Archives for 2011

About CC&R’s

CC&R’s, or Covenants, Conditions and Restrictions, are legal limits of usage that can be placed on a piece of property.  Ordinarily when we think of CC&R’s we think of a condo complex, but believe it or not, some cities have homes associations.  When you are purchasing a property in California, you will receive a Transfer Disclosure Statement(TDS) from the seller of the property and one of the questions on the TDS is, “Is there a Homeowners’ Association which has any authority over the subject property?” and another is, “Are there CC&R’s or other deed restrictions or obligations?”  When the buyer sees on the TDS that the seller has said yes to these questions, he should request that the title company provide a copy of the CC&R’s with the preliminary title report. 

California Law allows that either the association or an owner in a common interest development may file a lawsuit asking the court to enforce the CC&R’s.  The law currently requires, with some exceptions, that either the owner or the association must offer to engage in some form of alternative dispute resolution process before filing a lawsuit.  You may wish to consult wth an attorney who specializes in this type of law if you are faced with or contemplating an enforcement matter.

When the rules are broken, penalties might include fines, forced compliance, or a lawsuit by the association.  For example, if an owner attempts to sneak in a large dog into a condominium unit despite a rule specifying a maximum weight for pets, the owner may be forced to get rid of the dog as well as pay fines or face a lawsuit if necessary.

In Citizens for Covenant Compliance vs. Jared A. Anderson, the California Supreme Court concluded that recorded CC&R’s are enforceable even when they are not mentioned in a purchaser’s deed to the property.  As long as the CC&R’s are recorded prior to the execution of a purchase agreement, they are enforceable, even if a misdrafted deed fails to mention them. 

I would like to share one of my recent experiences with CC&R’s of a condominium association.  I was showing townhouses in a popular development in Rolling Hills Estates.  My clients wanted to purchase a townhouse and rent it out for a couple of years and then retire there.  We found a unit that they liked and wanted to make an offer on.  Lo and behold, the CC&R’s required that the owners could not rent out their unit until they had lived there for at least three years.  Well, of course, that sale did not occur. 

Another thing to be aware of is that some of the CC&R’s were written in the 1920’s or 1930’s and some of the restrictions are now illegal.  One of the cities in which I sell property has CC&R’s and a Homes Association.  The restrictions were composed when the property was initially developed and because the developers did not want little cabins or mobile homes on the lots they were selling, there are restrictions about what can and cannot be built.  There are different architectural zones with height restrictions, lot coverage restrictions, and so on.  The CC&R’s also state that if the owner violated the building directives, the Homes Association can require that the owner tear down the structure and if the owner did not, the Association would tear it down and charge the owner for the cost of demolition.  The Association no longer does this but it is still in the CC&R’s.  I recommend that people who are purchasing in that city pay a visit to the Homes Association for clarification about any of the restrictions they may have questions about. 

The upside of CC&R’s and the Homes Association is that no weird construction or unsightly exteriors, like bright neon paint and zero-lot-line structures, are allowed.  This city is beautiful and property values are the most stable in the Palos Verdes area. 


Making That Offer on Your Dream Home

You have been looking at homes for a few months now and you believe you have found your dream home.  The asking price is $850,000; how much should you offer?  Here are a few tips about handling that offer:

  • Because you have seen a number of homes, compare the homes you have seen with this one and you will probably have a good idea if the asking price is in the right range.  Your Realtor should be able to provide you with a list of comparable homes that have sold within the last six months and you can derive the list price to sales price percentage.
  • Write the offer to be accepted, not to get a counter offer.  If you are aware of the listed prices and the sales prices, make an offer that is reasonable…one that will make the seller wonder if you will go away if he does not sign it.  If you are within 10% of the asking price, you will have a good chance of coming to terms in today’s market.  In brisker markets we need to be within 5% of the asking price.  If the property is offered below market value, you may consider going over the asking price.  It has been my experience that “low-ball” offers are rarely successful.  Most likely, the owner will either not respond at all or will counter back at full price or will come down only a little bit.  One time I presented a low offer on an investment property.  The owner said, “Get out of my house!”  Needless to say, that deal did not go through.  Because an owner is often insulted by such offers, they are seldom made.  Also, instead of writing an offer of $800,000 for a home priced at $850,000, consider writing it for $815,500; at a glance it is not so obvious how far off the price is and your offer has 5’s in it, just like the asking price.  Ask your agent to find out which title, escrow, and termite companies are acceptable to the seller so you won’t receive a counter offer just spelling out the services to be used.
  • Ask your Realtor not to give too much advance notice to the listing agent that you will be writing an offer.  Because the listing agent represents the seller, he will want to get the highest price for his client.  Nine times out of ten he will be on the phone calling everyone who has shown an interest in the property to get a bidding war going and before you know it there is another offer on your dream home.
  • Ask your Realtor to present the offer in person to the seller and seller’s agent, if at all possible.  The reasons that personal presentations are more successful are:  1.  Your agent will be able to tell the seller all about you and your family and your qualifications and  2.  Your agent will be able to read the seller’s “body language,” which is key to successful negotiations.  3.  Your agent will be more likely to walk away from the table with an acceptance or counter offer.  One time I was presenting an offer to a listing agent because the Seller was out of town.  There was another offer to be presented after mine.  The agent told me what the seller’s terms were and they included price, closing date and amount of the earnest money deposit.  She went on to say that a counter offer would be issued the following morning.   Because I knew what the Seller would require, I went over to the buyer’s house (it was probably after 10 PM) and we re-wrote the offer per the seller’s terms and submitted it to the listing agent.  If we had waited for the counter offer, we would have been competing with the other buyer, but because our offer was exactly what the owner wanted, he signed it without countering back to the other buyer.
  • Be sure your offer is accompanied by a loan approval, proof of funds to close the escrow and a copy of your earnest money deposit.  Because of the difficulties of obtaining a purchase money loan today, most sellers will not even consider an offer without verifying that the prospective buyer is qualified to purchase their homes.  If you are paying all cash provide verification of the funds to close the escrow with your offer.
  • Give the seller time to consider your offer.  When a seller feels backed into a corner, he will often say “no”.

 In closing I would like to add that if you really love a certain home and it is within your means to buy it, go for it!  I have had a few buyers who never got over “the fish that got away”.

Protect Your Home While You Travel

Protect Your Home While You Travel

Planning your next getaway? Unfortunately, an empty house can be a tempting target for would-be burglars. Follow a few simple precautionary measures to secure your home, whether you are leaving for weeks or just a weekend.

Make your home look lived in – Install automatic timer switches on lights, radios, and the TV. They are inexpensive and many include variable timing schedules to create the appearance of activity in the house. Take extra steps to make your home seem occupied by turning off the ringer for your phone and parking a car in the driveway.

Alert the neighbors – Ask your neighbors to keep an eye on the house and leave them an emergency phone number. You might also consider hiring them to mow the lawn, water the plants, and put the trash cans out.

Stop all deliveries – Make sure things don’t pile up on the porch while you’re gone. Newspapers, mail, packages, and door flyers are all tell-tale signs that you’re away.

Secure your doors and windows – Use high-quality deadbolt locks on your doors, additional blocking devices on sliding glass doors, and sash locks on your windows. These can be easily retrofitted.

Install an alarm system – Deter would-be intruders with an alarm system and stickers on the exterior of your home. Many systems offer monthly monitoring for added protection. However, make sure everyone in the home knows how to properly use the system to avoid false alarms.

Remove valuables and keys – Leave your house key with a trusted friend (not hidden outside your home), and take valuables to a bank safe deposit box.

Spending a little time to protect your home before you go on vacation is well worth the effort. You’ll reduce your chances of being targeted and ensure a happy homecoming

Enjoy your trip!

Should I Accept This Offer?

Today’s market can be a difficult one for many sellers to navigate.  While your real estate professional can advise you, the ultimate decision of what offer to accept is entirely up to you.  This decision can come with quite a bit of pressure.  Even in the most favorable of markets this can be a difficult time.  How do you know when to accept an offer?  Here are some questions to consider:

1.  Is the buyer pre-approved?  Selling will involve an investment of time and money.  You may need to find a new home or a temporary rental.  There is nothing worse than buying a new house, only to find out the deal to sell yours has fallen through because the buyer is not qualified to buy.  If a buyer is paying all cash be sure to get verification of funds to close the escrow.  Always make sure the earnest money is deposited into escrow as written in the sales contract and this should be 2-3% of the sales price.

2.  Do you need to move?  The urgency of your move may dictate what offer you accept.  Many sellers need to move quickly for a new job or they may need to sell to avoid foreclosure.  If you are in a rush you may need to accept an offer that is less than ideal.

3.How much do you owe?  You do not want to sell your home at a loss.  Be sure to take closing costs into consideration.  For sellers a quick estimate of closing costs is 1% plus the commission percentage.  I try to provide a more specific amount when an offer comes in so the seller will know what he will probably net from selling for the offered price.  Many markets experienced high levels of depreciation over the last couple of years.  If you are “underwater” on your loan (you owe more than the present value of your home) now may not be the time to sell.

4.  What is the market climate?  Are you likely to get another offer?  How long has your home been on the market?  Have you had many showings?  All of these are factors to consider when contmeplating what offer to accept.

Above all, ask yourself if this offer was a reasonable offer.  There are buyers who may attempt to “low-ball” you.  They may see that your home has been on the market longer than your competition.  They may know that it is a strong buyers’ market.  In response they offer a much smaller amount for your home than it is worth.  You are not obligated to accept or even respond to these low-ball offers.  If you are in need of selling now, every offer warrants your consideration and potential counter offer achat cialis paris.

In the end you must accept an offer that works for you.  You may be willing to accept a lower price for a faster closing date or some other concession or you may want to hold out for the highest dollar amount.  Remember, real estate agents can market your home but only you can sell it.

What is Adverse Possession? What is Prescriptive Easement?

There are some interesting real estate terms that I would like to clarify for my readers; two of these are adverse possession and prescriptive easement.   Adverse possession occurs when someone occupies an entire property without the owner’s permission.   The law says one’s occupancy must be “open, notorious (obvious), hostile, exclusive and continuous.”

In addition, the occupant must pay the property taxes.  The number of years of hostile occupancy required varies by state up to 30 years.  The shortest time is five years in California.

A prescriptive easement can arise when you occupy just part of a property, such as a driveway.  The “open, notorious, hostile and continuous” requirements apply; however, the hostile use need not be exclusive and one does not have to pay the taxes on the property.  Again, the number of hostile-occupancy years varies by state.

To perfect a claim for adverse possession or a prescriptive easement, the claimant must bring a quiet title lawsuit in the local court.  The most common defense to such a lawsuit is that the legal owner may say he gave the claimant permission to use the property and if the judge believes him, that defense will defeat the claim.

Avoid Costly Mistakes When Selling Your Home

MISTAKE 1:  Putting the home on the market before it is ready.  Most of the time this happens because the seller gets impatient or is a procrastinator and has pushed himself up against a moving deadline without getting the pre-sale work done.  So, the home goes on the market with the horrible carpet or it is being painted while it is on the market.  Presentation is everything – so get the work done before advertising the property for sale.

MISTAKE 2:  Over-improving the home for the neighborhood.  This happens with additions, bump-outs, and upgrades that make the home stick out from the competition so much that it is an anomaly, instead of a nice addition to the community.

MISTAKE 3:  Pricing the home based on what a seller wants to net. This pricing strategy will inevitably end in failure. Sellers can control the “asking” price, but they do not control the “sales” price; the market does. It does not matter what the seller wants. The price is determined by the black-and-white, matter-of-fact reality of the current real estate market.

MISTAKE 4:  Hiring an agent based on non-business factors.  Make sure you are hiring a professional with a proven track record in your neighborhood.  It might be nice to put your largest asset in the hands of your nephew who just

got his license, but make sure he has a mentor to keep your deal from going south.

MISTAKE 5:  Making the home difficult to show.  Requiring the listing agent to be present for all showings complicates the process of showing a home to prospective buyers.  Some buyers’ agents will bypass your home if it involves coordinating an appointment according to the listing agent’s schedule as well as the buyers’ schedule and their own timetable.  Also, most agents show a number of houses and it becomes difficult to time the showings.  Consider having a lockbox installed; they can be timed for certain viewing hours and are extremely secure now.  I recommended to one seller that he leave a special greeting on his answering machine.  His message went like this, “…if you are an agent and would like to show my home, please leave your name and phone number and come on by and use the lockbox between 8:30 and 5:30 today.  If you need to come later, let me know the approximate time and you are welcome to show my home.”  This made the agents feel comfortable, we had a slew of showings, and the home was sold within a few days.

MISTAKE 6:  Getting emotionally involved in the sale of the home. This is one of the biggest challenges home sellers face when putting their house on the

market. Once you decide to sell your house, it’s no longer a home, but a commodity. It needs to be prepared as a commodity, marketed as a commodity, and priced as a commodity. It does not matter what you want, only what the market will bear, in regard to pricing your home. People are going to come in to kick the tires, so to speak, and you should not get emotional about how they may or may not appreciate the nuances of your home.

MISTAKE 7:  Trying to cover up problems, or not disclosing them.  A rule I like to follow is:  If you think a certain disclosure will be a deal-breaker, be sure to disclose it!