Q. We own a condo and are in the process of changing property management. The new property management sent us a form to fill out for our condo insurance, policy number, insurance company, policy period, etc. Is it right to give out my policy insurance information to them? I refuse to do this because this is my personal insurance for my protection. It seems the new management said we should have a policy, but when I bought the condo, nothing was said that I must have HO-6 insurance. I need help.
A. I strongly believe that every condominium-unit owner should have insurance to protect their investment. This is called an HO-6 policy. It covers the unit owner where the master insurance policy leaves off.
For example, if there is a theft in your unit, the master policy will not provide you with any coverage. Additionally, if you (or your predecessor) had made improvements to your unit — such as new floors or an upgraded kitchen — many master policies will refuse coverage for those items, which in the trade are called “betterments.” Equally important, should your upstairs neighbor’s washing machine leak, causing damage to your personal belongings(oriental rugs, furniture, art work), the master policy will pick up the cost to repair your ceiling and any walls that were damaged, but will not pay for the loss of those personal items.
But, I see no reason why you have to provide this information to the property manager. All that the manager really needs is a statement that you have such insurance.
However, I disagree that such information would invade your privacy, and unless you really have major problems, I would comply with this request.
Q. How do real estate agents get commission on rental property?
A. To my knowledge, there is no standard formula to compensate a real estate agent for finding a tenant for you. From my experience, most agents will want one month’s rent for their commission. However, this is negotiable. If, for example, you want the agent to manage the property for you, the agent may take a percentage of the monthly rent — ranging from 6 to 10 percent.
You should sign an agreement with the agent before moving forward. That agreement will spell out the terms and conditions of employment.
Q. My brother and I own a single-family house that we rent to our sister. The mortgage contains a due-on-sale clause. We would like to sell the house to our sister. She has the income to make the monthly payments, but she can’t qualify for a loan due to bad credit. I was wondering if the due-on-sale clause is enforceable if my brother and I were to sell the house to our sister?
A. Unfortunately, as I read the law, a transfer between siblings is not exempt from the “due-on-sale” clause. You can do one of two things: First, talk with the lender and explain the situation. You have to understand that you and your brother will remain obligated on the loan, should your sister not make all of the monthly mortgage payments. Perhaps the lender will decide that since this is a family transaction, it will not assert the due-on-sale clause.
Alternatively, if your parents are alive, you can transfer the property to them (or to one of them) and then the property can be transferred again to your sister. Since these transactions are exempt from the due-on-sale clause, this will work. And in most states, there is no transfer or recordation tax between parents and children — only a nominal recording fee to the county.
