I am a first-time homebuyer. What should I do first, find a mortgage lender or find a house? top

ANSWER: You first shop for a mortgage loan and obtain pre-approval for a residential loan in an amount reflecting your income and debt ratios. You then negotiate a purchase agreement with the seller, with or without the aid of a realty agent, for an amount that you know you can afford. Having the preliminary approval of your lender is to your advantage when negotiating with your seller, especially in a tight market.

I want to buy a condo? Will this be much different from buying a house? top

ANSWER: Condominium ownership is similar to buying a home in a residential development with important restrictions on what you may do in relation to other home owners in the development. You may, for example, be restricted in offering your condo for rent and you will have to pay your share of the cost of a new roof when the Board or Association of Owners decides it is needed. Condos include this layer of private government in order to be able to enforce the restrictions placed on all owners. These range from the décor and materials you may choose for the outside of your residence to the weight of a pet you may own to where you and your guests may park. These restrictions are not intended to be onerous. They are meant to insure that the value of your unit will not be adversely affected by the conduct or choices of the other unit owners.

Will I have to buy title insurance if I get a loan from my parents to buy a house or commercial property? top

ANSWER: Title insurance is always required by a bank or other commercial lender in a real estate transaction. In a private mortgage transaction, such insurance is advisable but not required. You should, however, protect your own and your parents' interests with a one-time title policy that pays any claim against the title of the property, including contractors' liens and boundary disputes. In some states, it is customary for the seller to insure the interest of the buyer and for the buyer, in turn, to insure the interests of the lender. In other states, the buyer purchases both policies. When two policies are purchased, the lender's policy is issued at a much lower price that the buyer's policy.

Should I put my children's names on the deed to my house for any reason? top

ANSWER: If you want to have your children take title immediately upon your death, you may have a deed drawn that will avoid unnecessary capital gains tax consequences and problems with your child's creditors. Do not risk drawing this deed without the aid of an attorney. If you decide to be your own lawyer, you may find the creditors of your children clogging your title and your children may find that they are stuck with an unfavorable tax valuation that could have been avoided.

My neighbor wants to use my driveway and agrees to pay me a small fee and keep the driveway in good repair for as long as I desire. What happens if we don't have a written agreement? top

ANSWER: In order to avoid any misunderstanding as to your rights and your duties and your neighbor's rights and obligations, you must have a detailed written agreement called a "license" and a certified survey of your property. Otherwise, your neighbor may one day claim easement rights with unlimited use forever for the neighbor and any one who buys the neighbor's property. If you intend, instead, to grant an "easement " that runs with the land, you will also need a detailed written agreement that will be recorded to make the transaction a matter of public record.

I want to buy some land on a lake. What kind of survey, inspections and other protections should I have if I want to build a summer cottage close to the property line? top

ANSWER: In order for you to know the exact nature of the land you are purchasing, you must be diligent in your investigation of the land and all matters affecting the land. Your purchase agreement must be carefully negotiated and must contain contingencies such as financing, suitability for building, satisfaction with the quality of the lake water and the drinking water, land boundaries, survey and topographical and underwater surveys, and soil inspection as well as important title matters such as assessments, restrictive covenants, easements, water rights, mineral rights, and municipal zoning and occupancy ordinances. Building close to the property line may violate subdivision restrictions and building codes. Your neighbors and upland property owners may have rights as to building and dock placement. All of these matters must be thoroughly investigated at your own expense. Your purchase agreement must also require the seller to pay for any investigation that reveals misrepresentation or failure to disclose on the part of your seller. Your financing and your construction contract are separate matters which involve another kind of due diligence in investigation for the purposes you intend to use the property.

Do I need a realtor to sell my house? Do I need an attorney if I have a realtor? top

ANSWER: Even though much of the forms used in the sale of a house are available through the realtor, it is risky to proceed without legal representation throughout the entire transaction. Your interests must be protected in the listing agreement, the disclosure statement and the purchase agreement, all of which require full understanding of their terms

What kind of forms will I be required to sign if I sell my house through a realtor? top

ANSWER: In most states, you will be required to sign the listing agreement, the disclosure statement and the purchase agreement, all of which require full understanding of their terms and which are troublesome if they do not protect your interests or express your understanding or all aspects of your agreement with your realtor and the prospective buyers.

What kind of problems could I have if I sell my house through a realtor and don't choose to have legal representation? top

ANSWER: Examples of troublesome areas are:

Do I need a realtor to buy a house? Do I need an attorney if I have a realtor to find a house for me? top

ANSWER: You may buy or sell a house with or without the aid of a realtor. You should not buy or sell a house without legal representation at every step of the way. Legal representation takes many forms in such transactions. If you employ your own realtor, you will be required to sign an agreement that requires legal explanation and interpretation. If you find a house on your own and the seller has employed a realtor, you may be asked to sign a dual agency agreement with the realtor. Or you may be presented with a purchase agreement form that does not provide for review by your attorney. Despite the temptation to proceed without legal representation, it is a decision you will regret when a problem arises. In addition to a legal interpretation of the meaning of the basic terms of a purchase agreement, the purchaser needs advice regarding the earnest money deposit and contingencies such as surveying, inspection and title matters. In addition to advice on these important matters, your attorney will arrange for the issuance of appropriate title insurance policies and work with your lender, the sellers and the title company to assure a smooth closing transaction. Difficult and complex issues often arise during contract negotiations and before closing. Resolution of rights and duties of the parties should never be delayed until after the sale. The seller and the purchaser both benefit from the full disclosure and complete understanding of the condition of the property and such matters as the moving date. After closing, your attorney will also arrange for the recording of documents and review the title policy and attend to any post-closing problems.

Why do I need title insurance when I buy a house? Will my lender require me to purchase title insurance to protect the lender's interest? top

ANSWER: Title insurance is always required by a bank or other commercial lender in a real estate transaction. Your lender protects its interests by having you pay for a one-time title policy premium that pays any claim against the title of the property, including contractors' liens and boundary disputes.

Why is it important to record real estate documents? top

ANSWER: Real estate documents such as deeds, easements and mortgages are recorded to make the transaction a matter of public record. In some states such as Michigan and Connecticut, it is the date and of recording that determines the outcome of conflicting claims. For example, an unscrupulous person may have sold the same property to two different persons on two different dates. The person whose deed is recorded first will win regardless of when the other deed was signed and delivered.

I have a house to rent for a six months. Do I need to have the tenant sign a written lease? How can I be sure that the premises will be returned in good condition? Should I insist upon a security deposit? top

ANSWER: Even with a short-term occupancy, it is best to have the agreement of the landlord and the tenant reduced to writing and to insist on the maximum security deposit allowed by law. . I recommend the use of inventory checklists even when they are not required by law. This avoids disputes as to who may occupy the premises, who is responsible for damage and who may be entitled to return of the security deposit. I also emphasize strict adherence to security deposit laws. Housing courts are more than fair to residential tenants but they are never happy to see unnecessary issues presented in landlord-tenant cases.

I have a dispute with my landlord over who should pay for the broken hot water heater in my apartment. It was new when I moved in two years ago and I have not done anything to cause the problem. Do I have to replace the water heater if I want to stay as a tenant? top

ANSWER: Look at your lease document. Generally, a tenant who has a lease longer than one year is responsible only for appliance repairs and never has to pay for any kind of replacement. A hot water heater is not an appliance. Your landlord is responsible for providing equipment for heat, hot water and electricity. While the lease may obligate you to pay some or all of the bills generated by the use of the equipment, you should not have to make capital replacements or improvements to the premises unless you cause the damage or create the problem. In your situation, you have a problem if you want to stay and you are a month-to-month tenant. Your landlord can give you a notice that your rent has increased and charge you more per month to pay for the new hot water heater over a period of one or two years. You have the same problem if your written lease expires soon. The landlord will definitely raise the rent to cover the expense.

I want to share my apartment with a friend. My landlord objects to having another person live in the apartment. Do I have to accept this decision? top

ANSWER: Your lease probably identifies the persons who can reside in the apartment during your tenancy. If not, look for other language that restricts the number of occupants. Some states allow the landlord to refuse to rent to an unmarried couple. Ask your landlord to reconsider with a subletting clause and a rent increase to cover the additional costs for such items as water and trash pickup. Do not add this person to the lease. You will be responsible for the entire rent no matter what and you will be restricted from evicting your friend if there are two names on the lease. If you do get a new lease, you should make your friend a month-to-month subtenant, collect a security deposit from your friend and complete an inventory checklist showing the condition of the premises at the time of the friend's occupancy.

How can I give real estate to my adult daughter without having to pay federal gift tax? top

ANSWER: If the property is worth less than $10,000.00, you may transfer the entire property to your daughter by quit claim deed. If the property is worth more than $10,000.00, you transfer part of the property in one year and the remainder of the property in subsequent years at the rate of $10,000.00 or less per year. If your spouse also owns the property, you may transfer partial interests equal to $20,000.00 per year. These transfers are also made by executing, delivering and recording a quit claim deeds.

I want to rent some commercial space in a small building. If the owner decides to sell, I want to have the opportunity to buy the place. How can I arrange this? top

ANSWER: You will need a written lease agreement that contain additional terms which describe in detail the conditions under you may exercise your right of first refusal. Do not do this without an attorney. You are negotiating a valuable property right and you should not risk losing out because of poor drafting.

Why do I have to go to the expense of hiring an attorney for a simple real estate matter? top

ANSWER: In real estate transactions, as with all matters of legal consequence, documents should never be signed without the advice of counsel. The time, effort and money that you spend in making a transaction turn out the way you intend also works to prevent future problems that may make you regret the entire transaction.

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