Real Estate in Steamboat

Q: I moved into a brand-new home last June. When I turn on the faucet in the master bedroom there is a strong odor that smells awful. The builder’s plumber came out and cleaned out the pipe underneath the sink, but the smell is still there. What do you think could be causing this and what should I should do about it? –Ayoub D.

A: I am assuming that the smell is not actually coming from the water, which would be very unusual to have happen at only one faucet, so it must be coming from somewhere in the drain portion of the system. The most likely culprit is something that is trapped in the sink stopper, so you want to remove and clean that. If the stopper is not removable by simply pulling up on it, then it is held in place inside the pipe by a small lifting arm. To remove it, unscrew the small knurled nut on the side of the tailpiece, right below the bottom of the sink, and pull out the arm, freeing up the stopper. While you’re at it, clean all the lifting mechanism as well.

If the sink is not used very often, it could be that the trap is drying out and allowing a sewer odor to come back up into the house, and you smell it for a moment when water first re-enters the trap. The only solution here is to make sure that the trap is always full by periodically running water into it. It’s also possible that something is caught in the trap itself, or that the trap or drain lines are leaking.

Another possibility is the overflow. There is an overflow drain that is actually cast into the side of the sink, and it’s possible that something is trapped in that overflow channel that is causing the odor. Try pouring a solution of about 1 part household bleach to 10 parts hot water slowly down the overflow. Be careful, use gloves and goggles, and use a funnel if needed to direct the water into the hole.

Q: Having accidentally spilled nail polish remover on the bathroom tile floor, some of the grout became discolored. Only about three tiles were affected. Is there any way to re-color the grout that was affected? –Peg H.

A: You can try a grout cleaner, available at most home centers and other retailers that sell tile supplies. In all likelihood though, the grout is permanently discolored and will need to be regrouted, at least in the affected area.

First, you will need to scrape or grind out the old grout. Since this is such a small area, I would suggest a manual grout saw, which is simply a little hand tool with a wooden or plastic handle and a carbide tip at one end that is set at an angle to the handle — again, available wherever you find tile supplies, probably for less than $10. Rub the saw along the grout lines to remove the old grout, then vacuum up the dust. Mix up a small amount of new matching grout following the manufacturer’s instructions, and regrout the affected lines.

Tile retailers will have small color chips of grout they can loan you for matching purposes. Depending on the age of the grout, you may have to experiment with mixing a couple of colors together to get the right shade.

Q: My driveway is 16 months old with a rough texture on top. I did not put a sealer on it because someone told me the sealer would make it slick in the winter. What should I do, and what would the sealer do? –Carol A.

A: You didn’t mention what the driveway was made of, so I’m going to assume it’s concrete and not asphalt. In a cold climate, water will work its way into small cracks in the concrete where it can freeze, expand and cause the concrete to chip. The more the concrete chips and cracks, the more water will get into and the worse the problem can become — a process called spalling.

A concrete sealer impregnates the concrete to repel water, which helps prevent this freezing and cracking cycle. Depending on the weather conditions and the condition of the driveway, sealers are typically applied every one to three years, and are a simple do-it-yourself process. Sealers are available at home centers, hardware stores, paint stores, or any retailer that handles concrete or masonry supplies. Talk to the dealer about where the sealer will be used, and they can recommend one that is not glossy and not slippery in wet weather.

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

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Copyright 2007 Inman News

DEAR BENNY: Will the real estate tax rate increase if I inherit my father’s house? My dad said it might not if I take the home as a distribution. I am currently living in his house, which is under his name. My concern is that when I have the option to purchase the home, the tax rate will go up, but it may not if I inherit it by this “distribution”? Your help is appreciated. Thank you. –Lynette

DEAR LYNETTE: I think you are confusing different kinds of tax situations. The real estate tax that you pay to your county or state is normally based on the value of your property. This decision is generally made by a government assessor in the real estate tax office where the tax is paid.

Another tax is called the “capital gains” tax, and this is calculated on any profit that you may make when the property is sold.

Let’s take this simple example: Your dad bought the house years ago for $100,000 and it is now appraised at $500,000. Assume for this discussion that no improvements were made to the house. For IRS purposes, they look to what is known as the “tax basis” of the property, and in our example, the basis is $100,000. (If improvements were added to the house, that would increase the tax basis.)

If you buy the house now from your father at the market price of $500,000, two things will happen. First, your father may have to pay capital gains tax on the profit he has made — in our example, $400,000. (However, if he has lived in the house for two out of the five years before it was sold, he can exclude up to $250,000 of this gain — or if he is married and files a joint tax return he can exclude up to $500,000.)

Second, I suspect that the real estate tax division in your county or state will want to increase the assessment up to your purchase price, which means that it is very likely that your real estate tax will increase.

On the other hand, if you inherit the property on your father’s death (which is what you refer to as “distribution”), you will get what is known as the “stepped up” basis. This means that the market value of the house on the date of death will become your tax basis. So if the value is $500,000 when he dies and you immediately sell it for that same amount, you will not have to pay any capital gains tax.

But, at some point in time, the real estate taxing authorities will get notice of the real value of the property and eventually they will raise your real estate tax.

In other words, the real estate tax is based on the value of the property; it has nothing to do with how you take title to the house.

By the way, in my opinion, it is not a good idea for your father to give you the house now. Under the tax law, the tax basis of the donor (the person giving the gift) becomes the tax basis of the donee. So in our example, if your father gives you the house, your tax basis would be $100,000. If you decide to sell now for $500,000 — and have not lived in the house for at least two years — you will have to pay capital gains tax on $400,000. The tax rate to the federal government for most people is 15 percent, which means that you will have to give Uncle Sam $60,000, plus pay any applicable state and local income tax.

That’s a lot of money you can’t afford to lose.

DEAR BENNY: What is the most direct and effective way to begin to invest in mixed-use real estate properties and development projects? –Ray

DEAR RAY: The very first thing I would do is to get three professionals on board: a lawyer knowledgeable about real estate; a real estate broker with investment property experience; and a lender.

The lender is perhaps the most important person and the one that you should talk to first. You want to make sure how much you can afford to buy and how much the bank is willing to lend you. Keep in mind that while this may be a good time to buy — because of the current housing situation — lenders are now very cautious and extremely conservative, especially when the loan involves investment property.

Map out a plan with your attorney and the real estate broker. What kind of properties do you want to buy — single-family homes, condominiums, office or apartment buildings? Your advisors will be able to guide you in the right direction, but they need your input as well as confirmation of your financial ability to buy.

Your real estate agent/broker should be able to advise you on the rental situation in your area. Obviously, if the vacancy rate is high, unless you get a very good discounted price for the property, you may be losing money on a monthly basis, and your lender will steer away from this investment.

My advice: If you are a novice in the field of real estate investment, buy properties in your area. I am old-fashioned enough to want to touch, feel and monitor any properties that I own.

DEAR BENNY: My partner and I have been together since 1995. Is there a way that an unmarried couple can take advantage of the up-to-$500,000 exclusion of gain on the sale of the house? We file separate tax returns, and the house is currently titled in my name only. –P.

DEAR P.: I have bad news for you. In order to take advantage of the up-to-$250,000 exclusion of gain, there are three requirements: (1) you must own the house for at least two years; (2) you must have lived in the house as your principal residence for at least two years; and (3) during the two-year period ending on the date of the sale, you did not exclude gain from the sale of another home. The first two tests are referred to as the “ownership” and “use” tests.

In your case, you are the sole owner of the property, and thus only you can take the exclusion.

However, if you put your partner on title, and the two of you then live in the property for two years, if you both meet the three tests, you can both exclude up to $250,000 on your respective income tax returns.

If you decide to go the route of putting your partner on title, discuss the tax ramifications with your tax advisor.

For more information, go to the IRS Web site and click on Forms and Publications. You want Publication 523, entitled “Selling Your Home.”

DEAR BENNY: My father-in-law died a couple of years ago. Because of various emotional and financial reasons, my husband and I are just taking or trying to take over the house. It needs a lot of work, but we can’t apply for any assistance until the house is in our name. How should we go about getting that done? My husband and I also live there now. –A.T.

DEAR A.T. The first thing you must do is to confirm that the real estate taxes and any mortgage obligations have been paid. The next thing you should do is to hire an attorney in your state who has experience with probate.

The state where your father-in-law died will normally be the place that has jurisdiction to handle the probate of his estate. I do not know where your father-in-law died, so I will have to give you a general answer; your lawyer will be able to give you the specific answers for your state.

Generally, when a person dies, his or her property will automatically be vested (go into title) into the personal representative (“PR,” also called “executor” in some states). However, until a probate case is opened, there is no PR. When you open the probate estate, the court will appoint the PR. If your father-in-law had a last will and testament, that document will most likely name the PR that your father has selected. If there is no will, the court will have to decide who will be appointed. Unless there are disputes among the family, in which case the court will appoint an outsider (usually a local attorney knowledgeable about probate law), the court will appoint a family member.

Once the PR is on board, title to the property will be in his or her name. Usually, the PR must put creditors on notice of the death, so as to give any creditors the opportunity to file claims against the estate. From my experience, this is done by advertising a number of times in a local paper of general circulation. After a period of time (six months in the District of Columbia where I practice law), creditors can no longer file any claims against the estate.

Once the creditors (if any) have been paid off, the PR can convey the house to you and your husband. However, if your father-in-law had debts that exceeded his assets, the house may have to be sold to satisfy those debts. In this case, you and your husband can, of course, purchase the property from the PR by coming up with enough money to satisfy the debts of the estate.

Obviously, this is very general. Your probate attorney will guide you through the process. But it is important to act quickly; you have already waited too long.

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. Questions for this column can be submitted to benny@inman.com.

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Copyright 2007 Benny L. Kass

(This is Part 2 of a two-part series. Read Part 1, “Wholesale mortgage prices uncover true costs.”)

Wholesale mortgage prices are “inside” prices, available to mortgage brokers and lenders but not to borrowers — until now. Through a special arrangement with Amerisave, I now provide wholesale interest rates on my Web site.

Last week, I discussed why wholesale prices were the most accurate indicator of day-to-day changes in the market. I also explained how borrowers could use this information to combat the widespread practice of inflating the mortgage price on the day the price is locked, beyond anything justified by market changes during the days prior to the lock.

A second purpose I had in developing the data was to provide accurate measures of how, at any one time, mortgage prices vary with different features of the loan transaction. These features include loan size, FICO score of borrower, down payment, type of documentation provided, and loan purpose.

This is designed as a general education tool for potential borrowers. For example, borrowers considering how much of a down payment they are going to make ought to know how much more costly a low-down-payment loan is. Similarly, if you want to avoid the hassle of fully documenting your income, it is a good idea to know how much the convenience of merely “stating” your income will cost you.

The tables that show how the interest rate varies with other features of the loan ordinarily don’t change much from day to day, so I compile them weekly rather than daily. However, over a long period they will capture the occasional changes that occur in how the market appraises risk.

Such a change, in fact, occurred while these tables were being developed. A trial run was done on May 4, 2007, which was before the full eruption of the subprime crisis. While the May 4 data covered California rather than the United States, the differences between California and the U.S. average are very small.

A marked increase in risk premiums occurred between May 4 and Sept. 21. The difference in rate between a $417,000 loan and a $418,000 loan rose from 0.278 percent to 0.745 percent. The $417,000 loan is saleable to Fannie Mae and Freddie Mac, while the $418,000 loan is not. The larger loan has to be sold in the private sector, which has been badly shaken by the subprime crisis.

In a similar vein, the difference in rate between a full-documentation and a no-documentation loan rose from 0.525 percent to 1.022 percent. The rate difference between a 740 FICO score and a 620 score rose from 0.3 percent on May 4 to 1.37 percent on Sept. 14. A week later, there were no price quotes on the 620.

A third purpose of developing the wholesale price data was to provide a shopping tool that borrowers could use to help them find the best deal. This means obtaining the best retail deal; you can’t borrow from a wholesale lender, though some borrowers try.

Mortgage brokers often conceal the identity of the wholesale lender whose product has been selected for a potential borrower because they fear the borrower will go directly to the wholesale lender. The borrower may, indeed, find a lender with the same name, but it will be the retail arm of the same firm, and the borrower will be charged retail prices. All the larger lenders have both retail and wholesale divisions.

The brokers and lenders receiving wholesale prices add a markup before quoting retail prices to borrowers. The markup covers the cost of the various retail functions, including marketing to borrowers, counseling and advising them, taking their applications, verifying credit, employment and other information provided by applicants, pulling together all the documents required for the loan to be executed (called “processing”), and arranging for all the third-party services required for the loan including insurance (title, mortgage, flood, homeowner) and closing services.

Wholesale lenders don’t have the infrastructure to do any of these things, so forget about the possibility of “getting it wholesale.” That occasionally works in men’s suits, but never in mortgages.

If borrowers know the wholesale price of their loans, however, they also know the retail markup. That is very useful information to have in shopping for a loan.

Not many borrowers can use my tables for this purpose because the details of the borrower’s transaction have to match those underlying a table. However, I am working on a feature called “Find Your Wholesale Price,” which will tailor the price to the specifics of the transaction. It should be available by Christmas.

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

Lenders’ underwriters are scrutinizing all aspects of the mortgage process, not just the borrower’s creditworthiness. Even a borrower with a high credit score, a cash down payment and verifiable income can run into snags in the mortgage approval process today if the lender’s underwriters are concerned about the value of the property.

Here are some of the recent changes in the appraisal process that could affect you. Up until recently, underwriters usually rubber-stamped an appraisal report if it included information about three comparable properties that sold in the area within the previous six months that supported the purchase price of the property being appraised.

Due to the fact that property values are under pressure in some areas, lenders may ask to see information about comparable listings that sold within the last three months. The more recent the comparable, the more indicative it is of current market value, particularly in a changing market.

For some lenders, information about comparable properties that recently sold in the immediate area is not enough. They want information about comparable properties that are currently being offered for sale. Current list prices that are lower than recent sale prices could be a red flag that prices are softening. Lenders want to make sure that they don’t approve a loan amount that is too high relative to the value of the property.

In areas where it is evident that property values have declined, borrowers may be required to increase their cash down payment by 5 percent. The lender will still make the loan, just not for as much as the borrower requested. This can pose a problem for borrowers who are cash-strapped.

For example, suppose a buyer is in contract to buy a home for $500,000 with a cash down payment of $100,000 and a $400,000 mortgage. The property is located in an area where prices have declined. So, the mortgage is approved for $380,000, or 5 percent less than the $400,000 the buyer requested.

For the deal to go forward, the buyer needs to come up with an additional $20,000. If the buyer can’t or won’t increase the down payment and the purchase contract includes financing and appraisal contingencies, the buyer may be able to back out of the contract without penalty, depending on how the contract was written.

HOUSE HUNTING TIP: Alternatively, if both buyer and seller want to work out a compromise, there are several options. The seller might agree to reduce the sale price enough to make the numbers work, particularly if the buyer can increase the down payment somewhat.

Or, the seller might be able to carry a second mortgage for the buyer to make up the difference, if the lender will agree to this. In today’s mortgage environment, some lenders aren’t keen on seller financing. This could change over time as the credit crunch eases.

Except for loan amounts of $1 million or more, lenders in the past have required only one appraisal for a property. It has become more common recently for appraisers to require two appraisals. This can mean an additional fee, and it certainly adds time to the appraisal process.

Before the recent credit crunch, lenders were able to fully process a mortgage in 14 to 21 days if the borrower was preapproved. Many lenders have recently cut staff due to the decrease in mortgage originations. Before you make an offer, check with your loan agent to find out how long it will take to process and fund your mortgage.

THE CLOSING: The home mortgage business is likely to be in flux for some time. This doesn’t mean that there won’t be opportunities worth pursuing. But, it is a time to have realistic expectations about what the process entails.

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

Despite a continuing decline in the 10-year T-note to the 4.2s, mortgage rates are stuck near 6.25 percent. That extraordinary spread is due in part to the poisonous status of mortgages; the rest is an aspect of leadership failure in this credit crisis.

In times of plague, wagons and carts each day clattered through cities and towns, the draymen calling, “Bring out your dead!” So it is on Wall Street today. You would think by now that surprise would have faded at the number and identity of new shrouds, contagion perfectly obvious. But, no, the secretive and blame-shifting culture of Wall Street is intact, markets as shocked each new day as the last.

Markets weakened by oil and dollar worries were hit with a new wave of credit news on Wednesday: Capital One (the credit card giant), IndyMac and other banks indicated deepening trouble; and credit insurers MBIA and Ambac continued their nosedive, exposing $1 trillion worth of insured bonds. All a complete surprise, of course.

That same day, New York Attorney General Andrew Cuomo announced appraisal fraud action against Fannie, Freddie and WaMu, adding their stocks to the heap on the way down. Young Cuomo was an embarrassing failure at HUD, is qualified for public office only by ego and his father’s good name, and in this grandstanding never contacted OFHEO, the regulator of his pretend perps. Civilians don’t know these things, so the news flash helped to push stocks below crucial support levels. Going lower.

Thursday … stocks stabilized, but a Cisco forecast changed the overall economic view. A collapse in sales to automotive and financial buyers says yes, there is linkage from housing and credit to the real economy, and hazard to the gold standard of the optimists: technology.

The worst of the week was Federal Reserve Chairman Ben Bernanke’s anti-inspirational appearance before Congress. Every Fed chairman has to deliver tough news form time to time, and it’s not a surprise that the Fed is cornered. His insistence that growth and inflation risks are “balanced” is earning widespread derision in the markets, but it should not: these risks are balanced, equally awful, the worst since the ’70s. The only way to deal with $100 oil is to destroy some demand, here and elsewhere, and that’s what the Fed must do.

The confidence-damaging aspects of the testimony was the man’s demeanor, and the void of ideas. He sat in half-smile (not Dubya’s smirk, but too close) until a very annoyed congressman from Baltimore broke from describing foreclosure pain in his district to snap at Bernanke, “You seem very calm about all this.” Throughout, the chairman seemed no more engaged than a man taking notes for a future book.

His blinking surprise at each new development is destructive. “Plague? Really? More bodies? Again? How odd.” The Fed’s phone log early in the August crunch shows a conversation between Robert Rubin and Bernanke. Rubin, greatly admired as Treasury Secretary and Goldman’s best-ever currency trader, has recently been hauling down a $17 million salary at Citi as resident nobility without portfolio. Now, three months later, neither Citi nor the Fed appears to have any idea the extent of Citi’s credit exposure, let alone systemic exposure, nor any sense of urgency to find out. No Fed since the 1930s has been as far behind the insight/information curve as this one.

The absence of invention is just as deadly. It’s OK to be cautious about rate cuts, but it’s not OK to just … sit. We need, immediately, a restoration of new credit, starting with mortgages. Bernanke floated a good idea about Fannie and jumbos … without conviction or urgency, gone on the afternoon breeze.

Right now, today, drop the Agency sand-box fight about mission and privatizing, and say something useful: “No one should doubt the credit of Fannie Mae or Freddie Mac.” Toxicity removed, mortgage rates would fall into the fives in an instant. The best quarantine for housing: refi bad loans to good, cheap, high-quality, low-risk, long-term, fixed-rate. If that means dropping a fixation with market solutions in favor of government guarantee, well, that’s where Fannie came in, in 1938. Late, that time.

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

Do you know — really know — where the boundaries of your property are? Most people don’t, at least not with certainty, but there are instances where not knowing could put you at legal risk.

When you purchased your home, you should have been given a small map, typically just a photocopy of one portion of a larger map, that showed the size of your lot. Known as a plat map, it typically shows the length of each side of your lot, the name of the streets that border it, the tax lot number, and perhaps the legal description.

If you were not given a map, or if you no longer know what became of it, you’ll want to obtain a new one. Most title companies can provide you with one, or you can get one through your city or county assessor’s or surveyor’s office — it’s something you really should have a copy of for your records.

FINDING PROPERTY LINES

If you want to know where the property lines are, you have two options. You can attempt to locate them yourself, using the plat map and a few investigative skills, or you can have the lines professionally surveyed.

To try to establish the property lines on your own, you first need to locate the property corners. The plat map should show you where the corners are, at least approximately. Surveyors typically mark corners with a metal rod driven into the ground, which may still be visible if the property was surveyed recently, or it may be buried several inches or even a foot or more underground. To save yourself a lot of digging, you can rent a professional-grade metal detector from many rental yards, and use that to narrow the search.

Once the property corners have been located, the rest is fairly straightforward. On smaller, relatively flat lots, you can stretch a string between the corners for reference. You can also use an inexpensive laser to shoot a line from one corner to another. This is best done near dusk, when the projected line is easier to see — wear protective goggles, and take other safety precautions for dealing with lasers as outlined by the manufacturer.

It often happens that locating and laying out property lines, especially on older lots or rural acreage, is very difficult for a nonprofessional to do with any accuracy — if at all. In many cases, the only way to be legally certain is to hire a surveyor. They will work back from established benchmarks and locate your property corners with great accuracy, and will give you a certified document showing where the corners and property lines are.

The cost for a professional survey can vary greatly, depending on the size of the property, how irregular it is, how recently it was surveyed, the distance to the benchmarks, and other factors. However, the cost is minimal when compared to what it would cost in legal fees to fight a property dispute, or in construction costs to move a fence or a building.

WHEN SHOULD YOU GET A SURVEY?

Ideally, when you first purchase a piece of property you and the seller can agree to have the land surveyed and can get a certified copy of an accurate map. In some cases, the seller may be willing to pay the entire cost of the survey, with the understanding that the map remains with the seller if the deal doesn’t go through. Even if the seller is unwilling to participate, it is money well spent to go ahead and have the survey done on your own.

You would also want to have a survey done if you are about to build anywhere near the property lines. This would include constructing a fence or a road, laying water lines or other utilities, adding outbuildings, or constructing an addition to your home. If you are financing the project, the bank may insist on a survey as a condition to issuing the loan.

Another obvious time for a survey would be if a dispute arises between you and an adjacent property owner. In this instance, a survey is almost automatic, as it’s the only way to be legally certain where the boundaries are.

IF A DISPUTE ARISES

In the unfortunate event that a dispute arises with your neighbor, you are going to almost certainly need legal representation. Even if you and your neighbor are able to reach a compromise between the two of you, whatever that compromise is needs to be legally established and recorded with the county so that it becomes part of the record on those properties.

Once again, land disputes can be very costly and time-consuming:

• Prior to undertaking any construction close to your property lines, have a survey done;

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

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

Copyright 2007 Inman News

As the child of Depression-era parents who still save old bits of string, used gift wrap, and the flimsy plastic trays from candy boxes, I too am mentally incapable of seeing things go to waste.

This confounding compulsion to conserve goes well beyond the usual household flotsam. When I’m dining out, not only do I feel guilt at leaving a few bites of food on my plate — I feel even worse when the guy at the next table leaves half his steak dinner to be thrown out.

I’m always annoying my wife by rushing around turning off lights, because in the back of my mind I imagine how much oil, gas or coal is being burned to keep that bulb lit for no reason. Likewise, I shower under a relative trickle of hot water because it bothers me to think of all that hard-won energy literally pouring down the drain. Come to that, I keep my water heater set so low that I can shower with only the hot water valve turned on.

As an admitted basket case in compulsive conservation, though, I feel entitled to say that I’m getting pretty sick and tired of having the government tell me exactly how, what and where I’m supposed to conserve.

I’ve got nothing against well-crafted energy-efficiency regulations such as California’s Title 24, which for the most part leaves designers plenty of latitude provided they meet an overall energy budget. On the other hand, some government micromanagers just want to issue marching orders. For example, earlier this year, a California congresswoman introduced a bill that would effectively ban the sale of all incandescent bulbs nationwide by 2012 (it’s worth noting that one of the bill’s most enthusiastic backers was Philips Lighting, the world’s biggest producer of compact fluorescent bulbs).

However well-meaning this kind of edict might be, it utterly fails to harness the power of self-interest that, for instance, a well-designed tax credit might. Instead, it simply breeds popular resentment and widespread attempts at circumvention. Rest assured, it wouldn’t be long before people were buying cases of 100-watt bulbs out of the back of some hooligan’s van

Enlightened self-interest is a far better motivator than laws that attempt to dictate a social conscience. Hence, I have to trust that the mindless consumerism that’s overtaken America in the last couple of decades will eventually be reversed by the same old-fashioned capitalist forces that created it.

There are already glimmerings of this trend. For example, as photovoltaic panels continue inching their way toward economic viability, more and more of us are looking into their use — not because we’re pious, but because we’d love to tell our local utility to stuff it. Ditto for the idea of owning a hybrid car that keeps us slightly less in thrall to our well-fed friends at the oil companies.

Such developments, modest though they are, make me believe that all Americans will eventually see the economic sense — if not the philosophical beauty — of cherishing everything Mother Nature gives us. Not because some law demands it, but because we’d be crazy to do otherwise.

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Copyright 2007 Arrol Gellner

Aiken, SC

WHAT: A 1910 Victorian house with three bedrooms, two and a half baths and 2,450 square feet of living space.

HOW MUCH: $515,000

PER SQUARE FOOT: $210

SETTING: Aiken, known for its 19th- and 20th-century architecture, is 15 miles east of Augusta, Ga., in a resort area.

COMMON SPACES: The kitchen has granite counters on a center island, as well as a breakfast nook; the house has a sunroom; a formal dining room; and a living room with a library.

PERSONAL SPACES: The master bathroom, recently renovated, has a walk-in shower and a dressing table.

OUTDOOR SPACE: A front porch and a rear deck; a screened-in porch on the side of the house and a balcony off of the master bedroom.

AMENITIES: A fireplace and a detached two-car garage.

TAXES: $1,080 a year

Galena, Mo.

WHAT: A lakefront log-style house with five bedrooms, three baths and 3,300 square feet of space, and an extra apartment above the garage.

HOW MUCH: $499,900

PER SQUARE FOOT: $151.48

SETTING: The property is on Table Rock Lake, an hour and a half north of Branson, a resort town in the Ozarks.

COMMON SPACES: A double-height ceiling in the living room; oversized windows in the dining room. The open kitchen has a breakfast bar.

PERSONAL SPACES: A master bedroom on the upper level; two bedrooms on the main level; and two on the lower level. A loft on the upper level is open to the living room below.

OUTDOOR SPACE: A rear deck, a front porch and a yard that leads to a dock.

AMENITIES: An above-ground pool, a screened-in porch with hot tub, a gazebo, an attached three-car garage, a detached garage with a studio apartment, a workshop building and two 10-by-24 foot boat slips with a boat lift.

TAXES: $1,373 a year; homeowner association fee: $10 a month

San Francisco

WHAT: An alcove studio with one bath in the Beacon, a mixed-use apartment building with 598 units and a Safeway, Starbucks and Borders on the retail level.

HOW MUCH: $499,000

PER SQUARE FOOT: $831

SETTING: Within walking distance of the financial district and a block from AT&T Park, where the San Francisco Giants baseball team plays; near to public transportation.

COMMON SPACES: Tiled floors in the kitchen; carpeting throughout the rest of the space.

PERSONAL SPACES: A bedroom nook off of the main room.

OUTDOOR SPACE: Landscaped grounds and a central dog park.

AMENITIES: A pool, fitness center, business center, media lounge and concierge. Private parking in an underground parking lot is $100 a month.

TAXES AND FEES: $6,000 a year; condominium fee: $560 a month.

Question: For several years, I’ve rented a home to an elderly woman in an area that is popular with active senior citizens. An ideal tenant, she was always early or on time with her rent payment. But three months ago, her payments didn’t arrive on the due date. When I contacted her, she said she had forgotten to mail the check. Another month went by and she forgot again. This month, I called her and she was totally disoriented, and said she has been sick and would soon get the check in the mail. I contacted her son, whose name was listed on the rental application and who lives out of town. He said his mother had become forgetful and that he was concerned for her health and safety. He said he has tried to bring caregivers into the home, and she has refused to answer the door. Last week, she was stopped by a local law enforcement officer and had been driving aimlessly around. He said he’s trying to get power of attorney to act on behalf of his mother.

In the interim, I’m concerned that my tenant could not only be in need of more direct attention, but that she may also damage the house. She smokes and I fear a forgotten cigarette could start a fire. It’s a sad situation. She’s on a yearly lease. Do I have any standing to intervene?

Steven Kellman, an attorney for tenants, replies:

It is a difficult situation when a person becomes forgetful, and your concern is commendable. Your tenant’s condition could be a temporary one or perhaps one that will only get worse with time. Behavior like you describe can be caused by certain forms of dementia, which could result from advanced age or other medical processes, or perhaps it is the result of a progressively degenerative disease like Alzheimer’s. In any event, it is difficult because being “forgetful” is a question of perception and there are degrees of forgetfulness. Even the most alert and competent adults can experience moments of “absent-mindedness,” which could mirror some of your tenant’s symptoms.

The problem is that until she is declared legally incompetent, she is free to act as she deems fit and proper for her. Therefore, she is entitled to be free from interference until it becomes clear that she is a danger to herself or others around her. If her son tried to help with no success, then you will probably have a more difficult time gaining her voluntary cooperation with any assistance.

You can take the hard-line attitude and begin eviction proceedings on the nonpayment of rent or you can try to help with another approach. You can contact your local county social service agency, including the Adult Protective Services, to have her situation evaluated. They can intervene and make an assessment of her condition, competency and need for help. If they determine she is well and competent enough to handle her own affairs but then insists on handling them poorly, you may be forced to take legal action to protect your property. If such action is commenced, her condition and need for assistance may then become more evident and hopefully will prompt action on her behalf.

Question: I am a property manager. A tenant signed a lease earlier this month that is set to begin on the first of next month. The tenant now indicates that he wishes to cancel the lease for vague reasons; he mentioned that his attorney told him he could have trouble in his child-custody proceedings. Can he just back out of the lease?

James McKinley, an attorney for landlords, replies:

Unless your tenant is in the military and is being deployed, there is no valid reason for him to back out of the lease. Assuming that both parties signed the lease and that you gave the tenant a copy of the executed lease, you have formed a valid contract with your tenant. To answer your question simply: No, the tenant cannot just back out of the lease.

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

Q: I’m looking for a roommate, and I’m pretty picky. I want someone of my own age, and I’d just as soon not have to deal with a divorced parent who will be hosting kids on the weekends. When I wrote an ad with these specifications, my local newspaper wouldn’t print it — they said it was discriminatory! But I placed it on a well-known Web site just as is, with no objections. This makes no sense. Are there different discrimination rules for print and online ads? –Autumn C.

A: Your confusion is understandable, and shared by many. The Fair Housing Act, developed in a pre-online world, makes it illegal for newspapers to publish an ad that indicates your preference for someone of a specific race, religion, national origin, disability, sex or familial status. The ad you gave the newspaper was discriminatory because you specified age and familial status (no divorced parents). But why should a Web site escape liability simply because it publishes the ad in a different medium?

The answer lies in the Communications Decency Act, a 1996 federal law that promotes the unfettered and unregulated development of free speech on the Internet. To further this end, the law says that mere providers of interactive computer services — Web sites that just give you a place to post information — can’t be sued over content created by third parties, such as you. A newspaper, by contrast, isn’t passive — it will typically review and edit its ads. That may explain why your local paper said no, but your online ad went ahead without a glitch. But wait, there’s more.

Ironically, spiffy Web site design has lead to the dilution of what everyone considered an ironclad rule protecting interactive computer services. Sophisticated sites don’t simply give you a place to write — they provide drop-down and select-a-box menus. That’s how Roommates.com designed its questionnaire for roommate posters, and guess what — the site required users to disclose information about themselves and their roommate preferences based on characteristics like age, sex and whether children will live in the household. Users could then provide “Additional Comments” through an open-ended text box, which Roommates.com did not review or edit.

Roommates.com got sued. The federal appellate court ruled that because the Web site required users to give discriminatory information as printed in their menus, they were no longer merely passive publishers, but had become an Internet “content provider” (a host who is at least partly responsible for its Web site’s content). Roommates.com had to defend itself with respect to its drop-down questions, but it was immune from liability for the information users placed in the “Additional Comments” text box (with respect to this information, Roommates.com was just a passive site).

You might take a look at your ad to see if it’s still there. Open-ended essay boxes that contain discriminatory ads are often taken down once the passive provider learns, typically through a viewer’s complaint, that the content is illegal. If your ad has gone missing, perhaps that’s what happened.

Q: When I moved in, my landlord collected a security deposit of one month’s rent, plus last month’s rent. Now, three years and two rent hikes later, I’ve given notice and have no intention of writing a check for my last month. The landlord insists that I owe the difference between the current rent and the rent I paid when I moved in. Who’s right? –Harry O.

A: Here’s an example of a fight that could have been easily avoided. When your landlord raised your rent, she could have asked for the increase for the last month’s rent, too. It was up to your landlord to take that step, and since she didn’t, you could argue that she waived her right to top off the last month’s rent.

Unfortunately for you, it’s going to be very easy for the landlord to get that money anyway — she’ll deduct it from your security deposit, and you’ll have to challenge that deduction in small claims court to get it back. Expect your landlord to argue that “last month’s rent” should be understood as standing for the rent at the end of the tenancy, whatever that is. But if that’s so, it’s up to the landlord to make sure that the last month’s rent is current.

Q: We own a small apartment building and would like to have one of the residents be our manager. The resident suggests that we knock off a few hundred dollars from the rent each month, and leave it at that. We’d like to keep things simple, too, but wonder if this is the right approach. What do you advise? –Dennis C.

A: There’s nothing wrong with compensating your resident manager with a rent reduction, but it may be wiser to charge full rent and pay your manager an hourly wage. Here’s why: Suppose you decide that the manager isn’t doing a good job, and you decide to do the job yourself, ask another tenant, or use a management company. To return the manager’s rent to its full amount, you’ll need to re-do the lease or rental agreement, and if your former manager balks, you may have to comply with the notice period in your state (typically 30 days). That’s 30 days in which the manager isn’t doing the job but is still enjoying the reduced rent. If you pay by the hour, and as long as you’ve not promised, directly or indirectly, that the manager can have the job as long as he’s your renter, you can terminate the employment arrangement with no notice at all.

Paying by the hour has other advantages. First, it allows you to track more closely how much time various tasks are taking. With a flat fee (the rent reduction), you may have a hard time determining whether the reduction is appropriate to the job you’re expecting. Second, with a rent reduction, it will be tricky to determine whether you’re complying with your state’s minimum-wage laws (you may not be able to use the full amount of the rent reduction when determining whether you’re following minimum-wage laws). For more help, check out the IRS Circular E, Employer’s Tax Guide, which gives details about your tax and record-keeping obligations (on the IRS Web site at www.irs.gov, type “Circular E” in the search box on the home page).

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