DEAR BENNY: My wife and I are selling our house and moving to a retirement community, which also has assisted living facilities. We have an offer coming this next week. This is the only offer we have had in the three months the house has been on the market. We have put a contract on an apartment in the retirement facility.
Presuming we can reach agreement with our buyer and sign the contract and get a settlement date, the retirement facility wants us to take out a bridge loan for the buy-in fee (about $300,000). Our concern is whether anything could go wrong before settlement. We feel we would be more comfortable waiting until we have the cash in hand.
Are we being overly fearful? We are told that it is a normal procedure to take out the bridge loan, as the earnest deposit guarantees that the settlement will go through. Is this true? We trust our seller’s agent but feel the buyer’s agent is dragging her feet. Should we have a real estate lawyer too? If so, how do we find one? –John
DEAR JOHN: I suggest that you get a real estate attorney to assist you. If you don’t know of any, you can call the local bar association in you area. Usually, those associations have referral arrangements.
You asked if anything can go wrong before settlement. The short answer is yes. While most settlements go smoothly, some can be a real disaster. For example: The buyer may have what we call "buyer’s remorse" and want to walk away from the deal. That’s why when I represent sellers I insist on a large earnest money deposit to put pressure on the buyer not to want to cancel the contract.
Additionally, the buyer may find problems in your house and either want you to pay a lot of money to correct those issues or walk from the contract.
Another possible glitch: In today’s economy, the appraisal that the buyer’s lender may come in too low, or the buyer may not be able to get the necessary financing.
Yes, a bridge loan is common, but there is a risk that you will end up having to pay two loans: your current mortgage as well as the bridge loan.
I would give serious thought about going the bridge loan route.
DEAR BENNY: My question involves renting back after selling your home. My son and his wife have found a buyer for their townhouse in this tight market, and they and the buyers are willing to close the deal within six weeks.
The problem is that the new owners cannot get out of a rental lease until April. Someone told my son that there is a rent-back limit, and that if he and his wife rent back for longer than 60 days, the property is considered a rental. Are you familiar with the law on this topic? We have looked online but can’t find an answer. –Barbara
DEAR BARBARA: You are referring to what we call here in the East a "post-settlement occupancy." It is a common occurrence. Usually, it works the other way, in that the seller needs a few days (or months) in which to get ready to move out of the house.
The seller agrees to put up a security deposit, which is negotiated between the parties. Typically, that deposit comes from the sales proceeds, which the settlement attorney (title or escrow company) will hold in escrow. It is not released until the seller vacates and the buyer can inspect the property to make sure that it is in the same condition as when the contract was signed.
Additionally, the seller agrees to pay the buyer PITI. That stands for "principal, interest, taxes and insurance." Since the buyer has taken title, and usually obtained a mortgage loan in order to go to closing, the seller agrees to reimburse the buyer the amount of money the buyer has to pay on the mortgage.
To avoid the situation becoming a landlord-tenant relationship, the typical post-settlement occupancy agreement makes it clear, in writing, that no such relationship is created.
But in your case, I would not be at all concerned. You son will remain in the property for a few months. If the buyer does not insist on getting a post-occupancy agreement signed, why should your son care if he ultimately is considered a tenant? Usually, state laws favor tenants. It would be the buyer who should be concerned, because he does not want to create any landlord-tenant arrangement.
DEAR BENNY: I’ve been living in my apartment for 17 years and am having problems with my next-door neighbor who moved into my building four months ago. She is harassing me because I am using cleaning materials and cosmetics (deodorant and eau de toilette) that affect her. She claims that she has a medical condition and cannot tolerate some odors.
I spoke with the management of the building and I agreed on using only green materials to clean my apartment. However, I can continue on with my lifestyle and use my soap and cosmetics.
The situation is now out of hand, and I would like to know what my rights are. Bear in mind that the management knew her condition before renting the apartment to her. So, I am caught in the middle. –Lia
DEAR LIA: You are not alone dealing with this issue. There are many people with medical conditions who will not tolerate certain chemicals or odors. In fact, many condominium associations have to be careful about the paint they use, as it can and does affect some hypersensitive people.
You have made an effort to cooperate by not using some of the products that irritate your neighbor. To the extent that you can cooperate a little more, such as opening windows when you use your cosmetics or use them outside if possible, that would show your good faith efforts.
You are not in the middle — your landlord is. Under the Fair Housing Act (a federal law that applies to owners and tenants) the landlord is required to make reasonable efforts to alleviate the situation. However, usually that means that the complainant has to bear the cost of any remedies.
I would not ignore the situation, but suggest that you talk with the neighbor and see if a reasonable accommodation can be reached.
DEAR BENNY: My husband died six months ago. We own a house, and the first mortgage is in his name only, but the deed and our second mortgage are in both of our names. My house is up for sale, but I haven’t received any contracts. When my husband died, I lost a large monthly payment that he was getting. I am afraid the house will end up in foreclosure. Do I need a lawyer? What is the procedure to do something about this? My home is in an adult community. Do I have to keep paying the maintenance fee? –Evelyn
DEAR EVELYN: I know that when I suggest that readers get a lawyer to assist them, some say that I am just trying to advertise legal services. That is far from the truth. I have personally assisted thousands of clients in my law practice, and helped them out of difficult situations. So, yes, you should get a lawyer.
You also should get a good real estate agent who understands market conditions in today’s economy. There are a number of government programs that may be helpful to you. You should consider a short sale, which many lenders are willing to approve. This means that if and when you find a buyer, if the sales price is below the amount of your current mortgage, the lender may be willing to allow the sale to go through. You would not get any money from the sale, but at least you would avoid the stigma of a foreclosure.
Other remedies include asking the lender to take back the property — this is called a "deed in lieu of foreclosure" — and filing for bankruptcy. These are only a few suggestions; your lawyers should be able to assist you based on the laws in your jurisdiction.
Should you pay the association’s maintenance fee? Legally, you are obligated to do so, although many association owners who are in your same situation opt not to make those payments.
I understand that you don’t want to throw good money after bad, but if you — and many other association owners — stop paying their assessments, your association will suffer and market values will go down even further. I cannot recommend that you stop making those association payments.