What If Home Seller Won’t Move Out?
QUESTION: We closed the purchase of our first home on the first of the month. The seller asked for a few extra days to move out so we agreed since we weren’t ready to move in yet. But the seller is still living in our house. He says he is moving to a retirement home. But they have no record of him. We suspect he has no place to move since he shows no signs of packing. What should we do?
ANSWER: Contact the best real estate lawyer in town. Your holdover seller is legally called a tenant at sufferance. You are the sufferee!
In a very few cities, a tenant at sufferance can be summarily removed by the police as a trespasser. But most police refuse to remove holdover residents so they must be evicted as if non-paying tenants.
Your situation shows why it is so important for home buyers to either not close their purchase until the seller is physically out of the residence or the buyer has a written lease with the holdover seller and prepaid rent. As you learned, sometimes it doesn’t pay to be nice.
VA, FHA Loans Require Owner Occupancy
Q: I am a Vietnam vet who has never used my VA mortgage entitlement. Can I use it to buy a duplex or triplex for investment? I want to remain in my present home. What about an FHA mortgage?
A: VA and FHA home mortgages require owner occupancy. They are available for up to four units, but one of those units must be occupied by the property owner. For full details, please consult a local VA-FHA approved mortgage lender.
Who Should Pay for the Title Insurance?
Q: When we bought our new condominium about four years ago we paid for the title insurance. Now we are selling the condo. On our list of closing costs is a title insurance fee. When I questioned it, the real estate agent said it is customary for the seller to pay for title insurance. If this is true, why did we have to pay the title insurance when we bought the condo?
A: Everything is negotiable, including whether the buyer or seller pays for title insurance. It appears when you bought your new condo, the developer stuck you with the title insurance fee. He probably figured you didn’t know this item is negotiable.
In most counties there is a local custom as to whether the property buyer or seller pays for title insurance. For example, in the county where I live it is customary for the buyer to pay. But in the adjoining county to the south, the custom is for the seller to pay. However, this is not a law so the buyer and seller are free to negotiate as to who should buy the title insurance.
It is not worth losing your condo sale over whether you or the buyer should pay for the title insurance. Please reread your sales contract. If it does not obligate you to buy the buyer’s title insurance, you shouldn’t have to pay.
Read Sales Contract Before You Sign It
Q: I have to reluctantly sell my Florida vacation home to pay off some credit card debts that got out of hand. Two weeks ago, my real estate agent brought me a sales contract that I signed without reading it carefully. I was counting on my agent to explain the important terms to me. As I study this contract, among other things I have discovered: 1--I am obligated to pay for termite and dry rot repairs, but there is no maximum limit, and 2--I must pay up to two points for my buyer’s mortgage. The termite inspector says repairing the damage will cost about $5,500. This will leave me very little cash to pay off my debts, which was my primary reason for selling. Can I get out of this sale for misrepresentation?
A: The time to read a home sales contract is before, not after, signing it. Although your realty agent should have gone over the contract terms paragraph by paragraph with you, it was hardly misrepresentation if she failed to do so.
However, it may have been fraud, which means intentional deceit, if your agent knew the contract had no limit on the seller’s obligation to pay for termite damage repairs and she failed to emphasize it to you. As for paying up to two points (each point is one percent of the amount borrowed) for the buyer’s mortgage, the agent’s fiduciary duty to you requires explaining any terms the client doesn’t understand. Please consult a local real estate attorney to discuss your best course of action.
How Much Insurance Does Association Need?
Q: I was recently elected to the board of directors of our condominium homeowner’s association. Along with two fellow members of the committee, my primary duty is to shop for fire and liability insurance and take bids for our policy, which is up for renewal in June.
Each insurance agent we consult has different recommendations. We have a pretty good idea how much fire insurance we need, but liability insurance is a different matter. Currently, we carry $300,000 liability insurance. However, I think we need more for a 22-unit building. How much insurance should we carry?
A: Your condominium homeowner’s association is grossly underinsured. In the event of a liability loss, such as someone tripping on a defective stairway and being severely injured, it might be possible to hold the individual condo owners liable due to under-insurance. That happened last year in a California appellate case.
The California legislature recently passed a law requiring at least $2,000,000 per occurrence of liability insurance for less than 100 condos and at least $3,000,000 liability insurance per loss for over 100 units. Otherwise individual condo owners may be held liable. Most states do not have similar laws but this statute sets a minimum guideline.
Since liability insurance is relatively inexpensive for condo associations, I suggest you buy at least $2,000,000 liability coverage to be safe. In addition, be sure to carry condo officer’s and director’s liability insurance, as well as fidelity insurance on the association treasurer.
Multiple Listing Service Not Open to Public
Q: The last time I visited a nearby shopping mall I noticed a little computerized kiosk where the public can shop for a home through the local multiple listing service. But none of the listing photos showed the address, just the general vicinity. As I would like to sell my home without paying a real estate sales commission, how can I gain access to this service to advertise my home to prospective buyers?
A: Many local multiple listing services are experimenting with new ways to improve public access to their listings. The purpose is to sell more homes.
However, only member real estate brokers and their salespeople can place listings in the local multiple listing service. The MLS is the most powerful sales tool realty agents have because it tells all members the details of homes listed for sale to be shown to prospective buyers.
In some communities, for a greatly reduced fee a few realty brokers will take so-called open listings and place them into the local MLS for do-it-yourself home sellers. If an agent sells the home, the seller usually must pay a 3% or 4% sales commission. But the seller does most of the work, such as advertising and holding open houses. I don’t think this is the best way to market your home but it is an experimental alternative available in some towns.
The new Robert Bruss special report “1995 Realty Tax Tips: 12 Chapters of Tax-Saving Ideas for Realty Owners” is available for $4 from Tribune Media Services, 435 N. Michigan Ave., Room 1408, Chicago, Ill. 60611.
