Mirror of Justice

Basics Of Real Estate

July 19th, 2009 at 10:38am Under Estates Law

Real estate refers to immovable property such as land, which also includes rivers or streams that may be part of the land, as well as any physical structures that may be affixed to the land like houses, buildings or commercial establishments.
The terms “real estate” and “real property” are often understood to mean the same thing, although in some circles, real property refers to the rights of the owner over the real estate. Both terms are used mainly in common law, which is further divided into property law, the laws that refer specifically to the property, and contract law, the laws which refer specifically to the rights of the person over the property.
For centuries, people have viewed land as the primary measure of wealth. Even today, land comprises a large part of the fortunes of the wealthiest individuals and nations. Developing countries who are rich in real estate use this to attract foreign investments that can spur economic growth. However, in recent years, economists have noted that the key real estate investments into developing countries have been derailed by the lack of effective laws to safeguard such investments.
The leading source of capital for purchasing and developing land real property is mortgages. These are loans that banks grant to individuals who use the real property as collateral. Mortgages are favorable endeavors for banks because they can’t lose: either the borrower successfully repays his loan with interest or if the buyer cannot pay his loan, the bank can claim the rights to the property through foreclosure, which is an action that is decided in a court of law. Once the property is foreclosed, the bank can sell it to recoup its loan.
This is where economists raise a howl. An analysis of international banking and real estate laws reveals that, in many developing countries, there is no effective way for a lender to foreclose. With no legal or institutional protection, many investors are discouraged from investing in real estate in developing countries. Often, the mortgage loan industry is only open to a select few, mostly engaged in by a cabal of well-connected families who frequently use their social connections in matters of foreclosure.

What your Real Estate Agent Knows That you Don’t

July 18th, 2009 at 10:38pm Under Estates Law

“When you make the decision to sell your home, you are under no obligation to hire a real estate agent or broker to help you with the sale. Nonetheless, most people prefer to hire a real estate agent in order to better protect themselves and in order to put themselves in a better position to successfully sell the home in a short amount of time.

When you hire a real estate agent, you gain access to a wealth of knowledge that will help keep you out of trouble and will help provide for a smooth transaction. Here are just a few things that your real estate agent knows that you probably do not.

The Federal Fair Housing Act

According to the Federal Fair Housing Act, you cannot discriminate against someone when selling a home. The act defines seven different classes that are protected against discrimination, these include:

• Race

• Color

• National origin

• Sex

• Religion

• Handicap

• Familial status

If you do not enlist in the help of a real estate agent, you put yourself at risk of violating this act if you refuse to sell your home to an interested buyer. In addition, you might even accidentally violate these laws without realizing it. For example, there are certain words that cannot be included in your advertisements for your home because they are in violation of the Fair Housing Laws. Some of these words include:

• Bachelor apartment

• Children welcome

• Couples

• Gentleman’s Farm

• Golden Agers

• Handicapped

• Integrated

• Married

• Mature

• Mother-in-Law quarters

• Professional

• Section 8

• Seniors

• Singles only

• Sports-minded

As you can see, some of these terms seem perfectly innocent. Therefore, it is a good idea to get the help of a real estate agent so you can tap into his or her knowledge and experience in order to stay out of trouble.

State Real Estate Laws

Although there are similarities in real estate laws from one state to the next, each state has its own set of rules that must be followed. If you do not understand these laws or are unaware of these laws, you can inadvertently break the law when selling your home. In addition, by not being fully aware of your seller’s rights, you might actually lose out on money during the transaction.

Taking Advantage of Connections

Aside from legal matters, a real estate agent simply has a vast number of connections that makes it possible to sell a home more quickly and for a higher asking price. Similarly, since people come to real estate agents when searching for homes, you are able to tap into a much larger market of interested buyers when you get the help of a real estate agent.

Since a real estate agent has experience with selling homes, he or she can also provide you with tips to help increase the market value of your home and to make the process go by more quickly. For example, small things such as painting a room a different color can go a long way when it comes to increasing the appeal of the home. By taking advantage of the realtor’s expertise, you just might have a much more profitable selling experience.”

Some thing about Real Estate! Read it if you are beginner in this topic!

July 18th, 2009 at 04:38pm Under Estates Law

According to WikiPedia, Real Estate is: Real estate is a legal term (in some jurisdictions, notably in the USA, United Kingdom, Canada, and Australia) that encompasses land along with anything permanently affixed to the land, such as buildings, specifically property that is fixed in location Real estate law is the body of regulations and legal codes which pertain to such matters under a particular jurisdiction. Real estate is often considered synonymous with real property (also sometimes called realty), in contrast with personal property (also sometimes called chattel or personality under chattel law or personal property law). However, in some situations the term “real estate” refers to the land and fixtures together, as distinguished from “real property,” referring to ownership rights of the land itself. [clarification needed] The terms real estate and real property are used primarily in common law, while civil law jurisdictions refer instead to immovable property. How to Find a Real Estate Agent in a Tight Market: Step1 Most articles in step one is going to tell you to get a referral. That’s nice if you happen to be moving somewhere that you know someone, but in a lot of situations, this simply isn’t the case. The main two pitfalls with referrals are: Step2 Go to the web. It is very important in the internet age that your real estate agent be web savvy, so the web will be your first stop in researching a good agent. All of the major real estate companies allow you to search online for real estate agents. Step3 Once you find the agents on the web, you will be bombarded with a plethora of acronyms like GRI, ABR, and NAR. Here is a quick guide to sorting them out and what will be most useful to you. And … These are some suggestion steps for you Real Estate Agent?! Who is this? What it do? Again according to WikiPedia: Real estate broker or Real estate is: A real estate broker is a term in the United States and Canada which describes a party who acts as an intermediary between sellers and buyers of real estate (or real property as it is known elsewhere) and attempts to find sellers who wish to sell and buyers who wish to buy. In the United States, the relationship was originally established by reference to the English common law of agency with the broker having a fiduciary relationship with his clients. Estate agent is the term used in the United Kingdom to describe a person or organization whose business is to market real estate on behalf of clients, but there are significant differences between the actions and liabilities of brokers and estate agents in each country. Beyond the US, other countries take markedly different approaches to the marketing and selling of real property. In the US, real estate brokers and their salespersons (commonly called “real estate agents” or, in some states, “brokers”) assist sellers in marketing their property and selling it for the highest possible price under the best terms. When acting as a Buyer’s agent with a signed agreement (or, in many cases, verbal agreement, although a broker may not be legally entitled to his commission unless the agreement is in writing), they assist buyers by helping them purchase property for the lowest possible price under the best terms. Without a signed agreement, brokers may assist buyers in the acquisition of property but still represent the seller and the seller’s interests. In most jurisdictions in the United States, a person is required to have a license in order to receive remuneration for services rendered as a real estate broker. Unlicensed activity is illegal, but buyers and sellers acting as principals in the sale or purchase of real estate are not required to be licensed. In some states, lawyers are allowed to handle real estate sales for compensation without being licensed as brokers or agents. Real Estate Investment: Real Estate Investment is now treated as a major case of capital budgeting by using state-of-the-art investment analysis which incorporates the future stream of income it may generate and the associated risk adjustments. It has been the highlight of the investment literature since the 1970’s when investment theorists extended techniques such as probability, time value of money and utility into its analysis. Real estate is basically defined as immovable property such as land and everything permanently attached to it like buildings. Real property as opposed to personal or movable property is characterized by the right to transfer the title to the land whereas title to personal property can be retained. The investment in real estate essentially depends on the risks associated with it, that is to say, even if the venture succeeds when the future stream of income will accrue to the investor and the alternative investment opportunities. Real estate investment can be attractive if viewed as a business opportunity; it can generate rental income, using it as collateral to secure a loan for a business venture, to offset otherwise taxable income through cash savings on tax-deductible interest rate losses, or simply from the profits garnered from its resale. Notable, in this context is the gains reaped by real estate speculators who trade in real estate futures (by buying and selling purchase options). A.K

Use a Buyer’s Agent When Purchasing Real Estate in Mexico

July 18th, 2009 at 04:38am Under Estates Law

So, you’ve reached a point in your life where you think that you’ve learned a little about business, finance, contract negotiating, real estate, etc. and have at least a layman’s knowledge of law pertaining to each. Being that savvy, you might also be aware of the incredible retirement locations and values south of the border; furthermore, you might even be considering Mexico as your retirement destination. If so, you might as well forget everything you’ve learned and leave your law degree at home!

Mexico, as beautiful as it is, has a somewhat different way of doing business and a completely different set of laws. Additionally, all legal transactions, including real estate transactions, are done in Spanish. Therefore, for those of you that may be considering locations in Mexico as possible retirement destinations, the following information should give you some insight as to how the Mexican real estate industry works, list some of the possible pitfalls, and most importantly, give you the guidance required to assure a pleasant and safe experience.

In 1984, we made our first real estate purchase in Puerto Vallarta; a condominium in Mismaloya, about seven miles south of town. Our second purchase, two years later, was the adjacent condo. A year later, we removed the wall between the two condos and remodeled them into one very spacious three bedroom condo. For thirteen years, while still working in Houston, we thoroughly enjoyed visiting Vallarta two or three times a year.

At some time after the purchases of the two condos, we noticed that our original escrituras (legal property documentation similar to a title or deed that is held in a fidecomiso or bank trust) showed the property values to be about one third of what we actually paid for them. When we inquired about the discrepancy, we were told that the lower values were used in order to reduce our annual property taxes.

It wasn’t until many years later, when we decided to sell the condo, that we learned that capital gains taxes were due on the huge difference between the selling price and the documented purchase price. Ouch, we owed substantial taxes on a paper gain, when in fact; there was very little real gain! We then learned that the condo developer entered the extremely low sales prices on all the escrituras in the condo complex in order to evade paying substantial capital gains taxes. As we later learned, the developer could have entered the selling price, the appraised value, his cost of construction, or just about anything imaginable into the escritura, and we, being the naïve Americans that we were, were at his mercy!

Upon the sale of the condo, we bought a beautiful new mountainside villa with a panoramic view of Banderas Bay, El Centro, and the Sierra Madres. We saw the new villa advertised in one of the local magazines and asked our realtor friend to show us the property. He showed us what seemed to be every property in town, before reluctantly taking us to see the villa in the magazine. Some time after buying the villa, we learned that our realtor friend received only 10% of the commission on the sale because that was all the listing agent was willing to pay. The listing agent ran the ad in the magazine and didn’t feel that an agent representing a buyer was necessary in order to sell this beautiful new villa. Therefore, our agent spent a couple days showing us nothing but properties listed by his agency before caving in to our demands and taking us to the villa of our dreams; one that we have thoroughly enjoyed for more than a decade.

These experiences revealed the tip of the real estate iceberg and after living here for ten years, we’ve finally been able to expose the entire iceberg and share some of the details below.

To begin with, there are no licensed real estate brokers or agents in Mexico! In fact, there is no mandatory licensing for real estate agents in all of Mexico because the Federal legislation process has yet to accomplish it and therefore such legislation remains in limbo. In Puerto Vallarta, where there are in excess of 80 real estate agencies, there are probably more than 500 real estate agents with minimal qualifications. With the booming real estate market and economy that exists today, it’s quite obvious why we have such a diverse group of agents and brokers in Vallarta.

In order to have some degree of continuity from agent to agent, a voluntary association for real estate personnel exists in various areas of Mexico. The Asociacion Mexicana de Profesionales Inmobiliarios A.C., known as AMPI, is quite active in Vallarta with the membership of approximately 50 of the 80 real estate agencies in Vallarta. Although membership in AMPI is not compulsory and has no bearing on the capabilities of the agents representing the buyers or sellers, it is considered to be the standard bearer for listing agents in the area.

A second real estate association, mainly consisting of Mexican agencies based in the Vallarta area, is Asociacion de Profesionales Inmobiliarios de Vallarta A.C., known as APIVAC.

These associations schedule periodic conferences, conduct educational programs, and hold various meetings where they attempt to keep their members and the public current on activities in the area as well as changes in the Mexican law as it pertains to real estate. They have codes of ethics and they do attempt to establish uniform sets of operating policies and procedures, some of which are in writing, others understood but not documented. They bring real estate personnel together where their members voluntarily agree to abide by their organizations´ statutes and codes of ethics while attempting to operate with some degree of continuity and professionalism. For sure, these associations are better than nothing but still not to be confused with associations such as the National Association of Realtors or NAR in the US. Dual agency disclosure, designated agency, full disclosure, confidentiality, imputed knowledge and notice, implied knowledge, fiduciary duty, loyalty, and vicarious liability are foreign concepts to the majority of real estate agents in Mexico. Consequently, misleading or inaccurate statements often made by many of the agents can put both the buyer and seller in intolerable predicaments in Mexico.

Although AMPI and NAR do have a working relationship, one example of the differences between AMPI and NAR is that NAR provides its member agencies with standard statewide listing forms, pre-qualification forms, escrow account and earnest money forms, standard purchase agreement forms, letters of intent, etc. In Vallarta, there are no such forms provided by AMPI or APIVAC. Each real estate agency has its own listing form or uses a form provided by an outside privately owned publisher, which clearly depicts the listing agent as receiving 100% of the commission upon sale of the property. Also, NAR has written and enforceable guidelines regarding the handling of commissions and the sharing of commissions between the selling and buying agents. Although there are guidelines in Mexico for real estate commissions, they are still flexible, and to some degree negotiable with the seller. The listing agent can then negotiate commission sharing with the buyer’s agent.

All other forms vary from agent to agent and are not necessarily written in the best interest of the buyer. Also, most forms and contracts for North Americans are in English; however the Spanish version is the only document that has any legal standing in Mexico. Therefore, regardless of what you read in English, a Spanish speaking attorney should always represent you along with your agent.

Another major difference between the Mexican based associations and NAR has to do with the Multiple Listing Service or MLS. In the States, the MLS is controlled and monitored by NAR and is available to all NAR agents. In certain Mexican cities, including Vallarta, there is an MLS; however it is not controlled by AMPI or APIVAC. Instead, it is privately owned and operated by a local publisher and is available for property searching to the public at no charge. AMPI members are able to list their properties on the Vallarta MLS, with the general public as well as the other AMPI and APIVAC members having access to the listings.

Once you understand the inner workings of the real estate industry in PV, you need to learn a little about Mexican real estate law. It can be quite complex regarding trusts, escrows, mortgages, treatment of taxes, etc. and is often open to interpretation by a state appointed attorney, known as a notario. A small percentage of the realtors in Vallarta have a fair understanding of Mexican law as it pertains to real estate transactions; however the vast majority of them are sorely lacking in this field. Even with little or no knowledge of the law, they will be anxious to advise you, right or wrong; therefore, the best law to follow is caveat emptor, or buyer beware!

Because of the many pitfalls that a buyer can encounter while purchasing real estate in PV, we learned over twenty years ago that it is wise to interview realtors with scrutiny, keeping in mind that most all will be promoting their own listings first and meeting your needs second. It’s just human nature and with virtually no control in Mexico, it’s pretty much assured. Also, because almost 100% of them have listing agreements with the sellers, they are legally bound to act in the best interest of the sellers, and not necessarily in the buyer’s best interest. Because the buyer usually has no contractual agreement with the realtor, he will in all probability get the “short end of the stick” in this conflict of interest.

Of all places, in Mexico you should select an agent that is 100% dedicated to helping you find the property that meets your needs and satisfies your requirements; preferably, a contractual agreement with an agent with no listings, no axe to grind, no ulterior motive, and is exclusively representing buyers and their best interests.

A true buyer´s agent in PV should have no property listings, should have complete access to the Vallarta MLS, should know the areas and growth trends in and around Vallarta, should be able to professionally negotiate on the buyer’s behalf, should have a decent understanding of Mexican real estate law, should have a working relationship with the local notarios, real estate attorneys, escrow and title agents, mortgage bankers, insurance agents, inspectors, appraisers, and lastly, your representative must have a thorough working knowledge of the local real estate industry and understand the idiosyncrasies associated with it.

Buying your dream home or condo in Vallarta should be one of your best experiences, however without due diligence, it can be a nightmare. Obtaining an exclusive buyer´s agent with 100% dedication to you is a prerequisite for assuring a pleasant beginning of your retirement in Paradise.

Before You Sell Your Home, Know the Law

July 16th, 2009 at 08:55pm Under Construction Law

There’s more to selling a home than putting up a “For Sale” sign and waiting for people to make offers. If want to sell your home, you need to be aware of the many local and state laws and various regulations attached to selling property. You have be knowledgeable about real estate contracts and know every step involved with regards to inspection, financial considerations, and legal paperwork.

For a real estate contract between two parties to be legal, for example, it must have the following elements:

1) At least TWO parties of sound mind in agreement of the contract – the buyer and the seller

2) Legal identification to verify legal signatures on all paperwork

3) The correct address of the property for sale

4) All agreements with regards to the sale and promises of payment made in writing and signed

5) Unqualified understanding between the buyer and seller so each is aware of payment schedules and other considerations

Coming to an understanding with a potential home buyer is one thing. When you consider going the For Sale By Owner route, you also need to be aware of the many laws attached to selling a house. Local and county laws may vary according to where you live, but there are at least twelve worth researching before you put up your sign:

Seller Disclosure Laws – By law, you are required to inform any potential buyers of damage or other problems with the home that may impact its value in the future. If the house will be in need of a new roof in a year, or if there are cracks in the foundation that need repair, you are obliged to let buyers know.

Lead Base Paint Disclosure – Similar to the Seller Disclosure, if lead-based paint has been used in your home, you are required to inform all potential buyers of this.

Federal Fair Housing Laws – In accordance with Title VIII of the Civil Rights Act, it is illegal to discriminate against a potential home buyer based upon race or color, gender, creed, nationality or handicap. These laws prevent refusal of a sale or price adjustment of a home based upon these factors.

State and Local Housing Laws – Your particular region may have specific laws relating to the sale of homes in the area. It is highly recommend to research any possible regulations that may affect your ability to sell on your own.

Advertising and Marketing Laws – If you plan to take on the advertising of your home sale by yourself, you may need to be aware of certain regulations applicable to your area. If you are placing a newspaper or magazine ad, you may be required to disclose specific information about your home. Do your homework!

Real Estate Contract Law – Is the contract you have with your potential buyer valid? Are there any hidden clauses that may come back to haunt you later? Know what your sale contract says and means before it is signed.

Zoning and Local Ordinance Laws – The sale of your home may be subject to various zoning laws and ordinances in your area. For example, a buyer may want your house for a home-based business or for charity purposes, but the laws in your town may not permit that. Research what regulations are applicable to your property before you sell.

Occupancy Laws – Is your home subject to occupancy laws? Can you legally sell your house to more than one family unit? Before you put your house up for sale, make sure you research any occupancy limits and restrictions.

Building Code Laws – Is your home “up to code”? In other words, is the house compliant to all safety and health codes? Have any repairs and remodeling work been done to the house, and if so were they done with the required materials? It is not legal to sell an unsafe home, so make sure any construction done before the sale is completed safely and correctly.

Environmental Rules and Regulations – Is there anything in your home that poses a potential environmental hazard? Is the construction of your home sound and free of asbestos and other harmful elements? Make sure you know what is considered toxic in your area, and that it’s not in your home!

Stigmatized Property Laws – Was your home the scene of a murder or other disastrous crime? Is your home a local legend in that people believe it’s haunted or cursed? It may sound amusing, but sometimes it can be difficult to sell property that has been “stigmatized” by gossip and legend. If your house has such a legacy, it is best to research any disclosure laws that apply to the sale. If somebody was murdered in your home, for example, you may have to disclose that to a buyer.

Governmental Rights and Real Property Laws – Each state has its own laws with regards to the definition of “real property.” It is suggested all potential sellers know how their states interpret what is real property as opposed to “personal property.” This may affect certain appliances in the house to convey with the sale, or property lines. Governmental rights laws may be put into effect if the government is interested in acquiring property for various purposes (i.e. you own a parcel of land where an interstate is to be built). Read up on these laws before you sell.

Selling a home can be a daunting process, made all the more difficult if you are not aware of the many laws in your area that bind you to certain obligations. So before you hang that sign, make certain you are knowledgeable about the implications behind it. Having the law on your side will make for a smoother sell.

Tarlow, Breed, Hart & Rodgers Outlines the Potential Impact of Upcoming Massachusetts Sjc Ruling on the State’s Consumer Protection Act

July 16th, 2009 at 02:56pm Under Consumer Law

 

DATELINE:  BOSTON, MA…

An upcoming ruling by the Massachusetts Supreme Judicial Court (SJC) has the potential to be a very significant case not only for consumers, but also for the Commonwealth as a whole according to Attorney Lee M. Holland of Tarlow, Breed, Hart & Rodgers.

 

At issue in Joseph Iannacchino & others v. Ford Motor Company & another is the extent to which a plaintiff must sustain a demonstrable injury or loss before looking to the courts for relief from allegedly unfair or deceptive practices under Chapter 93A.  Once they clear this hurdle, for instance, they can access the statute’s powerful treble damages provisions.  Accordingly, the answer is important to anyone who does business in Massachusetts and may potentially face such claims.

 

The Case in a nutshell.

In the Iannacchino case, the plaintiffs are contending that the defendants violated the Consumer Protection Act by failing to recall and fix certain vehicles that allegedly have a defect in their door latching mechanisms that exposes consumers to the risk of serious injury or death. The defendants evaluated the latch mechanisms and decided against initiating a recall.

 

The Superior Court granted the defendants’ motion to dismiss the plaintiffs’ claim since the plaintiffs had been able to use the allegedly defective vehicles, and had not suffered any direct personal or economic injury as a result of the alleged defect. In the pending SJC appeal, the plaintiffs challenge the trial court’s dismissal of the claim.

 

Pros and Cons.

Notes Holland, “Several strong but competing arguments exist for the SJC to consider. On one hand, consumer advocacy groups argue that the ultimate goal should be improved consumer safety, and that it would be perverse to interpret existing law to require a consumer to suffer physical injury as a prerequisite to bringing a claim where it can establish that a defect exists which reasonably poses an increased risk of causing harm to consumers.

 

Conversely, it can be argued that consumers are adequately protected under existing law, but even more so by demand for improvements in safety. Manufacturers have an economic interest in achieving safe products where the market demands them, such as in the consumer automobile industry. Litigation regarding an alleged safety defect that has not resulted in any physical injury consumes resources that manufacturers might otherwise invest in product research and development, thereby hindering efforts to advance safety.

 

Broader societal costs may exist as well. For instance, an unanticipated increase in the litigation risks to which corporations doing business in the Commonwealth are exposed could operate as a disincentive to economic growth . . . .”

 

Stay tuned for the verdict.

It is true that the Iannacchino plaintiffs have been able to use their vehicles and have not suffered any direct injury. Assuming a defect exists in the door latches, however, it is also true that the Iannacchino plaintiffs face an elevated risk of injury every time they go for a drive. Does that elevated risk mean they can sue under the state’s Consumer Protection Act? Stay tuned for the SJC ruling, expected in June 2008.

 

Tarlow, Breed, Hart & Rodgers, P.C.

Formed in 1991, Tarlow, Breed, Hart & Rodgers, P.C. is committed to providing high quality, comprehensive legal services to its clients. Featuring a breadth and depth of experience and perspective usually found only at larger law firms, Tarlow, Breed, Hart & Rodgers, P.C. offers sophisticated legal counsel to entrepreneurs, businesses, individuals, families, and institutions.

The firm’s areas of expertise include litigation and dispute resolution, corporate law, employment matters, mergers and acquisitions, estate planning, taxation, real estate, bankruptcy, and municipal law.

 

The expertise and collegiality of the firm’s fifty plus members, associates, and support staff has consistently resulted in the building of lasting relationships of trust and confidence.

 

The offices of Tarlow, Breed, Hart & Rodgers, P.C. are located at 101 Huntington Avenue, Prudential Center, in Boston, MA 02199. For additional information, or to arrange for a consultation, please call 1-617-218-2000, e-mail info@tbhr-law.com, or visit www.tbhr-law.com.

 

 

The Benefits of a Good Faith Estimate and Pre-approval When Buying Real Estate

July 16th, 2009 at 04:37am Under Estates Law

Most real estate purchases are bought with loans so getting a good faith estimate and pre-approval letter from your lender helps the process start off on the right foot. The good faith estimate, or GFE for short, is required by law to be provided by lenders when you are seeking a loan. It lists out the estimated closing costs, monthly payments, and interest rates for the loan program you are looking at getting. The pre-approval letter is provided by lenders once they have run your credit and get your income / debt information. By getting the GFE and pre-approval letter, you can be confident that the loan will get processed with no surprises. There are also additional benefits to getting pre-approval and GFE before you even begin the property search. For one, by discussing your debt to income ratio with your lender and obtaining the GFE, you can determine your maximum price. It helps to know the maximum sales price when shopping around so that you do not waste time and energy looking a over-priced properties, and also vice verse, you do not waste time and energy looking at under-priced properties. You can find an area in your price range that fits your needs and narrow down your search. You also will determine your monthly payments with the GFE. The monthly payments should include the property taxes, insurance, principle, and interest plus any private mortgage insurance (PMI). If the monthly payments are higher than you wanted, then you can adjust your sales price to be lower. Another reason to get your pre-approval and GFE before starting your home search is that you may find out some issues with your credit or financial situation that you could clean up before moving forward with a purchase. For example, the first time I bought a house, I found out that I had a $50 charge on my credit report from 3 years ago, which brought my credit score down. And with a lower credit score, I would have gotten a worse interest rate on the loan. I say ‘would have’ because I was able to pay off this collection and clear up the ding on my credit before going into the loan underwriting process. Finally, by getting a pre-approval letter, you have proof for a seller that a lender has confidence in being able to fund the purchase on your behalf. This helps with presenting offers and negotiating. Many sellers will not even accept an offer unless it is accompanied by a lender’s letter. Furthermore, if you do not have a letter, the seller may counter higher given that he feels he is taking on more risk that you may not be qualified for the loan amount. Also, if you happen to get into a multiple offer situation, your offer will be much stronger with a pre-approval letter.

The Hidden Treasures and Profits of Probate

July 15th, 2009 at 01:08pm Under Probate Law

To make money in real estate you need an advantage over your competition. So why not just eliminate them! Now I don’t mean you need to go out and create a bunch of probate by whacking all your competition. What I do mean is that you need to play real estate the same way I would like for my favorite team to play football—move to another arena. What I mean is that you need to go looking in hiding places that nobody else is looking in to find those hidden treasures. That is where probate comes in. I’ll never forget when my partner and I were filming our DVD for our course, The Hidden Treasures and Profits of Probate, at the probate courthouse. (learn more about the course at http://www.probaterealestatedeals.com) Jimmy asked me how much competition there was at the courthouse. As the camera panned around the room, there was nobody else in the whole office except the two ladies who worked there. How many people do you think were outside bidding on foreclosure properties? The answer is hundreds.

First, let me explain some things about probate. A statistic that may shock you is this: 100% of Americans will die. That’s right, according to the Center for Disease Control, about 2.5 million people will die each year. Now here is the thing about that statistic. 70% of those folks will die without a will. Even more important is that regardless whether you have a will or not, your estate will go through probate. The only way to avoid probate is to have your estate in an entity. But ask yourself this question. If so few people even have a will, how many people do you think will put their assets in an entity? To give you an idea about how huge that is, of all the cases coming in to the court system, 24% will be probate cases. In Seattle, WA in 2003, there were more than 6000 probate cases. In Ft Worth, TX in 2006 there were about 3500. Many of those cases had real estate involved. That is where you step in. Most people don’t want to work this market because they think it is morbid. It is not morbid. The estates that I have worked with have been some of the most appreciative people I have ever worked with. I will never forget the lady that thanked me for buying her mom’s house at fifty cents on the dollar.

So why do all of these estates go through probate? The government requires it for a few reasons. First, the state wants to make sure that the assets are divided according to the will. And if there wasn’t a will, then the state takes care of that too. Most states have heirship succession laws in place that says which relatives get what percentage of the estate. The other reason that the law requires estates to be probated is to let any creditors who may have an interest in the estate know that the person has passed away and the creditors will need to file in order to get paid from the assets of the estate. The final reason that the law requires the estate to be probated is that the tax man wants to be paid. It has been said that the only two certainties in life are death and taxes. With probate they both apply. Not too long ago the federal government made some changes to estate taxes that remove most people from getting taxed. But the local governments still want to get paid either estate taxes or property taxes. By forcing the real estate in to the probate courts, the government makes sure they get their fair share.

Your challenge is to find some deals in probate. You can see from the facts above that there can be a lot of motivation with people dealing with an estate in probate. By far, the easiest way to find the deals is to send some marketing to probate attorneys. There are better and faster ways, but my partner and I had to write a whole manual to explain those techniques. I simply can’t fit them all here in this limited space. But if you know that most people will not try to probate an estate themselves and will seek out the services of an attorney to help them, then obviously you can short cut the whole process by sending letters or brochures to your local probate attorneys. In some states, you can even get pre-printed labels for probate attorneys from you state bar association. That way, half your work is already done. Now you just need to come up with a good letter to send them.

When you write your letters, simply tell the attorneys in a professional way what it is you do. Make yourself out to be an expert in the field. You might say something like “I am a local real estate investor who specializes in solving probate related real estate problems.” Do you see how you just became a specialist there?

Now you know why you really need to be working the probate market, and you know a great shortcut to the market. All you need to do is go out and put it to work!!

Happy Investing!!

Brandon Lambert

Protect Your Deposit When Buying Real Estate

July 15th, 2009 at 10:37am Under Estates Law

When you start the process of buying a home or any type of real estate, you’ll no doubt hear the term “earnest money deposit” (EMD). So what exactly is an EMD?
An EMD becomes relevant when you are ready to make an offer on a property. In most states, your Real Estate Agent prepares the offer on your behalf. The offer usually takes the form of a written contract that is submitted to the seller by way of their agent.
In addition to the offer document, sellers typically expect an EMD. An EMD is a monetary deposit submitted via check to demonstrate to the seller that you are a serious buyer. In some regions of the country, only a photocopy of the check is submitted with the offer, and the original check is delivered to the appropriate entity if the offer is accepted. Ask your Real Estate Agent to clarify how deposits are handled in your region of the country.
The check is usually made out to an independent third- party such as a Title Company, Escrow Company, Real Estate Attorney or your Real Estate Broker. Ask your Real Estate Agent to clarify who will hold the EMD.
The amount of the EMD sellers expect varies by region. The EMD amount is based on the customs and practices for a region, but is generally from 1% to 2% of the purchase price. In a competitive market place where demand exceeds the supply of homes, some buyers may offer a higher EMD than expected to impress the seller of their intent. In determining the amount of your EMD, consult your Real Estate Agent and balance the need to demonstrate your serious intent, against the good business practice of minimizing the deposit amount.
The amount of the EMD is usually applied to reduce the purchase price of the property or to cover closing costs, as you dictate. For example, if you are purchasing a $300,000 property and you give an EMD of $3000, then the remaining balance owned at closing is $297,000 (plus closing costs). Alternatively, you may direct that the EMD be applied toward the closing costs.
Once a valid contract for purchase is created, an independent third-party usually holds the EMD until the purchase is either completed or cancelled. At this point, the money belongs jointly to both the seller and the buyer.
In cases where you make an offer that is accepted but later decide to cancel the offer, the terms specified in the contract (or state law) will dictate if, and under what circumstances, the EMD is returned to you. Be aware that you could loose your deposit if you do not not comply with the terms of your contract. Your Real Estate Agent can provide you information about how EMDs are dealt with if a contract is cancelled.
Since state law varies by region and practices can differ even within the same state, be sure to consult your Real Estate agent about the rules that apply to EMDs in your region of the country. You should also be aware that the EMD is not related to any down payment that you make toward your home loan.

Acquiring Real Estate in Israel

July 14th, 2009 at 10:38pm Under Estates Law

The Type of the Land

There are two main types of real estate properties in Israel, (i) privately owned land (“Private Land”); and (ii) State owned lands (“State Lands”), also referred to as “Minhal” land. Israeli laws and practices regarding State Lands differ from those regarding Private Lands.

The main difference between the two is that while the title to Private Land is registered under the name of the purchaser in the land registry, title to State Land as a rule does not pass on to the purchaser. Rather, the purchaser of State Land acquires a long-term lease to the property, (usually for 49 years with an option to extent for an additional 49 years) which may be registered under the name of the lessee in the land registry. Extending the lease for a State Land property may require payment to Israel Land Administration (“Minhal”). Consequently, the first thing that should be confirmed prior to purchasing a real estate property in Israel, is whether the property is registered as Private Land or State Land, and in the latter case the date of renewal of the lease should be ascertained.

It is worth noting that only 10% of the land in Israel is Private Land; however, most Private Land is situated in urban areas.

Verifying Title to the Property

Unlike in the U.S., where it is customary to obtain title insurance from an insurance company, in Israel, in order to verify the title to the property, one must rely on the registration in the Land Registry as well as on the Seller’s representations and warranties in the Sale Agreement. In other words, one must ensure that all necessary inquiries regarding the Seller’s ownership in the property are made prior to entering into a real estate transaction.

Purchase of a New Apartment from a Contractor

Prior to finalizing a contract for the purchase of a new apartment (i.e. an apartment which has yet to be built) from a contractor (or, alternatively, from a private owner of an apartment, who acquired the apartment from the contractor for resale purposes), the purchaser should carefully review the Specification and the Blueprint of the planned apartment. Under the Sale (Apartments) Law – 1973, the contractor is obligated to append the Specification to the contract. These documents set forth a salient part of the contractor’s commercial commitments regarding the apartment, and without them there may be material differences between what the purchaser was expecting to receive and what is actually received.

A few important verifications should be made regarding these documents:

1) It is important to insist that the contractor lists the apartment size in the Specification in net rather than gross terms (i.e. excluding the “common property”, wall areas, etc.).

2) “Joint buildings” (meaning buildings containing two or more apartments), are required to have a set of By-Laws, which regulate the relations between the tenants. A standard set of By-Laws is annexed to the Real Property Law – 1969, and applies automatically, unless the apartment owners have duly adopted a different set of By-Laws.

3) It is important to ensure that there is a precise definition of the building’s “common property” that will be attached to the purchased apartment.

4) The Law requires a contractor to provide the purchaser of an apartment with at least one of five (5) different types of guarantees, prior to receiving from the purchaser a sum exceeding 15% of the purchase price:

(a) Bank Guarantee ;

(b) Insurance Policy –This type of guarantee is rarely granted;

(c) Lien – This type of guarantee is likewise rarely provided by contractors;

(d) Caveat – registered at the local land registry, and grants the purchaser preference over any later conflicting transactions;

(e) Transfer of Title to the Property under the Purchaser’s Name at the Land Registry – contractors will almost never agree to the transfer title prior to receiving payment in full from the purchaser.

The two commonly used types of guarantees are the Bank Guarantee and the Caveat. It is imperative to demand from the contractor both types of guarantees.

The Bank Guarantee provides the purchaser with a money back guarantee, while the Caveat grants a preference over later transactions and protects purchaser’s rights to the property from encroachment by contractor’s creditors.

The bank financing the project often has a lien registered in its favor over the entire property, thus necessitating a waiver from the bank in order to allow registration of the Caveat. The waiver granted by the bank, is usually conditional waiver stating that in consideration for full payment being made by the purchaser, the bank will discharge the lien over the relevant apartment.

Following full payment, the bank should provide a final and irrevocable waiver, confirming that its lien over the relevant apartment has been discharged. It is important to demand that the contractor produce and append to the purchase contract a signed conditional waiver from the bank, as well as a draft of the final waiver to be provided by the bank upon full payment by the purchaser.

Purchasing a Second Hand Apartment

When purchasing a second-hand apartment, it is important to carefully review the registration documents of the apartment building, including the building’s registration extract, and the By-Laws (mentioned above). These documents regulate the reciprocal rights and obligations of each of the apartment owners.

These documents should address issues such as: sanctioned uses of the building’s common property; is the parties entitled to use the remainder of the unused building rights; the share of each apartment in the maintenance of the building; etc.

Furthermore, if upon purchase of the apartment the building has yet to be registered as a “joint building” in the land registry office, then it is important to realize that the “attachments” of certain parts of the building to specific apartments (for example: roofs, parking spaces, backyards etc.), have as well yet to be registered, and thus, it is imperative to check if every exclusive usage/attachment of such property has been approved by all of the neighbors.

If the apartment is acquired from a contractor who has entered into a “Development Agreement” with the Minhal, under which the contractor is obliged, within a set timetable, to submit plans, to commence building and to complete the project, it is imperative to verify with the Administration’s offices whether the contractor has satisfied all of its obligations in accordance with the Development Agreement, and is entitled to receive the property from the Minhal

Leasing a “Minhal” Apartment under a Long Term Lease

As aforementioned, State Real Property can only be leased and not purchased.

The “purchaser” is rather granted the right to enter into a long-term lease with the “Minhal”.. In the past, most apartment lessees were required to pay annual rent to the Minhal, however, the majority of apartment leases nowadays are “capitalized”, i.e. the developer/ contractor pays the rent for the entire lease term in advance and the lessee is exempted from annual payments.

Practically, once the lease agreement is signed, the lessee has no further dealings with the Minhal until the expiration of the lease, unless he wishes to modify the existing structure or change its designated use. In such case, approval of the Minhal, as the owner of the land, is required, and if the property has not been “capitalized”, such process may involve payment of transfer fees to the Minhal.

Therefore, when leasing property from the Minhal, it is imperative to verify that the property is capitalized and that in the event of transfer of rights in the lease there will not be any transfer fees due to the Minhal.

To sum, engaging in a real estate purchase transaction in Israel may be complex. One needs to be familiar with the different types of property, the law affecting each type and the measures that need to be taken in the course of such transaction.