Q–We bought our home in 1993 through a real estate agent who represented us. The house was a foreclosure being sold by a bank. The square footage was represented to us as 4,770. However, we recently had a property evaluation done by our insurance company’s inspector, who found only 4,022 square feet. Our purchase offer was based on $125 per square foot and 4,770 square feet. Based on our new knowledge, do we have any recourse after this length of time?
A–If you can prove the seller and/or the listing agent misrepresented the house’s square footage, that is fraudulent misrepresentation. In most states, the statute of limitations begins running from the date of discovery of the fraud. Check with your attorney to evaluate if it is worth going after the bank for fraud.
Q–I recently received a quote from a mortgage broker for refinancing my home mortgage to take advantage of the current low interest rates. In the list of estimated closing costs was an item called “waive escrows” for 0.25 percent of the loan amount.
I was told the $197.50 charge had to be paid upfront to the lender for the privilege of not setting up an escrow account for the property taxes and fire insurance. I was told all mortgage lenders do this to recoup what they lose on non-escrow mortgages. This really stinks. Is this true?
A–No. Your lender has dreamed up a new mortgage “garbage fee,” which you should be able to negotiate away by refusing to pay. If the other terms of the quoted mortgage are satisfactory, tell the mortgage broker you’ll take the loan, but you expect the mortgage broker to pay that unnecessary garbage fee to “waive escrow.” If the mortgage broker refuses, shop elsewhere for your mortgage.
You are obviously very smart. As a regular reader of this column, you know it is to your advantage not to have a mortgage escrow for monthly payment of one-12th of your property taxes and fire insurance premium. It’s best to pay these bills yourself when they come due. Lenders are notorious for overcharging on tax and insurance escrows. However, VA, FHA and PMI (private mortgage insurance) mortgages require escrows.
Q–I recently bought a nice $480,000 San Francisco condo with a rent-back to the seller. My down payment was $250,000. My agent (a personal friend) said the rent should be based on my mortgage PITI (principal, interest, taxes and insurance). But because I made a large down payment, on which I am losing interest income, shouldn’t there be some other way of setting the rent?
A–Yes. That real estate agent was not looking out for your best interests. The rental value of your condo has absolutely nothing to do with your mortgage PITI payment. If that were true, a condo without any mortgage would rent for just the cost of taxes and insurance. Also, your agent neglected to include the monthly condo assessment fee.
Residential rental value is based on competitive rentals. You can determine what comparable condos rent for by checking the newspaper classified ads and asking your agent to check the local multiple listing service condo rental listings.
Q–My boyfriend and I are buying a condo together. We plan to get married as soon as his divorce is settled. We’re discussing how to take title. The real estate agent recommends joint tenancy with right of survivorship. However, since I have a son from my first marriage, my father says we should take title as tenants in common so, if I die first, I can will my half to my son. What is the best way for us to take title?
A–If you take title as joint tenants with right of survivorship, each of you must own 50 percent. If one of you dies, the survivor receives title to the entire property by survivorship. Should you die first, because your will has no effect on joint tenancy property, your boyfriend will wind up owning 100 percent of the condo.
If you take title as tenants in common, each of you can own unequal shares (although you will probably each own 50 percent). If one of you dies, the deceased’s share is subject to his or her will. You could will your half to your son or you could will it to your boyfriend. Similarly, he could will his half to you (or to someone else).
An advantage of joint tenancy is avoidance of probate costs and delays. All that’s usually required is that the survivor record an affidavit of survivorship and a certified copy of the deceased joint tenant’s death certificate. Tenancy in common, however, usually must be probated.
Another alternative to consider is a revocable inter vivos living trust. It is very flexible, avoids probate and can be easily changed until one of you dies. Then it becomes irrevocable. Before taking title, consult an estate planning attorney so you don’t make a costly title mistake.
Q–I hired a tile contractor to install new front steps at my house. Although he came highly recommended by friends, his work was shoddy and of poor quality. When I refused to pay him unless he redid the job, he filed a mechanics’ lien against my house. My neighbor says I might lose my house if I don’t pay. Is this true?
A–Yes. Immediately contact an attorney who is experienced with mechanics’ liens. The local contractor’s association usually has a mediation procedure to work out conflicts like yours. You should prevent possible foreclosure of the mechanics’ lien by obtaining one or more experts to give their opinions on the quality of the tile work.
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Please note: Real estate laws vary from place to place. Be sure to check the laws of your state and municipality before making decisions on real estate matters. You may need to consult a lawyer.
Write to Robert Bruss at Tribune Media Services, 435 N. Michigan Ave., Chicago, Ill. 60611.
