HOAs .. & YOU!

When you purchase a townhouse, condo or any property within a planned development, you are required to join that development’s homeowners’ associations (HOA) which includes paying a monthly or annual HOA fee.

Generally, the HOA is in charge of the upkeep of common areas, landscaping and the buildings themselves.  Each HOA is unique however, and the responsibilities (and fee amount) of each varies based on the development and the amenities that it has. A more upscale complex may include a wide range of facilities such as swimming pools, clubhouses, fitness rooms, security gates and tennis courts.

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Also, beyond keeping the grounds in good condition, an HOA also sets the “code of rules” that governs life within a development. This set of rules must be followed by all residents and is known as the CC&Rs (covenants, conditions & restrictions). CC&Rs may dictate a variety of things: from the types of vehicles that may be parked on the street to fence height restrictions to the color of your window frames. If you, as a homeowner, decide to break one of these rules, you must appeal to the HOA to grant you a variance.  While CC&Rs are a great way to keep a neighborhood consistent, they could pontially limit your creative juices when it comes to decorating your home!

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An HOA is beneficial, because it ensures that all residents are equally responsible for maintaining the condition of their community. This helps to guarantee a high quality of life, while also preserving property values for the units within the development.

However, HOA fees do tack on an additional cost when it comes to owning a home and it is essential to factor that cost into your price of living. Average HOA fees are generally around $400 a month, but could run less or more based on the amount of amenities.

Another responsibility of a homeowner’s association is plan for the long-term well being of the community. That means looking ahead to larger scale repairs and improvements that will need to be made in the future. Each HOA holds a reserve fund, which is kept to pay for these long term projects, as well as any emergencies that may arise. However, if the reserve fund is inadequate, the association may require all occupants to pay a “special assessment” in order to supply the necessary funds. Special assessments may occur at any time.. meaning another unexpected cost for development residents.

HOAs are either professionally managed or are run by residents within the development. There are pros and cons to both scenarios, so we recommend getting in touch with the HOA prior to joining the development. It is a good idea to get a feel for the way that the development is run and to evaluate who is making the decisions that will affect your daily life. You can also find out specifics about that exact homeowner’s association.

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Some good questions to ask:

                                          – What services are covered by your HOA dues?

– Are there any services for which you have to pay extra?

– How often do fee increases occur, and by what percentage?

– Are any special assessments planned for the immediate future?

As a homeowner (especially one paying HOA fees) it is always better to be over educated, than under educated. Stay involved in your community, be aware of the CC&Rs and take full advantage of the perks of having a homeowner’s association!

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Title.

 

In California, title to real property may be held individuals in either Sole Ownership or in Co-Ownership (when held by two or more persons). In each instance, there are a number of variations as to exactly how title may be held. In this blog, we will discuss 8 of the most common situations.

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  1. Title may be held as a single man or woman who is not legally married
  2. You may hold title as an unmarried man or woman. This is different from holding title as a single man/woman because it refers to someone has has been legally divorced or who has dissolved a registered domestic partnership.
  3. If a married man/woman or a registered domestic partner desires to hold title in his or her name alone, he or she may do so with consent from the spouse/partner. Consent is given through a quitclaim deed that relinquishes all right or interest in the property. Thus, it is possible to hold sole and separate property, even if legally married.
  4. As defined in the California Civil Code, community property is property that has been acquired by either a husband or wife. When real property is conveyed to a married man or woman (or those in a domestic partnership), it becomes community property unless otherwise specified. This gives both spouses the right to dispose of exactly half of the property. If one spouse was to pass away, their half of the community property would automatically transfer to the surviving spouse. However, it is possible to leave one’s share of the property to a third party via a will.
  5. The Civil Code defines joint tenancy  as “owned by two or more persons in equal shares, by title created by a single will or transfer when expressly declared in the will or transfer to be joint tenancy.” Each share is equal. This style of holding title is made unique by the “right of survivorship” which declares that when a member hold joint tenancy dies, his or her interest in the property is automatically given to the survivor. A major advantage is that probate costs and delays are avoided when a joint tenant dies. However, it is important to note that property held in joint tenancy is not susceptible to being transferred to a third party by a will.
  6. Similar to joint tenancy, tenancy in common occurs when co-owners hold undivided interests, BUT these shares do not need to be equal or established at the same time. Another difference is that there is no right of survivorship, meaning that upon death each person may vest his or her interest to an heir.  A disadvantage to this is that the remaining tenant in common could wind up co-owning property with a stranger.
  7. Married couples and domestic partners have the ability to hold title as community property with right of survivorship, meaning that no share of the property may be given to anyone other than the surviving spouse or partner. This must be specified in writing that is signed by the grantees.
  8. Lastly, title to real property may be held in a living trust. In this scenario, a trustee would hold the legal and equitable title to the property for the beneficiary who is to retrain all of the rights and responsibilities. There are many advantages to a living trust, including avoidance of probate costs and delays. Further, until the death or disability of the trust creator, the property in the living trust is treated normally.

This chart from Fidelity helps to clarify:

chart

 

As a home owner, it is essential to not only familiarize yourself with the various ways to hold title, but also to be certain as to how you are holding title to your real property.

This knowledge is important because it may influence many tax and legal consequences during your life time and how (and whether) the property is transferred to your heirs when you die.

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There are significant tax and legal consequences that stem from how you hold title. We strongly encourage contacting an attorney and/or CPA for specific advice on how you should actually vest your title.

 

 

STOP in the name of Low Mortgage Rates

Seriously, stop what you are doing.

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BECAUSE, low mortgage rates = amazing opportunities for buyers, sellers, or homeowners looking to refinance!

While rates on mortgages change daily, they are currently holding steady at near record lows. In fact, according to the Bankrate.com rates have not been this low since December 2012!  The graphic below demonstrates the drop in rates from just last week.

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Both 15-year and 30-year mortgage rates are down more than 0.5% since the start of the year.

What does this mean for buyers?

This drop in rates means that those looking to buy have experienced a purchase power increase of 7%…meaning that buyers who could afford an $800,000 home in December can now afford an $852,000 home!  For many on the house-hunt, this increase in purchase power could put their dream home just in reach!

What does this mean for sellers?

Lower mortgage rates translate to a surplus of buyers looking to take advantage of their higher purchasing power; which means you, as a seller, have the ability to get top dollar for your home! More active buyers are out looking increases the desirability of your home.. making it a hot commodity.

What does this mean for refinancers?

Refinancing gives a homeowner access to a new mortgage loan which replaces the existing one. The details of the new loan’s mortgage rate, loan length in years, and amount borrowed can customized by the homeowner. Thus, refinancing during a period of lower mortgage rates could benefit borrowers by lowering their monthly housing payments and/or shortening the term of their mortgage.

For a personalized rate, check out this helpful site: http://themortgagereports.com/ratequote/

Remember: Mortgage rates change quickly and there is no guarantee that these rates will last. Whether you are a seller or a buyer, it is time to take advantage of the current market!

R E A P – Find Out What It Means To Me .. & You!

Ever been scanning across apartment listings in LA and been confused by the statement “Property in REAP. Looking for an all-cash buyer”? You are not alone. Read on for a brief synopsis on the program and whom it affects.

What exactly is REAP?

The Rent Escrow Account Program has been established by the City of Los Angeles and exists to resolve health, safety and habitability issues found in rental properties. It essentially functions to protect tenants from unsound housing, while also preserving the value of LA’s properties and housing developments.

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How does REAP work?

Rental properties and units get placed in REAP if they do not correct cited health, safety and Housing Code violations within the allotted time. This placement may be appealed by the landlord, but once the decision to put a property into REAP is finalized a rent reduction is put in place. Based on the severity of the violations, the reduction may be between 10% to 50% of the monthly rent.

The tenant may continue to pay the reduced monthly rate to the landlord or he or she can opt to send the payments to an escrow account established by the Housing & Community Investment Department of Los Angeles (HCIDLA).

Tenants will be alerted that their rental property is in REAP via mail or by a visit from one of REAP’s outreach counselors. An outreach counselor is assigned to every case and is accountable for educating the tenants and the landlord on their respective rights and responsibilities within the program.

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How is the property owner affected?

Once a property or unit is put into REAP, the HCIDLA also records a notice on the property’s title. This notice alerts potential buyers and their lenders, that there is a problem with the property.. which means that no one will lend to the owner or attempt to buy the property using a loan – this is why REAP properties are required to sell for cash. The owner is also charged a monthly administration fee of $50. Owners are further negatively impacted by spending more money on repairs while simultaneously being required to lower rental rents.

How does a property get taken OUT of REAP?

 A property remains in REAP until the HCIDLA can verify that the violations have been  resolved and that all the issues have been signed off on by a Department inspector.  Once the HDICLA confirms that Los Angeles Department of Water and Power bills have all been paid off, the City Council will evaluate (and most likely) approve the property’s removal from the program. Tenants will be alerted by mail that the property has been removed from the program and that required rent has been reverted back to it’s normal rate. It is important to note that if a tenant has been paying rent through an escrow account that they are required to return to directly paying his or her landlord.

Know your responsibilities as a land lord so REAP does not happen to you, as well as your rights as tenant when it comes to the quality of your rental property.

For more information on the Rent Escrow Account Program, check out the HDCILA’s info page: http://hcidla.lacity.org/what-is-reap-for-renters