Every month, Susan sends out a newsletter with useful tips for real estate brokers. Below are some recent topics not only of interest to brokers, but also to any individual looking to purchase or sell a property. If you would like to be added to Susan's email subscription list, please send a request to her email address, which can be found on the Contact Us page.
We all know that the rules require that the seller either give the buyer a Property Condition Disclosure Statement prior to entering into the contract, or a $500 credit at closing. In my experience, the vast majority of sellers in this geographical area prefer to give the $500 credit at closing. One glance at the Property Condition Disclosure Statement form that the seller would otherwise be required to complete reveals immediately why this would be so.
Many of the questions asked require a knowledge of events relating to previous owners or to knowledge which the seller may himself not know, resulting in the answer "unknown." Rather than put a purchaser's mind at ease, answers like "unknown" merely make purchasers suspicious.
Furthermore, a factually inaccurate response, if uncorrected prior to closing, may at some later date give rise to an action for fraud. Even if the seller can later prove that the inaccuracy was unintentional, the litigation itself would be much more bother than giving the buyer $500 credit at closing: another case of the cure being worse than the disease.
Perhaps most important, many sellers are unaware that declining to give the Property Condition Disclosure Statement and giving the credit instead does not protect a seller from his obligation to reveal a material latent defect or condition in the property. For instance, if the property has a significant underground drainage system which the seller himself installed, but which is located underground partly on his own property and partly encroaching on his neighbor's property (without the neighbor's knowledge or permission), this is a material condition which must be disclosed to the purchaser prior to the sale regardless of the property condition disclosure requirement. The underground system, being latent, is not discoverable by the purchaser even with good due diligence prior to the sale. The encroachment on the neighbor's property is actionable, and therefore is a defect in title. If the seller knows about this and fails to disclose it, he has committed a fraud, and can be sued later after the closing by a buyer who must pay damages or correct the condition. And a word to the wise - if the broker knew about the condition and failed to disclose it, she might have a problem also.
Hear no evil, see no evil, and speak no evil only applies to monkeys.
What if: The house is titled in the husband's name, and he lists the house. The listing is in his name alone. However, his wife lives in the house, but apparently they are not speaking. If the husband sells the house, and the wife refuses to move, can the transaction close?
Not really. If the parties close, it will be subject to the rights of the wife as a tenant in possession. The title company will except from title coverage the rights of the wife, if any, from the policy to the new owners or their lender. Meantime, depending on the arrangement between the parties, it is possible that the wife has some beneficial ownership rights in the house in this state, even though the title is not in her name. Under these circumstances, a lender will not lend, and a buyer should not buy.
So, if you see more than one person's shoes in the closet, check it out!
Tips for Realtors
Whose Shoes are Those?
Be the Bearer of Good News
You may already know that a new state law requires New York residents to register prior to December 31, 2013 for STAR tax relief for the 2014 tax year. This new registration must occur whether a previous registration has been made by the homeowner or not.
The good news is that this registration can be done in a matter of minutes (in your pajamas, if so desired) by going online to www.tax.ny.gov and clicking on "STAR." Have the homeowners' social security numbers handy and you're good to go. For those of you who prefer paper, a copy of the registration form and instructions can be found by clicking here.
So tell a friend, a client, or any homeowner of your choice. Be the bearer of good news.