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Real Estate Law
Hosted by Benny L. Kass
Washington Post Columnist
Wedesday, March 28, 2001; 1 p.m. EST
Only after entering into the process of buying real estate do many consumers realize just how little they know about real estate law. What are the legal obligations of both the buyer and the seller? Are there different legal ramifications for buying a home or a condominum, and what are they? What are the buyer's and seller's legal obligations to condo and homeowner's associations?
Benny L. Kass writes the "Housing Counsel" column in The Washington Post, navigating the legal issues and responsibilities of both buying and selling real estate. How do you plan for capital gains, or what can you do if you're faced with a buyer who's dragging his or her feet? Kass has the answers. He was online Wednesday, March 28.
Kass is a Washington, D.C., attorney with the law firm of Kass & Skalet, PLLC. Prior to his private practice, he worked as counsel to both Senate (1965-69) and House (1962-65) subcommittees, and was an attorney with the U.S. Maritime Administration (1969-71). Kass holds a Bachelor of Science degree in journalism from Northwestern University in Evanston, Ill., a law degree from the University of Michigan Law School and a Master of Laws degree from George Washington University Law School. In addition, he has also served on various legal and consumer-related counsels and commissions in the District of Columbia.
The transcript follows.
Editor's Note: Washingtonpost.com moderators retain editorial control
over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.
Washington, D.C.:
What exactly are Dower's Rights, and what are their consequences?
Benny Kass: dower is a vestige of old english common law. It is a means of assuring that if a husband owns property in his name only, and wants to sell it, that the wife has an interest in the property (albeit a small one). In recent years, this has been expanded to include husband's rights as well as wife's rights. basically, it was designed to protect the wife from the husband giving the family home to someone else -- such as a girl friend. The City Council here in washington recently passed a very large bill which (I believe) has eliminated dower. The bill is large, complex and did not yet go into effect. I intend to read it carefully in the near future and write about it in my Housing Counsel column in the Sat Washington Post. The new law impacts on many other things, including foreclosures and predatory lending.
for the time being, however, if a husband or wife purchase property in their own name, in order to obtain a mortgage (deed of trust) the other spouse must sign the mortgage document so as to convey whatever dower interest to the trustee under the deed of trust. Hopefully, this will be elimated shortly.
District of Columbia:
I bought a condominium on a presale basis. Drawings of my unit were provided with the promotional materials, with the sales contract and were available for on-site viewing. My unit was not built in the manner that these drawings indicated, although I did not discover the actual differences until I moved into the unit. The builder already has my money. What do I do?
Benny Kass: The first thing to decide is how significant are the changes. If they are not really important, I would not make a fuss. However, if they are important to you then I would carefully read your sales contract to make sure that the developer is required to sell you exactly what is included in the plans. Often, real estate sales contracts state that the developer reserves the right to make modifications to the plans and specs and that those plans and specs are not made part of the real estate contract.
However, if your condo unit does not comply with the plats and plans which have been recorded on the land records of the District (for example your unit is supposed to be 18x21 when in fact it is only 16x19) then you might have grounds to challenge the developer.
Once you have confirmed that (l) the problem is material -- not de minimus); (2) that the real estate contract does not give the developer the right to make changes, I would then discuss the matter directly with the developer.
If you get no results, then you may want to hire an attorney. But as we all know, litigation is time consuming and expensive.
Washington, D.C.:
My boyfriend and I are looking to buy a home. Because of various financial reasons, I am taking out the mortgage loan and paying the closing costs, but he will be making improvements and help with the monthly bills. I was wondering how we should take the title. We have been together for seven-plus years, and plan to marry eventually. He is the beneficiary of my life insurance policy and various other assets. I am concerned that if I should die or become incapacitated before we marry, the house would legally pass to my parents, which they do not want, and he would be left without a home. Thanks.
Benny Kass: Ah! the age old question: how do I take title with my friend. I wish you both long life and a successful marriage. But things happen, and you may decide that you do not want to get married. Thus, I would either take title in your own name -- and have a will prepared giving him the property in the event of your death -- or put the title in both names (as tenants in common). Under this approach, if you should die, your portion (half) would pass under the terms of your will, and you can name your boyfriend so long as you are together.
I don't want to break up this relationship before it even gets started, but I strongly recommend that you both enter into a written agreement, spelling out such matters as: (l) who pays what and who does what in the property; (2) what happens if one of you wants out? do you sell, get another roommate, etc; and (3) what if one dies.
I still strongly recommend that you take title in your own name. If you get married, you can always transfer title to you and your husband, as tenants by the Entirety. There is a nominal recording fee but there will no recordation or transfer tax between husband and wife.
Gaithersburg, Md.:
Mr. Kass,
I follow your column and Robert Bruss' column in the paper. Many times, the answers include a caveat to contact a real estate attorney in the local area. What is the best way to find a good, reputable lawyer? (Assume I'm doing this on my own and not working with a real estate broker who would have a list of references.)
S. J. Spencer
Benny Kass: I, of course, am tempted to say that you can call me since I practice law in Maryland and the District. But that would not be fair to the rest of my profession. Word of mouth is always the best way to determine what professionals are good and who are not (doctors, lawyers, engineers, etc) Also, the various bar associations in this area have legal referral services which can refer attorneys by specialization and practice -- ie. divorce attorneys, criminal law, real estate.
Fairfax, Va.:
Mr. Kass:
I hope you will take my question.
Months ago when I was house-hunting, I was losing houses left and right even though I was well-prepared with research, had a pre-approval on a mortgage and was always the first one to show up on the day the house went on the market.
It took a couple of phone calls to listing agents to figure out what was happening: The listing agents on those houses were showing the house BEFORE it went on the market to buyers who A, did not have a buyer's agent and B, would agree to work only with them, the listing/selling agent, for the transaction. So people like me (I had a buyer's agent) never had a chance.
I assume the agents are doing this to take advantage of the hot market and not have to share their commission with a buyer's agent.
IS THIS LEGAL?
Thanks
Lisa
Benny Kass: I could write a book on this question since it has several parts. Let's try to simplify all issues that I see:
1. make a list of the various houses you lost. About five years from now, go back and see what they are worth. I hope that they will appreciate in value; but real estate is like a roller coaster and goes up and goes down. I am very troubled with the frenetic way that people were buying major investments in their life without really thinking and with offering unlimited escalation clauses. We should all slow down; life -- and real estate -- are not worth the hassle.
2. why do you need a buyer broker? I know its legal, but what are they really doing for you. And, unless you -- as buyer -- pay the broker, they are paid by the seller, and that potential conflict of interest has always bothered me.
3. my suggestion: first, I believe the market is slowing down. Hopefully, you won't have the same problem. second, drop your buyer broker. tell him/her that if they find a house for you, they can get their commission from the seller (or split it with the listing broker). Third, don't worry. You will ultimately find your dream house.
Alexandria, Va.:
What is "right of first refusal" and is there such a thing in Virginia?
Benny Kass: i do not practice in virginia but cannot believe that there is any law prohibiting such a right. A right of first refusal means just that: you are my tenant, and my lease (contract) with you states that if I decide to sell, I will give you a right to purchase at the same price that a third party has made an offer. Thus, you are protected in that if the property owner gets a contract from a third party, you have the right to match that contract. Often, rights of first refusal are limited to a time period --ie. 15 days.
There are strong laws in the District of Columbia giving tenants the absolute right of first refusal --whether or not it is spelled out in the lease. But Virginia is -- in my personal opinion -- not a consumer friendly state (at least the legislature does not appear to be so) and thus there are no such laws in the Commonwealth.
Fairfax, Va.:
Is it standard practice to have your attorney present at the closing?
Benny Kass: real estate brokers often state (jokingly I hope) that lawyers tend to mess up the real estate deal. There is no standard practice. But look at it this way: you are purchasing a very large investment. At settlement you will have to sign a carload of papers -- deed of trust, promissory note, name affidavit, settlement statement, flood insurance statement, truth in lending statement. Unless you understand what you are signing, it is always recommended that an attorney review the papers before or at the settlement.
More importantly, what people do not understand is that the settlement may be the last time to negotiate (discuss) problems. In my career, I have had 8 hot water heaters go bad the morning of settlement. Because I was present and representing the purchaser, I was able to convince the sellers that they should give a credit to the buyers for repairing/replacing those heaters.
yes, I recommend that the attorney (1) review the sales contract before you sign it and (2) review the settlement papers before you sign them.
We go to a doctor for preventive medicine. We should also go to a lawyer for preventive law. In the long run, it may be less expensive.
Northern Virginia:
Mr Kass, my fiance and I have purchased a home together, taking title as "joint tenants in common." We both contribute equally. We do not have a written agreeement as you have suggested earlier. What should happen if one of us wanted to sell and split the house in half but the other refuses? Legally, can the other half be forced to sell?
Benny Kass: first, I recommend that you change the title to tenants in common and then each of you have a will, giving your portion of the property to the other. Let's look at this situation. God forbid, you die in an accident. Under a joint tenancy, your fiance gets the entire house. Two weeks later, he dies, and then the entire house goes to his heirs. Is this what you really want?
to answer your question, there is a concept of "partition". The courts will not permit two or more persons who own property to be forced to own that property if one of the owners want out. The courts will force the sale. Unfortunately, the only winners in such a lawsuit are the lawyers, the trustees who sell and the speculators who buy.
The time to resolve all these issues -- short of hostile litigation -- is while you are talking to each other. It's always a tough decision to approach your partner and say "let's draw up an agreement in case we split up". But from my own experience, its better to do it now (and clearly less expensive) than if you have to hire me or some other lawyer after you start having problems.
Washington, D.C.:
The question about the "couple" who are not married but want to buy a house illustrates another of the pitfalls in trying to maintain a non-legal union in this country. If the parents decide, they can contest. If you're going to get married, do it. Another illustration is that poor young man who was run over this week, while his pregnant girlfirend watched. If they had been married, she would get social security for her unborn child, also the right to sue for damages, now she gets nothing. No matter how much you may love each other, this country's laws are set up to help with and protect legal unions.
Benny Kass: thanks for the political statement. I live and practice in the real world and have to deal with these problems all the time.
Shelby Township, Mich.:
Who is the ultimate owner of condominium property? For example, if I bought a condo free and clear and I died without a will who would the property revert to, the state or the developer/manager of the condo property?
Benny Kass: when you own any real estate -- whether it is a single family house, a farm, an office building, raw land or a condominium unit -- you own it. On your death, the property will pass in one of two ways:
1. if you have a will, it will be conveyed to those you designate in that will.
2. if you die without a will (called intestate), the laws in your state will dictate who gets your property.
Thus, it is always a good idea to have a will prepared. You know who should get your property on your death; why rely on someone else's judgment (ie. your state legislature) to make that decision.
By the way, if you believe that your property manager somehow has an ownership interest in your condominium, you should do two things: (l) carefully read your condo documents and (2) try to get another property manager. As a condo owner, the manager works for you and the other owners -- its not the reverse.
Lorton, Va.:
We didn't have an attorney per se. We chose our settlement attorney. When we decide to sell our place and buy another home, should we hire an attorney?
Benny Kass: it is always a self serving statement when I -- as an attorney -- tell people that you should get a lawyer when you are involved in real estate transactions. But yes, have a lawyer review (or prepare) the sales contract and guide you throught the process. A real estate broker/agent can be helpful -- but they are not attorneys. If the settlement attorney who handled your house purchase seems competent, I see no reason why you should not go back to him/her. But make sure that you get a ballpark of what the legal fees will be BEFORE you sign up that lawyer. A lawyer should charge an hourly rate or a fixed rate -- it should not be a percentage of the sales price.
Fairfax, Va.:
Mr. Kass --
My husband and I are having a dispute with our homeowners association. (Bet you've never heard of THAT before!)
We restained our deck an apparently unauthorized color. And not only that, but we later learned that decks in the community are not to be stained at all, but given a clear sealer.
Well, the deck was stained when we bought the house, so we assumed staining was OK. To be safe, though, we re-read the association bylaws, covenents, restrictions, memos, etc. and nothing outlined the acceptable exterior colors or even addressed how decks were to be maintained.
Several weeks after we were informed (in a very officious letter) that we had broken a sacred rule, the architectural committee distributed guidelines to the entire development and, of course, mandating that all decisions go through them. That was the first time we had seen those guidelines!
As new owners (less than a year), we apologized in writing for breaking the rule and expressed our desire to work with the committee to resolve this, but they are being very difficult to deal with. The solutions they propose are costly and seem arbitrary to us -- their standards of what is or is not acceptable have to do more with their own taste than with set, objective standards.
They are even hinting that they could prevent us from eventually selling our house if they can't approve the way the deck looks.
How would you suggest we handle this situation?
Thank you!
Benny Kass: yes, its deja vue all over again. I have compled a list of "P"s of condominium problems: pets, parking, presidents, pools, pianos and even PATIOS.
Covenant enforcement is a serious problem in community associations. A board is directors is damned if they enforce the rules and damned if they do not. You may have a problem, which will have to be solved.
You should consult a competent condominium association attorney in your area. However, many such attorneys only represent associations and/or boards of directors, and are unwilling to take on cases such as yours.
One thing to keep in mind: a board of directors must enforce covenants uniformly; they cannot be selective, arbitrary or capricious. Check around your community; are all the decks covered with a clear sealer or are some painted such as yours. If the latter, and the board does not enforce their rules against those other owners, you may have a strong defense.
this is a troublesome area. Some boards strictly adhere to their covenants -- others do not. However, the guidelines have to be clear and unambiguous. good luck.
Somewhere, USA:
You speak of making a will to protect assets. What about a living trust? What's the difference?
Benny Kass: dear somewhere: a living trust is a creation of attorneys who have pushed the concept -- often unnecessarily in my opinion. First, there is absolutely no tax savings with a living trust. It's sole purpose is really to help avoid probate. However, if you have a trust -- and do not put all (repeat) all of your assets into that trust, your estate will still have to be probated. talk to your attorneys about the living trust. I really don't think it makes sense for most people. If, however, youhave property all over the country, then it might make sense, since otherwise your estate would have to file probate in each state where your property is located.
Sterling, Va.:
Can a condo association force the removal of a pet (the lease specifies the allowance of cats)?
Benny Kass: you state that your lease allows pets. But you have to look to the condominium documents. Some documents prohibit pets; some allow domestic pets. The answer lies in your association legal documents (which you should review whether or not you own or lease).
Washington, D.C.:
Mr. Kass, I love your column in The Post.
I am trying to find a way to buy a house in the hot D.C. real estate market. My friend suggested looking into foreclosure auctions. What pitfalls should I be aware of?
Benny Kass: good luck. Please see an attorney before you attempt to purchase at a foreclosure sale. If you decide to go this route, before you attend the sale (l) get a title report; (2) get an appraisal, and (3) try to see the inside of the house. People have made money when purchasing at foreclosure sales; people have also lost a lot of money.
Keep in mind that if the house was really worth something, most owners in default would try to sell it before itwas foreclosed upon. The question I always ask: if this is such a good deal, why is it coming my way.
washingtonpost.com:
That was our last question today. Thanks to Benny Kass, and to
everyone who joined us. Feel free to submit your questions to our other columnists, and we can re-submit them as well.
Stay tuned this week for the Online Homebuyers Conference:
Kenneth R. Harney on selecting a mortgage lender, Thursday, March 29, 1 p.m. EST at 12:30 p.m. EST
Bob Bruss on buying and selling real estate, Friday, March 30, at 1 p.m. EST.
In addition, Katherine Salant talked about new home construction and customization on Monday, March 26, and Barry Stone talked about home inspections on Tuesday, March 27.
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