Real Estate in Steamboat

Most home buyers are resistant to selling their current home before they already have another one tied up. This means buying before selling, which carries an element of risk.

One way to approach such a move, if market conditions permit, is to make an offer on the new home that is contingent upon the sale of your current home. This way, you don’t put cash down on the new place until you have your equity out of the home you’re selling.

Although you avoid the risk of owning two homes, you also may have to offer an over-market price to entice the seller into accepting your less-than-certain offer. There is also the risk of losing the house to another buyer who can close without having his or her home sold. Usually sellers who accept a contingent sale offer want a release clause in the contract.

A release clause allows the seller to continue marketing the property until the contingent-sale buyers remove their sale contingency. If the seller accepts another offer in backup position, he notifies the first buyers that they need to remove their sale contingency within the time period specified in the contract (often 72 hours), and show that they are financially able to perform, or they risk losing the property to the backup buyer.

Another drawback of the contingent-sale approach is that it doesn’t work in all markets. In a balanced or slower market where listings are not selling quickly, a contingent sale offer stands a chance of being accepted. But in a seller’s market, where inventory is low, contingent-sale offers are rarely accepted.

In a strong market, you’ll need to step forward with an offer that is not contingent on another property selling. You will also need to provide financial verification that you don’t need to sell in order to generate the cash you need to close.

HOUSE HUNTING TIP: A 30-year fixed-rate mortgage with an interest-only payment option can provide a reasonable option for well-qualified buyers. With this sort of mortgage, you have the option to pay only interest each month for the first 15 years of the loan. After that point, payments are amortized to pay off the loan in full over the remaining life of the loan. This can result in a huge jump in monthly payment. But, you should have no intention of letting this happen.

Let’s say you’re buying a $700,000 home and have enough cash for a 20 percent down payment without selling your home. But, you’ll have to take out a mortgage for $560,000, which is a bigger mortgage than you want.

However, you will have only a $560,000 loan balance until your existing home sells. At that point you take proceeds from the sale of the old place and pay down the mortgage on the new home to a more comfortable amount.

During the interest-only period of the loan, you pay interest only on the remaining loan balance. So, when you pay down the principal, you’ll lower your monthly payment. At the end of the 15-year, interest-only, pay-option period, the loan is amortized over the remaining 15 years. Your payments won’t jump significantly as long as you diligently pay down the principal during the first 15 years. Make sure that the terms of your mortgage permit principal pay-downs at any time without penalty.

Another benefit of this type of interim financing is that it’s long-term financing. You don’t have to worry about paying off a loan earlier than you might be able to if your home takes longer to sell. And, during the time you own two homes, you can make a lower interest-only payment rather than a higher fully amortized payment.

THE CLOSING: This helps with your cash flow.

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

In a recent article, I examined Bank of America’s new no-fee program for house purchasers, under which lender and third-party fees are absorbed by the bank. On a fixed-rate mortgage, the borrower pays the interest rate and points, and that’s it. Price shopping would be so much easier, I mused, if all lenders did the same.

A spokesman for another large lender responded to that article by claiming that other lenders do offer the same product, but they give it a different name; they call it a “no-cost mortgage.”

I will explain what he means with an oversimplified example. A lender who absorbs all costs in its rate and points must mark up the price accordingly. For example, if BofA is prepared to absorb $3,000 of costs including third-party charges to acquire a $300,000 loan at 6 percent, it will price a no-fee loan at 6 percent and zero points.

Now consider Lender X offering the same loan, and faced with the same $3,000 in costs except that the costs are billed to the borrower. This lender offers 6 percent at -1 point, which is a rebate to the borrower. The borrower selecting the 6 percent mortgage on which the rebate just covers the $3,000 has a no-cost mortgage from X that appears identical to that of BofA’s.

In other words, the borrower from BofA pays 6 percent and nothing else. The borrower from X pays 6 percent plus $3,000 in fees but receives a $3,000 rebate from X.

But note a critical difference. The $3,000 charged the borrower by X is probably not guaranteed. A few lenders guarantee their own fees (see below); even fewer guarantee third-party fees. All the rest provide estimates, which sometimes have a funny way of escalating as loans move toward closing. So the borrower dealing with X might end up with a rebate worth $3,000 and be billed for $4,000 in costs. That can’t happen with the BofA mortgage.

Most borrowers are not aware of the no-cost option from lenders other than BofA. The loan officers and mortgage brokers with whom they deal are unlikely to volunteer the information because no-cost loans are easier to comparison shop. If the borrower requests a no-cost quote, they will comply, but the quotes are based on cost estimates that can be far off the mark.

Borrowers can roll their own no-cost mortgage online. They do this by selecting an interest rate that carries a rebate large enough to cover the settlement costs. This requires that they have access to the complete range of rate/point combinations offered by the lender, as well as the settlement costs.

Unfortunately, very few lenders provide this information on their Web sites. Among those that do are Upfront Mortgage Lenders (UMLs), which are listed on my site. UMLs must provide this information in order to be certified.

As a source of no-cost loans, UMLs have advantages and disadvantages relative to BofA. UMLs provide online pricing for a wider range of products, and they provide complete pricing data on adjustable-rate mortgages online, which BofA does not. On the other hand, BofA pays third-party fees as well as its own, whereas UMLs guarantee only their own fees. Third-party fees are estimates — honest estimates, but still estimates.

NOTE: If you expect to have the mortgage five years or longer, you don’t want a no-cost mortgage unless you are desperately short of cash. If you have the cash, it pays to buy down the interest rate by paying points rather than the reverse. This calls for a revision of your shopping strategy, from finding the lowest no-cost rate to finding the lowest cost at a specified rate below the no-cost rate.

For example, if a 30-year fixed-rate mortgage with no cost is available at 6 percent, set 5.5 percent as your shopping rate and find the lowest cost at that rate. With BofA, it will be the points charged on the 5.5 percent loan, which may or may not be available online. With UMLs, it will be the sum of lender and third-party charges at 5.5 percent, which will be available online.

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

As incredulous clients are learning, mortgage rates are higher now than last week, back up to 6.5 percent for vanilla 30-year. Yes, higher. (“Sonny, you should be ashamed to try to trick an old lady! I still read the newspaper! You rotten crooks.”)

Federal Reserve Chair Ben Bernanke probably has the same frustrated shoulder sag that we do: he played this thing exactly right, and has gotten nothing for his trouble but a run on the dollar. The markets have been seized by Amateur Hour: inflation bears, gold bugs and the Buzz Lightyears of global growth. Doubly, triply frustrating — they may be right.

The Fed’s 0.5 percent was actually two quarters: the federal funds rate had been trading near 5 percent, 0.25 percent off-peg, for a few weeks. That was an intermeeting ease not formalized, a deft piece of central banking: if formalized, and then the crunch dissolved by itself, the Fed would have had to execute an embarrassing formal reversal. Instead, Sept. 7 news of sinking payrolls (an economic fade additional to and independent of housing and the crunch) made it easy to formalize the first quarter and add another.

At this moment the economy receives some dinky benefit from the cut (Construction money is 0.5 percent cheaper — wanna build a house? Short-term rates are down — how about a nice new neg-am pre-pay-penalty ARM? No?), but the crunch is still in place, especially in Mortgageland.

Other benefits have been cancelled. The 10-year T-note, driver for all long-term credit, has soared from 4.35 percent to 4.7 percent. The dollar run (I hate to use the term, but that’s what it has been since Tuesday) has been to the euro (now all-time $1.41) and to hard assets: gold at a 27-year high $744 and oil at one moment yesterday $84.

A great deal of domestic money has joined the run, buying into the fingernail-on-blackboard theorizing: there was no reason for Fed action; it guarantees a resurgence of inflation; it’s just Bernanke’s Put; and all bailouts all the time are bad.

This run has foreign fingerprints as well; Asia’s currencies are dollar-pegged, but a race to hard assets is typical of our Persian Gulf friends and their several-trillion-dollar-hoard. Big currency moves often involve confidence, and it is disturbing in a time of financial crisis to find money running away from the dollar, the historical safe-haven. Confidence has aspects beyond interest rates and inflation: at some point, the average Persian Gulf observer of U.S. leadership, present and forthcoming, might well conclude that we don’t have the good sense that Allah gave to the camel.

OK, who is right, the Crunchers or the Good-Time Inflationists? Two weeks from today, Oct. 5, 8:30 a.m. EST, we will get September payrolls, and either confirmation of a deeply slowing economy, or not. The Department of Labor is infamous for big revisions (don’t forget California, guys), and the June-August weakness in hiring has not been confirmed by an increase in new claims for unemployment, still flat. A new, weak number that day, and Bernanke will be a genius, more cuts in prospect, long-term rates falling. Strong job gains … a bond market disaster and a discredited Fed.

Many other indicators point to weakness ahead: real estate bubbles in Europe are about to blow; the eurozone export economy cannot make a living with a euro north of here; Asia is terribly dependent on exports to us; and most important of all: global credit is still vastly tighter than it was six weeks ago. Liquidity loosening, credit not.

In defense of the Good Timers, the global economic superstructure still looks gorgeous, demand largely intact. However, the balance-sheet evaporation in this crunch is like a corroding hull, out of sight; patch and pump and you’re OK. Fail, and the top-deck dancers never know they’re in trouble until they’re in the water.

The Inflationists I don’t think have a case. Asian labor still undercuts any threat of wage-price spiral outside of Asia, and a new spike in oil does more damage to fixed-wage consumers here. Yes, Asia has an inflation problem, but it will not survive a cut in demand for their exports. Yes, Asian wages will one day rise, but one billion Asians went to work to earn less than $2 for this day’s labor.

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

Despite all the negative publicity about the so-called “mortgage meltdown” with more than 100 major mortgage lenders either filing bankruptcy or being unable to fund their home loan commitments, low- and no-down-payment PMI (private mortgage insurance) mortgages are readily available if you have steady income and good credit.

According to the Mortgage Insurance Companies of America, a trade group, the use of PMI is up 40 percent during the first half of 2007 from the same period in 2006.

PurchaseBob Bruss reports online.

WHAT IS PMI? Most home buyers have heard of government-sponsored VA (U.S. Department of Veterans Affairs) and FHA (Federal Housing Administration) low-down-payment home loans. But they aren’t suitable for many home buyers, especially if you are not a veteran or home prices are too high in your city.

If you want to buy a house or condominium but can’t obtain a VA or FHA mortgage and are “cash challenged” with only a small down payment, PMI lenders loan 90, 95, 97, 100 and even 103 percent of a home’s purchase price. PMI insures the riskiest top 20 percent of conventional mortgages in case of a foreclosure loss to the lender.

For example, suppose you want to buy a $400,000 house with little or no cash down payment. If you default and the lender suffers a foreclosure loss, the PMI insurer will generally pay the 20 percent of the lender’s loss exceeding 80 percent of the loan balance. That’s about $80,000 in this situation.

But PMI should not be confused with mortgage life insurance, which pays off your mortgage if you die. PMI protects lenders, not borrowers. It enabled more than 2 million buyers to purchase homes last year.

PROS AND CONS OF PMI. PMI monthly premiums, usually paid along with the monthly mortgage PITI (principal, interest, taxes and insurance) payment, typically add between $50 and several hundred dollars per month to the cost of home ownership.

There are six nationwide PMI companies: AIG United Guaranty, Genworth Mortgage Insurance Corp., Mortgage Guaranty Insurance Corp. (MGIC), PMI Mortgage Insurance Co., Republic Mortgage Insurance Co., and Triad Guaranty Insurance Corp.

These PMI companies work with home loan originators such as banks, credit unions and mortgage bankers to prevent mortgage losses by establishing underwriting standards and insuring home loans across the nation. By diversifying, PMI companies minimize their losses if one area suffers substantial foreclosure defaults.

Although PMI premiums seem expensive, they enable buyers to purchase homes with minimal out-of-pocket cash. To make PMI, VA and FHA home loans more attractive, their mortgage insurance premiums are now tax-deductible, but only for new PMI, FHA and VA loans originated after Jan. 1, 2007, for borrowers with less than $100,000 annual gross income (AGI). However, this new tax deduction does not apply to mortgages originated before 2007.

HOW TO CANCEL PMI PREMIUMS. According to the Mortgage Insurance Companies of America (MICA), 90 percent of homeowners with PMI cancel within five years. Each mortgage lender, not the PMI insurer, makes its own cancellation rules.

Generally, when a homeowner’s equity exceeds 20 percent, as shown by a new appraisal from an appraiser selected by the mortgage lender, the monthly PMI premium will be canceled by the lender. To qualify, the borrower must have a record of on-time monthly payments.

It is up to the borrower to request PMI cancellation and pay for the new appraisal from an approved appraiser. If you think you are eligible, contact your loan servicer.

In 1999, Congress enacted legislation requiring automatic PMI premium cancellation when a home loan borrower’s loan-to-value ratio drops below 78 percent of the loan’s original balance.

But this law, applicable to PMI loans originated after July 29, 1999, does not consider (a) a home’s market-value appreciation or (b) the homeowner’s capital improvements, which added market value to the residence.

The result for most PMI borrowers is this law doesn’t help much because it takes about 10 years for most home loans to reach the 78 percent level.

AFTER CANCELLATION, YOU MAY BE ENTITLED TO A PARTIAL PMI REFUND. If you pay off your PMI mortgage in full or the lender agrees to cancel the PMI based on a new appraisal showing at least 20 percent home equity, some borrowers discover they are entitled to a partial PMI refund.

This refund can arise because PMI premiums are collected by the loan servicer each month, but the premium is usually paid annually to the PMI insurer. But the borrower must ask.

Refund checks of $100 to $1,500 or more are not unusual. If your lender refuses to account for your PMI premiums and you think you are entitled to a partial refund, the local small claims court is the best place to get the lender’s attention and receive a judgment for the refund.

FHA HOME LOANS DO NOT HAVE PMI. Just to confuse the situation, FHA borrowers have a different type of mortgage insurance, usually called MI, MMI or MIP. When an FHA home loan is fully paid off, a partial mortgage insurance refund may be due to the borrower.

After you have paid off your FHA mortgage in full, ask the loan servicer if you are entitled to an MI, MMI or MIP refund. If you don’t receive a refund check within 45 days, contact HUD at 1-800-697-6967 or write to U.S. Department of Housing and Urban Development, P.O. Box 23699, Washington, D.C., 20026-3699. On the Internet, go to www.hud.gov/fha/comp/refunds and enter your FHA case number with exact borrower’s full name to see if HUD owes you a partial refund after FHA mortgage payoff.

SUMMARY: PMI home loans enable borrowers to obtain mortgages with little or no cash down payments. Unlike VA and FHA mortgages, which often have restrictions to make them inappropriate for most home buyers, PMI mortgages are available regardless of loan amount if you have good income and good credit.

For new PMI, FHA and VA mortgages originated after Jan. 1, 2007, the mortgage insurance fees are tax-deductible for borrowers with less than $100,000 adjusted gross income.

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

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Copyright 2007 Inman News

With fall’s transition between the seasons comes a transition for your home as well. That roof and those four sturdy walls need to protect you from winter’s fury, and there are several things you can do to help get ready.

1. Seal masonry surfaces: Apply a sealer to concrete driveways and walkways, brick patios and other exterior masonry. The sealer, available from paint stores and masonry supply retailers, prevents water from penetrating into cracks and crevices where it can freeze and cause serious damage.

2. Prepare your fireplace: Now is the time to get wood-burning appliances such as fireplaces and woodstoves ready for the season. Remove ash buildup; check screens and glass doors for damage; replace door gaskets as needed; and check doors, door latches, screen brackets, and other metal parts to be sure they are secure and operating properly. Check the condition of the exterior of the chimney or flue pipe, including the cap, and then clean the chimney to remove last season’s accumulation of soot and creosote. Consider having a professional chimney sweep service clean and check everything at least every other year.

3. Prepare humidifiers: Winter is a dry time inside your home, and many people choose to use a portable or central humidifier to put much-needed moisture back into the air. Now is the time to check your humidifier to make sure it’s operating properly, that all necessary plates and filters are in place, and that the system is clean and the water supply is correct. Check your operating and maintenance instructions for more information.

4. Check the gutters: Check and clean gutters to remove leaf and pine needle debris, and check that the opening between the gutter and the downspout is unobstructed. Look for loose joints or other structural problems with the system, and repair them as needed using pop rivets. Use a gutter sealant to seal any connections where leaks may be occurring.

5. Change your furnace filters: Replace your old furnace filter with a new one. While you’re at it, check the furnace for worn belts, lubrication needs or other servicing that might be required; refer to your owner’s manual for specific suggestions, and follow any manufacturer safety instructions for shutting the power and fuel to the furnace before servicing.

6. Install a carbon monoxide detector: As we close up our houses for winter, the chances of carbon monoxide poisoning from malfunctioning gas appliances increases substantially. If you have a fireplace, water heater, or other appliance that is fueled by propane or natural gas, fall is an ideal time to install a carbon monoxide detector — available from many home centers and retailers of heating system supplies. While you’re at it, consider also having a professional heating contractor come out and inspect all of the fittings and components on your gas appliances.

7. Check smoke detectors: Fall is a great time to check the operation of your smoke detectors and to change batteries. You should also consider installing additional smoke detectors outside each bedroom.

8. Close off foundation vents: Depending on the winter climate in your area, you’ll want to be thinking about closing off your foundation vents to help prevent pipe freezes. You can leave the foundation open for as many months as the weather remains mild, but close them off when the local forecasts begin calling for freezing temperatures. Once closed, you can leave them that way until it warms up again in the spring.

9. Check weatherstripping: Air leaks around doors and windows can rob your home of expensive heated air and create uncomfortable drafts that keep you feeling chilly. Check the weatherstripping around doors and windows, and replace any that are worn — retailers who specialize in doors and windows can fix you up with the proper replacement type for your situation. Now is also a good time to close up a few more air leaks by checking the condition of caulking around exterior door and window frames.

Remodeling and repair questions? E-mail Paul at paul2887@ykwc.net.

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Copyright 2007 Inman News

DEAR BOB: We have rented out a legal apartment in our primary residence for 17 years. My wife and I intend to sell our house and shelter $500,000 of our gain. In order to do so, must we be “tenant free” for 24 of the last 60 months? –Bruce C.

DEAR BRUCE: No. You can sell your principal residence with the tenant still living in the apartment.

PurchaseBob Bruss reports online.

For capital gains tax purposes you will be making two sales. One is the sale price of your principal-residence portion. The other sale is the sales price of the rental apartment.

But the Internal Revenue Code 121 principal-residence-sale tax exemption up to $500,000 for a qualified married couple (up to $250,000 for a single home seller) applies only to your capital gain profit on the principal-residence portion. That’s presuming you both occupied your primary residence at least 24 of the last 60 months before the sale.

The capital gain on the sale of the rental apartment has two components. One is the “recapture” tax at the special federal tax rate of 25 percent for the depreciation you deducted after May 6, 1997. The other part of the capital gain on the rental apartment is taxed at a maximum federal tax rate of 15 percent. For full details, please consult your tax adviser.

EVICT TENANTS IF YOU FEEL STRONGLY ABOUT THEIR BREACH OF LEASE

DEAR BOB: What recourse do I have when my rental tenants don’t honor the terms of their lease? The house they rent from me has a nice yard. The lease terms require them to maintain the property. But the trees look like they are dying. I asked my tenants to water the trees, but they say they don’t have time. What are my options to have them honor their agreement to maintain the property? –Lisa D.

DEAR LISA: Even if your tenants have a lease, if it requires them to maintain the yard and they fail to do so, you can evict them if you feel strongly about their breach of the lease terms.

Just follow the state unlawful detainer (eviction) procedure, such as delivering a “Notice to Quit” and then filing the court lawsuit. If this is your first eviction, I suggest you hire a local attorney who specializes in evictions so you can learn how it is done.

If the lease is about to expire and you don’t want to evict, you have another alternative. It is to substantially raise the rent (presuming no rent-control limit applies). The tenants will then either move out or you will have the extra rent money to hire a gardener to keep the yard and trees looking good.

CHECK SPOUSE’S DEBTS BEFORE ADDING HER TO HOME TITLE

DEAR BOB: I want to add my spouse (not married) to my deed. We want to take advantage of that $500,000 tax break when I sell our home. But I want to be sure she has no liens before I do this. She had several loans with her ex-husband and then a bankruptcy. She went to our local courthouse and was told there were a couple of liens but it looks like they were cleared. How can I verify this before proceeding? –Harry G.

DEAR HARRY: You say you want to add your spouse’s name to your deed but you’re not married. If she is not married to you, she is not your spouse.

The only way to be sure she doesn’t have any liens that could attach to your home’s title if you add her name is to obtain a new owner’s title insurance policy. Before issuing such a policy, the title insurer will thoroughly check for possible judgments and other liens against her. Her informal search at the courthouse was a waste of time.

However, if you are legally married to her and you want to claim the Internal Revenue Code 121 principal-residence-sale tax exemption up to $500,000 (instead of $250,000 for a single home seller), her name does not have to be on the title. However, to qualify for the $500,000 exemption, you both must occupy your principal residence at least 24 of the last 60 months before its sale. For full details, please consult your tax adviser.

The new Robert Bruss special report, “How to Profit from Lease-Options (Rent to Own) Whether You are a Property Buyer, Seller or Realty 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 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

Q: Our landlords have just announced that they‘re selling the building, and advised us we‘ll be seeing brokers and interested buyers on the property — and looking at our apartments. We think the owners should have some consideration for our privacy, by giving us lots of notice and consulting us when scheduling visits. Eighty percent of the tenants in the building feel like we do. Do we have some legal rights in this situation? –Marcia H.

A: Putting up with applicants looking over your rental when you’re moving or buyers eyeing the property during a sale are hassles every tenant encounters eventually. Fortunately, most states give you some protections — more than half have laws that specify how much notice a landlord must give before entering a tenant’s apartment. If you’re lucky, your state specifies common periods such as two days or 24 hours. Some state laws are less useful, requiring “reasonable notice,” whatever that means. Notice requirements don’t apply to common areas such as the lobby, hallways and recreation areas. In these places, owners are free to bring visitors at any time and without notice.

Aside from your legal rights to adequate notice, let’s think about how those 80 percent can use their considerable strength. Consider asking the owner to meet with a delegation from your group, to discuss how this transition time can be made easier for the residents. Have a list of reasonable requests, such as showings at specified times and days, or modest rent reductions to compensate tenants for the disruption caused by the sale. A savvy owner will work with you, realizing that cooperation by building residents is essential to his marketing efforts and eventual sale — no seller wants to try to navigate a sea of resentful, gloomy residents, and no buyer wants to inherit a building full of angry people.

Q: When we moved into our single-family rental, the landlord told us we could do what we wanted with the backyard. I planted several roses that I‘d like to transplant to the house we just bought. The landlord says no way — he claims they belong to him now! I can take my portable dishwasher so why can‘t I transplant the roses? –John S.

A: You’ve stumbled into the arcane law of “fixtures,” which says that anything a tenant attaches to the building, fences or ground — by means of screws, nails or other means — belongs to the landlord unless the landlord has specifically agreed otherwise. Your portable dishwasher, attached by snapping a coupling onto the kitchen faucet, isn’t affixed in this way, and you can safely detach it and take it away. But your roses have been placed into the ground, and if you go ahead and remove them, your landlord might deduct their value from your deposit, on the theory that you have taken his property. To get that money back, you’ll need to challenge the deduction in small claims court.

A judge will look at a number of factors when considering your claim. The fact that you had the landlord’s permission to plant the roses is in your favor. Next, what did the two of you intend when the landlord gave his OK? Consider what the yard looked like when you moved in. If it was an untended dirt patch, you might argue that the landlord had no particular interest in preserving that yard and probably had no expectation that you’d permanently improve it. But if you removed existing plants in a landscaped yard, your landlord could argue that he’s entitled to replace them (new plants that he’ll purchase with the money he deducted from your deposit). Importantly, what is the effect of your removal? Did it disrupt sprinkler lines, or create a yawning bare patch or a series of big holes? The more damage you leave when removing your roses, the more likely it is that you’ll end up paying for it.

Q: We‘ve moved into a well-run building, but our problem is the neighbors next door. They are renters, and, with their friends, spend most evenings and every weekend working on muffler-less motorcycles in the driveway between us, sending fumes and a racket our way. We can‘t open the windows or even hear ourselves talk. Our courteous requests for peace and quiet have been ignored, and our landlord says it‘s been going on for years and he can‘t do anything because they aren‘t his tenants. Is there anything we can do about this intolerable situation? –Margie P.

A: While it’s true that your landlord has no direct leverage over these inconsiderate neighbors, that’s not the end of it. You and your landlord need to get creative and consider taking one or more of these steps:

• Try having your landlord talk to their landlord. Start simple; see if a landlord-to-landlord chat makes a difference. The neighbors’ landlord may have no idea what his tenants are up to, and might be horrified to learn.

Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of “Every Landlord’s Legal Guide” and “Every Tenant’s Legal Guide.” She can be reached at janet@inman.com.

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

Copyright 2007 Janet Portman

DEAR BOB: How does adverse possession work? I have been using about 20 feet of the vacant lot next door for the last 14 years. I tried to contact the owners, but my letters were always returned unopened. –Pam C.

DEAR PAM: Adverse possession occurs when you occupy an entire property without the owner’s permission. The law says your occupancy must be “open, notorious (obvious), hostile, exclusive and continuous.” In addition, you must pay the property taxes. The number of years of hostile occupancy required varies by state. The shortest time is five years in California. One state requires up to 30 years.

PurchaseBob Bruss reports online.

But a prescriptive easement can arise when you occupy just part of a property, such as a driveway or the 20 feet in your situation. The “open, notorious, hostile and continuous” requirements apply. However the hostile use need not be exclusive and you don’t have to pay the property taxes on the property. Again, the number of hostile occupancy years varies by state.

To perfect a claim for adverse possession or a prescriptive easement, the claimant must bring a quiet title lawsuit in the local court. The most common defense to such a lawsuit is the legal owner will say he gave the claimant permission to use the property. If the judge believes it, that defense will defeat the claim. For full details, please consult a local real estate attorney.

PROPERTY RECEIVER CAN DENY CLAIM

DEAR BOB: When my sister sold her property, she carried back an interest-only first mortgage at 20 percent interest with a balloon payment due in 12 months. The buyer paid for only four months and is now in receivership. What should she do? Is there a time limit to file her claim? Does she need a real estate lawyer? –Roselyn S.

DEAR ROSELYN: I am shocked at that outrageous 20 percent interest rate. Your sister should hire a real estate attorney to file a claim with the property receiver. But I highly doubt she will get paid that unconscionable interest rate.

NO WILL AND POOR WORDING ON DEED LEADS TO PROBATE COURT

DEAR BOB: My husband passed away last year without a will. We bought land from my mother and built a house on it. She signed the deed and recorded it at the court house. It included my name, a married person, and my husband’s name. Now the title company tells me this is automatically a tenant-in-common deed. I don’t know where his kids are from his first marriage. But I want to refinance the mortgage. What should I do? –Dona H.

DEAR DONA: Because your husband died without a will, that means he died “intestate” so the state law will determine who inherited his assets. The local probate court will decide who inherited his assets.

From your description of that poorly worded deed, it appears a tenancy-in-common with you was created. You presumably own 50 percent and his estate owns 50 percent of the property.

If you had intended to hold title as joint tenants with right of survivorship, or some other method, it should have been stated on the deed. Until you straighten out the title, you alone cannot refinance the mortgage because you lack full title. For details, please consult a local probate attorney.

The new Robert Bruss special report, “How to Profit from Lease-Options (Rent to Own) If You are a Property Buyer, Seller or Realty 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 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

Kim Sisemore, a mother of a 3-year-old daughter, is licensed to operate a family day-care center for up to 14 children in her residence. She applied for a home loan from Master Financial Inc. to enable her to buy a house suitable for her day-care business.

Although Sisemore was otherwise qualified for the mortgage, Master Financial rejected her application, stating in writing it “will not make loans with home day care if the home day-care income is required to qualify.”

PurchaseBob Bruss reports online.

Sisemore, along with Project Sentinel Inc., a nonprofit, fair-housing organization, joined to bring this lawsuit, alleging violations of civil rights laws based on the lender’s refusal to approve a home loan to a borrower who operates a home day-care center.

If you were the judge would you rule the mortgage lender discriminated against mortgage applicant Sisemore based on her occupational status?

The judge said yes!

The evidence shows Master Financial Inc. refused to approve Sisemore’s home loan based on her source of income from her day-care center, the judge began. Although the lender’s discrimination based on Sisemore’s source of income might not have been intentional, he continued, it was still a violation of civil rights laws to reject the mortgage due to her unusual income source.

Therefore, it was illegal discrimination by the mortgage lender based on Sisemore’s source of income and occupational status, the judge ruled. The lender’s discrimination created a disparate impact against women and families, he concluded.

Based on the 2007 California Court of Appeal decision in Sisemore v. Master Financial Inc., 60 Cal.Rptr.3d 719.

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

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Copyright 2007 Inman News

Q: We’re doing a master-bedroom addition. To get the space for the bedroom, we need to remove a 30-foot brick wall. Is it feasible to save the brick? How labor intensive is removing the mortar (the house was built in 1953) to be able to reuse the brick? If you think it’s feasible to recycle the brick, could you weigh in on the best technique and tools? My teenage sons are eager to begin.

A: Be still our hearts. Did we hear right? Teenagers who want to work! And manual labor at that. Your boys are to be congratulated.

Kevin learned something of bricks from his father-in-law, Ed, who was a master brick mason and practiced his trade almost to the day he died. For Ed, a house wasn’t worth a plugged nickel unless it had some brick. For Ed, the more the better. “Brick is strong, brick is classy,” he’d say.

Ed insisted on putting his mark on Kevin’s Idaho home. To this day, the elliptical red brick front porch evokes memories of a master craftsman who truly enjoyed his work.

You bet it’s feasible to clean and reuse the bricks from your wall. From a “green” standpoint, it’s better to recycle them than to send them to the landfill. Used bricks are good for building all kinds of things — they make handsome walkways, patios and planter boxes. If you’re a little more ambitious, a brick barbecue or fire pit is not out of the question. Your only limit is your imagination.

Taking down the wall and cleaning the brick is labor intensive, but it requires only minimal skill and perseverance. Be careful not to break too many bricks when deconstructing the wall. Stack the bricks in a pile so they’re accessible during the cleaning process.

All you really need is a brick hammer and a 5-gallon bucket of water to clean the bricks. Brick hammers are available at home centers and hardware stores. They are about 8 inches long, with a 1-inch-square head and a slightly curved, tapered end.

Clean one brick at a time by chipping off the mortar with the tapered end of the hammer. If the mortar is stubborn, soak the bricks in water. Some bricks might need a couple of trips to the water bath to saturate and loosen the mortar enough to be removed.

For really stubborn ones, soaking in a solution of water and muriatic acid will loosen the mortar. Follow manufacturer’s instructions and wear rubber gloves and eye protection. These safety precautions are essential — muriatic acid is fairly strong and will burn your skin if you don’t wear protection.

To clean up any mortar residue on the brick, use the muriatic acid solution to soak the bricks. Then use a wire brush to clean them.

As to the time necessary to do the job, we’d estimate five to 10 minutes per brick. When you have the wall down and the bricks stacked, you’ll be able to estimate the time it will take. However long it is, we think it’s well worth the effort. The projects you can do with this free material will enhance the look and value of your home.

It’s really great your teenagers are eager to get at it. You might also think about having a brick-cleaning party: You provide the food and your sons and their buddies provide the work.

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Copyright 2007 Bill and Kevin Burnett