Buying a house? Do your homework

Buyers engage in due diligence when purchasing commercial property, but is it necessary in residential transactions?  Do you need to do your homework beyond the information provided to you before buying a house?  Yes.

For most of us, our homes are our biggest asset.  Before purchasing the most valuable asset most of us will own, we should engage in thorough due diligence because broker forms do not provide enough protection, the forms tend to favor the seller, and because real estate problems can affect properties of all values.   In fact, buyers of lower-valued property (versus high-value investors) might not be as able to absorb unexpected costs or legal issues associated with the real estate problems.

Suggestions to include in your due diligence as a buyer:

  • Search for title issues such as liens and easements, survey to check for boundary lines and encroachments.
  • Ask if you are subject to a homeowners association and, if yes, read the bylaws. What are the restrictions?  Can you have a shed out back, a fence, an RV or boat parked in your driveway for more than 48 hours?  What is the annual fee?  Are you limited to two pets (common restriction)?  If you have a family member with a disability, be aware that some HOA restrictions might be subject to federal law, such as a HOA might have to permit a fence even if bylaws prohibit having one.
  • Talk to neighbors. Is there unwanted noise from local businesses, such as being able to hear cars in a restaurant drive-thru?  Are there train tracks nearby?  Do plows remove snow quickly or is the street the last to be plowed?  Do areas flood after a lot of rain?
  • Search crime and sexual predator statistics for the area. There have been a few occasions where buyers have moved in only to be surprised to learn that a neighbor has to register as a sex offender.
  • Know laws and ordinances about running a business from home.  Will your neighbor have clients coming and going from his home?  If a neighbor owns, for example, a plumbing business, can he park his vehicle fleet in his driveway and up and down the road?  Can she erect business signage in her front yard?  These issues with running a business from home might affect whether you feel safe allowing your children to play outside, and all could affect your property value.

A home is likely your largest asset.  Make sure you know exactly what you are getting.

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Happy National “Everything You Think Is Wrong” Day!

March 15th is National #EverythingYouThinkIsWrongDay.  Let’s celebrate by reading some things that many people believe, but are wrong:

  1. “Living together for 6 years means we are married.” No, at least not in Ohio.  Common law marriages in Ohio are recognized only if they occurred prior to October of 1991.
  2. “Contracts must be in writing.” Oral contracts are enforceable in many situations.  Exceptions exist, including most contracts for real property.
  3. “The United States Supreme Court has the final say of all laws in the U.S.” The U.S. Supreme Court is the final decider of federal laws and controversies involving federal law.  State supreme courts have the final say over state law.
  4. “I can’t be arrested for public intoxication if I’m on private property.” You can be standing on your front porch, beer in hand, and if you are creating a disturbance you can be arrested for public intoxication.
  5. “I don’t have a will.” You might not have prepared a will, but every state has a plan for your asses should you die without having prepared your own will.
  6. “I don’t need a will because my spouse will get everything anyway.” Not likely true if you had a child together, or you have children from a previous relationship.
  7. “My donations to a nonprofit are tax deductible.” In order for donations made to a nonprofit to be tax deductible to you, the nonprofit must have tax exempt status from the IRS.  Most commonly this is 501(c)(3) status.
  8. “If I’m arrested I’m entitled to one phone call.” This is partly true.  You have a right to one call to an attorney.  Generally the police allow an arrestee to call family or a friend but it is not a right.
  9. “The First Amendment protects your free speech from everyone.” This is a very common myth.  The First Amendment only protects your right free speech against the government, and even that protection has limitations.  People getting fired from a private employer for what they (employees) say is permissible, despite a hundred Facebook commenters lamenting that this person’s right to free speech has been violated.
  10. “If the house is in just my name, my spouse can’t get it if we divorce.”  Not true, typically.  Things acquired during the marriage are subject to equitable division and distribution.  And, equitable doesn’t mean equal, it means fair according to the judge.

Point of Sale home inspections–unconstitutional?

Connie Carr, partner and respected real estate attorney at Kohrman, Jackson & Krantz, recently published a post on the constitutionality of “point of sale” home inspections, “Constitutionality of Ohio Point of Sale Inspections Under Challenge.”  Her post caught my eye because of a relative’s experience with such inspections, and because of the impact such inspections have on home owners wanting to sell their homes.

As Ms. Carr’s post explains, in Ohio, some cities require a home owner to pass a government inspection of their home, and to pay for it, prior to selling their home.  Such inspections are called “point of sale” or “presale” inspections and are required by local ordinances.  If the inspection fails, and the homeowner sells their home anyway, he or she could face criminal prosecution and, or imprisonment.

Critics say this is nothing more than a money grab by the city, and is an unconstitutional and warrantless search that violates the 4th Amendment (and Ohio’s Constitution).  A group of those critics, the “1851 Center for Constitutional Law,” brought a lawsuit in federal court on behalf of three homeowners forced to undergo such home inspections.  For one homeowner, his inspection failed due to minor cracks in his asphalt driveway.  Another homeowner simply wanted to alter the title to his property, not transfer (sell) his home, yet he was still required to have such an inspection.  On a personal note, my aunt and uncle had their water filtration system damaged by the government inspector, who then told them they would have to repair the system at their own cost before they would pass the inspection for which they also paid.

Cities argue that point of sale inspections ensure a certain standard of housing within its borders.

The future of point of sale inspections is unclear.  As the article states, cities might need to re-work the requirements for such inspections, or eliminate them.