Real Estate News Archive

Top draws at master-planned communities
Active lifestyle, walkability factor heavily into planning

Ilyce Glink
Inman News

There are walking trails, swimming pools and tennis courts. The landscape is well-maintained. If you didn't know better, you might think you were walking the grounds of a lovely resort.

If you ask Janet Heilman what she likes about Cinco Ranch, the Katy, Texas, community where she bought her first house 12 years ago, she'll tell you that the consistency of the community is the thing she loves the most. And, that there are good schools within walking distance.

Community is also very important to Michele Davis, who lives with her husband Joe and two children in FishHawk Ranch, in Tampa, Fla.

"It just had a feeling of kind of a small community," she said. "It is really convenient. We've got really nice grocery stores, drycleaners, coffee places and pizza places. It's not unusual for my husband and me to walk up to get dinner. There are concerts in the summer."

The big challenge in community design is creating something that will remain popular over time, planners say. It means following trends that emerge and mature and translating those into a design that works as the population evolves.

According to Robert McLeod, CEO of Newman Communities, in San Diego, says that leading a more active lifestyle has become one of the hottest housing trends, a trend that communities cannot afford to ignore.

"Hiking and biking trails are even bigger now. People also want active parks for ball games and outdoor play, and a lot of places to meet and greet (their friends), he explained. "I know when we've designed a lot of our interior trail systems, we include destinations. So you can walk down the trail a quarter of the way and then there's something there like an art object or a field of grass, where you can throw a Frisbee or play with your dog."

The idea of having a community center, a central building that acts as the center point for all activities in the community, has changed as well. McLeod says that people want smaller places to gather.

"They want places for their teenagers to hang out, and places for garden clubs and bridge clubs to hang out. In some of our communities, we've put in small movie theaters that seat maybe 30 people. Those have been really successful. Parents will bring their children for Saturday cartoons or the newest Disney movie. Guys like to get together to watch sports, and women have gotten together to have "chick flick night," he explained.

When thinking about community design trends for a huge, long-term development, you have to focus on long-term strategic planning, explains Robert Folzenlogen, director of Planning and Design for AllianceTexas, a 17,000-acre, master-planned, mixed-use development built by Hillwood Properties and located in north Texas.

Folzenlogen says he looks at the future trends of the market, the future political landscape, future infrastructure and land issues, and how the company needs to prepare for the continuing development of AllianceTexas.

"We see more people caring about the environment and wanting to do something right for the environment. The big component for the people we're trying to attract is the quality of materials from the buildings to the surroundings. Our future tenants also want to be part of a community and have the ability to walk to recreational retail and employment areas," he explained.

A future trend that is being closely watched at Pulte Home's Del Webb division is how active baby boomers are transitioning into very active seniors.

"We see a lot of active adults who are continuing to work. A lot more are working from home and longer in life. The integration of technology [into the home] has become very important to them. They want a chance to balance that with the recreational side of an early retirement," said Sam Colgan, president of Pulte Home's Phoenix west Valley Division.

Paying attention to future trends now allows communities to remain thriving as they age.

Good community design can solve a number of problems and give residents the opportunity to reinvent themselves.

"We have a lot of people who we sell homes to who say, 'I'm not a joiner or a club person. I like the golf course.'" And we check in with the same people many years later and they have a whole new group of friends. Their family status changes, but the social environment [of the community] allows them to continue on to the next stage of life," explains Colgan.

"It allows for the integration of the entire day in life of the resident. They're able to go from morning to night and engage in what they want to in and around the community," he adds.

When asked what life is like in Estrella, her community development in Phoenix, Jackie Lavin says, "It's like a dream come true. It's a small town, and homey. It has a rural feel due to the state land adjacent to us and acres and acres of walking and jogging paths."

She adds: "And the people are friendly, too."

To get even more valuable advice from Ilyce, visit her Personal Finance and Real Estate Center.

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Beamed ceilings needn't make life uncomfortable
Batt insulation, drywall can bring relief from temperature swings

Bill and Kevin Burnett
Inman News

Q: I have exposed 8-inch beams throughout the house and no attic. Is there some kind of attractive insulation I can put between the beams, not more than 4 inches thick, that will give me the maximum amount of insulation with the least thickness?

A: We don't know of any insulation that you can just tack up between the beams and have it look like anything but what it is -- cobbled together. But with a few more steps, we do have a good solution to give you much-needed insulation and an attractive ceiling.

Your description of 8-inch beams and no attic tells us that your house is probably one of the post-World War II homes built with beams for rafters, 2-by-6 tongue-and-groove Douglas fir for sheeting, and probably a built-up tar-and-gravel roof. The roof has probably been replaced with asphalt shingles, but the substrate remains the same.

Acres of these homes were built all over the San Francisco East Bay. An example is the Palma Ceia subdivision in Hayward, where street after street of semi-flat-top homes have covered the landscape since the 1950s.

To say these homes lack energy efficiency is an understatement. We're sure you cook in the summer and freeze in the winter. Insulating the ceiling will provide some relief.

There's no way we know of to economically get the R-38 ceiling insulation suggested for modern homes. But we can get you R-13. We recommend that you create bays between the beams to install batt insulation, then cover the newly insulated ceiling with drywall for a finished look. Here's how to go about it.

In this type of construction, beams are usually set every 4 feet, or 48 inches on center. There is no batt insulation that we know of that is this wide. Also, if you try to cover a 4-foot span with wallboard, it will bow. The solution is to create a series of 2-foot-wide bays to accept the insulation and to provide proper support for the drywall.

Install 2-by-4 blocking between the beams every 2 feet. Two-by-fours are 3 1/2 inches wide. Adding 1/2 inch of drywall reduces the reveal of the 8-inch beam to 4 inches -- enough to form an attractive pattern on the ceiling.

Start at the wall and nail a block between the beams. Measure 23 1/4 inches from the outside edge of the block and make a mark. Nail the next block on the mark between the beams. Measure 24 inches from the outside edge of the block you've just nailed and install the next block. Repeat the process until you reach the ridge. This pattern will ensure that the edge of an 8-foot length of drywall will get full purchase on a block.

Make sure to nail a block to the beam between each cross block to form a square. These act as a nailing strip so the drywall can be fastened to the ceiling on all edges.

With the blocking in place, install the insulation between the beams. Use a faced insulation and place the vapor barrier toward the living area. If you want to go green, environmentally friendly insulation made from blue denim is available. For more information on this product, check out links.sfgate.com/ZRR.

Next, install the drywall. Trim 8-foot sheets of drywall to fit between the beams. Use drywall screws to secure the drywall to the framing. Place screws every 6 inches on the edge and every 8 inches in the field. If you framed the blocking correctly, the edge of the drywall should cover only half of the last block. If it doesn't, just sister another block to the existing one so the edge of the drywall is fully supported. Tape, texture and paint the drywall and you're done.

We suggest you consider using a decorative molding where the wallboard and beams meet rather than trying to tape that small gap. Molding also eliminates the chance that a crack will develop where the beam meets the rock.

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Next foreclosure wave sparked by walkaway homeowners?
Some believe housing recovery is still years away

Tom Kelly
Inman News

Where's the bottom? Are Phoenix, Denver, Sacramento, South Florida and Las Vegas still in a tailspin? Is it time to make a run at a second home you felt you could never afford?

Perhaps we have been too driven and proud of the fact that 70 percent of all families in this country own their homes. In order to get there, lenders, real estate agents and consumers dipped into a "too easy" bucket where the value of ownership sunk to the same level of the cost of getting in the door -- zero.

Sadly, greed became confused with privilege. We are now feeling the results of too much credit being offered to poor or borderline borrowers, overeager investors betting on dreams of continued double-digit appreciation, and impassioned move-ups wanting more housing than they could realistically afford.

The housing specialist first to label and predict a "foreclosure tsunami" for several areas of the country now predicts another round of foreclosures by homeowners who can afford to make their payments yet choose to walk away from their homes. When and if they do in any significant volume, it could lead to a housing meltdown.

"Virtually everyone missed the fact that housing appreciation is far more powerful to keep people paying than the legal consequences of default," said Tom DiMercurio, a veteran of 38 years in the foreclosure business and former president of Fidelity National Asset Management Solutions. "For many folks in different states and different stages in their life, defaulting on their home loan makes economic sense."

DiMercurio was the brains behind BuyBankHomes, a site that provides foreclosure information to interested parties such as consumers, investors and real estate agents. He also started Denver-based The Mercury Alliance, which offers conventional REO sales, management services, plus Internet auctions, and Paradigm Default Services, an operational platform for lenders and real estate brokers.

A decade of cheap money and incredibly flexible loan programs offered by many lenders sparked overbuilding by lenders, a flip-and-run mindset for speculators, and unrealistic expectations for first-time home buyers blinded by the low payments of a short-term loan. While the equity gained by rising home prices can cover many ill-conceived loan mistakes, a flat or sinking market only compounds problems for lenders and owners.

Credit is now tighter and borrowers are being screened and actually scrutinized for the first time in years. Yet, given the developments of the past 15 months, the key to getting a critical flow back into the housing picture may mean revamping the entire once-conservative loan-qualifying process.

"I also believe, that given the size of the growing number of people that have been and are continuing to be foreclosed, there will be no growth in the number of home buyers/borrowers -- unless a foreclosure will be looked upon as a 'late,'" DiMercurio said. "In order to have any kind of loan growth in the future residential market, something less than even subprime credit must be made satisfactory to lenders. And it won't be easily substituted with down payment since values are also in the tank."

Values are not in the tank everywhere, but homes certainly are not rising quickly in value and they are taking longer to sell. Multiple listing service figures that show a drop in new listings must be filtered with the number of would-be sellers not wanting to compete in a slow or flat market.

Some sellers, especially those in some select second-home markets, continue to believe that they are in the driver's seat. A recent offer on a $739,000 home with three bedrooms and two baths in 1,440 square feet near Lake Tahoe did not even draw a counter from the seller when a potential buyer offered $669,000.

The buyer did his homework and made what he felt to be a generous offer. In seven sales in the immediate area from May 2007 through March 2008, the highest paid was $453 per square foot and the lowest price was approximately $370 per square foot. The buyer truly wanted the home and offered more than the highest price per square foot.

All real estate is regional. Blips and dips in one neighborhood can resemble a flat line just a few blocks away. But a return to a national "feel good" housing atmosphere likely is years away, not months. The components are varied and complex and certainly will not be sorted out this year. How is that even possible anyway when some people believe defaulting on your home loan makes economic sense?

To get even more valuable advice from Tom, visit his Second Home Center.

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Girlfriend may have claim to home in breakup
In common-law states, unmarried partners have unique rights

Ilyce Glink
Inman News

Q: My employer's son bought a house a few years ago and his name is the only one on the deed. He recently moved his girlfriend in with him. If she decides to leave after a few years, and her name is never put on the mortgage or the deed, can she legally take anything in the house that's not hers? Or, can she somehow get part of the value of the house if it is sold?

A: If her name is not on the title to the property and she has not contributed at all to the property financially, she does not own the property and should not be entitled to any portion of the proceeds if it is sold. But her rights might be affected by the state in which they live. If they live together long enough in some states, she can be considered his common-law wife and will have rights to the home.

Aside from the house itself, she may have some ownership interests in other things in the house. For example, if she bought a refrigerator for the house, she might well be entitled to take that with her when she moves. If she takes a faucet that came as part of the house, she is probably overstepping her bounds.

Please ask your employer to consult with a real estate attorney who can perhaps help his son explore his legal options.

Q: My husband took out a mortgage loan to buy our house after we married. He left me off the loan application because he said his credit was perfect and mine was not.

After the loan was processed, he said he would add my name to the deed by having me sign a "quick claim" so both of our names were on the deed rather than just his. We went to a title company and went through some paperwork and when I came across one titled "quitclaim" I asked what that meant because my husband called it a "quick" claim initially.

The title company representative who I was asking this of looked at my husband and my husband then interjected that this was the paper that would add my name to the deed and he had the name of it wrong. I again looked at the title company representative and he said, "Yes, that's correct."

I was a newlywed with an infant and considered myself happily married so I had no reason to not believe what I was being told. I signed it but have since been told that what I signed was a waiver to any interest in the property. My husband (now estranged) said first that he doesn't know why I had to sign that and then later that the mortgage company required it in order to process the loan. However, I signed it after the loan was a done deal.

If you could offer any clarification of what impact my signing that quitclaim has and what recourse I may have, I would greatly appreciate it.

A: The deed is called a "quitclaim" deed, not a "quick claim" deed -- although it's a common mistake people make. The purpose of a quitclaim deed is to transfer any ownership interest someone has in a property to someone else. I could quitclaim you the Sears Tower in Chicago -- except that I don't own it.

If your name wasn't originally put on the house, your husband might have executed a quitclaim deed to transfer ownership of the property from himself to the two of you. Or, if you actually owned the property to begin with (even if he told you that you didn't), you might have signed a quitclaim deed giving him your ownership interest in the property.

You say you were a newlywed with an infant when this occurred, but you should never have signed any legal document you didn't understand.

I don't know what document you signed. Do you have a copy of it? If the deed was recorded, you should be able to find it in the local registrar of deeds office and see what it says. Then, you should hire a real estate attorney to assist you in figuring out what you've done.

On the issue of the closing, it's not unusual to have a married couple or just one half of the couple (usually the one with better credit) apply for a loan. It is more common to have a husband and wife own a property together, but on occasion, only one of the spouses might be the sole owner of the property.

If you and your husband owned the property together and you subsequently refinanced the property, he might have tricked you into transferring your interest in the home to him at that closing.

That being said, if you were never an owner of the home, when your husband refinanced the home, the lender would have required you to waive your homestead rights to the property. That document would have been required by the lender for your husband to refinance the property.

But if he tricked you and had you sign over your ownership in the home to him and you are now having marital difficulties, you might want seek the advice of a divorce attorney who may be able to help you figure out what you've done and what you'll be entitled to if you and your spouse divorce.

At the very least you should have a better understanding of what your rights are under your circumstances particularly if your husband decides to sell the home and keep the money from the sale. You'll have a harder time finding the money than protecting your interests in the home should you decide to get divorced.

To get even more valuable advice from Ilyce, visit her Personal Finance and Real Estate Center.

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Do you trust inspector with gas appliances?
Some say only licensed contractors are qualified to find defects

Barry Stone
Inman News

Dear Barry,

This is not a question as much as a comment. You occasionally discuss how home inspectors inspect gas-burning fixtures. In my opinion, home inspectors are not qualified to inspect gas appliances -- period. Unless they hold the proper licenses to do actual work on those fixtures, they should not be inspecting water heaters, furnaces or other gas appliances. You would better serve your readers by advising them to use licensed contractors for inspections of gas-fueled equipment. That way, the person doing the inspection will have the necessary knowledge and the proper license to make educated evaluations and reliable recommendations. --Jay

Dear Jay,

If gas-burning fixtures should be inspected only by licensed plumbers and heating contractors, we will have to dismiss nearly all of the municipal building inspectors who inspect furnaces and water heaters on behalf of city, county and state building departments. Those building inspectors, the ones who give final approval for newly built homes, are code-certified, but very few are licensed plumbing or heating contractors.

Repair skills are not essential when searching for defects. A doctor need not be a surgeon to diagnose a disease. Likewise, a competent home inspector can identify mechanical problems, without the expertise to repair them.

A qualified home inspector who inspects furnaces, for example, should be able to recognize inadequate fire clearances for furnaces and flue pipes, improper gas line connections, irregularities in the color and pattern of a gas flame, rust damage in burner chambers, visible cracks in heater exchangers, inadequate combustion air supply, back-drafting of combustion exhaust, and much more. In some cases, home inspectors have identified defects that were overlooked by the contractors and the gas company technicians who serviced the equipment.

Home inspectors who take their profession seriously participate in ongoing education in all aspects of real estate inspection, including the evaluation of gas fixtures. The annual education conferences offered by national and state home inspection associations typically include seminars whose instructors are licensed heating contractors or experts from major gas companies.

Contractor licensing is appropriate for those who install and repair gas-burning fixtures, but it is not essential for those who inspect these systems for specific defects involving function and safety.

Dear Barry,

Last week, while house shopping, I attended an open house. The agent said there had been a home inspection but refused to show a copy of the report. If an inspection report had been done, wasn't the agent obligated to make it available for viewing? --Ed

Dear Ed,

If the sellers or their listing agent have a home inspection report for the property that is for sale, they would be foolish not to provide a copy to prospective buyers. Whether they are required to show a copy before the signing of a purchase contract is a matter that may vary from state to state. But refusing to show the report to prospective buyers is not a good way to build trust. In fact, it's downright bad salesmanship.

To write to Barry Stone, please visit him on the Web at www.housedetective.com.

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HUD aims to crack down on loan overcharges
Part 2: A new era of mortgage market reform

Jack Guttentag
Inman News

(This is Part 2 of a three-part series. Read Part 1, "Why good faith estimate needs overhaul.")

Last week I reported favorably on one part of HUD's current reform proposals. A new and substantially improved good faith estimate (GFE) would make it easier for borrowers to shop alternative loan providers (LPs). The proposed GFE along with new rules as to how it must be used will also eliminate critical weaknesses of the current GFE that encourage opportunistic pricing -- the practice of charging as much as you can get away with.

The current GFE is an open-ended list of settlement costs with no meaningful subtotals, encouraging lenders to invent new charges. Further, all of the charges on the current GFE are "estimates" subject to change, the only barrier to abuse being the "good faith" of the LP. In all too many cases, charges are raised in bad faith and there is nothing that HUD can do about it.

In the proposed GFE, settlement costs are divided into three categories. Category one includes all charges by the lender and mortgage broker, tabbed "Our Service Charge," and government recording and transfer charges. At settlement, these charges must be the same as those on the GFE. This rule is completely appropriate regarding lender's own charges; it is also long overdue. Charges by governmental entities are another matter, and my experience suggests that these charges belong in category two, where the LP has a little latitude.

The second category now consists of services provided by third parties who are selected or identified by the LP. The most important of these is title insurance. The total of such charges can be as much as 10 percent higher at settlement than the total shown on the new GFE. This limit is better than no limit, but it doesn't touch the dysfunctional system that makes third-party settlement services far more costly than they should be. I comment on this further below.

The third category consists of services that the borrower has elected to shop among service providers not selected or identified by the LP. It includes homeowners insurance, which borrowers typically purchase on their own, and it can include title insurance if the borrower solicits title agencies on his own. These charges are not subject to any limits on price increases. This is a reasonable exemption.

To help borrowers police their own transactions, HUD has proposed to change the HUD-1 closing document so that it corresponds closely with the new GFE. It will then be easy for borrowers to compare the final charges on the HUD-1 with those on the GFE. Good idea.

HUD also intends to seek authority to require that the HUD-1 form be made available three days before closing, rather than one day, which is the current requirement. Another good idea, but they ought to include the mortgage note in this requirement. There is no excuse for forcing borrowers to confront a complicated contract for the first time at the closing table.

The most disappointing part of the proposed new GFE is that it leaves untouched the odious network of relationships between loan providers and third-party service providers, which raise the cost of these services to borrowers. Mandating that a title charge of $1,000 on the GFE can't be more than $1,100 on the HUD-1 closing document doesn't accomplish much if the charge ought to be $300.

While it is not possible to know what the charge would be in a properly functioning competitive market, we do know that the perversely competitive markets we have now encourage high prices. Competition is perverse when service providers market not to purchasers but to the entities who refer the purchasers to them. The LPs who refer mortgage borrowers to third-party service providers share in the overcharges -- sometimes legally, sometimes not.

The remedy is well-known and well-tested. It is to require lenders to pay for all services that they require from borrowers. If lenders want title protection, they should buy it and pay for it, passing the cost to borrowers in the rate and points. The cost passed through will be a small fraction of what borrowers pay now, as lenders are large and knowledgeable purchasers who can buy in bulk.

This is not a pie-in-the-sky idea. Indeed, since Bank of America adopted it last year, it can be viewed as an industry "best practice." Yet HUD, despite its legal mandate to lower settlement costs, ignores it. If this reflects HUD's concern that they will receive no support, they are surely mistaken. If it were placed on the table, community groups would have to support it. How could they not?

To be sure, the mortgage bankers would oppose the idea because trade groups can't advocate best practices without alienating a major segment of their membership. But the fact that a leading lender has adopted it voluntarily and successfully will make it difficult for them to argue that the market will collapse.

Next week: How broker charges are handled in the new GFE.

The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.

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Pest repairs are turnoff for buyers
If sellers can't fix problems, list price should come down

Dian Hymer
Inman News

In a perfect world, houses wouldn't deteriorate over time. In reality, the wear begins as soon as a house is built. Older houses tend to have more maintenance issues. But, even new homes can develop problems within a few years if they were poorly constructed.

Most homes are inspected for damage caused by wood pests -- such as dry rot, termites, fungus, decay and wood-boring beetles -- before they are sold. Who pays to correct the damage -- buyer or seller -- is often subject to negotiation.

In a hot seller's market with a high percentage of multiple offers, buyers frequently buy "as is" regarding known defects to better their chances. This was common several years ago when home prices were rising rapidly. At that time, owning a home was more important than the condition of the property.

One problem with buying "as is" with respect to pest work is that it's easy to overlook the fact that the work needs to be done. Many buyers who bought "as is" in recent years have not taken care of the pest repairs.

These buyers who are trying to sell in today's market may find they have less equity than they thought they had. Not only have home prices declined in many areas recently, but today's home buyers are unlikely to buy "as is" regarding a large pest bill that was passed on from the previous owner.

HOUSE HUNTING TIP: In soft markets, buyers are more prone to factor in the cost of curing deferred maintenance into their price. Ideally, sellers should have pest work done before they put their homes on the market. This removes the need for negotiation over pest repairs. Plus, the houses in the best condition that are priced right for the market are the ones that sell.

It's not always possible for sellers to have pest work done before marketing their homes, either due to shortage of time or funds. In this case, make sure that you have presale inspection reports done before you market the property and price it to take into account the cost of the repair work.

Also, you should make every effort to have the house looking as good as possible. In a soft market, sellers have a lot of competition from other sellers. Even if you can't replace a shower or a rotted mudsill before you market the property, at least have it showing at its best. This will get buyers interested in the property, particularly if the list price reflects the work that needs to be done.

There is nothing wrong with buying a property in its "as is" condition as long as you have complete knowledge of the work that needs to be done. But, it is essential that you factor in the cost of the necessary work and ongoing maintenance. Many buyers overlook this and later discover that they can't afford to continue to own their home.

It's rare that every item on a pest report needs to be done immediately. But, at some point the deferred maintenance needs to be corrected.

Ask your inspector to prioritize the items on the report in terms of urgency level. A deck that's rotted to the point that it's unsafe should be replaced as soon as possible. However, if the bathroom floor needs replacing, but poses no danger, you might want to hold off having this work done until you remodel the entire bathroom, if that is in your game plan.

THE CLOSING: In fact, in this case, replacing the floor would be a waste of money.

Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.

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Facing foreclosure: When must I move out?
Answer depends on whether home sells to new party

Benny Kass
Inman News

DEAR BENNY: I am one of the unfortunate who has to deal with eventual foreclosure. Can you tell me how long I can remain in my home until legally having to vacate? --Constance

DEAR CONSTANCE: Before the foreclose takes place, please talk to your lender -- and not just a low-level loan officer but someone high in the company. With all the foreclosures taking place throughout the country, lenders (at least the legitimate ones) do not want yet another foreclosure on their books. If no one buys at the foreclosure sale, the lender will be stuck with the house and will have to pay real estate taxes and insurance.

Also, check with your county and state governments. Many governments now have programs to assist borrowers who are in trouble, so you may be able to save your house.

How long do you have to stay in the house if it is foreclosed? Technically, you have to move out when the house is sold. But again, talk with your lender. They may be willing to let you stay for a period of time, if you can pay some rent. Lenders do not want houses to be vacant.

If the home is scheduled for foreclosure, I would attend that sale. Find out who bought it -- it may be the lender itself if no one bids. Then discuss your situation with the buyer; once again, you may be able to strike a deal with that buyer.

To my knowledge, although you have to move out, it has been my experience that many homeowners whose property has been foreclosed upon just stay in the house until eviction proceedings are brought, and then they move out.

DEAR BENNY: I live in North Carolina and my neighbor recently planted trees, two of which are on my property. Where do I stand? --Brian

DEAR BRIAN: I can't give you advice about North Carolina law because I don't practice law in that state. However, I suggest that you arrange to have a survey made of your property so that you will know exactly where your property line is. If your neighbor's trees are even one inch on your property, I would try to meet with your neighbor and discuss the situation with him or her. Be friendly; perhaps you can invite the neighbor over for coffee.

If the trees are on your property, you have the absolute right to demand that they be removed. If you do not object to those trees, then perhaps you can reach an agreement that the neighbor will maintain the trees. And while it may be a very small amount of money, you may want to ask your neighbor to pay the percentage of your real estate tax on which the trees stand on your property.

Finally, depending on your own state law, so long as you will not injure anyone or cause any property damage, you should have the right to cut down the trees if they are on your property.

DEAR BENNY: I'm a 66-year-old female living in California. I'm divorced and own three homes -- two rentals and one primary residence. I plan to leave my children an equal interest in my real estate holdings upon my demise. I do not have any other investments, savings, IRAs or holdings worth mentioning.

I need to generate a living trust, but keep postponing it due to the cost. I ran a search online and saw that one can order the necessary paperwork for the price of $149. I am a Realtor (retired) and would be able to obtain prelims on my properties myself.

What do you think? Would it be binding? --Marianne

DEAR MARIANNE: I cannot recommend that you use what is generally referred to as "off the shelf" legal documents that you can get on the Internet. These documents are general in nature, and may not be specific for your needs.

Since you have the ability to assist a lawyer, I am sure that you can negotiate the attorney's fee. But I strongly recommend that you consult a local attorney who understands real estate and living trusts.

DEAR BENNY: I presently have a Starker (Section 1031) exchange with my brothers invested in a rental property. We had this set up for about five years. If we sell the whole property, can it be divided into three shares with each one of us owning one share for another exchange? It is hard to work with three owners when we live in different areas of the country. --Marilyn

DEAR MARILYN: If the property is in the name of a partnership -- instead of in your three individual names -- then when the property is sold, you either have to pay the appropriate capital gains tax or do another exchange. The new property (called the replacement property) must be in the name of the partnership.

If, on the other hand, the property is titled in your individual names, then when it is sold, each of you has the right to enter into another exchange on your own (or pay the tax and keep the balance of one-third of the sales proceeds).

If the property is in the name of a partnership, here's a tip: In the year before the property is sold, formally dissolve the partnership and put the property in the name of the three of you. Then, next year, you each have the right to do with your one-third as you so desire.

DEAR BENNY: I purchased a townhouse in my brother's name until I resolved my financial difficulties. He already owns several properties. I am not really benefitting from this transaction. My intent is to have him transfer ownership to me this summer.

How do I get my name on the deed and the mortgage? --Janet

DEAR JANET: Your brother will have to deed the property to you. You and your brother will have to explain the situation with the current mortgage lender. They may be willing to allow you to assume the obligations of that mortgage, and they may also release your brother from his obligations.

Much depends on the lender and the kind of loan currently on the house. If it was an ARM (adjustable-rate mortgage), the lender may be willing to cooperate with you. On the other hand, if the existing mortgage contains a lower rate of interest than is currently available, the lender will probably not allow you to take it over.

If you have cleared up your credit, and can qualify for a mortgage on your own, then it may all work out alright. If you are unable to qualify, ask your brother if he will guarantee the loan. This may convince the lender to allow the transaction to take place.

But your brother should consult a tax accountant to determine any tax consequences he may have when he transfers the property to you.

DEAR BENNY: My tenants are divorcing. I received a 30-day notice from the husband. His spouse was not part of the 30-day notice. She would like to continue renting the property. My concern is that she does not have a job, and will be able to afford the rent only from monies received from spousal or child support. Her mother (who lives out of state) has offered to cover the rent if this becomes necessary. What should I do: create a new month-to-month tenancy? Who would be named? What precautions should I take? --Monica

DEAR MONICA: I would recommend that you enter into a new lease with both the current tenant and the mother named as the tenants. Make sure that the lease states that the tenants are "jointly and severally" responsible for paying the rent. This means that each tenant is legally obligated to pay the full monthly rent.

How long a term should you have? That really depends on you. If you think that the tenant will take good care of the house -- and that with the assistance of her mother, the rent will be paid timely -- then why not consider a year's lease? The mother may be concerned that a month-to-month is too short a period of time.

DEAR BENNY: Are title examination and loan origination fees legitimate or just junk fees? --Lee

DEAR LEE: There are some consumers who believe that most, if not all, of the lender's charges are "junk" fees, which means that they are not necessary for the settlement (escrow) process, but are primarily used to increase the lender's profits.

For years, lenders would charge between $50 and $75 for a credit search. As a result of litigation on this matter -- and the fact that everyone can get a free credit report at least once a year -- lenders now charge a lot less for the credit search.

Loan origination fees are, in my opinion, junk fees. But in most cases, if you want to get a loan, you will have to pay this to the lender. You should try to negotiate this fee as well as all other charges when you begin the loan application process.

The title examination, on the other hand, is legitimate. The mortgage lender is going to give you a large sum of money and wants to make sure that your house will serve as good collateral to secure the loan. You will sign a deed of trust (the mortgage document), which will be recorded among the land records in the county where the house is located. This document gives the lender the right to foreclose on the house if you cannot make the monthly payments. But if there are other lenders -- or other clouds such as tax liens or mechanic's liens -- on title, the new lender will not have the security that it needs. So a title search must be obtained to satisfy the new lender that it will be in first position against your house.

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com.

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Help me, father, for I have sinned
Will transferring condo title shield property from lawsuits?

Ilyce Glink
Co-written by Samuel J. Tamkin
Inman News

Q: When I was 22, my father purchased a condominium for me. He put it in both of our names. After approximately five years, he paid it off in full.

I have recently been sued both corporately and personally. Approximately one month prior to being served, my father wanted my name off of the property, so I filed a quitclaim deed to remove myself from the property and give him full ownership.

A month prior to the hearing, a pending lien was placed on the property by the plaintiff. A final judgment was awarded to the plaintiff, who has stated that he intends to proceed with post-judgment efforts, which include filing a motion to go after the condominium now owned by my father. Is this possible?

A: It is absolutely possible. You owned a property with your father. It can be assumed that you owned one-half of the condominium. When you were sued the plaintiff put a "lis pendens" on the condominium. That is a notice to all that the property you own is subject to possible action due to continuing litigation.

That notice meant that any subsequent owner of the property would take title subject to that litigation. If the litigation were successful, any subsequent owner might lose the property depending on the judgment awarded and the value of the condominium.

In your case, you tried to transfer your interest to your father, who paid for the property, thinking that you could shield it from the judgment levied against you. Unfortunately, now that your father owns your half, he could lose that half to the plaintiff in your litigation.

Much more fundamental to your case is the fact that you probably transferred your one-half interest in the condominium to your father without your father paying you for your interest and with your father probably having knowledge of your litigation problems.

When a debtor -- that would be you -- transfers an interest in property to another person without getting paid, your transfer could be said to be a fraudulent conveyance. Most states recognize that a creditor has the right to go after a debtor's assets for debts he or she owes the creditor. If the debtor disposes of his assets to prevent the creditor from getting to them, the law protects the creditor. Those fraudulent conveyance laws would say that the debtor's transfer of an asset to avoid the grasp of a creditor should be taken away from the person that received them.

Since your father did not pay you for your share of the condominium, when you transferred your share of the condominium to him and received nothing in return, it may be construed by the courts that you were trying to defraud the creditor.

If your father had paid you money for your share and that payment was what you would have received if you had sold your share to a stranger in a good-faith transaction, the transfer would not have been fraudulent. However, the cash you received from the sale would then have to be paid to those named in the judgment.

In your case, even if your father had paid you, the litigation notice had already been placed on the property and it was too late to sell the property without adverse consequences once you lost your case.

The only way your father might prevail in his case against the plaintiff is to prove that your name was on title in name only but that your interest in the condominium was minimal. Since you were on title, you had to have owned something. Generally if you own real estate as joint tenants, you and the other tenants are deemed to own the property in equal shares. The question would then be whether you owned the property in equal shares or not.

If you did not own the property in equal shares, you would need to have some documentation to prove your ownership stake in the property. That would be your share that would be lost to the plaintiff. If you can't prove that you owned something less than the presumptive one-half share, that one-half interest is at risk.

The plaintiff can attempt to have the half interest sold or force your father to pay them off to clear the title.

You would be wise to talk to an attorney about your situation.

To get even more valuable advice from Ilyce, visit her Personal Finance and Real Estate Center.

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Are architects becoming lazy?
Designs today seem inferior to 1920s revival styles

Arrol Gellner
Inman News

In 19th century America, the only way an architect could view historic architecture was to go see it firsthand (usually on another continent), or else find engravings of it in books. Because architects of the era were much less likely to travel than their modern counterparts, engravings ended up being their usual reference. Mind you, the engraver unavoidably put his or her own spin on the thing they were illustrating, and this subjectivity, along with a frequent lack of historic context, made it hard for architects to get a real grasp of historic styles -- one reason for the almost cartoonish nature of so much Victorian architecture.

All this changed in the 1890s with the introduction of the halftone process, which used thousands of tiny, variously sized dots to reproduce the full tonal range of actual photographs. For the first time, photos could be faithfully reproduced in mass publications such as magazines and newspapers, without the subjective distortions of the engraver.

The National Geographic was among the first magazines to replace line engravings with halftone photographs, but architectural journals were also fairly quick to make use of the new process. As early as 1898, The American Architect and Building News published a popular series on Colonial architecture. After World War I, when many mainstream architects and builders became smitten with Europe's vernacular architecture, photo features of historic architecture began going further afield.

By the 1920s, architects were routinely referring to trade journals packed with photographs of European vernacular buildings, whether English, Spanish or French. In 1926, Architecture magazine began a regular series of portfolios featuring authentic renditions of traditional European vernacular details such as iron railing, garden pools and window grilles. Spurred by such information, architects explored increasingly exotic styles, whether Moorish, Indian or North African.

The Depression and the advent of World War II put an end to America's (fascination) with European and exotic architecture, and for the next half a century, trade journals instead published equally influential photo spreads on what they presumed to be the future of architecture: Modernism.

Ironically, while traditional detailing is once again all the rage, modern renditions of historic styles -- or for that matter, copies of 1920s revival styles, which were themselves copies -- seem both less erudite and less charming than the originals. Decorative features such as columns, arches and moldings are misused, overused or carelessly thrown together in ways old-time practitioners would have found laughable. This problem is merely troubling in modest tract houses, but epidemic in expensive custom homes, whose larded-on detailing is at once overblown, graceless and clumsily proportioned -- much closer to Victorian-era pastiche than to the refined revival styles of the 1920s and 30s.

Despite the blizzard of information to be had on the Internet, we architects seem to have a much lazier grasp of traditional design than did our predecessors. Today's brand of pastiche strains to evoke the easy charm of tradition, but more often the result is plain old bedlam. It's a far cry from our colleagues of the 1920s, who composed their "informal" designs with utmost care, and who always kept an eye on their faithful photographs.

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Backyard deck a perfect DIY project
Tips for improving structural integrity, aesthetics

Paul Bianchina
Inman News

Building a deck remains one of those perennial favorite projects. A well-built deck definitely adds to the enjoyment of your home, while also adding resale value. With a few carpentry skills and tools, the construction of a basic -- or even not so basic -- deck is something that's well within the reach of most do-it-yourselfers. And there's something about that combination of fresh air and fresh sawdust that's irresistible!

Every deck, no matter the size, style or complexity, consists of two basic components -- the underframing (including the foundation) and the decking. If the deck sits up off the ground very much, you can add two additional components as well -- a railing and a set of stairs.

As with any home improvement project, construction begins on paper. Whether you do the design yourself or enlist the aid of a designer, lumberyard or home center, the design needs to incorporate all of the structural elements such as the size and layout of the support piers and framing lumber. If your deck will have stairs and a railing, that design should be included as well.

FOUNDATION AND UNDERFRAMING
This is the structure that supports and braces the load of the deck and its occupants, and while it's rarely seen, it's actually the most important part of the entire structure. Due to its location, where it's in close proximity to the ground and also subject to water runoff from the deck above, pressure-treated lumber is typically the best choice for this part of the project.

Typically, construction of the deck begins with the layout, digging, and pouring of the concrete piers or footings that will support the deck. Smaller decks can often utilize precast pier blocks, while larger decks may require piers that are sunk into the ground to a depth below the frost line. Galvanized steel brackets imbedded in the concrete provide a convenient and stable attachment point for the transition from the concrete to the faming lumber.

If the deck is attached to the house, the next step is installation of the ledger. The ledger provides an attachment to the house, and serves as the starting point for the deck framing. A ledger is typically made of the same size and type of material as the deck framing, and it's important that it be securely bolted to the house's structural framing.

It's also important that the ledger be level and at the correct height, depending on where the finished deck will be in relation to the house. For example, if you will be stepping out a door and directly onto the deck, the ledger should be located at a distance below the door that is equal to the thickness of the decking material you'll be using.

Using the ledger as a reference point, the rest of the framing takes off from there. Using string lines, a laser level or other means to establish their location in relation to the ledger, the support girders are installed next. The girders are supported by posts attached to the piers, and are installed perpendicular to the direction of the joists.

The final underframing step is the installation of the joists. These are installed perpendicular to the direction that the decking boards will run, and rest on top of the girders. They are also attached to the ledger at one end. Since the decking is typically installed parallel to the house, that means that the joists would be perpendicular to the house, intersecting the ledger at a 90-degree angle. Galvanized steel joist hangers are the most common method for attachment and support of the ends of the joists where they meet the ledger. Depending on the size of the deck, blocking and/or bracing may be required as well.

If your deck is freestanding and is not attached to the house, the overall construction process is pretty much the same. However, since a freestanding deck lacks the rigidity of the house to anchor one side, it often requires some additional bracing to stabilize the framing.

DECKING
With the basic framing complete, you can now move on to the installation of the deck boards, which are laid perpendicular to the joists. The most common attachment method is to screw down through the board into the joist below -- don't use nails, which have more of a tendency to work loose as the framing dries out. If you would prefer not to see the screw heads, there are several different methods of concealed fastener installation -- check with your designer or a local lumberyard for options that will work best for your particular deck design.

For the best appearance, use the longest boards possible so that you can eliminate some of the end-to-end joints. For example, on a 16-foot deck it's preferable to use 16-foot boards instead of two 8-foot boards. If the deck is large enough that joints are required, stagger them between successive rows by a minimum of two joists. For example, a 24-foot deck might start with a row of two 12-foot boards, followed by a row made up of three 8-foot boards. This will look better and be a little more stable than a row with one 10-foot and one 14-foot board.

Remodeling and repair questions? E-mail Paul at paulbianchina@inman.com.

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Avoid probate with TOD deed
Arrangement available in select states

Ilyce Glink
Inman News

Q: I am single, age 70. The only "individual" asset I have in my name is my condo in Florida, which is my principal residence.

In order to avoid this asset going through probate at my demise, may I record a new deed titled as follows: "Mary J. Smith, TOD (Transfer on Death) to Mark R. Smith (son)"? I have executed stock and other assets titled as above, thus avoiding probate. Thank you in advance.

A: There are currently nine states that permit a TOD deed, also known as a beneficiary deed, to be recorded for a piece of real estate: Arizona, Arkansas, Colorado, Kansas, Mississippi, Nevada, Ohio and Wisconsin.

In these states, you can record a TOD deed that names your heir as the grantee (the owner of the property is the grantor) upon your death. You would record the deed just as you'd record a regular deed. Your heir would need a death certificate and, in some states, an affidavit, in order to complete the transfer of ownership.

The big savings: You don't have to go through probate.

You can revoke or amend the TOD deed at any time without consulting the grantee and the grantee, since he or she doesn't own the house until your death, has no ability to borrow against the property or have it attached in a bankruptcy, for example.

And if there is an outstanding mortgage on the property, it would be transferred into the grantee name upon your death.

Since you live in Florida, I don't believe you can execute a TOD deed in order to avoid probate on the property. But if you wish, you can set up a living trust that would accomplish the same thing. In addition to being able to place your home into the trust, you could also place any other assets you own into that trust.

Normally, the trust would allow you to revoke the designation and you could take the assets out of the trust if you wished. But the trust would allow you to hold bank accounts, your home and even stock in the name of the trust. Upon your death, those items would stay in the trust, but the new beneficiary would be your son. He could then sell or use those items held in the trust and he would avoid the cost of probate.

Essentially, you'd transfer the property into the name of the trust, and name your heir as the successor beneficiary of the trust upon your death.

For more details, please consult with an estate attorney.

Q: My 88-year-old aunt died recently. She was best friends all her life with her 91-year-old sister. She told her sister numerous times that if anything happened to her that she wanted her to have her house along with her surviving brother.

After her death, my aunt's estate was settled and the house was sold. Upon researching the deed for the sale it was discovered that the brother who preceded my aunt in death was also on the deed.

The house proceeds were divided into thirds and the third portion wound up in the hands of my aunt's sister-in-law (her late brother's wife). My aunt never intended her to get any of the proceeds.

Would there have been anyway to reverse the deed and have the will override it?

A: I suspect that the answer is "no." Whoever is named on the deed is an owner of the house. A will would dictate only what is to be done with the property that is owned by an individual, in this case, your aunt. The fact that years earlier someone put your uncle on the deed to the house meant that your aunt's will would serve only to distribute her share of the property after her death.

While I don't think there is much you can do now, your situation is a good example for those who don't believe it's necessary to make sure their estate is organized and tidy. If you don't plan out your estate, little things can disrupt the best of intentions. This is particularly important if you have minor children or older relatives who are dependant upon you for support.

For more details, please consult with an estate attorney.

To get even more valuable advice from Ilyce, visit her Personal Finance and Real Estate Center.

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Making repairs shouldn't be tenant's job
Landlord wrong to think setup will save money

Robert Griswold
Inman News

Q: I have four small rental homes that are older and are really starting to show signs of wear and tear. I am constantly receiving calls from my tenants about something that is broken or needs to be replaced. This is getting expensive and is cutting into my cash flow that I need to pay my own living expenses.

So a friend of mine said he read a book on property management that suggested requiring the tenants to handle all repairs as part of their lease. This sounds great so I was thinking that I would send my tenants a written notice advising them that when they renew their lease I am no longer going to be responsible for the upkeep and repair of the air conditioners, gas heaters, or any of the kitchen appliances. They will accept them in "as is" condition, and the tenant will pay for all repairs or replacement if they break. What do you think about my idea?

A: If it sounds too good to be true, it probably is too good to be true. I would strongly advise against such a policy and recommend that you retain control of all repairs for all building systems and appliances. Do not be short-sighted even though it may increase your upfront out-of-pocket costs of maintaining your rental homes. The "savings" you think you will achieve are not real. I would expect that many tenants will not perform any preventive maintenance or pay for any professional contractor to properly maintain the air conditioner, gas heater and appliances. They don't own this equipment and most likely will do nothing at all until they break and then they will do the minimum to keep them barely functional or they may consider buying "used" equipment as replacements. Even if you had a tenant who was willing to agree to handling the maintenance and repairs he or she would consider it only for a reduction in the rental rate below the going market rental value of the property. So you don't really save anything.

I firmly believe that while the tenants need to be diligent to alert their landlord or property manager to building systems that need attention, the landlord should be responsible for the inspection and maintenance or replacement of all components of the rental property. I am aware that some property management authors and "experts" make these suggestions to sell books. One that I have seen is something along the lines of including a clause in the lease that says "tenants are responsible for all repairs under $50." This is not what I suggest and there are many liability problems that can occur if the tenant does not properly maintain the premises or gets hurt doing their own repairs.

I suggest you don't delegate the proper servicing and maintenance of any building systems, and that you consider increasing your rental rates if possible to cover the additional expenses and always retain control of your property.

Q: While on vacation, a tenant arranged for a friend to care for his cat. While in the apartment, his friend left the top door of his refrigerator open, causing the freezer to defrost. The leaking water flooded the apartment and eventually traveled through the subfloor and emerged in the kitchen ceiling of a lower apartment. The damage was so great that the ceiling had to be removed, replaced and repainted. In addition, the cat was allowed to escape from his apartment and defecated on the common-area carpet. There is a standard month-to-month lease in effect, requiring that the tenant be liable for damages caused by a guest or invitee. Who is responsible for the damages?

A: Based on your description of the facts it seems pretty clear that the tenant would be responsible for the damages caused by the negligence of his friend. It sounds like the damage is significant so the tenant should make a claim to his renter's insurance carrier. You, the landlord, should also file a claim with your insurance carrier so that the repairs can be done right away and then your insurance can subrogate the paid claim with the tenant's insurance policy or directly pursue reimbursement from the tenant if he is uninsured. Be sure to keep detailed written records of the costs of the repairs and photos of the damage in case the tenant or his insurance carrier disputes the claim.

This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of "Property Management for Dummies" and co-author of "Real Estate Investing for Dummies."

E-mail your questions to Rental Q&A at rgriswold.inman@retodayradio.com.

Questions should be brief and cannot be answered individually.

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Don't risk your security deposit
How renters can ensure full refund upon move-out

Helene Lesel
Inman News

Q: I'm planning to move into a new place next week and the landlord is taking a hefty deposit. Any suggestions on getting it back when I move?

A: Deposits are always a concern for renters, especially with higher rents raising the bar on deposits. To ensure that your monies are returned, it's important to know what to do before, during and at the close of the tenancy to safeguard your investment.

First, know the condition and inventory of what you're renting. Before taking possession of the property, complete a walkthrough of the property preferably while still vacant. An excellent checklist is available free from the California Department of Consumer Affairs Web site; select "inventory checklist" from the menu. The site offers excellent advice and how-tos any renter can appreciate.

When filling out the inventory checklist, you'll need more than a pen; bring along a clipboard, blank paper, ruler, tape measure and a camera to detail the items listed. Besides documenting conditions, it's good to know the size of any damage, such as a chip in the bathtub enamel. Be sure to ask the landlord what items are new or redone in the unit, especially flooring, paint and fixtures. New appliances should be noted on the sheet, too.

When filling out the form, understand the top deductions and how to avoid them. While cleaning fees and unpaid rent are common, there are larger expenses to be wary of.

Biggest deduction winners? "Well, I know this is a shock, but alas, it would be carpeting," explains property manager Jim Silton, who handles approximately 400 properties in Los Angeles. It's important to do more than just "check the box," as a single bleach stain or worn carpet could cost you hundreds or even thousands of dollars. If it looks like new carpeting, ask. If it's not new, note the existing condition. "Sometimes a landlord will charge a higher amount for replacement of carpeting, not taking into account its useful life," Silton notes.

Other types of flooring, such as hardwood, tile and linoleum should also be scrutinized. Because flooring covers a large area and cannot always be matched, protecting your security deposit requires knowing what you stepped into and protecting them during your tenancy.

Another ding to avoid is painting. Costs have grown over the years, especially with the higher expense of lead-free paint and materials. Once again, a single stain or large nail hole may signal the need for a wall or entire room to be painted. If you're moving in and there are pre-existing nail holes, stains or markings, a photo alone may not do it justice. Draw a simple sketch of the room's floor plan and indicate with an "x" the damage location and type to correspond to the photo. Sounds crazy, but a few extra moments could save you a bucket of cash.

Appliances can be expensive to fix or repair, and should not be on your tab if you rented them dented, chipped or broken. Since it's impossible to run every appliance at move-in, note if there's a problem when used. If the dishwasher leaks all over the floor, reporting it promptly in writing to the landlord can keep you from getting soaked financially.

Mold and mildew? Look under the sink and around water sources, such as around a tub or shower for discoloration. If the place had water leaks that caused the mold to form, that's not your fault. Failing to report it promptly during your tenancy is another story. Report leaks promptly before damage is done.

Countertops and sinks? Look for chips, stains and discolorations, especially around the edges and faucet.

Watch out for rare or hard to replace items that are very expensive to compensate for. Some properties may include one-of-a-kind features such as chandeliers, bookcases or custom materials that need special care. Rather than quibble over their condition or value, ask the landlord to detail the hard-to-define items. Custom paint colors are also a red flag, since they rarely can be matched if tampered with.

Once your checklist has been meticulously completed, and hopefully approved by the manager or landlord, be sure to file documents with your rental paperwork.

A few weeks prior to move-out, you can dust off the list and do a "before and after" evaluation. In some states, landlords are compelled by law to offer a pre-move-out walkthrough a few weeks before move-out. Wherever you live, it's worth asking the landlord for a stroll. Using your finely tuned checklist should help keep the landlord from stalling or even keeping your deposit.

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$3,000 deposit should've been red flag
Rent it Right

Janet Portman
Inman News

Q: My daughter will be a college senior next year and plans to live off campus. Most of the rental properties near the college are expensive and owned by landlords who are reportedly very unscrupulous; they supposedly do not take good care of their rental properties or handle tenant complaints fairly. My daughter wants to live in one of those properties (a large rental house that's big enough for her and seven other girls from her sorority).

The landlord wants a $3,000 deposit from each of the eight girls. When I visited the house, the current renters said they had wanted to stay another year but were being kicked out. They've heard that the owner always keeps the total security deposit, regardless of the condition of the place, and rents to a different group every year. Can you tell me anything we can do ahead of time to prevent this from happening to our daughter and her friends? --Theresa O.

A: In a nutshell, don't rent from this landlord! If your state limits the security deposit to a multiple of the monthly rent (in California, for example, it's twice for unfurnished rentals; more if furnished), you know right there that this owner is flagrantly violating the law (surely the rent isn't $12,000 per month!). If the word on the street is accurate, you can expect he'll keep your $3,000, as well as the deposits of the other tenants.

If this happens, you could, of course, sue in small claims court for the deposit's return, but that will be a major hassle (especially if the college is out of state). The students will be gone, on post-graduation romps, back in their hometowns, or off to new places with jobs, and no one will be eager to come back to handle a court case. In fact, you may also need the cooperation (and physical presence) of the other parents if they, like you, are putting up the deposits. Because it's the parents' money, a judge may insist that the parents file the lawsuit. A reunion like this is definitely not going to happen, and everyone will chalk this up to an expensive "learning experience."

You could try to set this sleazy landlord straight at the outset, but don't count on reforming him. Check with the university housing office and if you find that he lists there, share your information. Pressure and threats of de-listing from that sector might give the landlord pause. You could also speak with the local city or district attorney, or legal aid, asking if they are interested in bringing an "unfair business practice" case. They will need someone to be the plaintiff, a former tenant who has been ripped off already, and since that hasn't yet happened to you, you'll have to find a willing ex-tenant.

Rather than spending energy on all this, suggest to your daughter that she and a much smaller number of roommates look for a smaller place -- or perhaps a rental a little further away from campus. They'll have more options and a greater chance of finding a reputable landlord.

Q: Our rental unit in Palm Springs has been occupied by the same tenants for four years, who renew every year. They are dream tenants, but the property management firm we hired and who procured the tenants is a nightmare! They don't forward the rent to us (even though the tenants pay early), and even then, they make the checks out to the tenants!

We want to stop working with this company, but we're concerned about this clause in the contract: "This agreement may be terminated by either party on 30 days' written notice. The Owner agrees not to rent to any tenant procured by the Company for a period of one year after the last occupancy by said tenant. If the Owner does rent to such a tenant, the Owner agrees to pay the Company 20 percent of any and all rent obtained by Owner for the identified tenancy."

The company collects 10 percent of the rent per month. We are considering just giving them the 30-day notice and letting them chase us for the money for a change. What do you think? --Linda and Rueben P.

A: The management company was probably trying to ensure that, if you terminate the contract, you will pay them a portion of the rent from tenants they have found for you. But fortunately for you, they've done a sloppy job in writing their contract. Their clause says that you will owe them a cut of the rent if you rent to a tenant whom they procured within a year of that tenant's "last occupancy." This means that if your current tenants move out, but move back in within a year, you have to pay the 10 percent. As long as your current tenants continuously occupy the rental, there's no "last occupancy," so there's no trigger to start the one-year blackout period.

If the management company objects and takes you to small claims court to collect its fee, expect that they will argue that the clause should be read as it was probably intended. Don't buy it -- and argue that the judge shouldn't, either. If there is any ambiguity in the meaning of the clause, it should be resolved against the party that drafted the agreement: the management company. This is an age-old principle of law that should support your position.

You have a second argument to support your position that you will owe no further fees. The termination clause is intended to give you and the company a "no fault" way to end the arrangement. You would each use this method if you wanted to end the contract for any reason other than the other side's failure to follow through with the terms and conditions of the deal. For example, if you decided to handle the rental management yourselves, you'd end the contract using this procedure.

But if one side breaches the contract by seriously failing to follow through on a critical term or condition, the other side can declare the deal to be over and all future obligations for everyone are finished. For instance, if the company simply failed to collect the rent, you could end the agreement on that basis. It would be ridiculous to expect you to continue to pay the company when their failure to collect rent violated the terms of the contract. The question here is whether their repeated failures to forward the rent to you (and any other mistakes) rise to the level of a contract-ending breach. If their conduct has been so sloppy that you aren't getting what you're paying for, you should be able to convince a judge that the contract is no longer binding.

There's one final arrow in your quiver, should you need it: The management company is attempting to collect twice its usual fees if you end the contract and rent to a tenant whom they found for you. This maneuver runs afoul of another time-honored legal principle: When one side breaches a contract, the other side's damages are limited to the actual losses they suffer, no more. Yet the management company is attempting not only to cover its lost fees, but to go further and make money on your breach. Their clause is a penalty. American jurisprudence never embraced the idea of businesspeople penalizing each other for failure to live up to a contract, and judges routinely refuse to enforce contract provisions that are punitive.

Protect yourselves by sending a written termination on 30 days' notice, but also specify why you think the management company has breached the agreement. This way, you're ending the relationship according to the terms of the contract, but you're preserving your right to argue later that the management company didn't hold up their end of the deal.

Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord's Legal Guide" and "Every Tenant's Legal Guide." She can be reached at janet@inman.com.

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