DEAR BENNY: My husband and I signed a contract in November and put $1,000 down. The real estate agent put financing as "n/a" (not applicable) because we were preapproved by our bank. He sent us to a bank and the loan was approved, with a great interest rate and no points. Then problems started.
The underwriter said a road maintenance agreement was needed, which was not disclosed in contract. We told the other side we want out, and to give us our money back. The agent said an attorney was working on the road maintenance issue with 28 families.
We still have not gotten our deposit back, and the agent said if we pay the seller’s fee of $500 for the attorney doing the road maintenance agreement, they might release us from contract.
I filed a complaint with the Department of Real Estate because of the nondisclosure of road maintenance, and they said there is no violation. Now the home inspector is calling us wanting his money, and we have told him the agent still has it. We did sign a release of contract designating where the $1,000 should go, and when we called the agent he said the owners are still thinking about it. Do we have any options left, other than paying even more money for an attorney? This has been a nightmare. –Tom
DEAR TOM: Does your state require sellers to disclose known conditions of the property? If so, and if the road condition was not disclosed, I believe you have a good case against the sellers — not the real estate agent.
If disclosures are not required by your state, I suggest you call the attorney involved with the 28 other families. Find out the situation and ask why you have to pay the $500. That attorney is not representing you, and the seller will have to pay that fee regardless of who buys the house.
You should also discuss this with your own attorney. It may very well be that the road maintenance issue is a cloud on title, which would have prohibited you from buying in any event.
Generally, there is a provision in real estate sales contracts that the seller is conveying good and clear title. Under these circumstances, because the seller may not have had clear title to convey, you should get your money back. Furthermore, you may even have a claim for reimbursement of the home inspection fee.
There is, of course, a good lesson to be learned from your experience. Even though you had a preapproval letter from a lender, you still should have included a financing contingency in your sales contract. I know that real estate agents will object, stating that your contract was more attractive without that contingency, and I would agree with them. But I want homebuyers to be fully protected, and contingencies are consumer protections.
DEAR BENNY: I’d like to know if a deed-in-lieu of foreclosure is possible in the following situation: I am the sole mortgage holder on our house. I listed it as a short sale for a year to no avail. I am recently divorced, but my ex can reside in the house. Both of us are on the deed.
In our divorce settlement agreement, because the house mortgage is in my name only, he must allow me to try to sell it. I spoke with the bank and a deed-in-lieu is an option I would like to pursue. However, does my ex husband need to be involved with any of the official documents in the deed-in-lieu process? I guess what I am asking is although I am able to pursue selling however I choose, would a deed-in-lieu be considered the same thing? –Lisa
DEAR LISA: First, a quick explanation of a "deed-in-lieu." This is a process whereby your mortgage lender agrees to take back the house instead of (i.e., in lieu of) spending the time and money foreclosing on the property. Some lenders will agree to this, especially if there is only one mortgage on the house.
Have you discussed the situation with your ex-husband? Does he understand that he will probably have to move out, whether it is sold or the deed is given back to the lender?
Keep in mind that even if you have the absolute right to sell, your ex will have to sign any deed. Although you are the only one on the mortgage (in some states that is called a deed of trust), he still has an ownership interest in the property and will have to sign the deed along with you.
If you believe you can sell through a short sale, whereby you will not get any of the sales proceeds, I believe you would have the same right to give the deed back to the bank.
But before you proceed down either path, make sure that your ex will be on board. Talk with your divorce lawyer to confirm that you have the right to do a short sale. If so, then I think the deed-in-lieu will also fly.
DEAR BENNY: Your comments in a recent column to an elderly person seeking advice on possibly renting were unfair. Suggesting to this person that he or she watch "Pacific Heights" is like telling someone interested in country life to first see "The Amityville Horror." Painting such a gloomy picture is as wrong as saying renting leads to the road of riches.
There are pitfalls to renting, as you suggest, but there also are many benefits. A person could get help from a trusted family member, attorney or friend in screening applicants and learning the ins and outs of renting. Some older people might appreciate the companionship of a renter.
Although renting is not for everybody, someone who does his or her due diligence may find it very rewarding. I wouldn’t recommend that my 80-year-old mother rent her house, but I do know seniors who have been successful landlords.
We have been landlords for years and have never had anything remotely close to a "Pacific Heights" experience. I am sure you were looking out for the best interests of the elderly, but a more balanced column would have been more helpful. –Steve
DEAR STEVE: I accept your criticism, and perhaps I was a little too harsh in my response. But as you point out, renting is not for everyone, and sometimes one has to point out the extreme risks in order to get the point across.
As always, I welcome comments and suggestions from my readers — positive or negative.