DEAR BOB: In August 2006 I purchased an apartment in a condo conversion in the resale market. My seller bought the condo eight months earlier direct from the condo converter. To what extent and for how long a time frame can the developer be held liable for repairs and warranty work to each individual unit? For example, if a front-door lock is defective, and the third-party manufacturer offers a 25-year warranty, who is responsible for repairs, bearing in mind the manufacturer requires a copy of the invoice? –Helena S.

DEAR HELENA: In a condo conversion, the developer is liable to the homeowner’s association (HOA) for any structural defects, such as a foundation problem, in the common areas. However, if something goes wrong within your condo unit after purchase, the developer usually has no liability to the owner, especially a subsequent owner who was not the original buyer.

Purchase Bob Bruss reports online.

If you are asking who is responsible for repairing your front-door lock, don’t expect the developer to replace it (although a good developer will take responsibility and then deal with the lock manufacturer). Your best recourse is against the lock manufacturer. Or forget it. For more details, please consult a local real estate attorney.

HOME ON LEASED LAND USUALLY NOT ELIGIBLE FOR REVERSE MORTGAGE

DEAR BOB: I have friends who own their home, which is on leased land. The senior-citizen reverse mortgage lender told them the residence is not eligible. Is this correct? –Anthony L.

DEAR ANTHONY: If the residence is a manufactured house or a mobile home on a leased lot, it clearly is ineligible for a reverse mortgage.

However, if it is on a leased lot with an option to purchase, then some lenders will approve a reverse mortgage in such a situation. Owning a residence on leased land is never an advantage and is frequently a detriment.

ODDS OF LENDER ENFORCING “DUE ON SALE CLAUSE” ARE MINIMAL

DEAR BOB: You recently had an item about a mortgage-due-on-sale clause where you said it was unlikely the lender would call the loan. What are the odds the lender would find out and call the loan due in full? –Lawrence L.

DEAR LAWRENCE: As long as the monthly mortgage payments are made on time, mortgage lenders rarely risk enforcing the due-on-sale clause when a property title is transferred “subject to” the mortgage.

If a lender should attempt to enforce the due-on-sale clause, unless the transfer is exempt under the Garn-St. Germain Act such as an interspousal transfer, the new owner can then either pay the lender’s assumption fee (usually 1 percent of the mortgage balance) or refinance with another lender.

Unless mortgage interest rates skyrocket, a mortgage lender would be very stupid to attempt to enforce a residential due on sale clause today.

The new Robert Bruss special report, “The 20 Essential Questions Smart Home Buyers Must Ask to Avoid Overpaying in a Buyer’s Market,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant delivery at www.BobBruss.com. Questions are welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

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