Benny L. Kass

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Real Estate Law
Hosted by Benny L. Kass
Washington Post Columnist
Monday, Sept. 24, 2001; 1:30 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 Monday, Sept. 24.

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.

Silver Spring, Md.: With the market taking a downturn, should we expect to see mortgage interest rates plummet or rise? Is it a good time to re-finance?

Benny Kass: i am not prepared to state the the market (real estate that is) is taking a downturn. Reports over the weekend in the DC area indicated that sales (or house showings) are still strong. I believe interest rates will drop slightly -- not much but somewhat. I really can't see mortgage interest rates increasing. should you refinance? depends on your current mortgage. Get quotes from some lenders and compare your monthly payment now to what that new payment would be if you refinance (leaving out payment in escrow for taxes and insurance). If there is a savings with the new rate, go for it == but keep in mind that you will have to pay some closing/settlement costs.

Washington, D.C.: How do you think the terrorist attacks or any type of military action by the U.S. will affect the real estate market? Do you think it will?

Benny Kass: wow! i haven't the slightest idea. the terrorist attack has put all of us in shock, and we are gradually returning to as normal a situation as we can. However, the increase in military spending will certainly boost the economy in certain sectors, and that should keep real estate a good investment. Right now, real estate is certainly a better investment than the stock market.

Alexandria, Va.: What are the different legal ramifications of being listed as "Joint Tenants in Common" and "Tenants in the Entirety?" My fiance and I are closing on a home next month but we will not be married at the time of closing. Our intentions: If one person dies, the property should pass to the other only. We have no children. Thanks.

Benny Kass: tenants by the entirety is reserved for husband and wife. when you get married, you may want to change the deed to reflect this T/E arrangement. Right now,if you want your fiancee to get the property on your death -- and vice versa -- take title in your names as "joint tenants with right of survivorship"

Alexandria, Va.: I bought a new construction townhouse last November. There were many problems in the home that the builders were suppose to fix. The work that they did do was very poor, and there were several items they simply ignored. Now, they are coming in again to do more repairs, and I'm not expecting much.

If I were to hire workmen myself to fix these problems, is there any chance of getting the builder to reimburse me for this expense?

Benny Kass: look at the warranty document which I hope you received when you went to settlement. that should spell out what rights you have and what obligations the builder has. I seriously doubt that the builder will agree to reimburse you for any moneys you spend correcting their problems. Thus, work with the builder, take pictures, get some expert to assist you in determining (and documenting) the problems, and present all this to the builder. You may have to sue to get all the work completed. You should, however, at some point in time, get at least two estimates as to what it will cost to make the corrections.

Washington, D.C.: If your settlement lawyer screws up your real estate contract, do you have any recourse?

Benny Kass: can you define "screws up". what happened? Yes, you always have recourse, but there may be several options: (1) go back to the settlement lawyer and explain the situation and give him/her an opportunity to explain and/or cure; (2) go to the title insurance company for which the settlement attorney is an agent; or (3) file suit. I really need more details to determine what rights you have.

Capitol Hill, Washington, D.C.: Benny --

Thank you for taking my question:

I have recently purchased (do not close until October) a building in Columbia Heights that I intend to transform into four condos. How long is the process for this transformation, what is involved, and can demolition/construction begin before the condo conversion is "blessed" by the D.C. government.

Any other issues I should be aware of?

Benny Kass: there are many aspects to this question and I strongly suggest that you contact an attorney who understands real estate and has done conversions before. Are there tenants in the building? as to construction/demolition, you certainly can do this just as soon as you own the property, but it may take months for the district to approve the conversion. You need legal documents, plats and plans, and an engineering study, at the very least.

Also, probably more importantly, does you potential lender understand that you plan to convert? Will you be able to sell one unit (when it is finally approved as condo) without having to pay off the entire mortgage? Will the lender sign off on the conversion == as they will have to do?

If you haven't talked with your lender and a lawyer, do so as soon as possible and definitely before settlement takes place.

Alexandria, Va.: I live in a four-level townhouse in a new development Alexandria. The first and second floors are heated/cooled by a heat pump that sits on the balcony. The third and fourth are heated/cooled by a unit that is in a closet on the fourth floor. This unit is so loud that it will wake people up on the third floor, and rattles light fixtures on the third and fourth floor. The model house did not have this problem, as it was an end unit, so both heat pumps were located outside.

To make a long story short, repeated attempts to have the builder address the problem have not been successful. To date, the best response I have received has been that if I pay tham $3,000, they will move the fourth floor unit to the balcony.

Is my only option suing? Are there state agencies I can contact about this builder's actions? I have contacted a few media sources and they are very interested in the story, but we fear that the attention would negatively affect the prices in our neighborhood. Any advice?

Benny Kass: is this a condominium? Have you been able to get the support of all of the owners in the complex? this is important. There is an office in Richmond that handles consumer complaints about condos, but I don't have that information handy. However, virginia has a great web site and you should be able to get more information from that site. However, litigation may be your only solution, and then the question is: whether its worth spending money on the litigation or biting the bullet and paying the $3000.

Arlington, Va.: Are there any particular legal problems or concerns I should know about if I'm interested in buying a property that's been foreclosed and is up for auction?

Benny Kass: many, many problems. Despite all those "strike it rich" authors who tout the value of purchasing real estate at foreclosure sales or tax sales, there are many risks. without going into an exhaustive list, here are some suggestons: (l) make sure you have inspected the property -- inside and out. you don't want to buy a major headache; (2) obtain a title search before you make a bid on the property. find out exactly what liens, clouds or other encumbrances are on the property; (3) talk to the lender who is foreclosing; perhaps you can buy the note instead of going to the sale itself; (4) are there tenants in the property and what rent do they pay? will you be able to evict them if the rent is not sufficient to carry the property? make sure that you review the leases before you make a bid. good luck

Washington, D.C.: A question regarding co-ops.

What is the reason for requiring the seller's portion of the underlying mortgage to be subtracted from the selling price?

Benny Kass: that's a very good question, and I don't know the answer.Let me explain: you own a cooperative in DC and want to sell it for $100,000. There is a mortgage on the entire building that the cooperative association took out, and your share of that mortgage is $25,000. (this is called a blanket or underlying mortgage). You personally owe $50,000 on a share loan (mortgage) that you obtained from a bank. When you sell it for $100,000, your buyer will assume the $25,000 blanket mortgage, your personal lender will get its $50,000 and you will get $25,000.

Why does it work this way? I suspect its only custom and usage in the area. Because i understand that cooperatives in NY treat the blanket in a different way. In NY, in my same example, instead of getting $25,000, you would get $50,000; your purchase would pay $100,000 at settlement plus assume the $25,000 mortgage.

Go figure!

Bethesda, Md.: How long do I have to own a property before it begins to have "equity"? How do I know what its "equity" is?

Benny Kass: equity is the difference between the total amount of the mortgage you owe on a property and the market value. If, for example, you purchased property for $400,000 and obtained an 80% mortgage in the amount of $320,000, you automatically gained 20% -- or $80,000 in equity. How do you determine how much equity you have? get an appraisal of the property and subtract the amount of any mortgage(s) you have on the property.

washingtonpost.com: That was our last question today. Check in with the Online Homebuyers Conference the rest of the week: