Q. On Jan. 3, 2003, we moved into our brand-new house. When we signed our purchase contract, we did so based on the builder’s brochure stating our home was approximately 1,875 square feet. However, recently I noticed other nearby homes seem bigger than mine. I measured the outside perimeter of my house and discovered it is only 1,710 square feet. Even at a modest price per square foot, I feel the builder ripped me off for at least $16,000. What legal options do I have?
A. Measuring square footage of a home is a controversial topic. I can cite you court decisions where even experienced appraisers disagreed about a home’s square footage.
If your measurement is correct, you are missing the size of a very roomy extra bedroom. The general rule is a house is measured around the outside perimeter, excluding the unfinished garage area.
If you believe your home is 165 square feet less than was represented to you, it’s time to have a very polite conversation with your home builder. Maybe there is a reasonable explanation.
Should you still be convinced the builder misrepresented the house’s square footage, it’s time to consult a real estate attorney to see if legal action against your builder would be worthwhile.
Q. When we closed our recent mortgage refinance, we were told the IRS required us to sign a blank Form 4506 to verify we weren’t laundering money. We signed the form [which authorizes the release of tax returns to a third party] with only our names and address, as requested. The name of the lender was left blank, as was the date. Within a month, we were notified our mortgage was sold. I phoned the IRS and was told we could send them a letter requesting our Form 4506 not be honored. Is there any way we can rescind our signing of that blank form? My husband and I do not want this new lender or any other company to have unlimited access to our tax returns every year.
A. Now you know why it is so important for home mortgage borrowers to sign, date and name the originating lender on the IRS Form 4506, which most mortgage lenders ask borrowers to sign.
As you discovered, when your home loan was sold to another lender in the secondary mortgage market, as happens to most home mortgages, if you have an undated IRS Form 4506 in the file with no lender’s name on it, that is a virtual invitation to the eventual loan owner to pry into your private tax returns years from now. Sorry, I am unaware of any method to rescind the blank IRS form you signed.
Q. I got a reverse mortgage three years ago and thought it would take care of my lifetime financial needs. But I have since encountered medical and automobile problems that required I use my credit cards to pay. Now I need to pay off my credit cards. I have contacted local banks about a second mortgage but they won’t make a second mortgage loan behind a reverse mortgage. What should I do?
A. You have several alternatives. The easiest one is to contact your reverse mortgage loan servicer to ask for a lump-sum advance to pay your debts. This choice will reduce your lifetime monthly payments to be received on your reverse mortgage.
Another alternative, if your home has substantially appreciated in market value since you obtained your reverse mortgage three years ago, is to refinance it with a new reverse mortgage.
In the last three years, the loan limits of reverse mortgage lenders have increased substantially. Although there will be up-front reverse mortgage refinance fees, it might be worthwhile to pay off those unexpected debts.
Q. I just received a bill for $265 to pay the fire insurance policy on the condo building where I live in a 12-unit all-brick complex. I have lived in three other condos and have never had to pay for fire insurance. Shouldn’t the insurance bill be paid by my monthly assessments?
A. es. You should not receive a special assessment for the annual fire insurance premium for your condo complex.
The condominium homeowner’s association is responsible for buying adequate fire and liability insurance for the common areas of your 12-unit complex, including the structure.
It is very unusual for a homeowner’s association to bill the individual owners for their share, which should be paid from your monthly fees.
I will presume this bill is not for your personal condo owner’s insurance, which every condo owner needs. An individual condo owner’s insurance policy insures the contents of your condo from loss due to fire, water damage, theft and other causes. It also includes liability coverage in case your guest is injured within your condo.
Unless your condo homeowner’s association is broke, it is extremely unusual for an insurance bill to be sent to each condo owner. I suggest you ask the president of your condo homeowner’s association for an explanation. Something appears to be seriously wrong with the homeowner’s association.
Q. I recently bought a 1950s house “as is” to fix up and sell. I was told the furnace must be replaced. Fine. Later, I was informed there was an underground oil tank I must replace. Is the realty agent who sold my home to me liable for my cost of removing the oil tank?
A. No. Unless you can prove the home seller or agent knew of the defective oil tank and failed to disclose it, you’re on your own.
Q. My wife and I are trying to reduce our mortgage payments to the rock-bottom minimum. The mortgage broker suggests an interest-only mortgage. What’s your opinion?
A. If you plan to stay in your home less than 10 years, an interest-only mortgage can be a good deal. The primary reasons are that your monthly payment will be as low as you can go, and that all your monthly payment will be tax deductible itemized home mortgage interest.
But the obvious disadvantage is you won’t be building any home equity. However, if you expect to keep your home less than 10 years, the mortgage principal reduction doesn’t matter much so you might as well benefit from an interest only mortgage. For more details, please consult your tax adviser.
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PLEASE NOTE: Real estate laws vary from place to place. Be sure to check local laws.
Write to Robert Bruss at 251 Park Road, Burlingame, CA 94010 or e-mail questions to newhomes@tribune.com.
