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Starting a business is an exciting time. But statistics show that over half of new businesses in the Phoenix, Arizona area fail within a few years. Business writers have commented as to why this happens.   Here are some of the most common reasons why new businesses fail:

  1. Insufficient capital. A new business cannot be expected to turn a profit for at least one year so the owners must have sufficient capital reserves to pay business expenses and also their own living expenses for the first year.
  2. Lack of management experience.
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Certainly there are pros and cons to having an agent represent you when buying or selling your home. But to answer the direct question of whether an agent is needed is simple. In Arizona you do not need a real estate agent to buy or sell your home. While an agent is not necessary, there may be some practical reasons why someone would want to hire one.

Agents can often assist with preparing contracts and counteroffers that most people may not be aware of. They may be able to assist with appropriate time frames for responses and discuss what reasonable requests can be made or should be expected in the transaction. Agents often times have connections to other professionals who can assist in the process. These connections might include mortgage lenders, contractors or home inspectors to name a few. It is certainly possible to find these individuals on line, but sometimes helpful to get a personal referral.

While the above reasons are important, the most helpful thing an agent will do is to save you time. A good agent will know what you are looking for ahead of time and they will be able to narrow down the houses available to find a group of houses that fits your needs. This is certainly possible to do on your own, but with an already busy schedule many buyers simply don’t have the time. Of course, this is one of the main reasons agents get paid. To be sure it is a valuable service and your agent will be paid by taking a commission out of the sales price.

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A Lis Pendens is authorized by A.R.S. §12-1191 to be recorded when a lawsuit is filed that affects title to real property. The purpose is to give notice to prospective buyers and lenders that a title issue may exist.

It has come to our attention that some Phoenix Homeowner’s Associations have aggressively used a Lis Pendens when filing lawsuits against homeowners. In our opinion, this was done for its coercive effect. The recording of a Lis Pendens clouds a homeowner’s title and the home cannot be sold or refinanced until this cloud on title is removed.

Homeowner’s Associations that choose to use this tactic do so at their own risk. There is a fine line between lawsuits that will support the use of a Lis Pendens and those that will not. If a HOA errs, it can be subject to a lawsuit to collect $5,000.00 in statutory damages plus costs and legal fees pursuant to A.R.S. §33-420, the Arizona Statute dealing with wrongful recordings.

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Bankruptcies and Foreclosures were common just a few years ago and are still occurring. The vast majority of our Clients have never experienced these problems or procedures before, but often there simply are no other sensible options.

Understandably, Clients are concerned as to how these procedures will affect them. They ask how much their credit will be damaged, how long will the damage last and when can they consider buying a home again.   The answers to these questions will be different for each person. Some recover quickly—usually those with good jobs—and others continue to have financial difficulty. However, some answers are available.

Included below is information about how long potential buyers must usually wait before applying for mortgage financing. As it turns out, the wait can be different depending upon the type of loan being applied for.

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Buying a home is a major undertaking, yet I continue to be amazed by how casually this process is treated by many. We often meet these buyers after their transaction closes and something has gone wrong. What might have been handled before close of escrow has now become a major and potentially expensive problem.   The excitement of a new home purchase has been destroyed and turned into a stressful situation. Here are some steps that we recommend a buyer consider to make this process as trouble free as possible.

  1. Hire an experienced realtor. It seems that everyone has a friend, relative or neighbor who holds a real estate license. Don’t hire them. Hire an independent and experienced professional realtor. Sign a buyer broker agreement so you know that your realtor represents only you and is loyal only to you. Avoid a dual agency situation where the agent represents both buyer and seller. A dual agency is a common arrangement and can work fine so long as no problems arise. But if a problem develops it is good to know that you can rely upon an agent whose loyalty is to you alone.
  2. Shop for a loan before shopping for a home. Meet with several lenders. Assemble a package of information for your lenders and make multiple copies. Become pre-qualified and learn how large a loan you can obtain. Also determine how large a loan you are comfortable with. Sometimes the two are not the same.
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Selling your home is a complicated process. The Arizona Real Estate market is constantly changing.   Many things can go wrong. With a transaction valued in the hundreds of thousands of dollars, any error can be an expensive one. Unless you are a sophisticated seller, we highly recommend that you educate yourselves to the extent possible and then obtain help from experienced professionals. Here are a few things that we believe a seller should consider.

  1. Obtain a pre-listing home inspection. This will identify items that should be fixed before you put your home on the market. This is also a good time to tend to cosmetic repairs that have been neglected over the years. Your home should be generally spruced up, neat, clean and de-cluttered before you interview real estate agents.
  2. Investigate the market for similar homes in your area. Consult online services such as trulia.com, Zillow.com or realtor.com.   Visit open houses in your area. Be objective about the pricing of your home. The amount you paid and the cost of your improvements are not relevant.   The most relevant data is what price similar homes in your area are actually selling for.
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Homeowners associations, or HOA’s as they are commonly referred to, are governed by Arizona Revised Statutes Title 33 Chapter 16 under planned communities. These statutes deal with various components such as Penalties, open meetings, exceptions, financial and other records to name a few. Although these statutes exist, oversight is often minimal. Most homeowners find themselves dealing with their HOA in regards to the codes, covenants and restrictions, or more commonly known as the “CC&R’s.” The CC&R’s are restrictive covenants that “run with the land” and thus, if one member sells a home he is no longer part of the association and the new owner takes his place, and is subject to the restrictions that attach as well.

All homeowners in a given development have to follow the restrictions set forth in the CC&R’s. The general purpose for HOA’s is to protect the property value of the owners. However, this often comes at the expense of abdicating rights a homeowner would otherwise have control over. Things like home color, landscaping, additional structures and even parking. HOA’s have control over most aspects of ownership and the have many methods to enforce these restrictions including the threat, or actual levying of fines, liens and legal action against an individual homeowner. Given the broad powers of an HOA to enforce its goals, an individual homeowner can be faced with a daunting task of defending themselves if the association deems them to have run afoul of the CC&Rs.

If an HOA is trying to enforce restrictive covenants on you as a homeowner, it is important to know what they can do, and perhaps more importantly, what they can’t. Most HOA’s have general review or architectural design committees charged with the task of making sure homeowners requests are in line with the CC&R’s. When an HOA seeks to enforce a restriction, it must do so in good faith and not act in a manner that is arbitrary or capricious. Moreover, the enforcement procedures must be fair and applied uniformly to all homeowners.

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The baby boomer generation is aging. Over the next decade or two there will be an enormous transfer of wealth to the next generation. This should be a good thing. The intention is good—to provide for the next generation—but actual results are often disappointing. Everyone is familiar with the statistics on lottery winners. Many lottery winners will have lost most or all of their winnings within just a few years. It is the same with inheritances. A large percentage of inheritances is quickly squandered and lost. This is tragic. Not only is the work, thrift and discipline of the previous generation discarded, but the education, retirement and dreams of their children are lost or impaired.

So what can be done to prevent the next generation from acting rashly and spending inherited funds unwisely? Unfortunately, there is nothing that can guarantee that the next generation will act responsibly. But there are some things that will certainly help. Here are a few that we have found to be helpful:

  1. All family members need to develop the discipline of saving and know the basics of investing. This is a process that ideally starts when children are small but can commence at any time.
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A reverse mortgage is a financial device where borrowers can receive money based off the amount of equity they have in their home. Reverse mortgages offer a tool for senior citizens to supplement their retirement income. To be eligible for a reverse mortgage, a borrower must be at least 62 years of age. There are also restrictions regarding the residence. To name a few: it must be the borrowers’ primary residence, it must be in good condition, it must be paid off or almost paid off and it must be a single family home.

Unlike a traditional mortgage, a borrower in a reverse mortgage receives payments instead of making monthly payments back to the lender. This is true as long as the borrower lives in the home. Payments from a reverse mortgage can be in the form of one-time upfront payments or in monthly payments to the borrower. The borrower is however, still responsible for HOA fees, property taxes and insurance on the home. The balance of the loan becomes due once the home is sold or the borrower passes away.

Reverse mortgages are an alternative means to tapping the equity a borrower has in their home. More conventional options include selling the home, refinancing or taking out a home equity line of credit. However, these options may not be available or suitable if the borrower does not wish to move or is otherwise not qualified to obtain additional financing.

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A Living Will is different from a normal Will.   A Will is a common estate planning document that controls the distribution of a person’s property after he or she dies. It is not effective until death. A living will, however, is effective during a person’s lifetime and serves a wholly different purpose.   Also known as an “advance directive” a living will allows a person, in advance, to give written instructions for medical treatment should he or she become terminally ill and be unable to communicate with a physician or family member. Most states have laws authorizing living wills/advance directives. Arizona’s statutes are found at A.R.S. §36-3201, et.seq. A sample Living Will can be found in A.R.S. §36-3262.

Medical care has become so good that life can be extended artificially for long periods. Physicians often opt to extend life where possible, but this may not be what a patient wants. Few of us want our lives to be artificially extended where we are terminally ill with no chance of recovery. Most want to be allowed to die with some dignity.   This is where a living will comes in.

A Living Will provides a means to control the medical procedures provided to you at a time when you cannot speak for yourself.   In most cases, this amounts to a description of what services are not wanted in the event of a terminal illness. Often, people opt for “comfort care” with instructions that they are to be medicated to be free from pain but other life extending procedures such as feeding tubes, blood transfusions, cardio-pulmonary resuscitation and similar services are rejected. In other cases, patients may wish to preserve life as long as possible using current technology. A Living Will can also be drafted with this goal in mind.