What Is A Reverse Mortgage And Who Qualifies?

A reverse mortgage is a loan.  As a borrower, you receive a certain amount of money based upon the equity that you have built up in your home, either as a line of credit or as fixed monthly payments for life, or for as long as you live in your home. The proceeds of the loan are tax-free, and you can spend the money on anything.  However, there are two important factors that must be met to qualify for a reverse mortgage. First, as a borrower, you must be at least 62 years of age and hold title to your home.  Second, your home must be paid off in full, with no outstanding mortgage due, and if it is not you must use part of the reverse mortgage money to pay off the existing mortgage. 

Is A Reverse Mortgage “Free Money”?

While a reverse mortgage provides a borrower with disposable income, which can be used for a number of purposes, it is still a loan that has to be paid back – it is a loan with a maturity date!  Usually, the loan balance becomes due when the last remaining borrower passes away.  And usually the loan is repaid through the sale of the house when the borrower dies or moves into an assisted-living facility.  But in some circumstances, the due date arrives because the borrower fails to pay property taxes or fails to keep the home insured, and either situation can result in foreclosure. 

The Double Edged Sword:  How A Reverse Mortgage Can Avoid Foreclosure And Lead To One

Consider the case of Ruby Clark.  In the AARP article, “An Escape Route for Foreclosure,”  Ruby Clark’s experience demonstrates the saving grace a reverse mortgage can provide for some homeowners.  Ms. Clark was the unfortunate victim of a subprime loan that she took out to help her maintain the home she had lived in for over 30 years.   When she could not keep up with her payments, her home was headed for foreclosure. An attorney with the local Legal Aid Society persuaded the mortgage company to agree to a mortgage pay-off  of less than what was owed, and Ms. Clark then took out a reverse mortgage. She was able to use those funds to pay off the existing mortgage debt with some money to spare. In Ruby’s case a reverse mortgage saved her home. 

However, according the legislative policy director for AARP, there is increasing risk for people who take out reverse mortgages due, to the strict policies being adopted by mortgage giants like Fannie Mae.  According to a recent Los Angeles Times article, the Federal Housing Administration, which runs the reverse mortgage program, is clamping down on borrowers who are delinquent in paying their property taxes or who fail maintain property insurance.  A reverse mortgage borrower who doesn’t have the ability to pay their property taxes or pay their insurance premiums may face foreclosure.  Before you decide that a reverse mortgage is for you, you will want to fully understand the benefits and risks.

Our Real Estate and Estate Planning attorneys at San Diego Law Firm can help you evaluate all the alternatives if you are considering taking out a reverse mortgage.  We can take your reverse mortgage into account in updating your living trust and estate plan and planning for Medi-Cal.  And if you have an existing subprime mortgage, we may be able to negotiate with your lender to reduce the amount owing so that you can pay it off with a reverse mortgage. For more information or an appointment, please call us at 619-794-0423.  We look forward to helping you.

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What is a Short Sale?

A “short sale” in real estate refers to a sale of real estate that falls short of the loan balance owed on the mortgage. When a property is sold in this manner, the lender allows the property to be sold for an amount less that what is owed to them.  Under a short sale the lender may agree to “write-off” the difference between what remained on the loan balance and what the property actually sold for. It does not necessarily guarantee that the difference will be forgiven by the lender; instead, this is something that has to be negotiated with the lender.

What is a Foreclosure?

A “foreclosure” is a proceeding that allows a lender to end all ownership rights when the owner of a property stops making mortgage payments and is in default. Basically it allows the lender to reacquire the property. While each state is different, in California the lender generally has a right to pursue a property owner for the deficiency owing after the foreclosure has taken place.  This means that if your property is not sold, or the purchase price was not enough to cover the balance on the loan, the lender can turn the loan over to debt collectors, or sue you for the balance still owing, and/or pursue payment from you even if you file for bankruptcy.

However, there is an important exception to this rule:  the lender has no right to collect a deficiency from you if the loan was used for the original purchase of your primary residence, and you still live there.  If you refinanced your home, or if the loan was for a second home, commercial property, or investment property, this exception does not apply.  

Why a Short Sale May Be a Better Option for a Distressed Homeowner

There are a number of reasons that a short sale may be in the best interest of a seller who needs to let go of a property.  One important advantage to a short sale pertains to future home purchases.  For example, Fannie-Mae, the Federal National Mortgage Association, adjusted their guidelines in 2008 to allow an individual that successfully completes a short sale to be eligible for a Fannie-Mae baked mortgage package after only two years.  In contrast, an individual who loses their home to a foreclosure will not be eligible for a Fannie Mae backed mortgage for five years.

Another advantage to a short sale would be in the area of credit score issues.  The impact of a foreclosure can be a downgrade of your credit score anywhere from 200 to over 300 points, and it will affect your score for a minimum of three years.  However, the impact of a short sale on your credit score can be as little as 50 points and its effect can be as brief as 12-18 months.

How to Start a Short Sale

If you think you might be interested in short-selling your home or other real estate, it is best to talk to a legal expert about the process and related legal issues, such as potential tax consequences to you when part of your mortgage loan is forgiven.  The skilled real estate attorneys at San Diego Law Firm have specialized experience in handling short sales as well as a unique knowledge of the real estate market.  To schedule a consultation, please call San Diego Law Firm at 619-794-0243.

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Unlike your real estate agent—whose goal is to complete the sale and earn a commission—your real estate lawyer doesn’t work on a commission.  What’s more, sometimes a real estate agent represents both the seller and buyer.  In these situations, there’s bound to be conflict in representing both sides.  After all, sellers want to get the highest price possible, the buyer the lowest, and the real estate agent’s commission is usually greater if the sale price is higher. 

As your real estate attorneys, it’s not our job to push for a sale.  We focus on protecting your interests because we know there’s a lot at stake in any real estate purchase and sale. 

Take a close look at the property and potential legal problems

Whether you’re a buyer or seller, your lawyer can examine any legal issues related to the property.  Buyers need to make sure their investment will be worthwhile, and sellers need to be careful not to violate real estate laws and/or violate the purchase and sale contract. 

Real estate agents do a lot in a real estate sale and purchase, but their role is not to give legal advice.  Whether you’re buying a home or investment property, there are many legal issues to examine.  For example, we’ll:

      ●    Examine the title (including the history of ownership for the property), and check whether there are any clouds on the title that need to be cleared

      ●    Look for any liens, easements, property line disputes, and zoning violations

      ●    Advise you about inspections and disclosures

      ●    Prepare your purchase agreement (see below for more on this)

Understand the deal, and know what to ask for

There’s a lot of paperwork involved in buying and selling a home and other real estate, which means there are a lot of terms to negotiate if you know what to ask for. 

Your sale or purchase officially begins with the Purchase Agreement.  If the buyer’s offer is accepted by the seller, you’re both in a binding contract.  In most situations there can be serious consequences for backing out in violation of the contract, but your lawyer can build in protections in case things go wrong later. 

The key terms of the deal are in the purchase contract, but often the real estate agent will use a standard fill-in-the-blanks contract that won’t necessarily keep your personal interests safe.  Here are a few examples of what your real estate lawyer can help you with when preparing the purchase agreement and overseeing related issues: 

      ●    Will the seller make any promises and guarantees to the buyer when transferring ownership?

      ●    If you’re a buyer, will you be let out of the contract if you can’t get a loan, or aren’t able to sell your current home?  Also, are the terms offered by the lender good for you in the long run?

      ●    If inspections reveal problems, will the seller be responsible for any and all repairs?  Will the buyer be given credits instead?  And at what point can a buyer cancel the deal?

      ●    As a buyer, do you know how you should take title to the property?  For example, will it help or hurt you to take title as “joint tenants with right of survivorship.”  If you’re a real estate investor, should you create an LLC or corporation to hold title?

Getting help at the closing

The closing finalizes the transaction and transfers ownership from seller to buyer.  We’ll make sure contingencies have been removed, settle any remaining issues, and ensure you provide and receive all the required documents.  The bottom line is that you need to fully understand the real estate documents you’re given.  We’ll explain the terms, and identify things that should be included in your purchase agreement. 

Your real estate agent or broker does a lot for you, but your agent can’t provide the same kind of legal help and advice that a real estate lawyer can.  We’ll work to protect your interests at every stage in the process and look into potential problems.  Contact San Diego Law Firm’s skilled real estate attorneys at (619) 794-0243.

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What happens if you keep property titled under your personal name? 

If you’re sued and lose the case, then your personal bank accounts and other assets can be used to pay off a judgment.  But if you create an LLC or corporation, then typically only the property in the name of the company will be subject to these debts. 

To further limit potential liability, you should consider placing each investment property you own in a different company.  That way, a lawsuit against one company doesn’t affect other companies holding additional real estate. 

We’ll advise you on the best practices you should employ to you maintain the protections and benefits of California LLCs and corporations, and explain the tax implications and other important considerations. 

Real estate owners should keep in mind that lawsuits can come about for many different reasons, such as:

      ●    Accidents and injuries on the property

      ●    Legal disputes with tenants

      ●    Creditor disputes

Some of these claims could be partially covered by any insurance coverage you may have, but all too often the liability exceeds the coverage.  That’s why many people buy investment or rental properties through an LLC or corporation (or transfer title to one of these companies if the real estate is already owned under the investor’s personal name).

How else can you maximize the success of your real estate investments?

On the business end, investor and blogger John Fedro shares his advice in “5 Ways To Streamline Your Real Estate Investing Business Machine,” including:

      ●    At the top of Fedro’s list is a recommendation that you specialize in one real estate niche, because if you take on too much there’s more of a chance that you’ll fail. 

      ●    You’re also forewarned that even though not everything about your real estate ventures is exciting, you can’t ignore your responsibilities.  To that end, he suggests you make sure you complete at least one real estate task every day. 

      ●    Also do your “due diligence.”  In other words, before buying, thoroughly inspect every property so that you don’t end up in a financial and legal disaster later.  (This means inspecting the physical condition of the property, and looking for potential legal problems with the property.)

Before you buy real estate, contact your real estate attorney at San Diego Law Firm to evaluate the many legal issues involved in your real estate transaction. 

Don’t wait too long, because an LLC or corporation won’t protect you from claims created while the real estate was owned under your personal name.  Find out whether an LLC or corporation is a good option for ownership of your investment properties by contacting San Diego Law Firm’s skilled real estate attorneys at (619) 794-0243.

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As prices go up in San Diego, more homeowners will likely put their real estate on the market.  San Diego’s North County Times reports that median home prices in our county climbed 8.9 percent in January.  If you’re a potential real estate seller or buyer, your focus is probably on the sale/purchase price and financing.  These are no doubt essential terms to the property’s sale and purchase.  For the long run, also think about what type of deed will be given.   If you don’t, you may regret it later. 

What is a deed, and what can it do for you?

A deed is a document that transfers real estate ownership from seller to buyer.  Certain basic information has to be included in a deed for it to be valid.  This includes the names of the buyers and sellers, the property’s legal description (which isn’t as simple as a street address), words that transfer the property, signatures, and so on.

If you’re a seller, the deed can reduce the chances that you’ll be financially responsible for the real estate after you’ve sold it.  If you’re a buyer, the deed can help protect your major investment.  On the other hand, the deed may not give you any protection at all. 

After buying or selling real estate, always double check that the deed was officially “recorded.”  This means that for local real estate, the deed will be filed at the San Diego County Recorder’s office.  Once recorded, anyone is free to check the property’s ownership records.  This simple step is one important way to protect buyers and sellers.  But before the deed is turned in, you’ll need to figure out what kind of deed should be written up:

“Warranty Deed” or “Quitclaim Deed”?  Do you know the difference?

There are many different types of deeds.  Each has its own purpose, but not every kind of deed will be right for your situation.  After a sale goes through, there’s a chance that problems can come to light such as lawsuits, liens, or “easements” that give someone the right to use the property.  But who will be responsible for these problems?  The answer might depend on the deed you’ve negotiated before buying the real estate. 

Two common deed examples are the quitclaim deed and warranty deed. 

     ●  A quitclaim deed only transfers the seller’s ownership interest in the property (if any), and makes no promises to the buyer. 

     ●  A warranty deed can include many promises to the buyer.  For example, a warranty deed might guarantee that the seller will be responsible for existing liens and other problems – even problems created by people who owned the property before the current seller. 

There’s usually more than meets the eye when it comes to deeds, and the promises that should or shouldn’t be included when buying and selling real estate.  With a sale and purchase this big, you need to fully understand what you’re bargaining for.  As experienced real estate attorneys, we’ll advise you on the potential advantages, drawbacks, and other legal considerations.  You can do a lot to minimize risk in your real estate sale or purchase, which means saving time and money later.  Get the information and advice you need with any deed and title problems from San Diego Law Firm’s skilled real estate lawyers.  Reach us at (619) 794-0243.

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Adverse possession laws continue to change and every state has its own rules for establishing adverse possession, but in a “quiet title” action, California generally requires the possessor to prove that the possession was actual, open, hostile, continuous, and exclusive.  Without going into too much detail, this means that there must be an occupation of the land, and the possession has to be obvious to a property owner who might inspect the property or to anyone else (such as when a trespasser paves the driveway, plants a garden or crops, fences the owner out of a strip of his property, or lives on the property).  Also, the trespasser can’t share the land with the owner or strangers, except that if the trespasser leaves and another takes over the land, the possession can still be considered to continue if the trespasser had sold or given the property to that person.  In these cases, the time the first trespasser spent on the property can pass to the new possessor.  Some states will also look at the intent of the person in possession, and require that the possessor know he’s trespassing, while a few others instead require that the trespasser be innocently mistaken about ownership.  California law additionally requires that the claimed land be designated clearly enough and be improved or cultivated.  For many would-be adverse possessors, California’s biggest hurdle to ownership is our state’s requirement that the trespasser pay all of the property’s taxes and assessments (so the truth is that a squatter doesn’t get the land completely free).  All of these requirements have to have been continually met for at least 5 years for a California adverse possession claim to be successful.  If this happens to property you bought, then you can lose your real estate despite the fact that you have signed legal documents clearly stating that you own the property. 

If you’re a property owner, be on the lookout for squatters and trespassers, because potential ownership claims over your real estate may be on the horizon.  Owners with vacant property are not the only ones at risk, because there could be something less obvious and less drastic happening than someone taking over your entire property through adverse possession.  For example, a neighbor may have recently constructed a fence that encroaches on your property line, paved a driveway on your land, built an extra room or other structure on your property, or simply have taken over the landscaping of a strip of your land.  What’s more, even if the requirements for adverse possession are not met, a trespasser may be able to gain a right to use your property.  In this situation, the person using the property may get a “prescriptive easement” because of their use of your property for a specific purpose.  There are many different types of easements, but a prescriptive easement can sometimes be created if people have been using your property without your permission over a period of time.  The existence of the easement may hurt the value of your real estate, so it’s important to take the steps needed early on.  There are ways to allow the use of your property in writing, and without risking the creation of an easement.  Not only that, but if an easement is created on your property, you can end up being responsible to another for any damage you cause to the easement.  If you’re a property owner, protect your investment’s value and don’t ignore encroachments on your property, because letting time pass can be dangerous.  If you believe you’ve gained the right to use a property, or even ownership in it, we’ll assess your case and seek the best route to perfect your interest.  In any real estate dispute, we’ll advise you and help negotiate or otherwise resolve the matter as quickly as possible.  As soon as a boundary dispute or other property concern arises, safeguard your interests and contact San Diego Law Firm’s experienced real estate lawyers at (619) 794-0243.

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As pointed out earlier, any property taken by the government must be for a public purpose, such as to build schools and roads, to protect the public health and safety, or for other public projects.  In return, you’re owed just compensation.  So what is fair compensation?  This is one of the most important questions to ask in every condemnation case, because simple fair market value isn’t always the answer.  First, the government’s appraisal of fair market value will probably be different from another appraiser’s findings.  Second, you must identify all property interests and costs that should legally be reflected in the compensation offered for your relocation, especially when there is a business on the land to be taken.  In these cases, fixtures, equipment, and your business’s goodwill may be affected by a move, and these values need to be assessed and negotiated.  Often tenants also have the right to be compensated for their interests in a lease, such as the difference between the rent under the lease and a potentially higher fair market rent once the property is condemned.  What’s more, eminent domain can affect you even if your property isn’t being condemned.  You may instead be in the situation where the government’s actions on neighboring land affect your own property and diminish its value.  Or it may be that even though you still own your property, it is so heavily regulated that you lose almost all value in it, causing the government’s actions to amount to a “regulatory taking.”  In any of these situations, we’ll seek the compensation owed to you for your loss.

Here in San Diego, you may often come across local news of government takings through eminent domain.  Recently, the San Diego Union Tribune’s Matthew Hall reported that if the San Diego Chargers build a downtown stadium, the city might have to take over private land through its eminent domain power.  Similarly, Michele Clock of the San Diego UT notes that as part of Lemon Grove’s downtown redevelopment, the city may have to resort to taking land through eminent domain if negotiations to purchase a property (on which a storage business is located) fail.  If you’re facing similar circumstances, whether or not you should take the deal offered or go to court instead greatly depends on the legality of the government’s actions, and on how much the government is offering compared to how much you believe your property is worth.  In helping you answer these questions, we’ll also review whether the government agency involved is following the required legal process in condemnation proceedings, and strategize and prepare for the public hearing that’s held before an eminent domain lawsuit is filed.  If a favorable settlement isn’t reached, we’ll prepare for trial, file the required documents, and pursue your rights in court.  Avoid costly mistakes and make informed decisions by engaging San Diego Law Firm as soon as you learn your property has been targeted.  We’ll work to strengthen your bargaining power when negotiating with the government, coordinate with experienced appraisers, and pursue your rights in court when needed to further your interests.  Whether it’s your residence or commercial real estate that’s at stake, or if you’re a business owner leasing property that faces condemnation, our experienced San Diego real estate lawyers understand your needs and are here to help.  To contact San Diego Law Firm, call us at (619) 794-0243.

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In a typical real estate purchase, California law requires sellers to disclose certain defects that they knew or should have known about, and the seller must provide the buyer with an additional disclosure statement.  Not only that, but the seller’s real estate agent must visually inspect the home and disclose any information that can materially affect the property’s marketability.  These types of problems can hurt resale value and seriously affect a buyer’s ability to sell the real estate later on.  So what must a seller disclose? Examples include leaky roofs, defective plumbing, electrical problems, building code or zoning violations, construction defects, insect infestations, and other problems or conditions.  Legal problems that must be disclosed include encroachments or easements, liens on the property, or issues with title to the property.  At times, the seller’s actions may even amount to fraud.

In addition to the mandatory disclosures under California law, when negotiating the deal a seller may decide to go beyond the minimum disclosure requirements and include warranties in the real estate purchase agreement.  Unlike with the state law disclosures, if a warranty in the contract is breached, the seller can be held liable even if the seller had no reason to know that the representation was false.  If you’ve discovered defects in your home after moving in or have been defrauded by the seller, contact our skilled real estate lawyers as soon as possible, before any time limits on your claim expire.  We’ll discuss your options and help you obtain compensation to repair the undisclosed defect or, in some cases, rescind the purchase.  Similarly, if you’re a seller who has wrongfully been accused in a nondisclosure case, we’ll evaluate the circumstances and work toward resolution.  Contact San Diego Law Firm’s experienced advocates at (619) 794-0243 for help with any real estate dispute.

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It’s clear that land use regulations such as zoning affect us all in our day to day lives.  Zoning restrictions are an effective tool for local governments to control the development of land and the uses to which property can be put.  Generally, the idea is to keep residential, commercial, agricultural, and industrial areas separate, with further restrictions applying to each category.  Zoning laws can protect you from many nuisances and benefit the public at large, but at times problems arise when these regulations conflict with your personal or business objectives.  From business owners making plans for the future use of commercial property on one end, to homeowners seeking to expand or make changes to their homes on the other.  We’ll research and review current zoning laws and ordinances, and seek relief from these regulations when needed.  For example, depending on the circumstances, you may need to obtain a variance, permit, or a zoning change.  After careful preparation, we’ll handle the application process, submit any required reports, and represent you at hearings. 

Also note that not all zoning regulations are legal, and we’ll assess how reasonable or unreasonable the regulations or any conditions placed on the approval of your proposal are under the law.  Zoning and other land use laws, like building codes, can have serious consequences for you.  With this in mind, we’ll negotiate contracts to include important contingencies when buying or leasing commercial property, advise you about the impact of zoning laws on your current or future business plans (such as when buying or starting a business), or assist with residential projects.  Contact our real estate attorneys early on with your zoning or development concerns, and we’ll strategically develop your case to maximize your chances of a success.  Reach San Diego Law Firm at (619) 794-0243.

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If you already bought your first home in 2008, and after April 8, then you may also be eligible for a tax credit up to $7,500, but the rules change because you’ll be required to repay the credit over 15 years on your future tax returns.  While the deal’s not as sweet, you can still benefit because the credit acts like an interest-free loan from the government.  Note that even if you purchase your home in 2009, the repayment requirement will kick in if you stop using the home as your principal residence within 36 months of the purchase date.  Those interested can visit the IRS website to see how it works and for more details on whether the home you’re buying (or the home you built) will qualify for the credit. 

Once you find a home you want to buy, you’ll need to work out the contract details, get inspections done, get your mortgage approved, and have everything else done to prepare for closing.  This will usually take up to two months.  Senior Financial Analyst Greg McBride suggests in the Wall Street Journal that you get pre-approved for a loan to speed up the purchase once you do find the home you want to buy. 

Even with the impending deadline, remember that this is a huge purchase, so don’t skip over important considerations, such as your mortgage options.  Compare plans according to your finances and requirements in order to get the best deal.  It’s also crucial that you fully understand the terms of the sale.  Home buyers and sellers can greatly benefit from our extensive real estate knowledge as we work to protect your interests.  We’ll examine whether there’s a title or easement issue, negotiate the terms of the agreement, prepare required documents, and deal with any problems that arise during inspections or at closing.  Contact San Diego Law Firm’s real estate lawyers at (619) 794-0243 for help in closing your deal and safeguarding your investment.

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