DEAR BENNY: In 2003 I submitted plans for a new home to the local building department that also included a one-bedroom basement apartment. I didn’t anticipate any difficulty with the procedure because the subdivision had been preapproved for duplex housing.
Not only did they turn down my request for the inclusion of this small apartment, they also required a seven-page special permit form be filled out in addition to a $250 charge to go before the planning board to get a special use approved. Talk about government control gone mad! I politely declined. It seems I could build a two-family house without an issue but including a mother-in-law apartment in my basement was inappropriate.
I went ahead with building the house and got a certificate of occupancy prior to adding the basement apartment. The apartment has been occupied for several years by a family member. When she passes on, we intend to sell the house.
Because the apartment has no prior approval, what difficulties are we likely to run into when we try to sell the house? I would not try to hide the fact the basement apartment has not been approved; however, I have been told we can still sell the house without an approval. The only issue is the value of the apartment would not be included for appraisal purposes. –John
DEAR JOHN: The damage has been done, and you have had the use of that "illegal" basement apartment for several years. Hopefully, even in today’s market, your property has increased in value.
You must disclose that the basement apartment is not legal. Perhaps a family will buy the property hoping to use the apartment as you have — i.e., as a family room.
A real estate agent should be able to provide you with suggested valuations of your house, but you must disclose these facts to your potential buyers.
Also talk with your tax advisers as to whether you can claim the basement apartment as part of the "up to $500,000 exclusion of gain" (or if you are not married or file a separate tax return up to $250,000). In order to claim that exemption, you must have owned and occupied the entire house for at least two years before it is sold. You want to make sure that you can include the basement in this exclusion.
DEAR BENNY: I am the treasurer of a small condominium association in the Chicago area. One of our owners is consistently late with her monthly association assessment and is currently five months overdue. This pattern has gone on for several years. There is little or no communication and no offer to make even partial payments.
We have issued a lien on her property but my understanding is we can collect only upon the sale of her unit. We have a 10 percent penalty each month if owners are 10 days delinquent, but this has not changed her pattern of late payments.
What can we do to change this delinquent behavior and enforce punctual payment of our monthly assessment? In addition, is there a resource for finding legal help in the northern Chicago suburbs that specializes in condo and townhouse bylaw enforcement? –Theodore
DEAR THEODORE: Although I do not practice law in Illinois, I suspect that the issues you are facing are no different from other states. In general, if a unit owner is delinquent, you have the absolute right to file a lawsuit against that owner in the appropriate state court.
You have to carefully review your association’s legal documents, especially the condominium bylaws. That document should spell out the remedies available to your board of directors, which usually includes (1) filing a lien, (2) suing on the delinquency, and (3) actually foreclosing on the unit.
My experience with the associations my law firm represents is that we try to file suit when the unit owner is not more than three or four months in arrears. Condo bylaws usually allow the board to accelerate the amount due to the end of the association’s fiscal year. That means that if the owner does not make a payment in January and February, instead of just filing suit for the two months, the board adopts a policy of acceleration to the end of the year, and thus can file suit for the full 12 months.
You should retain a lawyer who understands and practices association law.
One resource is the Community Associations Institute (CAI), which is headquartered in Virginia. They should be able to provide some information about a local chapter in the Chicago area. You can access CAI on the Web at www.caionline.org.
DEAR BENNY: I am looking at a home that is listed as a short sale. Is it true that the price is nonnegotiable on short sales? Will financial institutions require a 20 percent downpayment in order to finance (approve) a loan on such properties? –Rony
DEAR RONY: Short sales are relatively new, having been developed as a result of the many bank foreclosures that have taken place in the past few years. The federal government has developed guidelines that have only recently been promulgated, so the answers to your questions are still being worked out.
In general, however, the bank that owns the property will set a minimum price that it will accept. While some banks may be flexible, most will not, and thus the price will not be negotiable. Some real estate agents may be willing to forgive some of their commission to assist with the sale, but each agent has to make that decision independently.
As to whether you must put down 20 percent in order to obtain financing for a short sale, I do not believe this is correct. You can still get a VA or an FHA mortgage by putting down as little as 5 or 10 percent, so long as your credit is good.
Talk with a mortgage lender before you enter into any real estate contract, to make sure you can qualify. In fact, it makes sense to get a "preapproval" letter from a lender early in the process; this will demonstrate to your seller — whether a short sale or not — that you are a good candidate to buy the property.
DEAR BENNY: I am a Realtor and I have a client/friend who has been working with a major lender on a loan modification and he had arranged to make payments for the next three months. He is on his second payment and his home was published to go to auction even before the three months were up. Despite the fact that the lender accepted two payments, it still proceeded to notice a foreclosure sale. The borrower called the lender who claimed it had no knowledge of the auction. The company handling the auction said it was told to proceed. Is there any recourse for the borrower? And can the lender keep accepting payments and still auction the home? –Connie
DEAR CONNIE: I have discussed this issue with many people, including a number of lawyers involved with lending and foreclosure proceedings. The general consensus is that loan modification is a bogus concept.
Unfortunately, the right arm of many major lenders does not know (or care to know) what their left arm is doing. I cannot believe that the auction company is proceeding without authorization from the lender.
Demand that the auction company provide you with a copy of the authorization letter. If this is not possible, then file a complaint with your state attorney general’s office. And if the lender is a national bank, also file a complaint with the Office of the Comptroller of the Currency. You can find the lender’s information on the Web at www.occ.treas.gov.