Real Estate in Steamboat

Editor’s note: Robert Bruss is temporarily away. The following column from Bruss’ “Best of” collection first appeared Sunday, April 16, 2006.

DEAR BOB: We recently purchased a beautiful waterfront home in the state of Washington. This will become our retirement home in three years, but we are reluctant to rent this home and are leaning towards having a housesitter live in it until we move in. This individual is highly recommended by our new neighbors. However, I read somewhere if we allow an individual to house-sit, we are granting “squatter’s rights.” Is that correct? This individual would not pay rent but will pay the monthly expenses. –Jeanine W.

DEAR JEANINE: “Squatter’s rights” (legally called a “tenancy-at-sufferance”) refers to occupancy without the owner’s permission. Obviously, your housesitter will occupy the house with your permission so you need not worry about squatter’s rights.

Purchase Bob Bruss reports online.

Be sure to consult your insurance agent in Washington to be certain you have adequate insurance for this unusual situation, including liability coverage in case the housesitter trips on a loose carpet, which could be considered negligence by you.

You need a written agreement with your housesitter so you can remove him or her at your will without cause. I suggest you consult a real estate attorney located near the property.

HOW TO GET HOME SELLER TO PAY FOR REPAIRS

DEAR BOB: We are in the process of buying an older home in a great neighborhood with outstanding public schools. As you often suggest, we insisted on a professional inspection contingency clause in our purchase offer. We also accompanied the inspector to discuss the problems he discovered. Two defects that the seller did not disclose are: 1) the roof is leaking water into the attic, and 2) the foundation is sinking slightly in one corner, probably due to poor drainage, which can be corrected. But the roof will cost at least $12,000 to replace. How can we get the seller to pay for the repairs? –Josh R.

DEAR JOSH: Congratulations on including a professional inspection contingency clause in your home purchase offer. Although the seller made a good faith effort to disclose known defects, perhaps he was not aware of the roof leaks and the foundation problem.

The best approach is to reopen negotiations and ask the seller to give you a “repair credit” for the leaky roof and the foundation repairs. This is better than asking the seller to install a new roof and fix the foundation. The reason is most sellers will hire the cheapest contractors who might not do a quality job.

A repair credit usually doesn’t affect your mortgage eligibility amount or the appraised market value. If your seller refuses to give you a repair credit, you can always walk away.

In today’s slowing home sales market, you can be sure the listing agent will help with negotiations. But don’t be unreasonable. It’s a good deal for both parties if the seller agrees to credit you with half the cost of a new roof.

NO EASY WAY TO FORCE RELUCTANT CO-OWNER TO SELL HOUSE

DEAR BOB: My wife and I own a two-thirds interest in a nice house with a pool. The other one-third belongs to the occupant who is not taking care of the property, is on food stamps, and is not likely to repay us or buy us out. How can we sell our interest in this house without a partition lawsuit? Private investors suggest paying him off to get him out. They offered us only a fraction of full-market value. –John L.

DEAR JOHN: You were very lucky to find anyone who would buy a two-thirds interest in a house. Without a partition lawsuit to force the sale of the property, you can’t force the occupant to sell.

Just because the resident is “down-and-out” doesn’t mean he should be able to keep you from selling. I suggest you remind him that if he sells, he will receive one-third of the net sales proceeds.

If I were an investor interested in buying that property, I would make you a very “low-ball offer.” After you accept and taking title to your two-thirds interest, I would bring a partition lawsuit to force the sale of the property at full market value, thus making a “quick-flip” profit. For more details, please consult a local real estate attorney.

WHAT IF BUYER’S AGENT LIED ABOUT STATUS OF THE DEPOSIT?

DEAR BOB: We had a sales contract to sell our house. The buyer was supposed to pay a deposit into a trust account with the realty office representing the buyer. We expected to close with no problem. But a few days after the scheduled closing date, the buyer’s agent told us the buyer is a “fraud” and passed forged checks for the deposit and the down payment. The agent cannot locate the buyer. Does the buyer’s agency have any obligation to us to pay the deposit, which was supposed to be in a trust account? –Charles S.

DEAR CHARLES: That dishonest buyer’s agent should be reported to both the state real estate commissioner (for possible license revocation) and to the local Association of Realtors (for discipline) due to breach of fiduciary duty to you.

There is no valid excuse for not promptly telling you the buyer’s good-faith earnest money deposit check bounced.

However, I would not bother suing the buyer’s agent because proving your loss might be difficult and costly. I suggest you move on. However, your listing agent should have been monitoring the situation so perhaps he or she should share the blame too.

WHAT ABOUT THOSE “WE BUY HOUSES” COMPANIES?

DEAR BOB: I am thinking of selling my home to one of those “we buy houses” companies. They claim to buy “as-is.” They ask the seller to inform them of any repairs needed, but they also say if the seller does not inform them of any necessary repairs, they presume repairs are necessary anyway. This firm offered me a very low price. If accepted, they then perform a “due diligence” inspection before the contract is final. Does the fact that they assume repairs are necessary and that they highly discount the sales price change the seller’s legal liability for repairs? –Mark P.

DEAR MARK: Most states now have laws and court decisions requiring home sellers to disclose known defects of the residence in writing. Making an “as-is” home sale is not a method to avoid liability for undisclosed defects of which you are aware.

If you sell to those professional buyers at a price heavily discounted from market value, you should insist on a written waiver in the sales contract that you have disclosed all known defects, and the buyer has investigated and will not hold you liable for any latent (hidden) defects that might become evident later. For more details, please consult a local real estate attorney.

NO EXPIRATION DATE FOR $250,000 HOME SALE TAX BREAK

DEAR BOB: I read in the AARP newsletter that Internal Revenue Code 121 will expire in 2007 but that it will be extended if Congress passes President Bush’s 2007. Do you have any further information on this topic? –Helen K.

DEAR HELEN: There is no such expiration date in Internal Revenue Code 121, which provides principal residence sale tax exemptions up to $250,000 for a qualified single home seller and up to $500,000 for a married couple filing a joint tax return.

If there were such a provision in either IRC 121, or President Bush’s proposed 2007 budget, you can be sure the National Association of Realtors (the nation’s largest trade association with over 1.2 million members), the National Association of Home Builders, and other real estate groups will be extremely vocal to stop such an irrational tax law repeal.

SAVE RECEIPTS WHEN CONVERTING RENTAL TO PERSONAL HOME

DEAR BOB: I own a house that has been rented to tenants for many years. Now we want to use this as our primary residence and sell it after 24 months. What documents should I have to prove to the Internal Revenue Service this is indeed my primary residence so I can claim the $500,000 exemption of Internal Revenue Code 121? –Deb S.

DEAR DEB: Just move in. Save your utility bills and other evidence of principal residence occupancy. Be sure to file your income tax returns from your new principal residence, change your car registration, driver’s license, bank accounts, etc. to your new address.

You mentioned “we.” If your spouse is not on the title, that’s all right as long as he also meets the 24 out of last 60 months before sale occupancy test. However, if your co-occupant is not your spouse, he or she must be on the title to claim their $250,000 principal residence sale tax exemption. For more details, please consult your tax adviser.

The new Robert Bruss special report, “How to Sell Your House or Condo for Top Dollar With or Without a Real Estate Agent,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet PDF delivery at www.BobBruss.com. Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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Copyright 2007 Inman News

“I have recently heard advertisements for mortgages with the disclaimer that the ‘payment rate is not the interest rate.’ How does that work?”

The interest rate is the rate used to calculate the amount of interest the borrower owes the lender each month. The payment rate is the rate used to calculate the amount of the payment the borrower is obliged to make each month. On most mortgages, they are one and the same, which is why it may be confusing when they are different.

Consider a 30-year mortgage for $100,000 at an interest rate of 6 percent. The interest due from the borrower in the first month is .06 multiplied by 100,000 and divided by 12, which comes out to $500. Using 6 percent as the payment rate, the monthly payment is $599.56. This is calculated from a formula that my editors find too complex to show here, but it is available on my Web site.

The formula is derived on the assumption that the payment rate and interest rate are the same. It calculates the “fully amortizing payment,” which is the payment that will amortize the balance over the term. If the borrower in my example pays $599.56 every month, the 360th payment will be the last.

Now let’s assume that the interest rate remains at 6 percent but the payment rate is only 3 percent. Using the same formula, the payment at 3 percent is $421.61, but since the payment rate is below the interest rate, this payment is not fully amortizing. The borrower is now required to pay $421.61, but because the interest rate remains at 6 percent, the interest due the lender continues to be $500. The shortfall of $78.39 must be added to the loan balance. The shortfall is called “negative amortization.”

A payment rate below the interest rate is always temporary. Because all mortgages are designed to be paid off in full over their term, at some point the payment must be recalculated at the interest rate to be fully amortizing over the remaining life of the loan.

In my example, assuming this happened after five years, the payment would increase to $679.55, which will pay off the $105,469 balance at that time over the remaining 25 years. If it did not happen for 10 years, the balance would reach $112,847, and the payment required to amortize it over 20 years would be $808.48.

A small-type disclaimer saying the “payment rate is not the interest rate” almost certainly was attached to marketing materials for an option ARM. This is an extremely popular mortgage because of its low initial payments. In 2005 and 2006, about $500 billion in option ARMs were written, many to borrowers who did not understand the difference between interest rate and payment rate. No one bothered to explain it to them at the time, but many have been catching on more recently and wondering if they made a mistake.

The confusing thing about the most widespread version of the option ARM is that the payment rate and interest rate are the same in month 1. The interest rate on this ARM adjusts monthly, however, and in month 2 the rate jumps. It can be 3 percentage points or more above the payment rate starting in month 2, remaining there for up to 10 years, but a day of reckoning is inevitable.

The option ARM has been very aggressively merchandised. The focus has been low initial payments, with the inevitable rise in payments in the future deemphasized or ignored altogether. Existing disclosure rules provide no help to borrowers.

Recently a group of regulators from five federal agencies expressed concern that many borrowers taking option ARMs were getting in over their heads without realizing it. Acknowledging that amending the disclosure laws would take too long, they proposed that lenders provide their own. The disclaimer about the payment rate not being the same as the interest rate may be a response. If so, it is pitifully inadequate, though it may provoke some borrowers (including the one who wrote me) to seek more information elsewhere.

The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.

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Copyright 2007 Jack Guttentag

No one wants to buy a house that’s riddled with termites. So, a termite inspection — technically an inspection for damage by any kind of wood-destroying organisms — is usually done at some point during the course of a home sale.

Loosely referred to as a termite inspection, an inspection for wood pests covers such organisms as dry rot, fungus, wood-boring beetles, carpenter ants — to name a few — in addition to termites. Who pays to repair the damage varies, often depending on market conditions.

For example, during soft markets that favor buyers, sellers are usually more willing to pay for pest repairs than they are when houses sell quickly. However, in a hot seller’s market, buyers are more likely to overlook these defects and buy properties in their “as is” condition, without asking the sellers to pay for repairs.

Even if a seller doesn’t have to do pest repairs in order to sell, there are times when it makes sense to do so. Buyers look favorably on a house that has little, if any, pest damage. It’s one less thing for buyers to worry about after moving in. A pest report with little or no damage is a big draw.

Although it’s not custom everywhere, it’s wise for sellers to have their homes inspected for wood pests before selling. Actually, it’s a good idea for homeowners to have their homes inspected every few years, even if they’re not planning to sell, so that problems can be dealt with before they become major.

In some areas, sellers don’t pay to have their homes inspected for wood pests until they have accepted an offer from a buyer. This approach can be problematic. If the pest inspection reveals more damage than anticipated, the contract could end up in renegotiation. And, if you can’t come to terms with the buyers, the listing will be back on the market.

There’s another advantage to having a wood pest inspection done before the marketing begins. Even if you don’t have the time or inclination to have all the work done, it might enhance the marketability of the home to have selected items done.

For example, let’s say the bathroom floor not only looks bad, but there is dry rot underneath it. The pest report calls for removing the old floor, repairing the damage and installing a new floor. If you do this work before you put your home on the market, you not only eliminate one of the items on the pest report, but your home will probably look more attractive to prospective buyers.

HOUSE HUNTING TIP: As nice as it is to move into a house that needs no work, there are benefits to having the buyers oversee corrective work. The sellers are on their way out of the property. They could be involved in a job transfer or a divorce, and have little time to devote to making sure the job is done correctly. The buyer has a vested interest in making sure the job is done right.

It may be advantageous for the buyers to take responsibility for wood pest repairs if they plan to make improvements to the property. For instance, a buyer could factor deck repair costs into the price and accept a dry-rotted deck in its present condition, without asking the sellers to make repairs. That is, if the condition is not an urgent concern. This way, the buyers can redesign the deck to meet their own specifications.

THE CLOSING: Buyers who agree to take on the pest work can either factor that in to the price or ask the seller to credit money to them at escrow. Check with your mortgage representative to determine the best way to structure the transaction taking your financial situation into account.

Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.

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Copyright 2007 Dian Hymer

The slow drift downward in long-term rates stopped this week, the 10-year T-note at 4.69 percent, mortgages settling just above 6.25 percent.

Once again, good economic news dampened recession hopes in the bond market: orders for durable goods were very strong in March, up 3.4 percent, double the forecast, and February’s orders were revised up half-again the initial report. Orders for durable goods trend along with capital spending by business, and weak business spending during the winter was thought to prove economic weakness spreading from housing and autos. But, not yet.

Today’s first-quarter Gross Domestic Product data confirmed the pattern: overall GDP growth was the poorest in four years, only 1.3 percent. However, consumer spending was up a solid 3.8 percent, and weak housing by itself sawed one full percentage point from GDP.

The immense hopes in the bond market that housing will pull the economy down are — so far — misplaced. Housing has slowed the economy, but not tipped it over. Hence, a four-year low for GDP growth failed to encourage bond buyers, and long-term rates are the same.

It is hard even for professionals to sort through housing stories. Actual economic weight is distorted by exuberance among pessimists, and gallows humor at the fall of the profiteering mighty. Far too many “experts” report the fate of home prices as though there were one, single, unified national market. A traditional forecasting error, projecting trend to straight-line infinity, is especially misleading when it comes to the marvelously adaptable American household.

There are three forces in play: damage done to the economy by the current state of housing; how much worse housing may get; and effects of mortgage defaults on the credit markets. Keep these separate! The daily alarmism has all three in a self-reinforcing spiral to doom, but they are not so closely linked.

One at a time. Home prices on national average are flat, OFHEO and Case-Shiller studies giving the lie to all the “prices-are-falling” howling. Prices are falling in several micro markets; however, except for the auto-belt, the falling-price zones are the ones that enjoyed the greatest gains. If you were the last lucky buyer to the party, you’re in pain; but the earlier buyers are thoroughly protected by 100 percent-plus appreciation, feeling nothing more than a missed opportunity to cash out at the top.

Housing went flat at least a year ago, and the Fed’s numbers show that equity-extraction dropped sharply way back then. Not “going to drop,” but already has.

How bad will it get? Blue sky. Pick your pessimist, or pick history. History says that markets that outran supporting purchasing power will stay flat for years; the bigger the “outran” margin, the more likely prices will drop for a year or so after the peak — but then, just flat. Grinding, millstone flat.

The best black comedy and hysteria says that default shock to Wall Street and friends will cause a sudden withdrawal of mortgage credit, which will make all of this worse. We will know shortly, because that shock is also in the past: most mortgage underwriting has rolled back to old standards, yet new loan applications are steady.

I think the most probable outcome is a multiyear limit on consumer spending imposed by a near-stop to equity extraction. Already countering the damage: adaptability (co-signers, gifts, reduced expectations, new jobs, and revolutionary concepts like “saving”), and fantastic strength in the global economy.

Last month it looked as though the U.S. economy was finally caving in; now the corporate sector looks OK. If inflation will behave, slide back under 2 percent, pulled down by wage competition with Asia and not by unemployment here … then we get one of the all-time sweet spots. No recession, moderate growth — a scenario more probable than doom by housing. Doom will need reinforcement from elsewhere.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.

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Copyright 2007 Lou Barnes

Editor’s note: Robert Bruss is temporarily away. The following column from Bruss’ “Best of” collection first appeared Sunday, May 7, 2006.

During this peak home sales season, when thousands of houses and condominiums will be sold, buyers and sellers need to be aware of what is legally included and excluded from their sale.

Most experienced real estate agents have horror stories about “fixtures,” which the seller removed but the buyer thought were included in the sale.

Purchase Bob Bruss reports online.

To illustrate, my mother was a mild-mannered woman. Only once did I ever hear her raise her voice. I was helping mom and dad move into their condominium. As I walked down the hallway to the condo carrying some boxes, I heard her scream as she entered the condo, “Where is the chandelier?”

The seller had removed the dining room chandelier. Even my dad was surprised.

Fortunately, a phone call to the real estate agent resolved the problem, the seller sheepishly restored the chandelier, and everyone lived happily ever after.

That typical example shows how important fixtures can be in a home sale.

THE SIMPLE REAL ESTATE LAW OF FIXTURES. Most home buyers and sellers, and even their real estate agents, often do not understand the simple law of fixtures.

A “fixture” is moveable personal property, which, by means of bolts, nails, screws, cement, glue, or other attachment method, has been converted to real property. Clearly, that dining room chandelier had been converted from personal property to real property because of its permanent attachment to the structure. Nothing was said in the sales contract about its exclusion from the condo sale.

A more troublesome example can be window coverings. Suppose a house or condo has beautiful draperies and attached wood window blinds. Those draperies hang by hooks from a drapery rod that is screwed into the wall.

The law of fixtures says the draperies are personal property because they can be easily removed without damage, but the drapery rods are fixtures included in the home sale. The wood window blinds, if permanently attached to the structure, are considered fixtures, which are included in the home sale.

But the printed sales contract can change the result. Most well-written home sales contract forms specify “window coverings” are included in the sales price (unless otherwise excluded).

REMOVE IT IF YOU DON’T WANT IT INCLUDED IN THE SALE. As longtime real estate agents know, the worst thing a home seller can do is hang a sign on a fixture stating the seller wants to exclude it from the sale.

Having bought many rental houses, I recall seeing little signs hanging from the dining room chandelier, or pasted on the front of the dishwasher, saying, “This item not included.”

That is like waving a red flag in front of a bull. Unless the item is junk, the buyer will then insist on receiving that fixture as part of the home-purchase price.

A better approach for home sellers is to remove the item before exposing the house or condo to prospective buyers. Removing the dining room chandelier and installing a tasteful replacement is far better.

For example, last year I recall inspecting an $18 million estate where the seller had removed the built-in kitchen appliances. Frankly, I thought that was “tacky.” But I was not a serious buyer so I didn’t bring up the issue with the listing agent.

MY FAVORITE FIXTURE STORY. Years ago, in the small town where I live, a large house was listed for sale. One of its primary features was the beautiful rose garden.

After the house sale closed and the buyer obtained title, image the buyer’s shock to discover the seller had removed all the beautiful rose plants. That seller obviously understood the law of fixtures.

Plants and trees growing in the ground are considered to be fixtures because they are permanently attached to the land by roots. However, because the rose plants were in large pots, the seller was legally entitled to remove them since they were not permanently attached to the real property.

AVOID FIXTURE TROUBLE WITH A WELL-WRITTEN SALES CONTRACT. When a home buyer spots non-fixture items, such as patio furniture, which the buyer wants included in the home sales price, the buyer must itemize that personal property in the sales contract to have it included in the sales price.

Similarly, if the seller wants to exclude any fixtures that are attached to the structure, those items must be itemized in the written contract otherwise they are automatically included in the sale.

Troublesome items to consider include: track lighting, fireplace inserts and equipment, solar systems, built-in appliances, screens, awnings, shutters, window coverings, attached floor coverings, TV antennas, satellite dishes and related equipment, telephone and Internet wiring, window air conditioners, pool-spa equipment, water softeners, security systems, keys to all locks, garage door openers and remote controls, mailbox, and landscaping equipment.

FIVE LEGAL RULES IF A FIXTURE DISPUTE GOES TO COURT. If a lawsuit develops over an item that the buyer thought was an included fixture, but the seller removed, five basic legal rules generally apply:

1. METHOD OF ATTACHMENT. The most important fixture rule is the method of attachment. If the item is permanently attached to the structure, it is legally considered to be a fixture, which is included in the home’s sales price.

However, if an item can be removed without damage to the structure, such as draperies, it is not a fixture. Examples include unscrewing light bulbs and unplugging a refrigerator because both are personal property not permanently attached to the building.

The item’s weight is immaterial. To illustrate, an aboveground swimming pool is removable personal property unless it is surrounded by a permanent structure, thus making it a real property fixture.

2. INTENT OF THE BUYER AND SELLER. If the written sales contract is indefinite, in a court trial the intent of the buyer and seller become pivotal.

For example, when the multiple listing service (MLS) listing specifies a “beautiful kitchen with the latest appliances,” that implies the seller intends to include those appliances and the buyer can rely on that statement. Or a description of the beautiful swimming pool can be interpreted to mean the seller plans to include the pool cover and equipment.

3. ADAPTABILITY TO PROPERTY USE. When personal property is built into a home, it indicates it has become a fixture, which is included in the sales price.

To illustrate, when I bought my home there were built-in stereo speakers on each side of the den fireplace. Although nothing was said in the sales contract, I would have been very upset if the sellers removed those speakers. However, they did unplug their stereo equipment and I had to buy new stereo components.

4. AGREEMENT OF THE PARTIES. A written contract that lists a specific item, whether it is a fixture or personal property, usually prevails to make it included in the sales price. If in doubt, buyers should list any questionable items.

5. RELATIONSHIP OF THE PARTIES. As a general rule, if a lawsuit develops, courts tend to favor a) buyer over seller, b) tenant over landlord, and c) lender over borrower.

TRADE FIXTURES ARE AN EXCEPTION. The fixture rules explained above apply to residential sales. However, when a commercial business property is sold, the business tenant is entitled to remove business trade fixtures.

Examples include restaurant equipment, outdoor business signs, display cabinets, a bank vault, and a tavern bar. However, the business seller or tenant must restore the premises to its pre-lease or pre-sale condition.

SUMMARY: A well-written sales contract can prevent fixture problems by clarifying what is included or excluded from a real estate sale. For more details, please consult a local real estate attorney.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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Copyright 2007 Inman News

If you’ve got a piece of wood to cut, chances are pretty good that you have a saw sitting in your garage that’s more than equal to the task. But what about those pavers for the new patio? Or the bricks for the walkway, and the ceramic tile for that new bathroom floor?

For those tough jobs, you need the specialized power and accuracy of a masonry saw. Masonry saws come in a variety of sizes and styles, from small portables to bruisers capable of slicing through 10-inch concrete blocks in one pass, and can be purchased or rented depending on your needs.

Virtually all masonry saws have several things in common, whatever their size. Perhaps the most important common feature is their specialized blades, which utilize a coating of diamond dust around the outer perimeter of the blade instead of the teeth commonly seen on wood cutting blades. The diamond coating is able to slice through tough, highly abrasive materials, such as brick, concrete, stucco, roofing tiles, ceramic tiles and many other similar materials, without dulling.

To extend the life of the blade and minimize the dust associated with this type of cutting, most masonry saws are designed to provide a continuous flow of water over the blade while in use. These types of masonry saws, called wet saws, typically utilize a water tray and a recirculating, semisubmersible pump to keep a steady flow of water moving across both sides of the blade.

While sizes and designs vary, the most common style of masonry saw has a large plastic or steel tray with a set of guide bars on each side. Positioned on top of the guide bars is a rolling platform, and fixed to a frame above that is an electric motor and blade.

To use the saw, the blade is lowered to the proper height over the sliding table. For thinner materials such as tile, the blade is set low enough to cut all the way through the tile in a single pass; thicker materials may require that the blade be set higher, so that the cut is made in two or more subsequently lower passes. The material to be cut is placed on the sliding table, the blade and pump are activated, and the cut is made by sliding the table into the blade, which remains stationary.

Another style of masonry saw is the dry saw, which utilizes a diamond blade but without water. Some of the larger types of brick- and block-cutting dry saws utilize a pivoting head, much like a conventional wood-cutting miter saw. The brick or block is positioned against a fence on a fixed table, and then the blade is pivoted down into the material to make the cut. This type of heavy-duty brick- and block-cutting saw is available in both electric and gas-powered models.

Another type of dry saw is the portable circular masonry saw, which resembles a standard circular saw like those used for cutting wood. Dry-cut circular masonry saws are very useful for cutting holes in stucco and brick walls, cutting out grout lines in ceramic tile prior to removal or regrouting, cutting concrete and similar tasks where it’s necessary to bring the saw to the job instead of the other way around. Some types of dry-cut portable saws can also be fit with a water reservoir and hose, which allows for a slow, steady flow of water across the blade for those times when dust is a concern.

Another type of specialized masonry saw is the concrete-cutting saw, which is used to cut lines or holes in concrete slabs, asphalt, terrazzo and marble floors, and other areas. Concrete saws utilize large diamond blades that are powered by a gas motor. The motor and blade sit on a three- or four-wheel frame, and are rolled over the line to be cut. A garden-hose connection provides a continuous flow of water over the blade, creating a slurry as the cut proceeds, which both minimizes dust and assists with the cutting process.

Masonry and tile saws are available for purchase through home centers, tile stores and other outlets. Prices range from under $100 for smaller tile wet saws and portable dry saws to more than $1,000 for the larger brick and block saws. Just about any of these saws, as well as the larger concrete saws, are also available for rent from most local rental yards.

Remember that you are working close to a high-speed blade that, due to the design of these saws, has only minimal covering for protection. Follow all manufacturer safety precautions for setup and use, and don’t neglect the proper clothing and, especially, good eye protection.

Remodelingand repair questions? E-mail Paul at paul2887@hughes.net.

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Copyright 2007 Inman News

The U.S. Department of Transportation tells us that, as of 2004, there were more than 243 million passenger vehicles registered in the United States. That’s very nearly one car for every man, woman and child in the nation. In fact, it’s some 13 million more cars than there are licensed drivers to drive them.

Thanks to such mind-numbing figures, historians will someday regard the 20th century — though hopefully not much of the 21st — as an absurdly auto-infatuated era. After all, ours is a time in which cars are at the very core of American identity. They’re central to our coming of age and integral to our self-image and social status — not to mention being all but mandatory to get around in the asphalt-paved, commute-saddled world we’ve created for ourselves.

Still, future historians may have quite a bit of trouble understanding the supposed romance of a machine whose thirst for petroleum led us to befoul our own skies and oceans, and made us tailor our foreign policy in large part to keep our gas tanks cheaply filled. They’ll be even more mystified at how we Americans could panic over the supposed health risks of asbestos, electromagnetic fields and radon gas, while more than 40,000 of us died every year in the comfort and perceived safety of our own automobiles.

We shake our heads at our ancestors, who fought long, brutal wars over water, salt or patches of worthless land. But once oil-powered vehicles join the paddle wheeler and the steam locomotive as stone-dead technology — a moment that’s coming much sooner than we might think — future generations, too, will shake their heads over our own century-long addiction to automobiles, oil and the troubles that went with them.

The fact that cars have also taken over our built environment may be a less immediate threat, but it’s equally dismaying. Among city planners, not to speak of traffic engineers, the logistics of accommodating motor vehicles long ago took precedence over the needs of mere humans on foot. And since a car takes up about 20 times more space than a person does, making room for those 200 million-plus motor vehicles has led us to pave over some 40 percent of our cities (in Los Angeles, this figure is said to be closer to 60 percent). Inside our own homes, about one-fifth of our hard-earned living space is given over to keeping our four-wheeled friends warm and dry. A century ago, not even Henry Ford could have dreamed that our automobile obsession would lead us to this state of affairs.

So there you have it: Another tract decrying those awful automobiles, written by a tree-hugging car hater, right? Not quite.

I’ve been a hardcore gearhead my whole life. I own four cars, three of them being what car nuts rather amusingly call “classics.” I’d stay up all night talking about spread-bore carbs and roller cams if I got half a chance. But even this degree of motor mania can’t overcome an obvious fact: We’ll all be better off when petroleum-powered cars have cruised off into history.

Next time: Why no one walks anymore.

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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2007 Arrol Gellner

Editor’s note: Robert Bruss is temporarily away. The following column from Bruss’ “Best of” collection first appeared Sunday, May 7, 2006.

DEAR BOB: About five years ago, I co-signed a home mortgage for my niece so she could buy a condominium. All went well until about four months ago. She lost her job and refuses to take another job that doesn’t pay as much. The result is she is now four months behind on her mortgage payments. Frankly, there is no way she can catch up, even if she does find her perfect “pie in the sky” job. However, I have a 723 FICO score, which I don’t want to lose because good credit is important to me. Other than paying the missing mortgage payments, which now are about $14,000, how can I protect my good credit? –Fred G.

DEAR FRED: You can’t. You probably now realize it was a major mistake to co-sign on your niece’s mortgage. I’m sure you wanted to help her and you trusted her to make the monthly payments. But when she defaulted, it not only hurt her credit rating but it also hurt yours as a co-signer.

Purchase Bob Bruss reports online.

Your situation is a classic example why not to co-sign on a mortgage obligation.

Legally, you are liable for the missing mortgage payments. However, if there is sufficient equity in the condominium, the lender will probably foreclose and either be paid in full by a bidder at the foreclosure auction or receive title to resell the condo.

Chances of the lender suing you for a deficiency loss are not great, but it could happen. For more details, please consult a local real estate attorney.

DON’T WASTE YOUR INVESTMENT PROPERTY TAX LOSS

DEAR BOB: Is there any way to carry over Internal Revenue Service Schedule E losses to the next tax year? Why can’t I defer expenses to offset future taxable income? –Claude R.

DEAR CLAUDE: If your IRS Schedule E tax loss is from operating your rental property, probably due mostly to the non-cash depreciation deduction, you can carryover “suspended” tax losses to future tax years.

Or you can use suspended tax losses to offset your capital gains profit when you sell your rental property. It sounds like you should consult a new tax adviser to be certain you are maximizing your real estate investment property tax benefits.

IF YOU DIDN’T INHERIT PROPERTY, NO STEPPED-UP BASIS FOR YOU

DEAR BOB: My late mother battled cancer for five or six years. Three years ago, she deeded her house to me to avoid probate and a possible claim by her ex-husband. She died about four months ago. I have decided to sell the house, but my tax adviser says that because I received a lifetime gift, I took over my mother’s very low cost basis of $160,000. Today, the house is worth at least $550,000. Since I did not own and occupy the house as my primary residence, is there any way I can avoid capital gain tax on this profit of about $390,000? –Paula W.

DEAR PAULA: No. If you didn’t inherit the property, you don’t get a new “stepped-up basis” to market value on the date of the decedent’s death. Because you received a pre-death gift deed to the house, as the donee you took over your donor’s low adjusted-cost basis.

However, the current maximum federal capital gains tax rate is only 15 percent, plus any applicable state tax. Your tax adviser can provide full details.

The new Robert Bruss special report, “Pros and Cons of Fast and Slow House Flipping for Big Profits,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2007 Inman News

Question: Four years ago, my landlord agreed in writing to a $350 rent reduction on my one-bedroom apartment. The landlord is now very ill and there is a good chance the building may be sold. How do I ensure that I will continue to be able to pay my current rent and not have the new owners hold me to the rent agreed to on the original lease or otherwise raise my rent?

Property manager Griswold replies:

It sounds like you have a lease that has expired and rolled over to a month-to-month rental agreement if you are still relying on a 4-year-old letter from your landlord reducing your rent by $350 per month. Clearly, you need to have a new lease signed for the net rent that you have been effectively paying for the last four years. You are probably OK under the current ownership, as your current lease is valid and as long as the current owner doesn’t rescind the rent reduction letter agreement and/or send you a notice of rent increase. However, any new owner will likely be seeking higher income from the property. They may make an argument that the rent-reduction letter is not binding, or they could simply raise your rent by giving you at least a minimum of a 30-day written notice of rent increase. Since it is very likely that the rent increase would be equal to or greater than 10 percent, a 60-day written notice would be required. What you are seeking is a valid lease with as long of a rental term as the current owner is willing to give you, as that lease would be binding on the new owner. I suggest you contact the owner and negotiate the best lease terms possible so that any new owner will have to honor it. Of course, a savvy owner will know that this lease is binding on the new owner and that such a long-term lease, especially if it is at a below-market rental rate, will adversely impact the value of the property.

Question: My neighbor and I both rent single-family homes from the same landlord in a residential neighborhood. We share a fence. The neighbor traps squirrels and feeds them live to their dogs. They also shoot birds and squirrels with a pellet gun, with the shots often hitting or ricocheting into my yard, nearly hitting my family and pets. Our enjoyment and use of the yard is affected by their shooting of birds and animals, and having to listen to their dogs tear apart live animals that are fed to the dogs. What is the landlord’s responsibility in causing them to cease this behavior?

James McKinley, an attorney for landlords, replies:

You must immediately notify your landlord of the situation. Your neighbor is interfering with your quiet use and enjoyment of the premises, and your landlord should put a stop to it, and, if necessary, terminate your neighbor’s tenancy. In addition, your neighbor is likely breaking several laws, including hunting in a residential neighborhood, most likely hunting without a license, and cruelty to animals. You should also notify your local law enforcement agency.

Steven Kellman, an attorney for tenants, replies:

Besides calling the landlord, call the local animal control agency and the Humane Society. When you call the landlord, be sure to give specific details of what is going on. If your neighbor is violating any rules of their lease, you may ask the landlord to enforce those rules. Clearly your neighbor is way out of line with that behavior. Your common landlord is limited in controlling your neighbor’s actions by demanding such actions cease under threat of eviction, or in this case, he or she may choose to evict without giving any chance to stop the behavior under the law of nuisance or illegal activities. Since it appears that your neighbor may be violating several laws and eviction procedures may take some time, perhaps the appropriate law enforcement agency may prove more effective.

This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of “Property Management for Dummies” and co-author of “Real Estate Investing for Dummies,” and San Diego attorneys Steven R. Kellman, director of the Tenant’s Legal Center, and James McKinley, principal in a law firm representing landlords.

E-mail your questions to Rental Q&A at rgriswold.inman@retodayradio.com.

Questions should be brief and cannot be answered individually.

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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2007 Inman News

Editor’s note: Robert Bruss is temporarily away. The following column from Bruss’ “Best of” collection first appeared Sunday, May 7, 2006.

Charles and Sandra Anderson bought the Eureka Street Bed and Breakfast Inn in Sutter Creek, Calif. They, and Sandra’s parents, use part of the 5,664-square-foot house as their personal residence. Their bed-and-breakfast guests use the rest of the house.

On their income-tax returns, the Andersons calculated 4,818 square feet for business use, resulting in 85 percent business use and 15 percent personal use.

Purchase Bob Bruss reports online.

But part of the main floor (lobby, registration area, office, kitchen, and laundry room) is “dual-use” by both the taxpayers and their guests.

Upon audit, the Internal Revenue Service denied deductions for the 606 square feet of dual-use, resulting in $1,434 additional tax for the Andersons. They took their dispute to the U.S. Tax Court.

If you were the U.S. tax court judge would you allow the Andersons to deduct depreciation and other expenses for the personal and business dual-use 606 square feet?

The judge said no!

The 606 square feet of dual-use bed-and-breakfast business and personal-use space cannot qualify for the depreciation deduction of Internal Revenue Code 280A(f)(1)(B) for business use, the judge explained.

Internal Revenue Code 280A(a) is very clear there are no personal residence expense deductions and that includes dual business and personal uses, he emphasized.

To qualify for tax deductions, the business-use portion of the taxpayer’s residence must be “exclusively” for business use, the judge continued. Dual-use areas for both personal and business purposes clearly cannot qualify for tax deductions, he ruled. Therefore, the Andersons owe $1,434 additional income tax, the judge ruled.

Based on the 2006 U.S. Tax Court decision in Anderson v. Commissioner, T.C. Memo 2006-33.

(For more information on Bob Bruss publications, visit his Real Estate Center).

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What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

Copyright 2007 Inman News