Dear Michael: I am purchasing a property that has a city violation on title because the garage has been converted to a guesthouse without permits. The seller states that he will build a carport at the driveway before the close of escrow. I am skeptical about depositing my “earnest deposit.” Is there a risk with moving forward with the purchase of this home?
Answer: My experience with a converted garage is that it cannot be cured unless the seller re-converts the garage to its original use. If you have started the escrow period, then time is of the essence. Your best bet is to go to L.A Building and Safety and find out if a carport is allowed. A carport may need approval with a signed petition from surrounding neighbors. And even if the neighbors approve the carport the city can still deny it. The process can take up to one year. Your options are limited. I suggest you negotiate with the seller by having him/her reconvert the garage to its original use. Once the lien is lifted by the city then you can remove contingencies and proceed with the purchase. If the seller does not agree to your request you may want to consider canceling your purchase of this property. Keep in mind that the seller will have the same problem when, and if a next buyer comes along. No buyer’s lender will carry a loan on a property that has a cloud on title.
Dear Michael: How long must I cease making my mortgage payments in order to qualify for a short sale?
Answer: You question is very vague. You don’t just qualify for a short sale by just stopping your mortgage payments. The institution that carries your loan will need to see proof of hardship. Hardship can include: upside down on your mortgage, lost job, divorce, death, bankruptcy or any unfortunate state resulting from unfavorable outcomes. You have a moral obligation as a homeowner to make your mortgage payments as agreed when you purchased your home, and unless you are completely unable to, for reasons stated above, then you probably will not qualify for a short sale. In order to qualify for a short sale you will need three months of delinquent mortgage payments to starts the process. Reasons must be other than simply wanting out of your home.
Dear Michael: I am purchasing a home and just found out that the washer and dryer are excluded from the sale. Are all fixtures not included with the sale of the home?
Answer: A fixture is something that is attached to a piece of real estate such that removing it would damage the real estate. Since washers and dryers can usually be removed by simply disconnecting a few hoses and cords, they are not considered fixtures. The only way that you can be sure that they are included with the sale is if you had included them in your purchase contract. The seller can also counter to exclude them. You can also ask the seller if he/she will sell them to you.
Dear Michael: I am in the process of short selling my home. I was told by a friend that I may have to pay taxes on the lenders forgiven amount. Can you please let me know?
Answer: Congress reached a settlement in the “fiscal cliff” negotiations. As a result, “The Mortgage Forgiveness Debt Relief Act of 2007” has been extended for another year trough 2014. By extending the Act, homeowners will not have to pay income tax on mortgage debt forgiven up to two million dollars. This extension is especially important to underwater homeowners, who owe more for their home than it is worth. Short sales have enabled them to avoid foreclosure; however, already struggling homeowners with no equity in their homes would have faced significant difficulties paying income tax on their forgiven debt. Homeowners who are able to avoid foreclosure by receiving a loan modification that includes a principal reduction will also benefit. Please check with your tax professional for all applicable scenarios as not all mortgage debt is subject to the Mortgage Forgiveness Debt Relief Act.
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