Scammers love to prey on consumers who are at their most vulnerable -- during difficult economic times -- and the timeshare business isn't immune from their damage, according to an industry leader who is warning would-be timeshare sellers to tread cautiously.
Indeed, attorneys general in Arkansas, Massachusetts, North Carolina and Oklahoma recently have issued warnings about dubious timeshare-resale companies -- particularly about reseller companies charging upfront fees that might run into the thousands of dollars, according to Howard Nusbaum, chief executive of the American Resort Development Association (ARDA), a trade group.
"This economy brings out the best and worst in people," said Nusbaum, who warns that timeshare owners who promise huge profits at resale aren't to be trusted.
Nusbaum estimates there are more than 5 million timeshare owners, representing properties at about 1,650 resorts in the United States.
Five things to keep in mind in order not to run afoul of resale hucksters, according to ARDA:
1. Many scammers operate by cold-calling or writing to timeshare owners who may not even have tried to sell their units, Nusbaum said.
"You might get a phone call from somebody saying, 'I have a buyer who wants to give you $20,000 for your timeshare,' " Nusbaum said. "And you say, 'Times are rough -- sure, I'll take it.'
"And then you give him your credit card (to pay upfront 'fees'), and guess what -- the buyer goes away," he said.
That request for a credit card is a red flag, Nusbaum said.
2. There are numerous unrisky ways to get the word out that you're interested in selling your timeshare, Nusbaum said.
He recommends first approaching the developer/operator of the resort where the timeshare is located, or its homeowners association. Those entities might have interested buyers, he said.
Plus, a homeowner can choose any number of print and online advertising vehicles, with costs ranging from free to hundreds of dollars. Just have a clear idea of what's included in their services and how long the advertising will run, Nusbaum said.
Some legitimate timeshare resellers' services include only advertising; they usually won't or can't help with sales contracts or negotiating with buyers.
3. There are legitimate resellers that employ licensed real estate agents, he said. In some states, they're permitted to charge upfront fees, or they may charge a commission that's a percentage of the sales price. Just as when selling a home, there also may be additional title and closing costs. The key is doing research to make sure they're legitimately licensed, Nusbaum said.
He recommends checking on the licenses of individuals at the Association of Real Estate License Law Officials, which maintains a searchable database of licensees in 42 states at www.arello.com.
4. Scammers recently have been advertising falsely to would-be clients that they're affiliated with American Resort Development Association, Nusbaum said. The organization doesn't contract with, authorize or endorse any company's resale activities, he said.
In one recent scheme, a scammer told a timeshare owner he was acting as ARDA's agent to disburse refunds (collected by the Florida attorney general) for consumers who had been victims of fraudulent resale practices and that the consumer was entitled to the proceeds, but would have to pay a $2,000 fee to process this claim.
5. Before contracting for any help with a timeshare sale, shop around to compare costs and services. And verify identities. In addition to the aforementioned arello.com, some sources include:
Mary Umberger is a freelance writer in Chicago.
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Q: I am removing the screws from our 10-or-more-year-old redwood deck. At about 1,200 square feet, it's a big job, and it's taking a lot of time to remove the screws, inspect the boards, then flip them over and screw them back down, replacing boards as needed. I am about halfway through with this project.
When finished, I plan to power wash the deck, then stain and seal. A neighbor told me I'm too late because the decking has turned gray and no stain or sealer will cover the gray. We don't really worry about the gray -- that is a natural color for wood to turn when sun and weather get to it.
Do you have any suggestions on what stain and/or sealer I should use to level out the color? Some of the boards are gray and on many you can see lighter areas where they were fastened to the joists every 2 feet. The power wash may help a little, but I know it can also damage the wood's softer grain.
A: Your plan is pretty much right on and your neighbor is dead wrong. Flipping the boards on a redwood deck the size of a small house will save you a ton of money and be worth the work you're putting into it. With a few simple steps and some caution with the power washer you'll have a deck uniform in color and ready for another 15 or so years of enjoyment.
You're halfway there on the first step. Flipping the boards is the lion's share of the work.
We suspect that the original decking contains most, if not all, heartwood. For that reason, use construction heart-grade boards for replacement. Also, as you replace the damaged boards, disburse them at different locations around the deck. If there is any color or finish variation when complete, they won't all be in the same place.
Ultraviolet radiation from the sun breaks down surface fibers of the wood, causing graying and surface erosion. Moisture encourages surface mildew and causes stains. Tannins in redwood also can discolor the surface.
After you flip the boards, your next step is a good cleaning with a pressure washer. Ten-plus years of exposure to dirt, dust and cobwebs need to be cleaned out. You're right -- caution is the watchword.
Be gentle with the wand. Wear safety glasses; hold the nozzle about 6 inches above the deck's surface and spray in line with the wood grain, overlapping your path. Make sure the spray is a fan shape and keep the wand moving. Leaving it too long in one place will dig at the soft wood fibers of redwood. You'll find that much of the gray color and perhaps some of the joist marks are removed with the washing.
Once you've done the initial pass, give the deck a few days to let it dry thoroughly.
The first line of attack on joist marks is a light sanding. A palm sander and 80-grit sandpaper will work best. But a sanding block and 80-grit sandpaper will do the trick and build some muscles, too. Make sure you sand with the grain and remember that a light sanding to remove the joist lines is all you're after.
Several products are available for dealing with any residual graying and stains. Commercially available powder or liquid concentrates have a base of non-chlorine bleach or oxalic acid. Bleach-based products eliminate mildew and acid-based materials handle graying and stains. Make sure you test any chemical in an inconspicuous place, as some products may darken the redwood.
Wear rubber gloves, eye protection and old clothes when working with these chemicals, and follow the directions precisely.
Leaching tannins or corroding hardware and nails cause non-mildew stains. For these problems, an acid-based deck restoration product is best. Pre-mixed oxalic acid deck cleaner and oxalic acid crystals can be purchased from a hardware store or home-improvement center. Make sure to follow manufacturers' instructions for use. Allow the deck to dry, and then rinse with clear water.
Before finishing, allow the deck to dry for a week or two. The best finishes are those that penetrate and soak into the wood. If you want to add color, a semi-transparent stain is the way to go.
There are three important characteristics to look for in a finish.
Regular preservatives should be reapplied once a year, but some newer and better products offer more UV protection and may last up to four years.
And, as always, buy quality materials and follow the manufacturer's directions.
What's your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story.
In the case Barnett v. Gomance, Keith Gomance's mother, Wanda Stafford, owned a cattle ranch neighboring another cattle ranch owned by Shelby and Linda Barnett.
The ranches were separated by a 40-plus-year-old, tree-to-tree wire fence that had been built and rebuilt since a verbal agreement between Gomance's father and Barnett's predecessor in interest, under which both parties acknowledged that the fence was built 30 feet inside the Gomance ranch's property line.
The parties also agreed that both Barnett and the previous owners could graze cattle and otherwise operate their ranches up to the fence line.
According to Gomance, the fence was simply a wire nailed between the trees to keep the parties' cattle on their respective properties, and was erected to avoid the costs of constructing and maintaining a more robust fence, as the fence washed out every time there were major rains.
When Barnett purchased his ranch, he obtained a survey, which showed that the fence was not on the property line, but Barnett testified that he simply disagreed with the survey. Additionally, Gomance's father testified that he had discussed the property line with Barnett, who had acknowledged that the fence line was not on the property line.
After a fire destroyed the wire fence, Barnett built a new fence to contain his cattle. Gomance and his mother filed suit, claiming Barnett's construction of the permanent fence constituted a trespass on their property.
Barnett counterclaimed that he had acquired title to the disputed 30-foot strip through adverse possession or, in the alternative, that the boundary line had been moved to the fence line by acquiescence.
The trial court found in favor of Gomance and his mother, rejecting Barnett's claim to own the disputed strip of land. The court explained that Barnett had failed to make the showing required under common law and Arkansas' adverse possession statute, A.C.A. Section 18-11-106.
In particular, the trial court articulated, Barnett had "failed to show that the use by the (Barnetts) was notorious, hostile, and exclusive or that the (Barnetts) had taken any action to put (Stafford) on notice that they were seeking to convert the permissive use into a claim of ownership."
Additionally, the trial court noted that Barnett could not show that any of his predecessors in interest believed that the fence was the boundary line.
Barnett appealed, and the appellate court affirmed the trial court's ruling. On appeal, the court explained that Arkansas law does allow for a fence line to become the boundary line by acquiescence where "adjoining landowners occupy their respective premises up to the line they mutually recognize and acquiesce in as the boundary for a long period of time."
In this case, however, there was no evidence that the parties mutually agreed that the fence line was the boundary line. In fact, there was significant evidence that the parties mutually agreed that the fence was not the boundary line, as well as a survey that showed the fence line was contrary to the boundary line.
Accordingly, the trial court's rejection of Barnett's claim of boundary by acquiescence was not in error, and was upheld by the Court of Appeals.
Similarly, the Court of Appeals found that Barnett's adverse possession claim was not supported by the evidence. Because Barnett's predecessor was given permission to use Gomance's land, and never notified Gomance's family of his intention to convert that permissive use into an adverse use, Barnett's claim to the property -- if any -- began only after his 1997 purchase of the property.
Accordingly, Barnett was required to show not only that "he has been in possession of the property continuously for more than seven years and that his possession has been visible, notorious, distinct, exclusive, hostile and with the intent to hold against the true owner," but also, under Arkansas' 1995 adverse possession statute, that Barnett had paid property taxes on the strip of land.
Barnett introduced evidence of property tax payment in an untimely manner, only after the trial was over.
Additionally, because the original use of the property by Barnett's predecessor began with permission, Arkansas law presumes that Barnett's use was also permissive, in the absence of any evidence that Gomance's family was put on notice that Barnett or previous owners were holding with "openly, notoriously, and with the necessary hostility."
As a result, the trial court's decision was affirmed.
Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.
DEAR BENNY: My husband and I recently applied for a home equity loan to help finance a new home we are building until we sell our current home. We applied at our local bank and it acknowledged that our home's value, which is fully paid for, is more than adequate to cover the amount we applied for. The bank also noted that we have excellent credit and sufficient monthly income to support the payments (which it verified through direct deposits).
The bank requested a copy of our 2008 tax return, and I submitted pages 1 and 2 of our 1040. However, the bank said it also needs to see schedules B and D of our tax return. I questioned the bank on this, but the bank said it is a requirement. Is this standard practice, and is it lawful for the bank to check where our investments lie? It seems to be an invasion of privacy. --Joanne
DEAR JOANNE: Your question touched a raw nerve with me, as I have been complaining about this practice for years. Actually, you may have been lucky: Many lenders actually require you to sign Internal Revenue Service Form 4506, entitled "Request for Copy of Tax Return."
This enables mortgage lenders to invade your privacy even more, since with this form they can get some of your back tax returns, but if you want the loan you have to comply with their terms.
Readers who are asked to sign Form 4506 should read it carefully. The IRS provides a cautionary note: "If the tax return is being mailed to a third party (such as a mortgage company), ensure that you have filled in line 6 and line 7 before signing. Sign and date the form once you have filled in these lines. Completing these steps helps to protect your privacy."
Despite these clear instructions, many lenders just tell their potential borrower, "Just sign but don't date it."
And unfortunately, the answer to your question is the same: If you want the loan, you must play their game. However, I understand why your lender wants to know your entire financial situation, including your investments.
For example, if you own stocks on margin, and those equities go down in value, you will be obligated to come up with some money to make up the loss. This may impact your financial ability to repay the mortgage loan.
My experience is that most borrowers will reluctantly provide their entire tax return to the potential lender. In fact, because most of us generally do not sign the copy we keep in our files, I have encountered lenders who insist that those copies be signed before the loan is finalized.
Yes, it's a clear invasion of your privacy. But nowadays, lenders are lending-scarred -- they don't want to be audited by a federal (or state) agency, so they want assurances that they have carefully reviewed your entire portfolio.
DEAR BENNY: My income has declined about 65 percent in the last two years. I have used reserves to live on and get by, hoping things would get better, but they haven't.
I've been using several credit cards since the early 1990s and have never been late or missed any payments. I had a credit score as high as 800-plus at one time, but now I don't have the money to even make the minimum payments. I'm married and the cards are in my name only. My wife's income or information was never used as a secondary on which to base my credit.
If I miss payments or even default on the cards or even try to negotiate a settlement or pay off less than what's owed, will that affect my wife's credit score? --Tom
DEAR TOM: I am not an expert in credit ratings or scores, but if the credit cards are in your name only, I cannot see how this would impact your wife. However, if you both wanted to buy a house -- or any other big-ticket item -- where the lender determines that your wife's income is not sufficient (or if the transaction requires both of you to sign promissory notes), then your credit standing would be considered and you may not be able to buy that item.
You may want to consider going to a nonprofit credit counseling agency to try to assist you in rehabilitating your credit. However, make sure the agency is legitimate. Call such groups as the Better Business Bureau in your area to get more details about the agency before you sign anything. And by no means should you have to pay anything up front before your counseling begins.
DEAR BENNY: My husband and I own a building consisting of 12 small offices and warehouse space. We rented all the offices except for the one my husband occupied for his business. Upon receiving each request to rent, I purchased a standard rental form and thought my husband had them complete it, but he did not.
Because the tenants were very nice people and they befriended him, he let them stay when they were having financial troubles and could not pay the rent. As things improved for them, they paid the rent regularly but have trouble paying the back rent, which now totals more than $100,000.
What can we do to collect this rent? I wanted to charge them interest to prompt faster repayment. If we do this, should I write the letter or should we get an attorney? We really can't afford an attorney at this point, as all of my husband's income from his suffering business is going toward the mortgage and upkeep of this building. We have a buyer and the sale is in the works at this moment. Do you have any suggestions? --Rebecca
DEAR REBECCA: You should get a lawyer. Try to convince the attorney to take your case on a contingency basis -- which means that if he or she is successful, a portion of your recovery will be the legal fee. And even if you cannot find such an attorney, you really should take legal action as soon as possible.
But whether you can find a lawyer, you must determine what the applicable statute of limitations is. This means that after a specific period of time, which is determined by your state law, you can no longer file a lawsuit.
If you are selling your house and will not be barred by your state statute of limitations, then perhaps you can wait until you can use your sales proceeds for the litigation. Hopefully, your lease provides for attorney fees should you prevail.
Advice to consumers: First, make sure that you have a good lease. Don't rely on forms. Have a local attorney prepare a lease that you can use for your tenants.
Next, make sure it is completely filled out and signed by all parties. If the tenant is a corporation or a limited liability company, insist on obtaining a written personal guarantee from the prime owner of the company.
And finally, never -- I repeat never -- let the rent escalate more than a couple of months. The longer you wait, the harder it will be to collect. There is no cash register at the back of the courthouse; you may get a judgment but may not be able to collect. Worse, the tenant will file for bankruptcy relief, which may wipe out your claim for back rent.
DEAR BENNY: I have a rental property that I had purchased in 2005. I was going to hang onto the property and sell it a few years later, but since that time the real estate market has not been good.
I find myself in the same position as many others: that my property is now worth less that what is owed on it. Now I carry only a first mortgage on the property. I do not have a second mortgage or even a line of credit. In a previous article you stated that with only a first mortgage the option of asking the lender to take back the deed and cancel the mortgage would be a lot easier.
My question: What sort of risk to one's credit rating does this have? I still have excellent credit but am unable to continue pulling out of savings to make the mortgage. Is there something that might also be able to help me convince my lender to take back the deed? --Yvonne
DEAR YVONNE: I am not familiar with how credit bureaus work. To my knowledge, however, when the lender takes back the deed -- called a "deed in lieu of foreclosure" -- it will have an impact on your credit standing. It won't be as bad as if the property were foreclosed upon, but it will still affect you.
I also have absolutely no idea how banks work -- some banks will accept the deed and others will not.
My suggestion: Try to talk with your lender to arrange a loan modification. Many lenders do not want to foreclose (or even take the house back) because they not only lose their mortgage but often end up owning the property. There are also a number of government programs that may be of assistance.
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.
DEAR BARRY: When we bought our home, we noticed that the exterior paint looked worn and that the knots in the wood siding were showing through. We pointed this out to our home inspector and asked for his opinion. But our agent interrupted and said, "You just need to cover them with shellac." The inspector made no further comment and said nothing about the paint in his report.
Sixteen months later, the paint was peeling off of two sides of the building. We had to sand, scrape, prime and repaint the entire exterior. What is your opinion about the inspector's liability? --Linda
DEAR LINDA: The prime directive in home inspection is to report all defects that are visible, accessible and within the scope of the inspection. If a buyer points out a specific defect and asks the inspector for an opinion, there is no excuse for omitting that disclosure from the report.
An appropriate disclosure, in this case, would have been, "Exterior paint finish appears worn, and discoloration is apparent at the knots in the wood siding. Further evaluation by a licensed painting contractor is recommended."
Your agent's comment was particularly foolish. Excusing a defective condition by proposing an easy fix is an invitation to major liability. Unless that agent is a licensed painting contractor, that kind of advice is outside of the agent's professional expertise. It's the kind of remark one would expect from a proverbial "used car salesman," not wanting to kick too firmly against the tires.
If the agent had withheld this comment, the home inspector would probably have offered an opinion of his own, verbally as well as in the report. What those comments and disclosures might have been, we will never know.
In the final analysis, the home inspector can be regarded as negligent, while the agent can be viewed as "slick." You tell me which is worse.
DEAR BARRY: The water heater for our master bathroom is an electric fixture, installed in the rear corner of the closet. It is about 10 years old, and a friend told me that it should have a drain pan in case of leakage. The problem is, the house has concrete slab floors, and the closet is not located at an exterior wall. So there's no way to run a pipe from the pan to the outside. What do you recommend? --Jack
DEAR JACK: The water heater has already lived beyond its normal expected life. As it becomes older, it will eventually leak. When that day comes, an overflow pan with a discharge pipe to the exterior could prevent major damage in your home. Repairs could include replacement of floor coverings, drywall, baseboards, door casings and wood-based furniture, not to mention mold remediation.
A drain pan with a discharge pipe to the exterior is essential if the water heater remains in its present location. If there is no way to install a pipe from the pan to the exterior, you should hire a plumber to move the fixture to a more practical location.
To write to Barry Stone, please visit him on the Web at www.housedetective.com.
Book Review Title: "More Not So Big Solutions for Your Home" Author: Sarah Susanka Publisher: The Taunton Press, 2010; 160 pages; $22.95
Bigness, that staple of American values and culture, is, in the words of Heidi Klum, "Out." (Note the capital "O.") Mega, ultra, super, jumbo stuff has generally declined in popularity over this recent recession, first motivated by cost-cutting and, later, by the realization that life smells just as sweet (or even sweeter) without all the "extra" our bodies and budgets are perfectly capable of doing without.
In early 2009, the story broke that American homes were trending down in size for the first year in many. Authorities from the National Association of Home Builders, the American Institute of Architects and even groups of real estate professionals started noticing homeowners at all income levels beginning to express a preference for smaller, better built homes -- some even before the recession. And they project that the trend will continue when the recession is just a memory.
Enter Sarah Susanka, an architect and advocate of homes that are smaller, practically and efficiently designed, yet still beautiful and comfortable. With her first book a decade back, "The Not So Big House," Susanka likely felt like the lone voice of reason crying out against excessively large homes in the wilderness of rapidly multiplying McMansions that was the American new-home market at the time.
With the release of her latest title, "More Not So Big Solutions for Your Home," Susanka's masterful authority on efficient, smaller home design is in laser-beam precise alignment with the wants and needs of today's homebuyers and builders.
My keyword for "More Not So Big Solutions for Your Home" is "solutions." The challenges of creating a space for everything in close quarters, organizing a family's belongings and activities in a comfortable, space-efficient way, and still maximizing aesthetic appeal are many, and this book provides solution after solution for resolving them.
While Susanka repeatedly refers to her approach as "commonsense," I strongly disagree -- many of her strategies and ideas are quite creative and reflect a uniquely uncommon skill for manipulating spaces to suit the lives of the people who live in them. In fact, the common approach was to just supersize the space!
Susanka's practicality is evident in the widely varying knowledge sources she draws on throughout "More Not So Big Solutions for Your Home" in formulating and supporting her cases for various design elements.
In Chapter 1, "By Design," she looks specifically at the physiological dimensions of the human form to generate recommendations for lowering windowsill heights and making other design decisions to suit "our human scale," and discusses open plans, lighting and garage placement.
The next chapter, "Room by Room," covers the kitchen as this generation's center of the home, and proposes a number of "rethinks," including rethinking eating, dining and living areas, before moving on to solutions for designing a retreat or guest room.
In Chapter 3, "Attention to Detail," Susanka turns her efficient eye to the finishing touches that don't even occur to the average homebuyer but make a huge difference in the experience of a home, including column proportion, trims, ceiling heights, and finding unobtrusive locations for smoke detectors and security sensors.
The last half of the book tackles the topics of Making It Personal, using porches, nooks and colors; Practical Matters, including creative space and design solutions for TVs, kitchen islands, bath and laundry; and Living in the Real World, which touches on real-life dilemmas faced by homebuyers and homeowners, like privacy and accommodating extended family members.
Whether you've got an old home you'd like to redesign for your current lifestyle, newer construction you'd like to "de-McMansion-ize," or are having plans drawn for a custom build, "More Not So Big Solutions for Your Home" is truly a must-read resource.
Even if you are not intentionally approaching your build or remodel project as one of downscaling or downsizing, in this book you will find a ton of tricks for smartly and attractively ensuring that "no spaces are sitting idle too much of the time or are decorated in a way that makes them unworkable for the functions they're intended for."
If you like the idea of having a place for everything and everything in its place, grab a copy of "More Not So Big Solutions for Your Home" -- you'll get a potent little toolkit for creating a home where you can live the way you want to live in every square inch.
Many mortgage borrowers with adjustable-rate mortgages (ARMs) on which the rate has adjusted within recent years are currently enjoying extremely low interest rates. This reflects the unusually low levels of the rate indexes used by most ARMs. But these low rates are accompanied by high anxiety, because of widespread expectations that rates will rise.
For example, the Treasury one-year constant maturity series, which is a widely used index, averaged 0.35 percent in January. This means that the rate on an ARM with a 2.25 percent margin that uses this index and adjusted in January is now 2.6 percent.
Switching to a fixed-rate mortgage (FRM) in today's market, even if the borrower commands the best terms, will about double the rate. ARM borrowers don't want to double their rate before they have to, but neither do they want to be caught flat-footed by a rate increase that materializes before they can make a move.
The stakes are high. The borrower with the 2.6 percent ARM, who was paying 4 percent initially, probably has a maximum rate of about 10 percent and a rate adjustment cap of 2 percent.
That means that if the one-year Treasury rate jumped overnight to 10 percent and stayed there, the ARM rate would adjust to 4.6 percent at the next adjustment, 6.6 percent one year later, 8.6 percent the year after that, and it would top out at 10 percent one year later. Since the FRM rate would escalate with the Treasury rate, the opportunity for a profitable refinance would be lost.
Of course, rates never jump 10 percent overnight -- the process occurs over a period of time, which creates a temptation for ARM borrowers to wait until the rate-increase process starts before making a move. That is easier said than done because the market can move very fast.
In January 1977, for example, the one-year Treasury rate was 5.29 percent. One year later, it hit 7.28 percent; one year after that it was 10.41 percent; and in March 1980 it reached 15.82 percent. That was an unusual episode, but we are now living in unusual times. Indeed, the rise in rates this time could be even faster.
There is no one best way for ARM borrowers to deal with this problem, as it depends on their individual circumstances:
Early movers: ARM borrowers who intend to sell their house within, say, the next 18 months, have little to gain by refinancing, because portable mortgages that can be transferred to the next house are no longer available. Such borrowers have a lot to lose if rates escalate before they buy their next house, but refinancing their current mortgage will not help with that problem. Moving the sale/purchase dates up could be a prudent move.
Shaky capacity to absorb payment increases: ARM borrowers who anticipate that they could not afford the payment if their ARM rate ratcheted up to the maximum over several years should consider refinancing into an FRM right away. The savings from the low ARM rate may not justify the risk of getting caught by a rate escalation that results in the loss of their home.
Limited capacity to monitor the market: ARM borrowers who don't know how to monitor the market and who don't want to invest the time required to learn how and then to do it should refinance now. Otherwise, they are very likely to be caught by a rate escalation.
Borrowers whose idea of watchful-waiting is to see what happens to their own ARM rate fall into this category. The rate on most ARMs adjusts annually after the initial rate period ends, which means that the ARM rate can lag the market by up to 11 months. ARMs that adjust the rate monthly use rate indexes that are themselves lagged indicators, such as the cost of funds index (COFI).
Alert rate monitors: These ARM borrowers are prepared to monitor the market and can take the risk of being caught. To minimize that risk, I advise adopting an operational rule, such as this one: "As soon as the (monthly value) of the (Treasury one-year rate series) reaches (2.5 percent), I will refinance into a (fixed-rate mortgage)."
The first bracketed term might be weekly, the second might be a different rate series, and the third might be a different target rate. I would expect the target rate to be higher for a borrower with an ARM rate 2-3 percent below the current FRM rate than for one with an ARM rate only 1-1.5 percent lower.
The rate series used should be one of the open market series that are available daily and weekly as well as monthly. These include the Treasury and Libor rate series, which are used as indexes on many ARMs that adjust annually. Avoid COFI, CODI, COSI and MTA, all of which lag the market. You can find the open market series at www.mortgage-x.com and www.federalreserve.gov/releases/H15/update/.
Alert market monitors should also be alert refinancers. You can't refinance in a day, or even a week, but you can minimize the time required by developing your refinance strategy beforehand. This means selecting one or several loan providers who you will contact as soon as you have decided to refinance.
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.
Buyers in some areas complain about walking into an open house and finding dirty laundry in bedrooms. In places like the San Francisco Bay Area, so many listings are well presented for sale that sellers who don't stage their homes are at a disadvantage.
Occasionally, a home shows beautifully as is and needs little work to get it ready to sell. A listing in the hills above Oakland, Calif., came on the market last year without the aid of a professional stager and sold for the asking price within a week. The house had just been renovated and the sellers had great taste. Their furnishings and paint colors were perfect for the house.
Most sellers need to put more effort into preparing their homes for sale if they want to sell successfully. Some of this work can be done on their own, like decluttering, painting and sprucing up the yard, if they have the skills, time and are so inclined.
Many sellers will benefit from hiring a stager, which is a decorator who specializes in preparing homes for sale. Finding the right stager is important. You want to hire someone who will give your home a look that will sell it for the highest price possible.
HOUSE HUNTING TIP: One way to get familiar with different stagers' work and style is to visit Sunday open houses. Usually stagers display their business cards at the property. If not, ask the agent holding the house open if it was staged. If so, ask for the stager's name.
Most professional stagers have Web sites where you can find out more about them and preview samples of past staging jobs. Your real estate agent is a good resource. Some real estate agents have a favorite stager. If your agent has had success working with that stager, that could be an obvious choice. You're looking for results. A stager who has a good track record in your area is someone to seriously consider.
If you live in an area where staging is not popular, ask your agent for the name of an interior decorator to consult with about how best to arrange your furniture and artwork. Make sure, before you pay for a consultation, that this person can also select colors for you if your home needs painting.
Some sellers talk to several stagers before deciding on one. Each stager should meet with you at the property. Try to arrange for your agent to attend the meeting to give input on how the house should be staged to appeal to the most buyers. For example, should a bonus room be staged as a den or home office?
Find out if the stager can use some of your personal possessions -- those that are appropriate for selling the house. The staging cost should be less if the stager doesn't have to bring in as much furniture and accessories. Ask if the stager will select paint colors. If not, there might be an additional cost for hiring a colorist.
A stager should provide you with a written proposal, including the scope and price of the job, the term of the contract, and the cost to extend, if you need it. In this market, it could take months to sell your home. Staging contracts usually run for two to three months from the date the house is staged. Extensions are usually 10-25 percent of the original fee for each additional month.
Deciding who should stage your home shouldn't be based on price alone. A cheap look is not going to generate an enthusiastic response. Go with the best stager you can afford.
THE CLOSING: You want your home to look amazingly good so that it creates a buzz among buyers and their agents.
Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide."
I love Tim Burton films. That a single director's filmography includes "Beetlejuice," "Edward Scissorhands," "The Nightmare Before Christmas" and the disturbingly delightful-looking "Alice in Wonderland" is absolutely amazing.
I crave to know what it looks like on the inside of Tim Burton's head. If what comes out of there is any indication, I suspect he lives in a totally different reality than the rest of us -- one of swirly, brilliantly colored gorgeous/grotesque beings that are certainly not of this planet -- among plants, buildings and even machines and buildings, that bear only a whiff of a resemblance to the material of the world in which you and I live.
While Tim Burton's creative genius might be unparalleled in the world of film, in the business of real estate he certainly has challengers for Best Resident of a Fantasy World: sellers.
Yep, sellers are Tim Burton.
Lest you think I've gone madder than Johnny Depp's Mad Hatter, allow me to explain. Some sellers resemble Tim Burton in one key respect: fantasy. They live in a magical fantasy world where anything is possible (like, their home appraising at 40 percent more than the identical home next door that sold 10 minutes ago).
It's a world populated by mythical creatures, like the well-qualified cash buyer who finds the cat pee stains on your hardwood floors to be a charming touch reflecting your love of animals, and is willing to pay you tens of thousands of dollars more than any comparable home in the area just to help fund the downpayment on the seller's next home.
I work with more buyers than sellers, so sellers' fantastical thinking is more apparent from the other side of the home-viewing-and-negotiating table where I sit. But buyers can be Burtonesque, too.
When they think, because they've heard it's a "buyer's market," that sellers will be greeting them at the doorway with offers of foot-washing and orchid leis, offering to sell them their homes for less than they (seller) paid and less than they (seller) owe, buyers are dwelling in Tim Burton-style fantasy.
When they totally ignore the recent comparables and sales data documenting what a home is worth, and make wildly lowball offers -- and expect a seller to take them? When they think that they have weeks to sit and get really comfortable with the idea of making an offer on the "perfect home at the perfect price," when comparables sell in a day or two? That is buyer Burton-ism at its best. I mean, worst.
Now, it's one thing to know what you can afford or want to pay and be firm, knowing that you may or may not get the property, and being totally comfortable taking that risk. But, to be righteously indignant that investor sellers should want to make a profit by selling a home at a well-supported fair market value, because you "don't like" the idea that they bought it so low (before investing thousands adding the touches you love, but could never afford to add)?
To be totally outraged and angry at your home's listing agent because the too-high price you set against their advice, combined with the too-cluttered and too-dated appearance of your home (also against the agent's advice), is getting no offers and bad buyer feedback?
Fantasy. Land.
While the Tim Burton analogy frames this conversation with a humorous, lighthearted cast, let's get serious here. These real estate fantasy lands are dangerous. For Tim Burton, fantasy pays -- in fact, it's his stock in trade.
For buyers and sellers in the real estate market, on the other hand, fantasy costs. It can cost you tens of thousands of dollars. It can cost you your dream home. It can certainly cost you your sanity and peace of mind in terms of creating regrets you deal with for many moons after your transaction is over.
The conventional wisdom among brokers and agents (which has been proven many times over) is that a property priced correctly out of the gate can generate multiple offers in almost any market climate.
Homes listed too high simply sit on the market, and while one price reduction strikes most buyers as an indication that a seller is willing to deal, obviously overpriced homes that fail to course-correct and lag on the market unsold cause buyers to speculate that something might be wrong with the home and/or the seller.
There is virtually no agent among my colleagues who hasn't experienced or witnessed a perfectly saleable home that ends up sold below its fair market value because it was overpriced for overlong. Attention sellers: Fantasy costs.
Buyers who insist on looking only at bizarre, irrelevant sales data in an effort to support their lowball pricing, or who otherwise evidence Burton-inspired buying practices, often end up losing their "dream home" to other, more realistic buyers.
They may miss the peak of favorable market dynamics and incentive deadlines (or funds availability for first-time-buyer programs); or lose their minds from exhaustion, frustration and depression with their fantasy-based attempts to make a square house fit into their mental round homebuying frame of reference.
What's behind this fantastical thinking? Well, some buyers and sellers allow their attachment to their wants and desires, their fantasy "after" picture of their life, to blind them to the real estate reality.
Others can chalk it up to the nature of homebuying and selling as a hybrid business transaction/lifestyle transformation -- that makes it extremely easy for both buyers and sellers to overindex on the emotional investment in the transaction, sometimes unfortunately resulting in an under-attention to the cold, hard facts about their home and the market.
I'm a huge proponent of holistic homebuying and selling, with attention to all the impacts -- not just the financial ones -- on a buyer or seller's life. But to err on the side of overemphasizing the lifestyle to the exclusion of the actual, unbiased data handicaps buyers and sellers, and costs them big time.
My advice? Listen to your agent. Read the numbers he or she gives you -- and take them seriously. And go see a Tim Burton film. Don't be a Tim Burton.
Q: I filed for bankruptcy in 2008 and then lost my job in 2009. I'd like to keep my condo and my car, even though those debts were included in the bankruptcy. If I can sell my condo for more than its payoff amount, can I keep the money or do I have to pay it back to the bankruptcy court?
Second, if I am not able to sell the property and it goes into foreclosure, am I still responsible for the mortgage? Will there be attorney fees, etc., that I will be responsible for?
A: One thing about bankruptcy is that it is a tool that can be used only very, very sparingly. In most cases you must wait six years after one discharge to file again. So, you find yourself in a Catch-22 now, where you can't file again but also can't pay your bills.
I've certainly had clients who were in a financial bind hang on and put off filing to have some alternative to turn to in case their jobs went south. But I've also had others, like you, who filed, lost their jobs and wished in retrospect that they'd toughed it out and reserved bankruptcy as an absolute last resort. You live and you learn.
The answer to many of your questions is, "It depends." The implications of selling your condo at a profit or losing it to foreclosure depend on (a) under what chapter of the bankruptcy code you filed, and (b) what state you live in.
Chapter 13 bankruptcies are essentially just a three- to five-year repayment plan, so your discharge probably has not even occurred yet, if that is the flavor of bankruptcy you elected.
If you filed under Chapter 13 of the bankruptcy code, you were probably ordered to provide the bankruptcy trustee with your tax returns for the duration of the repayment period, and to report to the trustee if your gross income increases by more than 10 percent of the amount you reported at filing.
Selling your home at a profit is an increase in gross income, and must be reported to your bankruptcy trustee. And, yes, chances are good that the trustee will seek to capture that income (profit) for your creditors, unless an exemption applies. Talk with your bankruptcy attorney to get clear on what your likely outcome would be before you put your home on the market. If your bankruptcy was a Chapter 13, your case is still open and the trustee will actually have to be involved in the sale of your home.
If you filed for bankruptcy under Chapter 7, you are required to report changes in your financial circumstances, including income, that occur within 180 days after your case was filed, not discharged. Based on a 2008 filing, if you filed a Chapter 7 bankruptcy you should be fine, even if you sell your home now for more than your payoff. But, again, talk with your bankruptcy attorney before you move forward.
In some states, known as "recourse states," the law does allow lenders to foreclose on a home and still sue the defaulting borrower for the difference between what was owed (including legal fees the lender incurs to execute the foreclosure) and what the lender is able to sell the home for.
A few states require lenders to choose a single lawsuit against a defaulting borrower; they can foreclose, or they can sue you, but they can't do both. Mortgage banks' preference in these "one action" states is almost always to foreclose, so they can at least have the house to sell off and recover some of their losses.
Other, "nonrecourse" states prohibit lenders from pursuing the borrower after they foreclose on the home that secured the mortgage. In reality, most lenders today are not pursuing borrowers after they foreclose on homes, primarily because (a) litigation costs money and (b) most homeowners who have lost their homes are what we call judgment-proof (aka "broke" -- they have no assets for the lender to recover against).
If it looks like you're going to lose your home to foreclosure, it might be worthwhile to consult with a local real estate attorney and an accountant so you can get a truly accurate sense for what the tax and legal ramifications of foreclosure will be, customized to your personal situation.
If you're thinking of listing your home this spring, now is the time to be thinking about one of the most important elements of real estate marketing: curb appeal. It's your one and only chance to make a first impression on a potential buyer, so make it a good one! Here are some suggestions to make your home stand out from the rest:
1. Get some new eyes: The thing about curb appeal is that you need to look at your house through a stranger's eyes, not through your own. You don't even notice the faded paint on the trim or the missing house numbers, but other people do. So if you can't be honest and objective about the overall condition of the exterior of your home, find someone who can.
If you have a friend, relative, or neighbor who you trust to be honest with you (and that you have a good enough relationship with that it will survive their bluntness), then ask them). Ask your real estate agent. If necessary, hire a landscaper or a contractor to act as a consultant.
The main thing is to get a comprehensive, written list put together of what needs to be done to the outside of your home to improve the first impression it makes. Concentrate on the front, but don't overlook the sides and back either.
2. Start with basic repairs: The very first thing on your curb appeal list should be basic repairs. Is there a broken window? A torn screen? A loose gutter or downspout? A sagging screen door? It doesn't matter what it is or how small it is, fix it.
They may seem like little things, but making sure that everything is in proper working order can make a huge difference in how people perceive your house and the care you have taken with it as a homeowner. Make sure you have big, bright, easily visible house numbers. Oh yeah -- and don't forget to squirt a little oil on those squeaky door and gate hinges.
3. Next, do some cleaning: Break out the broom and clean the outside of your house better than it's ever been cleaned before. Rent a pressure washer, and clean the driveway, walkways and patio. Clean your decks and your siding (a scrub brush is a better choice in these areas than a pressure washer, to avoid damage to the wood). If your wood deck is badly weathered, consider a deck cleaner and brightener made specifically for that purpose -- available at paint stores. Wash all your windows, inside and out, including the window screens.
4. Declutter: Just as you would with the interior, you want to declutter the outside of your house as well. Pick up the kids' toys, and put away the garden tools and hoses (remember, you're going to have people visiting the house, so this is also a liability issue). Remove all that accumulated junk from the sides and back of the house, and haul it to the landfill.
5. Next, tackle the landscaping: As part of the decluttering and general cleaning, do the landscaping areas as well. Prune overgrown plants and trim back overhanging tree limbs. Pull out anything that's dead. Rake up leaves and needles, and pull weeds. If you have an underground sprinkler system, make sure everything is working properly. If you have a lawn, fertilize and water it regularly to green it up, and run an edger along sidewalks and driveway edges.
In your planter areas, you can make a huge difference in how your house looks with the simple addition of some fresh bark and colorful flowers. And if you don't have any planter areas, create a few, or add some simple planter boxes to do the same thing. There's nothing like color to really catch the eye and give your home a bright, fresh appeal.
6. Consider a trip to the paint store: Few things help your home show better than a fresh coat of paint. If it's been awhile since the outside of your home's been painted, this might be a worthwhile investment, especially in a tough seller's market. If you're handy with a brush and an airless sprayer, you might just want to undertake the project yourself. A long weekend and a few hundred dollars in paint can make a world of difference in how well the home shows and how quickly it sells. Otherwise, talk with a licensed painting contractor for an estimate.
Maybe painting the entire house isn't really necessary. Sometimes just a fresh coat of paint or maybe a new color on the trim, exterior doors, garage door or window shutters can make a big difference as well.
A word of caution about paint colors: When painting the house for resale, select colors that complement the house and the neighborhood and that will appeal to the greatest number of buyers, whether they happen to be your favorites or not. You may have really been itching to paint the house purple with black trim, but save that for another day.
Remodeling and repair questions? E-mail Paul at paulbianchina@inman.com.
By November 2009, the share of the home-loan market flowing to adjustable-rate mortgages (ARMs) had slipped below 6 percent. In a sense, this venerable product that has been with us for decades has almost disappeared from the marketplace. And that's a shame, because the basic ARM is a useful and efficient alternative to fixed-rate mortgages.
The problem for ARMs is that the financial services industry almost engineered the ARM into oblivion, creating numerous, obscure, high-risk products for consumers such as interest-only ARMs and option ARMs, both of which involved a formidable amount of payment shock.
Seemingly congenial, the interest-only ARM, as an example, allowed the consumer to initially pay just the interest and not the principal. Wow, what a break for the borrower, right?
Not really, because the mortgage continued to amortize, which meant that at the end of the interest-only period, payments increased substantially. Since interest-only ARMs and their brethren were often sold to consumers with income or credit deficiencies, when the payments reset it was almost a certainty the borrower would not be able to afford the terms.
"ARMs are not evil," asserts Keith Gumbinger, vice president of HSH Associates, a Pompton Plains, N.J., mortgage rate tracking firm. "The traditional ARM has well-demonstrated and well-understood risk. It's when you get into exotic payment methodologies where you are making payments that don't even cover the interest that things go badly. The problem isn't the ARM -- it is the payment structure which is overlaid on top that helps the borrower dig a deeper and deeper hole."
As a result of these engineered ARMs and the problems they have wrought, all ARMs, even the basic product, have been tarred.
"It has gotten to the point, where consumers, looking at ARMs, consider it toxic," says Gumbinger. "It is like touching the third rail of mortgage lending."
All this is unfortunate because ARMs are strategically useful to some consumers. The attraction with the ARM was a lower interest rate for the first, mostly five years. Then, there was a reset. Before 2007, most homeowners with an ARM usually refinanced to a fixed-rate mortgage before the resetting of the ARM to higher interest rates, or they moved to a new property.
"If you have a fixed horizon -- that is, if you know you are moving in five years, seven years or 10 years because of the particular stage of life you are in -- child going to college or for business purposes -- the ARM is a good product," says Neil Sullivan, president of Westfield Mortgage LLC in Westfield, N.J.
Let's say a family has three children under 3 and one of the parents has landed an excellent job. At the moment, the family could afford only a starter home, but the mother and father know that in a couple of years they will need to move to a bigger house.
In that circumstance, says Sullivan, "there's no reason why they should have to pay a traditional amortization of 30 years. The family could use the extra money in the first five years, and they don't need to pay the cost of having the fixed-rate option for years six through 30."
About mid-year 2009, some of the homebuilders such as Toll Brothers Inc. decided to revive the ARM with a product that offered borrowers an interest rate of 3.75 percent for seven years. There was also a lifetime cap of 8.75 percent. In other words, after the reset, no matter what interest rates were at the time, the rate on this loan would not climb above 8.75 percent. No word on how effective the ARMs were in generating new business, but Toll Brothers' fourth-quarter net signed contracts were above levels of the same period in 2008.
That 3.75 percent looked awfully good, as the rate on the 30-year fixed was at least a full point higher at the time -- and that didn't make it a teaser rate.
"Today, with an ARM, you have an attractive interest rate," says Gumbinger. "The interesting thing is, you hear that these are teaser rates -- an artificially low interest rate designed to trick the borrower into taking an ARM. Technically, the phrase 'teaser rate' does have a definition: an interest rate that is below the value of the index that governs it. The introductory rate on ARMs are not teaser rates, and in many cases they are as high as the fully indexed rate or the sum of the index plus margin."
Today, if a consumer does find an ARM with a 3.75 percent introductory rate, as with the Toll Brothers loan, there is generally a cap of no more than 8.5 percent to 8.75 percent, which is not only reasonable but for many who are of baby boomer age something that was once the norm in their early homebuying years.
For the past two years, the mortgage market has been heavily weighted toward the traditional 30-year, fixed-rate product. That was to be expected, as there was a definite fallout from the exotic mortgage products that trapped millions in unfortunate and unaffordable payment situations.
Also, anyone buying a home in the past two years was probably looking for a more secure situation, and the 30-year, fixed-rate mortgage is our financial version of comfort food.
Just don't count the ARM down and out for good; 2010 could be the year of the comeback.
"Going forward in 2010, we do have some expectation that fixed interest rates are going to rise somewhat," says Gumbinger. "At the same time, the Fed is expected to keep short-term interest rates low, and it's the short-term rates that govern the prices of ARMs. So, a gap between the fixed-rate mortgage and the ARM will probably widen in 2010 and that would make the ARM more attractive again."
Steve Bergsman is a freelance writer in Arizona and author of several books, including "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade."
In a recent column, we explored some of the steps suggested by longtime housing experts that would allow traditional forces to return to the market.
While the initial moves are not easy, they are somewhat logical: Scrutinize the loan qualifying process, subsidize those who would be temporarily displaced from the homes they could never afford to begin with, and instruct lenders to reduce principal loan balances for qualified borrowers.
The amount of the reduction probably would be dictated by the borrower's present equity position and income. The goal is to eliminate some of the inflated appreciation brought by years of cheap money and overheated demand.
Some lenders are already seeing the writing on the wall, especially where the present value for a home is far greater than what the market would realistically bear. They want to continue in the home-lending business, not the homeowning business. The costs of repairing, maintaining and selling a vacant home can be expensive, not to mention the legal preparation and the actual foreclosure process.
The financial "haircut" taken by the lender to reduce the loan principal may outweigh its cost and internal labor and anxiety of finding another buyer.
For example, Joyce Lennon, 71, has a little home of approximately 1,000 square feet. The place was built in 1910 and has a two-car garage with a small rental unit -- all situated on a 5,000-square-foot parcel of land. The property was appraised at $285,000 and its drive-by condition was "fair" at best.
"Joyce's problems started when she injured her arm late last year and lost her job," said Maggie O'Connell, reverse mortgage specialist for The Reverse Mortgage Store. "She didn't make mortgage payments for all of 2009."
In an attempt to lower her monthly payments, Joyce first investigated the various loan modification programs offered by government incentive programs. Not one of them proved helpful.
She then looked into the possibility of a reverse mortgage, but the combination of her age and property value proved to be a challenge. And, borrowers are not allowed to refinance a current loan or acquire "subordinate" financing simply to acquire a reverse mortgage.
A reverse mortgage historically has enabled senior homeowners to convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment. Reverse mortgages are available to individuals 62 or older who own their home. Funds obtained from the reverse mortgage are tax-free.
A year ago, the government backed a program to help older homeowners purchase a home with a reverse mortgage. This new program can be particularly helpful for older people seeking a way to purchase a home closer to an adult child or grandchildren, or a smaller home in a nearby community.
The move allows older homeowners to make a large downpayment on a new home and then utilize the reverse mortgage as permanent financing.
Reverse mortgage fees also have been reduced. The maximum loan fee is 2 percent on the initial $200,000 of the home's value and 1 percent on the balance thereafter, with a cap of $6,000. Previously, fees were capped at 2 percent of the home's value or the county lending limit, whichever was lower.
"I had worked with her a few years ago, trying to get the numbers to work," O'Connell said. "I knew quite a bit about her situation. This time, we were able to work with the lender so that she could stay in her home with no payments for the rest of her life. They could have forced the sale and collected the full payment, but chose to work it out."
Deutsche Bank, the huge international financial agency, had purchased Joyce's loan. The bank reduced the amount it was owed to the level where a reverse mortgage would work.
O'Connell also eliminated her commission to help matters and estimates the bank took an $85,000 haircut on a home it did not want on its books, which allowed Joyce to stay put. The bank received its money in cash from the proceeds of the new reverse mortgage in the same fashion as a conventional refinance.
"This turned out to be a godsend," Joyce said. "I did not want to move but I knew I might have to because I couldn't make those payments. Now, I don't have to make any payments."
Joyce is required to keep all taxes and insurance current on her home -- but it is still hers.
Tom Kelly's book "Cashing In on a Second Home in Mexico: How to Buy, Rent and Profit from Property South of the Border" was written with Mitch Creekmore, senior vice president of Houston-based Stewart International. The book is available in retail stores, on Amazon.com and on tomkelly.com.
Q: A while back, you wrote a column about replacing a wood shake roof with asphalt shingles. You said it was necessary to install new plywood or OSB (oriented strand board) sheeting over the one-by-four skip sheeting to provide a surface to nail the asphalt shingles. I would like your opinion on an alternative to the OSB. I thought I might fill the spaces with one-by-fours.
A: Skip sheeting is used primarily with the installation of wood shake roofs. The one-by-four or one-by-six boards are nailed to the rafters, leaving a gap between each board. This allows air to circulate under the shakes.
Years ago, Kevin watched with amusement while a couple of workers stripped the old roof from his next-door neighbor Al's rental house, filled in the skip sheeting with salvaged wood and put on new three-tab asphalt shingles.
Al's middle name was "frugal." He stockpiled material salvaged from work he did on his apartment buildings for use elsewhere. The stockpiled casework and baseboard he'd salvaged found a perfect place on the roof and saved him from buying new plywood sheeting.
The workers weren't happy, as they had quoted a fixed price for the job and spent the bulk of their time with a circular saw cutting and fitting the old material. When all the gaps were filled, the sheeting was every color of the rainbow because of the use of old painted casework and baseboard.
To answer your question, filling in the gaps with one-by-fours is a bad idea. Don't do it. It's more work, gives you a lower-quality job and costs more money. These days, a 4-by-8-foot sheet of 7/16 inch OSB costs in the neighborhood of $6. Even if one-by-four pine costs 30 cents a foot, you'll spend more than $10 in material to fill in the 32-square-foot section covered by one sheet of OSB, and it'll take at least twice as long to install.
It's much easier and more cost effective to nail down OSB panels over the skip sheeting. Just make sure to nail through the one-by-fours and into the rafters. Doing it this way will also create what is essentially a one-piece roof deck, providing added protection in case of an earthquake.
And now to a bricklayer's lament: Several weeks ago we told a reader how to remove a brick chimney located in the center of her house. Our advice prompted reader Sam Phillips to send us the following tongue-in-cheek story. While it's most certainly an urban legend, it's a reminder to put safety first and be careful out there.
"The Bricklayer's Lament," as told by Gerard Hoffnung at the Oxford Union, Dec. 4, 1958:
"Respected Sir,
"When I got to the top of the building I found that the hurricane had knocked some bricks off the top. So I rigged up a beam with a pulley at the top of the building and hoisted up a couple of barrels full of bricks.
"When I had fixed the building, there was a lot of bricks left over. I hoisted the barrel back up again and secured the line at the bottom, and then went up and filled the barrel with extra bricks. Then I went to the bottom and cast off the line.
"Unfortunately the barrel of bricks was heavier than I was, and before I knew what was happening, the barrel started down, jerking me off the ground. I decided to hang on, and halfway up I met the barrel coming down, and received a severe blow on the shoulder. I then continued to the top, banging my head against the beam and getting my fingers jammed in the pulley.
"When the barrel hit the ground, it burst at its bottom, allowing all the bricks to spill out. I was now heavier than the barrel, and so started down again at high speed.
"Halfway down I met the barrel coming up, and received severe injuries to my shins. When I hit the ground I landed on the bricks, getting several painful cuts from the sharp edges.
"At this point I must have lost my presence of mind because I let go (of) the line. The barrel then came down, giving me another heavy blow on the head, and putting me in (the) hospital.
"I respectfully request sick leave."
Q: While my son and his girlfriend were visiting us over the holidays, a water main in their apartment burst and flooded their apartment. All of their possessions -- clothes, furniture, everything -- were ruined by the water or the resulting mold. Is the landlord responsible for replacing these items? --Sharon P.
A: If your son had renters insurance, the answer to your question would be short and sweet: Call the agent and file a claim. Renters insurance, which typically costs just a few hundred dollars a year, will cover the damage you've described.
But since you didn't mention it, I'll assume there's no insurance to cover the damage. Then, the answer to your question depends on why the water main broke -- and more specifically, who's responsible.
The main itself is under the control of the landlord, as are other major elements of the building and its systems. If the break resulted from the landlord failing to maintain it, one could argue that the landlord was negligent.
For example, if the owner knew that the pipes were in danger of bursting (because they were old or had been repaired in a faulty way, for example) but did nothing to deal with the problem, your son might be able to convince a judge that the landlord's carelessness resulted in the break, which resulted in his losses.
That will get your son's foot in the door to make a claim against the landlord's insurance policy. The insurance carrier, which has contractually agreed to pay for damages caused by the landlord's negligent acts, should step up.
But suppose the pipe burst from no fault of the landlord? Did unusually cold weather put stress on a pipe that normally would hold just fine? Or did the pipe break for no apparent reason, with no warning? If the landlord was not negligent, he isn't responsible for the damage suffered by his renters.
Losses that result from accidents or defects on the property are the landlord's responsibility only if he was careless or otherwise actively failed to maintain the property.
(Here's an interesting wrinkle: Suppose the pipe burst through no fault of the landlord, but he was inexcusably slow to respond and made no efforts to save his tenants' possessions, knowing the residents were absent. Then, you'd be dealing with negligence in the landlord's response, which might be enough to lay responsibility on him for damage, such as mold, that could have been avoided had he acted promptly.)
Back to renters insurance, for a moment. If your son had it, the carrier would pay him with no questions asked regarding the culpability of the landlord. If the carrier suspected that the landlord had carelessly failed to maintain the pipes, it could proceed against him (or, more likely, his insurance company), to be reimbursed for what it already paid your son. And if your company couldn't pin the cause on the landlord, they'd be out of luck -- but your son would still have his money.
Q: I run a seniors' housing community (55 and older). I've asked my tenants to help me verify that I'm complying with the rules, but some say that I can't ask about their age now that they're tenants, that it's age discrimination. What should I do? --Henry B.
A: Most of the time, landlords cannot ask tenants or prospects how old they are. The federal fair housing laws prohibit familial status discrimination (which includes age), though owner-occupied properties with four or fewer units are exempt. The laws of many states and localities echo and expand federal protections, and some close the owner-occupied loophole in the federal scheme.
But owner-occupier exemptions aside, landlords are entitled to ask about age when they advertise and run a "55 and older" property. These are rental properties where at least 80 percent of the residents are 55 years of age or older. Obviously, you can't comply with the law unless you ask.
Your current tenants' displeasure at being asked to provide continuing proof of their age is unfortunate, but they have no legal basis for their complaints. You'll need to explain to them that you face continuing responsibility to be able to prove that you're complying with the law. Now, you'll doubtless hear an exasperated response that no one is getting any younger, but that doesn't help you much.
For example, you may be thinking that the spouse of the couple in Unit A who was under 55 at the time they moved in is now older than 55, which increases your over-55 population. That, in turn, will allow you to accept one more under-55 resident, and still maintain your 80 percent mix. You can't confidently accept that additional under-55 prospect without verifying that a slot exists.
One way to prepare residents for these ongoing questions is to include a clause in your lease or rental agreement, explaining that you will need to ask for verification of age periodically to maintain your legal tenant mix. Prospects who are about to rent from you should have no objection -- after all, they've chosen a seniors community.
Making it clear from the start that you'll need to verify age throughout the tenancy should eliminate the element of surprise when you ask, tactfully, for a copy of a driver's license, passport or other official proof of age.
In a similar fashion, landlords whose loans require them to rent to a certain percentage of low-income tenants, or those who participate in affordable housing programs or the Internal Revenue Service's low-income housing tax credit program, will need to gather financial information from tenants periodically in order to maintain their status.
All such landlords should use lease clauses that permit them to ask about income and jobs, as well as any other information they will need to comply with the terms of their loan or housing program.
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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