DEAR BENNY: What are the rules for adverse possession? What can new homeowners do to protect themselves when buying property? What should homeowners do to protect their property from their neighbors? Should a small encroachment such as an A/C unit or a driveway with flower borders be addressed as soon as the encroachment is discovered?
What is the current trend regarding adverse possession? Legal issues aside, when is claiming your neighbor’s land ever really the right thing to do? –Melina
DEAR MELINA: Adverse possession is a legal concept whereby if your neighbor uses a portion of your land for a period of time (which is established by state law) and the use is "open, notorious and hostile," your neighbor can go to court and ask a judge to order that the land now belongs to him or her.
One judge defined adverse possession like this: "The person claiming the property by adverse possession must unfurl his flag on the land and keep it flying so that the owner may see, if he wishes, that an enemy has invaded his domain and planted the flag of conquest."
You should have received a property line survey at settlement (escrow). You or your attorney should carefully review that survey to make sure that there are no encroachments.
If you find, for example, that your neighbor’s fence, shed or heat pump is sitting on your land, what should you do?
Obviously, you do not want to start a fight with your neighbor the day you move in. But you do want to protect your land. When I conduct real estate closings and see encroachments, I always advise my clients that they should introduce themselves to their neighbor. Invite them over for tea. During that meeting, the neighbor should be shown the survey and be advised of the problem. I tell my clients that they should say, "I don’t want to start a neighborly fight, but my lawyer tells me that I have to discuss this with you. So that I can protect my land, I am giving you permission to have your encroachment on my land, and I will send you a friendly letter to this effect."
Permission will defeat a claim for adverse possession — it is no longer "hostile."
However, this can backfire. If your neighbor’s encroachment has been on the property for the period established by state law, he already has a claim for adverse possession. It does not matter that you just bought the house. Adverse possession is determined by how long the encroachment has existed.
You raised perhaps the most important question: What is the right thing to do? Only you can make that decision. If the encroachment is minor, you may decide it’s just not worth starting off challenging your new neighbor.
DEAR BENNY: I purchased a home last year. I let the seller live in it while he "looked" for a place to move. After several months and a number of stories, I finally had to secure a writ of possession to evict him. He moved, leaving several months’ rent unpaid.
I inspected the home and found it has no central heat source. I then reviewed my appraisal. It clearly states that the home has central heat and air conditioning. It has neither. The appraiser and supervisory appraiser both signed off on the appraisal.
I know I should have seen it when I purchased it but did not.
The appraiser has liability insurance. This is either an oversight or misrepresentation.
Based on your experience, am I in a position to have the contract rescinded and the loan bought back by the insurer?
The appraisal is very clear, and the lender and I both relied upon it. No lender that I know of will lend on a property without a central heat source. It cannot be lived in or sold in its present condition. –Robert
DEAR ROBERT: Didn’t you inspect the house before you bought it?
The short answer is that unless you ordered the appraisal, generally, appraisers work for — and are responsible to — the lender, and not the homeowner. This is true even though you reimburse the lender for the appraisal report.
You should immediately discuss the situation with your lender. They may be willing to take legal action against the appraiser, since his security is at risk. You may also want to file a written complaint with your state office of consumer protection (or state attorney general).
However, your question raises a couple of consumer issues, which I want to address.
1. Before you buy: You should have hired an independent home inspector to carefully review the house and give you a written report. Also, many states have laws requiring sellers to disclose known defects. You may have a case against your seller, although he probably does not have any money. Finally, on the day before you go to settlement (also called escrow in some states), you should go to the house and carefully inspect it yourself. Do not do this at night, because you will not be able to see all of the possible problems.
2. Settlement: You allowed your seller to stay in the house. Did you have a written agreement as to how long the seller would stay there? Did you get a security deposit? Did you escrow a dollar figure to make sure that you would be paid "rent" for the time the seller stayed in your house? In my area, we have a form called "Post-Occupancy Settlement Agreement," which should have been used in your case.
DEAR BENNY: I’ve been following this mess with subprime loans and its fallout. One part of this topic that seems to be missing is the PMI. I bought my last home and was required to have this "insurance" against loan default. Isn’t that the security the loans were depending on? When I hit 20 percent equity, I got it removed, but every risky loan must have had that insurance. –Alan
DEAR ALAN: PMI stands for "private mortgage insurance." This is insurance that the homeowner pays for to protect the mortgage lender in the event the property goes into default and is foreclosed upon. If you put down 20 percent of more when you buy a house, the lender will not require PMI; the theory is that there is enough equity in the house so that even if the house is foreclosed upon, the lender will be paid in full.
However, the "mortgage meltdown" our nation is currently facing was caused primarily because the subprime loans were often based on 100 percent of the value of the house. According to recent statistics, approximately 40 percent of loans originated in 2005 and 2006 were "piggyback" loans. These are mortgages where the first trust is for 80 percent of the value of the house and the balance — often as high as 20 percent — was a second mortgage.
Under a piggyback loan, since the first trust is 80 percent, there is no need for private mortgage, and it is my understanding that a large number of the loans currently in trouble did not have PMI.
But, PMI does not help the borrower in any way. If available, the insurance proceeds go to the lender. If the borrower is in default, his or her house can still be foreclosed upon, regardless of whether PMI is available.
DEAR BENNY: A couple married in 1961 and bought a house in 1990. The house is in her name only now. If she dies before him without a will, does the house automatically belong to him? Or if she prepares a will now saying that she wants to leave the house to her two children, would the will be valid? –Gisselle
DEAR GISSELLE: Although I recently answered a similar question, you have added some facts that require a response.
As I advised in an earlier column, while the spouses are alive, they really should resolve the situation as to the disposition of the house when one of them dies.
At the present time, since the house is in the wife’s name only, on her death her estate will have to be probated. Since she does not have a last will and testament, the intestacy laws in her state will control who will get the property. Her husband, if he is still alive, may (depending on state law) be able to claim a portion of the estate — including the house.
If she does prepare a will — which everyone should do — the probate court will honor her intentions. However, once again, her husband may have a statutory right to part of her estate.
The couple really should sit down with an attorney to discuss their situation. In fact, to avoid conflicts of interest, each of them should first talk to their own counsel, so that they both understand the ramifications of their current situation.
Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to email@example.com.
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