Dear Michael: I am closing escrow in two weeks and the tenants whom are occupying the property are moving out on the day we close escrow. I am worried that they may not move out on time. What can I do to guarantee they move out on time?
Answer: Your best bet is to delay the close of escrow. The purchase contract clearly states that the tenants shall vacate the property at least five days prior to the close of escrow. Schedule your walk-trough the day after the tenants moves out. This is the only way to be sure that they have moved out and the property is in the same condition as when you first purchased it. Your seller is in breach of contract, unfortunately with tenants it may be beyond your seller’s control. Hold off depositing your down payment funds to escrow until you’re guaranteed that the tenants are out. Timing is of the essence; the cut off time to stop the transfer (closing) is between 2 and 4 p.m. the business day prior to the transfer of your funds. If you close escrow with tenants occupying the property you then become a landlord. A position I am sure you do not want to take on.
Dear Michael: How come I’m paying more in property taxes than some of my neighbors who have similar houses?
Answer: Your taxes are not based on your neighbors assessed value, but are based on the price you voluntarily agreed to pay when you purchased your home. Before Proposition 13 the average property tax rate in California was three percent of assessed value and there was no limit on annual increases. In those days, if a house on your block sold for much more than you paid for your house, you shuddered in fear when you received your next property tax bill. Chances are, your new taxes would be based on what your new neighbor was willing to pay for his home. Things got so bad in the late 1970s that people were actually losing their homes because of uncontrolled tax increases. The assessment rate in California is now 1.25 percent and annual tax increases are limited to no more than two percent. When real property is sold it is then reassessed at market value, but the rate remains at 1.25 percent and the new owner is then protected by the two percent cap on annual increases. The property may be reassessed under certain conditions other than a change of ownership, such as when additions or new construction occurs.
Dear Michael: If I become the owner of a home by a Quit Claim Deed, am I responsible for any delinquent taxes?
Answer: That would most likely depend on where the property is located but the most common answer to that question is YES. Property taxes, mortgages, liens, and some other encumbrances are tied directly to the property, not the person that owns it. For instance, the IRS has the right to place a tax lien on your property if you are delinquent on your taxes. That lien is then attached to the property. If you Quit Claim your home to your sibling, then the lien follows the property and your sibling will have to pay that tax lien before they sell the property. A word of advice is never to obtain a property without first doing research. At the very least, run a search for the title report, and any entities which may have the right to liens over the property. However, there may also be judgments and other liens attached to the property that you can’t find on your own and may become a problem for you. These may not be your judgments but you will inherit them thus becoming your problem when you attempt to sell the property or get a mortgage on it. It is highly advisable that you have a title company do a complete search of the property before you have it deeded to you. Please contact a real estate attorney for oversight.
Michael Kayem is a Realtor with Re/max Estate Properties serving Culver City and the Westside since 2001. You can contact Michael with your questions at 310-390-3337 or e-mail them to him at: homes@agentmichael.com.