Patty's "All Things Real Estate" Blog.

Beginning January 1, 2013 a new 3.8% tax on SOME investment income will take effect.  Since this new tax will affect some real estate transactions, it is important to clearly understand the tax and how it could impact homeowners in general.

It is important to note this tax WILL NOT be imposed on ALL real estate transactions.  When the legislation becomes  effective , it MAY impose a 3.8% tax on some, but not all, income from interest, dividends, rents (less expenses), and capital gains (less capital losses), as it relates to a sale of a property.  The tax will fall only on individuals with an adjusted gross income (AGI) above $200,000 and couples filing a joint tax return with more than $250,000 AGI.

More information and a downloadable brochure can be found at  the  National Association of Realtors website.

US Flag (Photo credit: PS-OV-ART Patty Sue O’Hair-Vicknair, Artist)

Starting January 1, 2013, the existing California protection for a service member against foreclosure by a mortgage lender during the period of military service or within three months thereafter, has been extended to nine months thereafter. Exceptions apply to sales made by agreement or court order. This law applies to mortgage loans originated before a service member period of military service for which the service member is still obligated. The nine-month period mirrors the foreclosure protection under the federal Service members Civil Relief Act. However, President Obama recently signed into law the federal Honoring America’s Veterans and Caring for Camp Lejeune Families Act which extends, from February 2, 2013 to December 31, 2014, the foreclosure protection to one year after the period of active duty.

Source: AB 2475 and H.R. 1627

An existing law requiring an owner of vacant residential property acquired through foreclosure to maintain the exterior of the property, was originally set to expire on January 1, 2013, but has now been extended indefinitely. To prevent blighted neighborhoods, this law allows a governmental entity to impose a fine up to $1,000 per day for any violation. {{Yikes!}} Violations of this law include allowing excessive foliage growth that diminishes the value of surrounding properties, failing to take action against trespassers or squatters, failing to prevent mosquitoes from breeding in standing water, and other public nuisances. This new law, which is part of the California Homeowner Bill of Rights, also gives a buyer of residential property foreclosed after 2007 an opportunity to correct substandard conditions. Starting January 1, 2013, if that buyer has purchased and is in the process of diligently abating any building standard violations, an enforcement agency cannot commence any action or proceeding for nuisance abatement for at least 60 days after the buyer takes title to the property, unless a shorter period is deemed necessary to prevent an immediate threat to health and safety. Also commencing January 1, 2013, any mortgage lender who releases a lien from a property with a recorded Notice of Pendency of Action must notify the enforcement agency that issued the order within 30 days of releasing the lien.

Source: AB 2314.

I was having a discussion recently at an event with a group of people about the state of the economy.  Eventually that topic morphed into a discussion about the state of the real estate market.  More than several people expressed the opinion that working on a short sale is a waste of time because it wont’ ever close.  The truth is, working on a short sale that won’t close is a waste of time.  Do you see the difference here?

In order to have a short sale close successfully, the homeowner must have reasonable expectations, be motivated to go through with the deal, cooperate by keeping the property presentable, and respond promptly to communications. They must also be honest, open, and  willing to submit all financial documentation to justify a verifiable financial hardship. The homeowner must be prepared to give the bank EVERY financial document they ask for.  This could include pay-stubs, bank statements, tax returns, financial worksheets that show monthly household expenses, W-2′s, layoff notices, employment termination letters, divorce or separation decrees, death certificates, and rental income statements.  The bank must have  FULL COOPERATION.

The agent must do their part by making sure any buyers submitting an offer are qualified financially AND committed to the transaction for the long haul. They must also be diligent in their dealing and follow up with the bank, know how and when to escalate an issue to get a response, be willing to spend hours on the phone, work on the banks terms, be calm and non-confrontational when working with the decision makers, and be available and responsive when the bank needs information.

It is also a benefit to work with an agent that has a Certified Distressed Property Expert (CDPE ) designation from the Charfin Institute.  Many banks are recognizing agents with this designation as agents they prefer to work with.  The banks know the agents have been trained on what the needs are and how to get the job done.

Any agent can list a short sale, however, not all agent know how to be successful at doing so.   If you talk to a real estate agent and they tell you “well let’s just list your house and see what happens” – please don’t!  You could be setting yourself up for a half a year’s worth of frustration and misery only to have your home foreclosed on anyway.  If you are having a financial hardship and think you may be able to sell your home rather than face foreclosure, please enlist the help of an experienced, professional, CDPE agent.

Someone once said, “if you think its expensive to hire a professional, just wait until you hire an amateur’.

I just attended a round-table discussion by the Tri-Valley Housing Opportunities Center (TVHOC) held at the offices of Bay East Association of Realtors in Pleasanton, CA.  This was a very informative hour of information about an alarming trend of squatters in our area occupying vacant properties.  Even more alarming is that groups are organizing and becoming very sophisticated in the respect that they are obtaining free legal council from local agencies to prevent them from being evicted from the properties they illegally occupy.

There are many vacant properties out there, some owned by banks, some still owned by the property owner who has moved out and waiting for a foreclosure to occur.  Some are listed for sale and in escrow to be sold.  In a nutshell, here’s what is happening.

Squatters find a vacant property and gain entry, either through windows, unlocked doors, or by breaking in to the property.  When it is discovered that a squatter is in the property, the authorities are generally able to remove the tenant on the grounds of trespassing.

However, here’s where it gets scary.  There are groups of ‘savvy squatters’ that are falsifying Grant Deeds to reflect they own the property, or providing fraudulent rental agreements showing they have a lease on the property.  In these cases, the actual homeowner is burdened with taking legal action through an Unlawful Detainer to evict the tenant.  Unfortunately, these savvy squatters have become educated with the help of free legal services on how to respond to the eviction and tie up the case for many months, or in recently reported cases, years.  They are able to stay in the property, without paying rent to anyone, until the civil case is resolved and a judgement or eviction order is issued.  Some are even paying the property taxes & utilities on the properties, making a case for ‘adverse possession‘.

In addition, there are an increasing number of unscrupulous parties out there that will gain entry into a vacant property, have it re-keyed, advertise it for rent, secure a tenant, and collect rent.  The renter is none-the-wiser, they believe they are dealing with the property owner or management company.  The tenant signs the lease, moves in, and starts paying their rent.  Shortly thereafter, they are approached by the actual property owner,  a new buyer of the property, or a bank representative and asked to leave the property.  The tenant is in a real dilemma.  They have an actual rental agreement and are paying rent on a property that their ‘landlord’ has no legal ownership of.

If you are looking for a rental property, BE SURE YOU VERIFY THAT THE LANDLORD OWNS THE HOME.  I cannot stress this enough! Property owners names are public record and can be found on your local county tax assessors office website.  Ask to see the landlords identification.  Enlist the help of a reputable real estate agent or broker to help you find a rental property.  They have access to records that can verify the ownership of the property.  Talk to neighbors of the property, neighbors are nosy, they will generally have insight to valuable information.  Although online ads are a great vehicle to market rental properties, be wary of the ‘too good to be true’ advertisements.  If the advertised rental price is below the going market rate, you have to stop and question why.

This is an unfortunate circumstance of our current real estate market and economy, and one that I hope is eradicated very soon!