items that sometimes are overlooked in the TDS process.

Transfer Disclosure Statements: Document Your Efforts

2007-10-29T18:46:00.000-07:00

Your client's house is in escrow and the clock is ticking on the close. The TDS i still in need of attention. The seller is not cooperating, for one reason or another.

How do you represent a seller that won't focus on the TDS? Make documented efforts to schedule a thorough walk-through. Make sure your client knows that you've placed a great importance on disclosure. Make sure your client knows that you want to disclose anything and everything that might be an issue to a reasonable seller.

Remember, if there is a problem with non-disclosure, the agent/broker is usually brought into the dispute. That's where a solid collection of notices and memos may protect a Realtor who has done his or her job.

Should the Housing Industry Solve the Housing Mess?

2007-10-24T18:50:00.001-07:00

I respect Jim Jubak and enjoy reading his columns. I also respect any writer who, with reason, thinks outside the box. Jubak's latest column echoes what many experts and leaders in the real estate and finance industry have been saying: let's have the lenders, brokers, and builders fix the housing mess. To me, that makes little sense. First, the fact that an industry finds a way for a consumer to buy a product easier than he or she would otherwise, is not new, and goes on everyday. Look at car dealers!

Second, the regulatory oversight of builders and of lenders makes it realistically impossible to craft and implement a solution that benefits troubled consumers, and thereby fixes this "mess". This reasoning actually flies in the face of what many others believe, that we simply need more regulation and less discretion for the lenders, brokers, and builders.

A refreshing approach: why not treat housing like other products and commodities, and accept that there will be highs and lows, and inventory swings in both directions? Do we really need to make an industry (in this case, housing) pay extra for making its product more accessible to the consumers?

Memories of a Malibu Fire

2007-10-23T13:43:00.000-07:00

The Malibu fire brings back some memories. It was October 1985. I was a sophomore at Pepperdine, living right near the convergence of Malibu Canyon and the coast. I've never seen a fire tear through the landscape so quick. This brutal wilderness which sits behind the mountain range overlooking the beaches, has been the site of many fierce firestorms in the past, not just this one or the one I experienced. (BTW, the school was closed for four days!).

Who owns this land? I don't know. Most of it will never be developed so the owners aren't too worried. It's the homes, expensive homes, next to the wilderness, on top of the hills or looking over the water from the side of the hills, that are the real victims of these fires. All you can do as a homeowner in these areas is get lots of good insurance and keep lobbying for more controlled clearing of brush and trees in your area.

Another Disclosure Example

2007-10-23T12:05:00.000-07:00

Does a seller of property have to list defects that are subjective in nature? Usually, they should, since the seller often must assume that the buyer is an arbitrary person. The subject of my last post, the haunted house, got me thinking. What if, for example, your neighbors around the corner have loud parties until late in the night? May not bug you. You've been there, done that. But if you think it is something that would decrease the value of your property in a material way, you may want to let the other side know. If they have reason to know of this already, perhaps they have heard about these neighbors or expect that type of behavior in this particular neighborhood, you probably do not have to disclose it. I've been involved in a matter with this "factor" before and in our case, I can recall that it was difficult to show that the loud noise affected the value. This is especially the case if the buyers start throwing their own late-nighters!

Boo! Your Listing is Haunted!

2007-10-22T20:41:00.000-07:00

I expected the article to say that ghosts in the house would decrease the value of the house, possibly cause the broker to disclose this "defect". What I didn't expect was that, in some cases, haunted houses are a good thing? Good or bad, folks, this is something you need to disclose. Question is, when does this "factor", good or bad, cross the line from fairy tale to real. Happy Halloween!

Saving Your Home From Foreclosure

2007-10-22T19:20:00.000-07:00

Contrary to what some homeowners think, most lenders do not mind if you can save your home from foreclosure. Why? Because usually that means that they're getting paid. But what can you do to save the property? There are many ways to do it, and some are actually legit. Not just some fly-by-night gimmick from some real estate scam artist.

If there is fraud in the making of your loan, depending on the type of fraud you may be able to convince a judge that the sale should be stopped. If the loan and its making was fair but you simply aren't able to come up with the funds on time, there are options. One is a right of redemption. This is a rather complicated legal right. But it essentially is a right the homeowner has to pay off the loan after the sale.

The period of time in which a homeowner has this right of redemption depends on whether the sale proceeds covered the loan amount. If it did, the period may be three months. If the sale proceeds were not sufficient to pay the loan, the period may be a year. Check with your attorney on this.

Right of redemption may allow a homeowner to find an investor (an honest investor!) to work with him or her to put the property back in his or her name.

More Fraud Examples

2007-10-18T16:25:00.000-07:00

My last post linked to a guy who put deals together in Indiana when he did not have a license. The post mentioned having a license as one factor a buyer or investor looks for when considering a deal. Let me clarify one thing though. There are many people in California who managed to get a license, both a salesperson license and a broker license, and who are just as shady as the guy in Indiana. I've represented victims in some of these cases myself and can tell you that a valid license is a positive, but it is by no means a badge to rely upon. I'm hopeful that the DRE can strengthen its regs a little more so that many of these folks can be eliminated from the industry, not just the profession. But do this consumer check, too.

Licenses are there for a Reason

2007-10-18T16:17:00.000-07:00

The slump in the real estate market has weeded out some of the fly-by-nighters, but courts all over the country are still cleaning up the messes left behind by the last flight of greedy dealers. It's happening in your town, too, I'm sure. You would probably have to go down to the courthouse to hear about much of it, but I promise you the shady deals are being exposed. Only problem it's usually the victims who expose them, at the expense of hiring a lawyer to remedy the fraud.

The best advice for anyone dealing with real estate, is the same as for anyone dealing with any other profession that the State of California had decided it's important to regulate. Check their license. Check the quality of their past work. And, don't do business with them if anything doesn't seem right. Just ask these folks in the Indiana deal linked above, or many other deals that went south because of a shady investor or dealer.