DEAR BENNY: I own a condo in a two-unit building. We have always split all common expenses 50/50 per our legal documents. Recently we discovered a leak in the common garage, and have established the cause and are embarking on repairs. This leak also caused dry rot in some of the hardwood floors in my unit. I considered this to be a common expense and expected the entire cost of the repairs to be divided 50/50. The other owner disagrees and claims that because the damage is in the interior of my unit I must bear the cost of those repairs myself. Your advice will be most helpful. –Sherry
DEAR SHERRY: This is perhaps one of the most controversial issues in community association law. My first question: Have you filed a claim with the association’s insurance carrier (called the "master policy")? If not, you should do so immediately, although many policies require that if claims are not filed within 30 days from the date of discovery, the insurance company will reject the claim.
Although state laws may differ, in most situations these laws have been interpreted to mean that associations obtain what is known as "single-entity" property insurance. This means that the insurance coverage for an association would include not only the common elements, but also the individual units.
My second question: Are the hardwood floors in your unit the original flooring, or did you (or someone who owned before you) add the hardwood? I ask this because typically the master insurance policy is responsible for covering all common elements as well as damage within units — except for "betterments," which are those items that owners made to their unit, such as new kitchen appliances, parquet floors or wallpaper.
My third question: Do you have your own insurance to cover any damage to your unit that is not covered by the master policy? This is known as an HO-6 policy and is insurance coverage that I believe every condominium unit owner should obtain.
You — or an attorney for your two-unit association — should review your legal documents carefully. I suspect that the answers to your question will be found in those documents. I further suspect that if it can be determined that the dry rot is the direct result of the common element garage leak, this is an association problem, which hopefully your insurance policy will cover.
DEAR BENNY: We read with interest your article on home titles. When my husband and I bought our house in Nevada, the title papers listed us as tenants-in-common. Are we able to change that to joint tenants or tenants by entireties? –Lorette
DEAR LORETTE: It is a very easy and inexpensive process to change your title. But there are tax, estate and other legal ramifications involved, so before you do this I suggest that you consult a local real estate lawyer in your area who can give you the pros and cons.
You should also understand that in community property states, there are different tax considerations, and that’s why it is important for you to discuss this with an attorney.
DEAR BENNY: I bought a house at an auction a few days ago. The house was sold "as is." I am a first-time home buyer. After I won the bidding, they took a $5,000 deposit (cashier’s check) and $2,500 extra after the auction was done. They had me sign papers I did not know was a contract. It happened very quickly. They just said sign here and here, and I did.
The next day I went to the office and got my copy of the contract and when I took my friend to see the house, we found out it has a lot of termites. We did not go to a title company yet.
Can I back out and get my deposit back? Or can I ask them to fix the property because they did not disclose about the termites? –Said
DEAR SAID: Why did you sign a document that you did not understand? Why did you buy a house without at least looking at it? I am not sure that you will be able to get your deposit back. The auction made it clear that you were buying the property "as is," which means that the seller was not agreeing to make any repairs or to deal with any termite issues.
You should consult a local attorney to determine if there is any hope of getting your deposited refunded, but I seriously doubt that this will be possible.
DEAR BENNY: Is there a certain age at which one is allowed to sell a home and avoid having to claim the profit made on the sale? –Patricia
DEAR PATRICIA: No. Regardless of how old you are, if you have made a profit by selling real estate, you have to pay the applicable capital gains tax. If you have owned and lived in the house for two out of the five years before it is sold, you can exclude up to $250,000 of any profit you have made (or up to $500,000 if you file a joint income tax return).
If your income is low, there are reduced tax breaks, and you should discuss these with your tax advisors.
DEAR BENNY: My mother passed on in March 2007 and left my brother and me as co-executors of the will. The house in New York is the main asset. My brother moved into the house in June 2007 because his house in another state wasn’t selling.
My brother is still in the house and does pay the basic bills. He has made other changes to the house and because I live far away I hear about them after they are done. He is considering that if his house sells he may want to buy my mother’s house.
For three months now, I have asked him for an accounting of the changes he has made, but all he does is procrastinate. Can I ask him for rent if he stays any longer and how do I get information on what is going on in the house? –Joyce
DEAR JOYCE: Is the probate estate still pending? If so, since you are co-executor, you have the right to ask the court to require that your brother present you with the requested financial information.
Is there an attorney handling the probate material? That attorney can also be of assistance to you.
As for getting your brother to pay rent, that probably depends on the law in New York. In my experience, judges take the position that unless your brother did not allow you to live in the house, because you also have that right, you cannot collect any rent.
But here’s the real question: What do you want to do with the house? Are you willing to sell it to your brother — assuming of course that you can reach agreement on the purchase price? You should try to reach agreement as soon as possible with your brother. However, if you are unable to do so, then your only remedy may be to file a suit for partition. This is a procedure where you ask the court to force the sale of the property. It is a matter of right in all 50 states, but the real winners are the lawyers, the speculators and the trustees (or real estate brokers) who get involved with the sale.
Partition should be your absolute last resort.
DEAR BENNY: We recently refinanced our home loan with the XX company. Within weeks, we received a letter from the ZZ company saying that our October payment was due to them. An October payment invoice was included. I contacted XX, and was told that the loan was not sold. They said if and when that happens, we would receive a "goodbye letter" — which has not arrived. We now have October payment invoices from both mortgage companies, and only two weeks to go until the first payment is due. We contacted ZZ, which insists they own the loan now. In fact, both companies say they have our loan. What do you suggest we do? –Linda
DEAR LINDA: Mortgage lenders often sell their loans to other lending institutions, and unfortunately it is confusing to the homeowner as to where the payments are to be made. However, several years ago, Congress attempted to solve this problem. If a loan is sold, the homeowner must receive a letter from both the old and the new lender, advising that the loan has been sold and where the new monthly payments are to be sent. This is the "goodbye" letter mentioned by your lender. The law further makes it clear that once you get those letters (or often one joint letter from both lenders), you cannot be penalized if within the first 60 days you send your mortgage payment to the wrong lender.
I suggest that you immediately contact the consumer division of the Federal Reserve Board as well as your state Attorney General and Consumer Protection offices. Send copies of your complaints to both lenders. I suspect that your problem will be resolved promptly.
But in the meantime, because you did not get the "goodbye letter" make sure that you send your check to the XX company — your original lender.
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 firstname.lastname@example.org.
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