The804.com–Richmond VA Real Estate Blog

Washington Post (Robert Bruss)

• I recently bought a house. The seller and/or his real estate agent took all three sets of washers and dryers in this large house before I got the keys. I think the washers and dryers are fixtures, not to be removed by the seller or the agent. What can I do about this?
• About six months ago, I bought an upscale condominium. My neighbors are the nicest people, and I like associating with them. However, the condo homeowner association is considering a special assessment to re-carpet the hallways and refurbish the main entrance. Although the replacement reserves appear to be adequate to take care of this expense, which I agree is needed on our 15-year-old building, the board of directors proposes assessing each owner $1,500 to $2,500, depending on the size of his/her condo. What irritates my neighbors and me is we are not allowed to attend the monthly board meetings. We are allowed only to write letters to the directors and attend the annual meeting. Is this legal?
•   I am preparing for my annual visit with my accountant to discuss my tax situation on my investment properties, which I have owned for many years. I was trying to verify at what tax rate I will be taxed for the depreciation I’ve deducted over the years. What is your perspective on this matter? Is the tax rate 15 percent or 25 percent?
• About a year ago, my elderly mother deeded to me her home and two rental properties I manage for her. Her attorney handled the quitclaim deeds and the recordings. Mother died in October 2006. When I talked to my mother’s tax accountant he said, “It’s too bad your mother deeded the titles to you. If you had inherited those properties, you would have a new stepped-up basis of market value and you would owe practically zero tax when you sell them shortly after her death.” Is this true I don’t get a new stepped-up basis?
•   I am considering buying a vacant lot on which I want to build a home. What assurances can I receive before the purchase that the building permits and site plans will be approved by the local authorities? I do not want to be stuck with a lot on which I cannot build.
•   I own two rental properties. Let’s call them A and B. I have never lived in either one. Nor do I intend to. Let’s say I sell A and B on the same day and do an Internal Revenue Code 1031 tax-deferred Starker exchange by identifying and purchasing property C. Assume I rent property C for three years and then move in to make it my principal residence for two years. Then I sell property C. If the total capital gains on A, B and C are less than $500,000 (I am married and my wife would live with me in property C for at least two years), can I sell property C without owing any tax?
• During the December holidays, my adult son and daughter, along with their spouses and my three grandchildren, visited me at my home for several days. My daughter, a big-time New York City lawyer, suggested I “consider” putting the title to my house and two investment properties into a living trust to avoid probate when I pass on. I am 86, in relatively good health, but death might not be too far away. When I explained I might want to sell or refinance my house, or perhaps get a reverse mortgage, she really didn’t have any good reason why I should consider a living trust. However, I don’t want to burden my daughter and son after I pass on (or become senile) with probate court because I saw what happened to a good friend of mine whose estate was tied up there for about four years. What do you think of living trusts?
• We had to move out of town on short notice due to a terrific job promotion for my wife. Because I am self-employed, I can work virtually anywhere. Her employer provided a superb relocation plan and we bought a new house within a few weeks. However, it has now been about four months since we listed our old home for sale with a trusted real estate agent friend. When I was recently talking on the phone with another real estate agent, I asked for his opinion on why our home hadn’t sold. After he checked the local MLS (multiple listing service), he said our house isn’t even in the local MLS. When I confronted our listing agent, she said, “We don’t like to put classic houses like yours in the MLS because it cheapens them.” I was shocked. Thankfully, our listing recently expired. Should we re-list with the same agent or let the relocation company buy our house at a discounted price? 

Miami Herald (Richard White)

• I am an elected board member. Our board consists of seven members. What concerns me is the amount of power our president has. She meets with our management representative at least twice a month. Many business transactions are approved without discussion by the board. Also, our meetings are held the same day each month. Another board member and I work and have requested changes in the meeting schedule. The president responds that the meeting has always been held at that time. Her attitude is that as long as there is a quorum, she will have her meeting. We have many new owners who are young working families and do not have time to get involved. Then there are the old-timers who do not make waves. That does not alleviate the fact that this woman has been president way too long and makes way too many financial decisions that are pricing many owners out of living here. Her term expires next year and she is just waiting it out as she feels we can not fight city hall. Do you have any advice?
• We have been asked by our board to vote on rolling over excess funds into next year’s operations. We were told these funds would be subject to taxes if we did not roll them over. If the money is rolled into the next year’s budget, should not those funds be figured into calculating the new budget and possibly reduce what our monthly cost would otherwise be? Being a nonprofit association, should we not have the option to have the excess funds refunded to owners?
• A homeowner had a fire in his unit. He has not paid his association dues in several months since the fire, when he vacated his home. We sent him a letter stating that we would put a lien on his property. It was sent registered mail, return receipt requested. It was returned to us unopened. Can we start legal action when he has not signed for the letter?
• Our community has 105 single-family homes. Getting volunteers for directors, secretary and treasurer are difficult. I know that we cannot pay directors, but what is your opinion on paid volunteers for the duties needed in the community, short of hiring a management company? If we had a homeowner who was willing to act as treasurer or property manager, and the compensation was a reduction or elimination of that homeowner’s yearly dues, what are your thoughts?

Seattle Times (Elizabeth Rhodes)

• All the owners in our small condominium are older. What would we have to do to officially turn our building into an “over-55″ community?
• Our neighbor’s home has no downspouts, and his runoff has flooded his neighbors’ basements on both sides of him. He says Seattle city code doesn’t require him to have downspouts. (His house is older). Is there a specific city code for existing residences that addresses runoff? If so, who regulates and enforces it?
• How does the homeowners association operate when a building is a combination condo/hotel complex? My fear is that if the hotel owners have a majority stake in the association, they may run things contrary to the wishes of homeowners.

MarketWatch (Lew Sichelman)

• In mid-2006, my wife’s father passed away, leaving all his assets to be split evenly among his five adult children. One of these children, who is the executor of the estate, has neither contacted a lawyer nor begun any procedures to divide and distribute any of these assets.  Since then, one of these five and another family member have been living, rent-free, in the house, which is lien-free. The executor has been paying all recurring bills (e.g., utilities, taxes, etc.) with an account she shared with her father. I assume her father’s final tax return, if/when filed, will reflect property tax payments and various income from the 2006 tax year.  My question is: How will these estate-related expenses and income be viewed by the IRS in tax year 2007 and beyond? That is, who, if anyone, can/will claim the property taxes as a deduction and the income on bank accounts, CDs and an annuity? 
• In a recent article, you indicated that with condos you can deduct depreciation, repairs, upkeep, dues, interest and taxes as well as assessments for the care of the common areas. My condo has taken out a loan in order to replace building defects. We are paying for the interest on the loan with special assessments and an increase in maintenance fees. Are any of these deductible on either the state or federal levels? Where do you suggest I can find the special rules that apply to condominiums regarding what is and what is not deductible? Any guidance you can provide would be appreciated as I have never lived in a condo before, and as a senior citizen I do not know where to get these answers.

NY Times (Jay Romano)

• Is a landlord required to reimburse rent-stabilized tenants for the cost of parking in a private lot if the building’s rent-stabilized parking garage becomes temporarily unavailable for use?
• My one-bedroom apartment went off rent stabilization last year, and the landlord immediately raised the rent to $3,000. Now he says that unless I agree to a full kitchen and bath renovation — leaving me without plumbing for weeks and allowing him to raise the rent another several hundred dollars — he will not renew my lease. Since I’m no longer rent-stabilized, do I have any rights?

San Francisco Chronicle (Robert Griswold)

• I own a few rental condos. What are the pros and cons of allowing waterbeds in an upstairs unit? I’m not sure how much I like the idea, especially because I just installed new carpet and appliances in this older property. I would require the tenant to have renter’s insurance.  
• There are many large dogs (60 pounds and up) in the apartment complex where I live. However, the complex has a 35-pound pet limit, which it advertises on its Web site and which is included on the lease that all tenants sign. Many of the dogs are allowed to roam free on the grounds, which can be intimidating. When I signed my lease, I did so believing that the 35-pound limit was enforced. Had I known the complex was overrun with large, noisy and aggressive dogs, I would not have moved here. Management now says that the limit is not a hard and fast rule. Can I break my lease based on the fact that management refuses to enforce their own rules? 

Wall Street Journal (June Fletcher) 

• Could you please explain more about a short sale. I am stuck in my home with two mortgages and can’t get out. Please help. I cannot afford this house anymore and can’t work anymore due to health reasons.

Washington Post (Robert Bruss)

• My husband has a terminal illness. I wonder how long I have after he passes away to take advantage of his $250,000 principal-residence-sale tax exemption. We have owned our home for 30 years and have no mortgage but a lot of equity, thanks to market-value appreciation. I want to stay in the home for a while, but I don’t want to miss out on his exemption. 
•   What is meant by the real estate term “short sale”?
•   How can you recommend a reverse mortgage instead of a home-equity line of credit for a senior citizen homeowner? As a loan officer, I am often frustrated with your advice. I run my lines of credit for my clients at almost zero commission to myself. With fees of only about $175 including the appraisal, there isn’t room for much commission. Reverse mortgages should be outlawed. I will never do that type of mortgage for my clients. Reverse mortgages require mortgage insurance. The commissions I’ve seen are about four points. I am appalled. Seniors who have equity in their homes should do a cash-out refinance and have a financial adviser manage their money. This is the most cost-effective loan. And they get to keep their house. 
• About five years ago, when my 83-year-old dad started declining, his lawyer suggested that he give me a power of attorney. The form was witnessed and notarized. Dad has now been living in an assisted-living facility for six months and there is no chance he will ever return to his house. So I put the house on the market and sold it. However, the title insurance company refuses to honor my power-of-attorney form. The title officer says she must verify that my father really wants to sell his house and is not a victim of elder abuse. Because dad often doesn’t even recognize me when I come to visit him, there is no way he can understand that I need to sell his house to pay for his care. Meanwhile, the house buyer backed out. What should I do? 
• My wife and I purchased a renovated condominium last April. The settlement terms include our paying a city transfer tax and recording fees. We weren’t too pleased about that but decided to proceed with the purchase and are very happy. Are these expenses tax deductible the way property taxes are?
•   I have a house I have been trying to sell for almost a year. It’s not selling. What should I do? I am alone and running out of money.
• I recently bought a house. The seller or his real estate agent took all three sets of washers and dryers in this large house before I got the keys. I think the washers and dryers are fixtures, not to be removed by the seller or the agent. What can I do about this?
• About six months ago, I bought an upscale condominium. My neighbors are the nicest people and I love associating with them. However, the condo homeowner association is considering a special assessment to recarpet the hallways and refurbish the main entrance. Although the replacement reserves appear to be very adequate to take care of this expense, which I agree is needed on our 15-year-old building, the board of directors proposes assessing each owner $1,500 to $2,500, depending on the size of his or her condo. What irritates my neighbors and me is that we are not allowed to attend the monthly board meetings. We are allowed only to write letters to the directors and attend the annual meeting. Is this legal?
•   I am preparing for my annual visit with my accountant to discuss my tax situation on investment properties, which I have owned for many years. I was trying to verify at what tax rate I will be taxed for the depreciation I’ve deducted over the years. What is your perspective on this matter? Is the tax rate 15 or 25 percent?
• About a year ago, my elderly mother deeded to me her home and two rental properties I manage for her. Her lawyer handled the quitclaim deeds and the recordings. Mother died in October. When I talked to my mother’s tax accountant, he said, “It’s too bad your mother deeded the titles to you. If you had inherited those properties, you would have a new stepped-up basis of market value and you would owe practically zero tax if you sell them shortly after her death.” Is it true I don’t get a new stepped-up basis?
•   am considering buying a vacant lot on which I want to build a home. What assurances can I receive before the purchase that the building permits and site plans will be approved by the local authorities? I do not want to be stuck with a lot on which I cannot build.
•   I own two rental properties. Let’s call them A and B. I have never lived in either one, nor do I intend to. Let’s say I sell A and B on the same day and do an Internal Revenue Code 1031 tax-deferred Starker exchange by identifying and purchasing property C. Assume I rent property C for three years and then move in to make it my principal residence for two years. Then I sell property C. If the total capital gains on A, B and C are less than $500,000 (I am married and my wife would live with me in property C for at least two years), can I sell property C without owing any tax?
• During the December holidays, my son and daughter, along with their spouses and my three grandchildren, visited me at my home for several days. My daughter, a big-time New York lawyer, suggested I “consider” putting the title to my house and two investment properties into a living trust to avoid probate when I pass on. I am 86 and am in relatively good health, but death might not be too far away. When I explained I might want to sell or refinance my house, or perhaps get a reverse mortgage, she really didn’t have any good reason why I should consider a living trust. However, I don’t want to burden my daughter and son after I pass on (or become senile) with probate court. I saw what happened to a good friend of mine whose estate was tied up there for about four years. What do you think of living trusts?
• We had to move out of town on short notice because of a job promotion for my wife. Because I am self-employed, I can work almost anywhere. Her employer provided a superb relocation plan and we bought a new house within a few weeks. However, it has been about four months since we listed our old home for sale with a trusted real estate agent friend. When I was recently talking on the phone with another real estate agent, I asked for his opinion on why our home hadn’t sold. After he checked the local multiple listing service, he said our house isn’t even in the MLS. When I confronted our listing agent, she said, “We don’t like to put classic houses like yours in the MLS because it cheapens them.” I was shocked. Thankfully, our listing recently expired. Should we relist with the same agent or let the relocation company buy our house at a discounted price? 

Miami Herald (Richard White)

• Our board of directors has presented a budget that we believe is underfunded for our insurance. The board plans a special assessment for the down payment for the insurance bill, with the balance to be financed next year. The budget does not reflect future payments. Our board recently posted and convened a meeting where the agenda said it was a working session to discuss the budget. The posting notice indicated the membership may attend but input would not be taken or allowed. Are boards allowed meetings where a quorum is present and the membership is not allowed to speak on agenda items? 
• Can the board and members discuss items not on the agenda at meetings? We have members who will come to a meeting with new items to discuss.
• The president of my association had a meeting in closed session to discuss legal matters. I questioned the legality of the closed meeting and was told she did not feel that lot owners should be embarrassed by discussing their plight at a monthly board meeting. Our attorney said that it is appropriate to have a closed meeting so long as the topic of discussion is pending litigation. The attorney was not present and these issues did involve pending litigation. Does the attorney have to be present, or is it reasonable for our board to answer his questions about directions he should take for us on pending and proposed litigation in private?

Milwaukee Journal Sentinel (Thomas Musil)

• I know that California is a community property state; however, can you affirm if there is a full step-up cost basis on a property that remains with the surviving spouse, or if there is a 50% step up? Thanks for your help.
• In response to your recent article in the Orange County Register, I questioned whether it would be a good idea to hold real estate in an IRA and sell it during the life of the IRA so the gain would stay in the IRA. When any distributions are made from the IRA, the income is taxed as ordinary income. If you hold real estate as an investment outside of the IRA, any gain on the sale would be taxed at the federal capital gains rate of 15%. The gain for state purposes would be taxed as ordinary income. Is this correct? 
• I read your article about using a self-directed IRA to invest in real estate. Can any real estate property be purchased with a down payment from a self-directed IRA, or are there restrictions? I live in Silicon Valley and would be interested in using the funds as a down payment on a home nearby, which I would rent out. 

NY Times (Jay Romano)

• I am a condo owner in Manhattan. The building’s assistant superintendent installed a new air-conditioner in my apartment. Because the unit was tilted in, it leaked into the apartment and ruined part of the newly renovated wood floor. The board used to repair air-conditioner sleeves, but now the building manager tells me that the apartment owner is responsible. So who is really responsible for this? 
• In the Real Estate Q & A column on Feb. 4, a lawyer answered a question about interest on a security deposit. He said that a landlord is allowed to deduct from the interest earned on the deposit an “administrative expense” equal to 1 percent of the total amount on deposit. What happens, though, if the interest earned is less than 1 percent? Can the landlord deduct the difference from the security deposit itself?
• I live in a condominium complex where most units, but not all, come with a garage. The board is planning on levying a special assessment to replace the garages’ roofs. Are those of us who do not own garages responsible for this assessment, too?

Seattle Times (Elizabeth Rhodes)

• Each time the tenant in the condo below mine cooks, the odors enter my unit through the floor ventilation system. I would appreciate your opinion on who’s responsible for this problem — the tenant, the condo association or who?
• I’ve been led to believe that I need an attorney to help me evict a rental tenant, and attorneys want to charge me plenty to do it. Is there a process I can follow to do it myself?
• A couple of our neighbors have large amounts of debris in their yards, including some on the median between the sidewalk and the street. Much of it is from stalled construction projects. Requests that this debris be cleaned up haven’t been successful. I hate to escalate this, but it’s a blight on our entire Seattle neighborhood. Where can we turn?

MarketWatch (Lew Sichelman)

• In mid-2006, my wife’s father passed away, leaving all his assets to be split evenly among his five adult children. One of these children, who is the executor of the estate, has neither contacted a lawyer nor begun any procedures to divide and distribute any of these assets. Since then, one of these five and another family member have been living, rent-free, in the house, which is lien-free. The executor has been paying all recurring bills (e.g., utilities, taxes, etc.) with an account she shared with her father. I assume her father’s final tax return, if/when filed, will reflect property tax payments and various income from the 2006 tax year. My question is: How will these estate-related expenses and income be viewed by the IRS in tax year 2007 and beyond? That is, who, if anyone, can/will claim the property taxes as a deduction and the income on bank accounts, CDs and an annuity? 
• In a recent article, you indicated that with condos you can deduct depreciation, repairs, upkeep, dues, interest and taxes as well as assessments for the care of the common areas. My condo has taken out a loan in order to replace building defects. We are paying for the interest on the loan with special assessments and an increase in maintenance fees. Are any of these deductible on either the state or federal levels? Where do you suggest I can find the special rules that apply to condominiums regarding what is and what is not deductible? Any guidance you can provide would be appreciated as I have never lived in a condo before, and as a senior citizen I do not know where to get these answers.

San Francisco Chronicle (Robert Griswold)

• I own a single-family house that I am renting to a woman. Last week, when doing some requested maintenance, the tenant mentioned that water was overflowing from the roof onto the front porch. This is “the same problem as last year” was her comment. This is the first time she had mentioned this to me. The gutter was plugged and water had been running over the side of the flat roof onto the front porch. This excessive water had caused dry rot to form on the corner of the roof where the downspout is located, so obviously the problem had existed for some time. Also, the front door has been damaged by the water. Who is responsible for maintaining the downspouts, the tenant or the landlord? 
• I am a small-business owner and rent space in a local commercial building. I thought I read in your column recently that if a tenant requests a copy of the lease, a landlord has to provide one. Is this true?

Washington Post (Benny L. Kass)

• I want to buy a house that my parents own. It has a mortgage of $250,000 and has been appraised for $499,000. My parents want $200,000 out of it. Should I ask them to refinance and get the money they want, then just arrange to put the house in my name? Or should I buy the house and give them the money? I want to put an addition on the property and would like to have money to do this without stressing out financially.