Customers that give non-refundable deposits to resort projects that are not yet built, are doing so primarily on the trust of the company. What might seem like a good deal could cost an investor in such a property dearly. Take for instance the project in Mexico recently that went belly up prior to being completed. Everyone lost all their deposits, investments and money. Worse, the company doing the project was part of the Trump Corporation, and had their name on it.Since this project was in Mexico, there was little if anything anyone could do, there was no money left in bankruptcy for anyone, nothing left, all gone, and that is all she wrote. And it could not have come at a worse time, with the overall stock market down, even more alarming was the fact that many of the folks that put money down, did so to have a place for their retirement in Mexico. Now their dream is gone along with all the money they gave.For some these deposits were for speculation or vacation homes, and even though they could never have imagined the whole thing going bankrupt and their money all disappearing, they can recover from it and chock it up for experience. And maybe that’s the purpose of this article, maybe you too can remember this so you are not caught with the same bad experience.Real Estate law is not as cut and dry as you might think and when you are dealing with investments in other nations, especially speculative resort properties like this you are gambling, so make sure you understand that and act accordingly. Please consider this.
Just when you thought you knew everything about real estate law, there comes along something that changes everything. Let me explain something that recently happened to a friend of mine that owns a coin op carwash and a mini storage unit does right by an airport. The new Department of Homeland Security laws requires that each Airport have a buffer zone between the airport fence and the rest of the world. This is to protect against so-called terrorists coming onto the airport property or firing a weapon over the fence.Despite what you might think about such a topic, or how you lean politically this can be a huge problem if you own a piece of property that is adjacent to the airport. In this case, my friend found that his properties were cut in half by imminent domain and the government bought the properties at the bottom of the market. When they cut off the back of his coin op carwash, it was no longer usable and therefore he had to tear down the facility because he couldn’t make money with it any longer.There simply was not enough room to turn around in vehicles and therefore no one came to get their cars washed anymore. He couldn’t sell the carwash equipment or the building to anyone else for the same reason. They didn’t give him enough to pay for his losses but he was stuck.He originally purposely put the carwash and the mini storage unit next to the airport because he knew someday that land would be worth more. So even though his businesses were barely making the payments as it was during the recession he figured that his investment was safe and he was going to use that money to retire someday when he sold the properties in 20-years.Just because you think you know real estate law, does not mean that your investments are safe. Please consider all this.
Many federal legislators never stop long enough to read the bills they are signing. This leads to unintended consequences. Take for instance the new home energy efficiency rules that were tucked inside the alternative energy spending bill. There is a clause in that bill that prevents homeowners from selling their property if they don’t have proper weather stripping and if their homes are not energy compliant. But if the homeowner cannot afford to upgrade, then they are not allowed to sell there home to the new buyer or the new buyer is not allowed to buy the home until things have been upgraded.This obviously means there will be fewer home sales at a time when the real estate market is in the trash can, and it could lead to more foreclosures. It’s laws like this that don’t help anyone and while we may be helping ourselves to better efficiency in our energy usage, we are violating the personal property rights of the owners and getting in the way of the right of free contract which is guaranteed in the Constitution.All too often the government gets in the way of private agreements and contracts in the free market, and each time they do their unintended consequences hurt the rights of citizens. Further, many homes were built, which are very old can never be fully energy compliant and therefore they will either have to be torn down or they cannot be sold.What if the home is part of a probate proceeding and the property must be sold. What if the government ends up with a home due to property taxes not being paid? There are all sorts of ramifications of these laws and it just adds another layer of paperwork, and will cause further lawsuits in the future. Real estate laws are already complicated enough and personal property rights are something that we protect in the United States. Please consider all this.
It’s no secret that same sex couples are not created equal. Not only with general discrimination that exists, but being allowed to legally wed (in most states), adding your significant other to your health care plan, or even buying a home together proves to be a challenge. With the new real estate laws and same sex couples, they may now have one up on this jaded system we call “constitutional.”The Supreme Court has dismissed the existing law that identifies marriage as a joining of a man and a woman. This might be a small step to the general population, but it is huge to gay couples. And while it does not remove all of the other obstacles that they still face, it is a step in the right direction.So what does this have to do with real estate? Well, the Supreme Court has recently ruled that a portion of the Defense of Marriage Act (DOMA) is unlawful. For gay and married couples, this means changes that will affect the mortgage interest tax deduction and VA Home loans.Married gay couples, who until now have not been unable to claim this tax deduction, will now be able to file tax returns jointly. In the past, these couples living in states that allowed gay marriage would not allow couples to file joint tax returns. Since this ruling, DOMA must recognize same sex marriage just as a marriage between a man and a woman, and as such, they will now have the same rights when it comes to the mortgage interest tax deduction.When it comes to VA loans there is still plenty of work to be done. Currently, a married gay veteran who would like to obtain a VA loan cannot include his/her partner as a spouse on the application. This is because the federal rules require the spouse to be of the opposite sex. While a joint loan is possible, if both are veterans, the VA only allows a portion of the loan to married gay applicants. What a way to treat those who service our country, wouldn’t you say?While we as a country, are nowhere near treating gay couples equally when it comes to the laws and how they are applied to same sex couples and what we call “traditional marriage,” continued small strides and wins are definitely helping.Perhaps one day we will all be treated equally. While that is too far down the road for any of us see, maybe one day it will happen. Until then, rulings such as this will help ensure that any gay couple who wishes to buy a home is not discriminated against because of their sexual preference.
Real Estate Law is a lot more complicated than it has ever been in the past. Now when you sign a brokerage agreement with a realtor instead of 1 page or 2 pages it is 14 pages? That is just for the listing. Why is it so long? Well that is nothing compared to all the other forms involved and they just keep getting bigger due to all the laws, bureaucracy and lawyers. Everyone is so busy trying to cover themselves and their rear ends from every known or potential eventuality.It is a giant game of 100s of pages of What Ifs. How can you have time to read it all? Well you need to make the time and it also makes sense to not allow yourself to be forced into doing anything too fast out of social conditioning. Such as thinking you might look stupid if you read it all or that you are wasting the other person’s time. In Real Estate Law you have a right to knowing what you are signing and why.If you were a business person would you sign an agreement without reading it all the way through? I think not. And realize your home is probably the biggest personal investment you will ever make and it will take you years to pay it off. Is it worth rushing through if you still have questions? Read it, understand it and ask questions and you will be glad you did.Go buy the book Real Estate Law 4 Smarty Pants’ if you can find that title; if you have to, but please read and understand what you are signing. I certainly hope this article is of interest and that is has propelled thought. The goal is simple; to help you in your quest to be the best in 2007. I thank you for reading my many articles on diverse subjects, which interest you.
In 1995 the Arizona legislature authorized a husband and wife to hold title to their home (and other real property and even personal property such as stocks and bonds) as community property with right of survivorship (“CPWROS”).Prior to this 1995 Arizona real estate law a husband and wife either held title to their home as community property (“husband and wife”) or, most commonly, as joint tenants with right of survivorship (“JTWROS”). Community property had the tax advantage of a step-up in basis of both halves of the home when the surviving spouse sold the home, but had the disadvantage of requiring probate. JTWROS had the tax disadvantage of a step-up in basis of only the deceased spouse’s one-half interest in the home, but had the major advantage of transferring title to the home to the surviving spouse without any requirement of probate. The purpose of the 1995 legislation authorizing CPWROS was to have the “best of both worlds,” namely, after the death of the first spouse a step-up in basis of both halves of the home, but without probate.The following simplified example will illustrate the importance of a step-up in basis of both halves of the home. A husband and wife buy a home for $40,000 (each has a basis of $20,000). Ten years later the husband dies and the home is now worth $100,000. The wife then sells the home for $100,000.If the home is JTWROS property, only the deceased husband’s one-half interest will be deemed by the IRS to have a step-up in basis, and the wife will have a taxable gain of $30,000 ($100,000 sale price less deceased husband’s 100% step-up in basis to $50,000 less wife’s original basis of $20,000).If the home is CPWROS property, both halves will be deemed by the IRS to have a step-up in basis, and the wife will have no taxable gain ($100,000 sale price less deceased husband’s 100% step-up in basis to $50,000 less wife’s 100% step-up in basis to $50,000).In addition to the tax advantage of owning real property as CPWROS, as opposed to JTWROS, CPWROS real property can only be sold or mortgaged with the consent of both the husband and the wife. JTWROS real property can be sold or mortgaged by either spouse without the consent or even the knowledge of the other spouse.If a husband and wife want to transfer the title to a home or other real property from JTWROS to CPWROS, they should contact the title insurance company that insured the title at the time of closing. The title insurance company will normally prepare the necessary transfer documentation for a minimal fee, generally less than $250.Note: Since 1997 a husband and a wife have the $500,000 capital gain exemption on the sale of a principal residence. This $500,000 capital gain exemption is generally available after the death of one of the spouses if a joint tax return is filed and the principal residence is sold in the year of death. Otherwise, the $250,000 capital gain exemption is only available. Therefore, a husband and wife holding title to their home as CPWROS is not as important as with other types of real property, unless there has been significant appreciation of at least $250,000 in the value of the home.
Many people visit Jamaica and are enamoured by the beautiful landscape and fabulous real estate. For many of them though the complex procedures involved in buying Jamaican real estate in Jamaica is a deterrent. The process by which legal title in land in Jamaica is transferred is called conveyancing and there are many reputable attorneys who practise in this field. The Jamaican conveyancing law and procedures are based on the old English common law and the torrens title system. While the property laws in England have changed over the years, the Jamaican laws have not been updated and so many foreigners who are accustomed to a quicker course of action believe that in Jamaica it is too long and expensive and some believe unnecessarily bureaucratic. It is for this reason that it is recommended that anyone buying or selling real estate in Jamaica employ the services of an attorney who specializes in conveyancing.Most but not all properties in Jamaica are registered at the National Land Agency commonly referred to as the Titles Office. Some owners have common law title to their properties but it is recommended that a buyer purchase from a landowner with registered title or request him to apply for a registered title. It is easier to validate a registered title. In addition it has several other advantages including but not limited to the fact that it is a fairly simple document which provides proof of ownership of property which is clearly described. Furthermore if a buyer will need to use the title as security for mortgage financing then a registered title is typically better received by the financial institutions.The typical conveyancing transaction in Jamaica takes about 12 weeks or 90 days after the contract is duly executed to completion. This is standard but it can take longer especially if the Purchaser is buying the property with a loan from a financier.During the pre-contract stage the Purchaser should:o view the property thoroughly. Home inspections as conducted in the United States are not usually a condition of the contract so buyers must be ready to decide whether they are willing to take this upon themselves or bear the risk of buying real estate with expensive obvious defects.o negotiate the price either directly with the vendor or through a realtor or the vendor’s attorney.o search the title to make sure the Vendor is indeed the owner, the property on the ground corresponds to the address you visited and to determine if there are any caveats on the title.o arrange the deposit (this is usually 15%)o if getting mortgage loan visit a reputable financial institution to see if you pre-qualify.During the contract stage, you must discuss the terms of contract with your attorney, determine all your closing costs, obtain any amendments if necessary, sign the contract and pay the deposit. It is strongly recommended that you employ your own attorney instead of having joint representation with the Vendor’s attorney.During the post contract stage the Purchaser should:o obtain his signed duplicate contract and his stamped receipt for the deposit,o comply with the requirements of the mortgage institutiono obtain mortgage commitmento sign Instrument of transfer and mortgage deed and,o pay closing costs and any cash balance purchase priceOn completion the purchaser should get his title, keys, letters of possession, letters to the utility companies and proof of payment of water rates, property taxes and other outgoings. If he had financed the purchase through a mortgage institution the title will be forwarded to said institution but he should ask to obtain a copy for his records.
These laws legally force the seller of a home to disclose to the potential buyer any serious defects of the property. The laws were created to help protect the buyer from any defects that were not noticed until they closed on the house and become the owners. Many times it is hard to enforce real estate disclose laws because what is considered serious defects may be open to interpretation. Because of this, the laws are constantly changing resulting in many states not having effective disclosure laws. If the state does not have mandatory real estate disclosure laws, they will usually have a voluntary disclosure.These laws can cover many different subjects so you should consult with a qualified lawyer or real estate agent to find out the specifics of what they cover. In regards to real estate disclosure there are both state and federal laws regarding these laws. Some brokerages have additional regulations for listings they accept. In the United States, Federal law requires disclosure in regards to using lead paint in homes constructed before 1978. The disclosure laws generally cover toxic or hazardous materials and the presence of asbestos and radon gas.These laws are designed to help protect a potential buyer from buying a home that has known defects or issues. For example, if the home you are considering buying has suffered from earthquake or flood damage these laws will typically require the seller to provide you with this information. In addition to real estate disclosure law protection the buyer should also have a home inspection done by a professional. This inspection can possibly find other potential issues. Sometimes, the lender will require that a home inspection be done before they approve the loan.In some states, there are long questionnaires that the property owner has to fill out before they can sell the property. This questionnaire does ask about any potential issues or defects with the property. These questionnaires typically cover everything from issues with the land to the wiring and plumbing inside the home. Some of the things that the seller has to disclose include, but not limited to, are:• Water damage caused by a leaking roof
• Presence of wetlands on a part of the property
• Recent deaths on the premisesGenerally, these laws only require that the sell reveal issues that they are aware of. This means that they cannot be held responsible for any problems they were unaware of before putting their home on the market but not every state provides this protection. There have been some cases that the seller can be sued by the buyer after they buyer becomes the homeowner. This is why you need to have expert advice about real estate disclosure laws in your state.
Hundreds, if not thousands, of people are telling themselves how great it would be if they could lose their 9-5 work week and live the lifestyle of a real estate investor. Many of these people haven’t the slightest clue on how to get started, however. They tempt themselves into buying the courses that are out there. In the end, they have spent thousands on these courses and yet still haven’t a clue on exactly how they should get started. I know because I was once there.When I started to look into real estate investing, I was 24 and didn’t have a clue on how to even buy a house. I spent most of my time on the internet researching. Eventually I bought a few books off amazon.com and purchased a wholesaling course from a well known guru. It’s not my job to list the names of these books or gurus, but I think more importantly it’s my job to inform you how you can get started without those books.If you are a total beginner in real estate, I first suggest you do some research on creonline.com. Visit their article and success story links. This will help broaden your mind a little bit and give you some motivation which will help carry you through the learning process. Keep in mind that you are only going to focus on wholesaling.What is wholesaling? Basically, what a wholesaler does is find ugly houses that need a lot of work. They get the house under contract, and then they do a contract assignment(sell the contract). An assignment of contract is great because you never actually buy or own the house yourself. The investor you assign your rights to will close on the house instead of yourself. This creates very minimal risk on your behalf.I’d also recommend you research your local market before getting started. Get an idea of how much properties in your area are going for. Find out where the nice neighborhoods are and target those locations. Remember… we want ugly houses that are in nice neighborhoods. Make sure you get an idea of what the legal process is like in your state as well because each state is different. You may try doing a Google search on real estate law in your area, or perhaps it would be even better to contact a local real estate attorney. Just make sure that the attorney specializes in real estate transactions.Do you need good credit or tons of money to get started? NO! I started with very little. Believe me when I say that your willpower is more important than your bank account. The great thing about wholesaling is that you are not buying these homes yourself. The only money you will need is to buy an option, put a earnest money deposit on the property, and/or money towards advertising. That’s it.There is just so much information out there on wholesaling. I cannot cover it all here. So I suggest that you do your own due diligence because remember that in this business you are your own boss, and if you procrastinate the learning process too much then you’ll eventually lose interest in doing it. Always invest your time in something that is going to benefit you the most. Start by investing into yourself. Then get out there and wholesale some houses!
All investments carry with them some degree of risk. The same is true with real estate investing. Despite the promise of high rewards you should be aware with the risks involved are more often than not just as high as the potential rewards. This is why you need to take every possible precaution in order to minimize your losses whenever possible or at the very least are prepared, financially and mentally to accept the consequences of those risks if the time comes.How can you protect your investment?Know the real estate laws. It doesn’t matter if you are a novice or a savvy investor, ignorance of the rights and regulations can put your investment at risk. You don’t have to become an attorney, but you should be brush up on the laws that govern the market.Stay educated with the current economic climate. Is the economy in general still improving? What is unemployment high? What was the rate of new home construction in the last five years? All of these variables are good indicators of whether property values will rise, level off, or even see a correction.Consider putting down a large down payment when purchasing a property, at least 10%. Most novice investors might think that going with zero down loans is a great way to dive into real estate investing, but zero down loans are very risky. Putting down a large down payment will give you instant equity, reducing your interest rate. This will obviously reduce your cash on hand, but it will lower your risk and increase the capital of your investment.Adjustable Rate Mortgages allow investors to purchase property with less cash and an attractively low relative rate. There are 1 year adjustable rate mortgages 5 year, even 7 year. the number signifies how long the offered rate is good for. After this period, the lender adjusts the rate according to the current interest rate.However, if you keep the property longer, that low rate can climb several percentage points. Unless you sell or pay down the principle on the property you can expect to be stuck with higher monthly payments.As the adjustable rate mortgage goes up, property values are under pressure to level off or even decrease because of the rise in interest rates. Your investment gets hit twice. Of course, it’s possible for rates to go down, but that’s less common and refinance is usually toward a fixed rate, in those cases.So, instead of being risky, take a long term view. Invest as much as you can up front, make at least one extra payment per year, lean toward fixed rate mortgages of the minimum length you can afford. A 15 year mortgage pays down the principle quicker, so you spend less on interest, increases your equity rapidly, and usually carries a lower rate.Playing it safe will ensure maximum return on your investment with minimal risk.