Articles Posted in Real Estate Transactions

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Arizona is a community property state. “Community property” is a term that  refers to how the property, during a marriage, is viewed in the eyes of the courts. In community property states all property accumulated by a husband and wife during their marriage becomes joint property. In plain terms, this means that all property belongs to both husband and wife equally if it was acquired during the marriage. Even if it was originally acquired in the name of only one partner.

Conversely, all property acquired before marriage, or through a gift or inheritance during marriage, is presumed to be the sole and separate property of the spouse who has acquired the property.  As with anything in law, there are exceptions, but this is the general rule.

The character of property as community or sole & separate can be important.  For example, if spouses divorce, each will retain his or her sole and separate property just as if they had never been married.  Any community property will be divided equitably. Equitably does not always mean equally. However, an “equitable” division of assets means a fair division.

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Arizona law provides penalties in the form of substantial statutory damages plus awards of costs and legal fees for recording false documents under A.R.S. §33-420. Pertinent provisions of this statute are as follows:

  1. A person purporting to claim an interest in, or a lien or encumbrance against, real property, who causes a document asserting such claim to be recorded in the office of the county recorder, knowing or having reason to know that the document is forged, groundless, contains a material misstatement or false claim or is otherwise invalid is liable to the owner or beneficial title holder of the real property for the sum of not less than five thousand dollars, or for treble the actual damages caused by the recording, whichever is greater, and reasonable attorney fees and costs of the action.
  2. A person who is named in a document which purports to create an interest in, or a lien or encumbrance against, real property and who knows that the document is forged, groundless, contains a material misstatement or false claim or is otherwise invalid shall be liable to the owner or title holder for the sum of not less than one thousand dollars, or for treble actual damages, whichever is greater, and reasonable attorney fees and costs as provided in this section, if he willfully refuses to release or correct such document of record within twenty days from the date of a written request from the owner or beneficial title holder of the real property.
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Reverse mortgages can be a great financial tool for retirees or others living on a fixed income. A reverse mortgage can be used to pay off an existing home loan, gain freedom from a house payment and/or provide a retirement income source. The homeowner must still pay real estate taxes and homeowner’s insurance but otherwise no payments are due on a reverse mortgage until the borrower spouses both die. Then the loan comes all due and must be paid in full by refinancing, the use of other estate assets or by a sale of the home.

But what happens when the reverse mortgage is taken out by only one spouse?   If the surviving spouse is not also a borrower, he or she may need to sell or refinance the house when the borrower spouse dies. Refinancing is not usually an option for a surviving spouse so the family home would need to be sold at, perhaps, the worst possible time.   At least that was the situation until the advent of an FHA program called Mortgagee Optional Election (MOE).

The MOE program can enable a surviving spouse who was not a reverse mortgage borrower to remain in the family home after the borrowing spouse dies.   But inclusion in this program is not automatic. The surviving spouse needs to contact the mortgage servicer to request an MOE assignment. Certain conditions also apply:

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Most people who buy homes will remember one thing about the experience – the paperwork. Seriously, you get major hand cramps just signing all those title and loan documents. Trying to understand all those documents? Even worse.

Well, here comes TRID to the rescue – sort of. TRID stands for TILA-RESPA Integrated Disclosures. These new disclosure documents are, for the most part, replacing the old disclosures. We say “for the most part” because TRID does not apply to home equity loans, reverse mortgages, and mortgages for mobile homes or other dwellings that are not actually attached to real property. TRID will apply to most other real estate loans, including Fanny Mae, Freddie Mac, VA, FHA, USDA and other government-backed and conventional loans. TRID will even apply to private money loans and some owner-financed transactions.

The new TRID Loan Estimate form replaces the initial Truth in Lending Disclosure & Good Faith Estimate. The new TRID Closing Disclosure form replaces the final Truth in Lending disclosure & HUD-1 Settlement Statement. These forms contain much of the same information as the old ones but lays it out differently so it is easier to digest.

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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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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.