Team Reba Real Estate

A new pamphlet has been started for licensees within WA State to receive semi-annual updates of legislation affecting our industry.  I’m a fan of it so far and the very first story on the front page of the pamphlet tells us about the new licensing law for RCW18.85 coming into effect on July 1, 2010.

Not only will there be higher initial education standards for new agents, but there will be other fun updates to the requirements such as fingerprinting and background checks with WSP and FBI.  This is not new for other states such as Kansas (where my mom, Myrna Haas, does business) as they’ve implemented this kind of procedure as well.  And, I for one, am happy to see it happen.  Hopefully we’ll be able to better monitor the quality of those getting into the industry and hold higher standards overall.

Want another reason for those kinds of background checks to be done?  One of the noted disciplinary actions in the document revealed that an agent had a level II sex offender background and he’d failed to register and provide that information to the department. There are others who may have convictions in drugs, theft, larceny or fraud that the public might want to have screened out from the business as well.

Oh, and one other thing.  The titles of agents will change too.  People who are currently labeled Sales Associates, Real Estate Agents, or some similar name will become “brokers”.  And those folks that had broker licenses before will become “managing brokers”.  Happy licensing……

To get all the details you need with regard to septic systems and what’s necessary for you to do when selling your home, go to this handy website set up by King County and their Wastewater Management and Public Health Services Dept.  There is also a section that will provide details on how to use and care for a septic system as well. 

As a seller, you have responsibilities and paperwork that is required.  As a buyer, you should be prepared to look for these details during your inspection process.

Agents should be familiar with this process as well, and if you (Mr. or Ms. Agent) aren’t, then you should do a little reading too. 

Most septic (aka onsite sewage) systems are found in outlying areas of Puget Sound or in County controlled areas.  If you aren’t in King County then you should check with your local county government website or contact the local county office for the info you need for your area.

Our very own Tim Burkart (a frequent contributor to Team Reba’s Blog) was selected by his peers for inclusion in the 2008 edition of The Best Lawyers in America. 

According to information provided by the annual letter from Garvey Schubert Barer, the firm where Tim works and who represents Team Reba’s business, “The Best Lawyers list is compiled through an exhuastive peer-review survey in which thousands of top U.S. attorneys confidentially evaluate their professional peers. The 2008 edition is based on more than 2.1 million detailed evaluations of lawyers by other lawyers.”

This is a coverage that has become near and dear to my heart as I am now a newly minted condo owner (Thank you Rebecca Haas and Eric Aasness).  As an insurance agent I have always been amazed at how people would take all of this time, money and effort to buy the condo of their dreams and expect someone else to protect (i.e. the Master Policy) it.  Let’s face it, the Master Policy’s the last thing you’d want to read.  It’s boring and full of insurance misto-babel.  Some master policies cover more than others but in a nut shell it is designed to protect the building and common areas and its purpose is to make sure the structure and common areas can and will be rebuilt in the event of a loss. 

There is no coverage for your personal property such as your clothes, flat screen TV or the new sofa you just purchased.  So everything from the walls in are your responsibility.  Items like fixtures, cabinets or appliances maybe covered by the master policy but often are not especially if you’ve remodeled your place in any way. 

This is where I, your friendly insurance agent, enter the picture and ask you if you feel safe knowing your neighbor has a candle fetish and another can’t even boil water to make tea.  I believe condo insurance should be thought of the same as  home insurance.  All too often it has been looked at like renters insurance and considered optional and it also doesn’t help that it is not a required condition for closing your loan.  Thankfully, the new construction condo I just purchased DID require proof of individual unit coverage prior to closing any sales.

To get an idea of what condo coverage costs I always recommend you start where you have your auto insurance coverage.  Most companies give a discount for having more than one policy with the same company.  I also think this might be the right time to review all of your insurance coverage and make sure you are maximizing discounts and coverage. 

Thanks for listening to your favorite online and blogging insurance agent.  Feel free to call or email me with any questions about this or any other type of coverage.  I wanted to share some of my thoughts about condo coverage in the hope that it might help all of us condo owners out here.  Take care and be well.     

So, recently I have had a client interested in a house that has a major problem with an attached garage and den - added after the original house was built. The problem with the garage and den is that it is impacted by a steep slope that has eroded part of the foundation beneath it and it is slowly beginning to slide down the hill.  A geotech engineer’s report is included with the seller’s disclosure statement that spells out all the problems with this site and gives the engineer’s recommendations which include removing this portion of the structure completely.

Now, let’s take a look at what is the most likely scenario for a buyer wanting to purchase this house and the financing they might need to procure - if they don’t have all cash to buy it.  My personal opinion is that since the garage and den are recommended for demolition and either rebuilding or just plain extinction that it is encumbent on the new borrower to give all this detail to a lender.  Chances are, in today’s more risk averse lending climate, the building would qualify only for a construction or a rehab loan (perhaps the FHA 203(k) program) with the lender being given a detailed list of the problems and the plans for reconstruction - typically a timeline for completion is necessary for these and are limited to 6 months to 1 year.

My interested buyers currently have only looked at conventional loan packages so I directed them to inquire from their lender about these other options.  I also emailed the listing agent to ask him if he had a lender that was aware of the problems and if they perhaps had a loan package that might suffice for purchase of the property. 

Here is his reply with details of individuals/firms redacted:

Greetings,

I spoke with my lender, XXXXXX, at XXXXXX XXXXXXXX  and she talked with

her underwriter who told her that as long as the appraiser didn’t mention

it, the lender would not be concerned about it.

We should have the cities approval on the new permit for the garage in the

next week or so if your clients are interested in building the new garage.

My clients have lived with it as it is since 1994 with no problems.

Let me know your thoughts.

This same agent told me that his clients had never lived in the property and that it had been a rental the entire time they owned it.  So, yeah, I’ll bet they never had any problems with it.

Now, let’s take a look at the language that just came out from the NWMLS regarding the new law enacted in June 2008.

“Under some circumstances, omitting information about the property may be considered mortgage fraud. House Bill 2770, which became effective June 12, 2008, makes mortgage fraud a class B felony, punishable by confinement not to exceed ten years, or by a fine in an amount not to exceed $20,000, or by both confinement and a fine. Mortgage fraud has always been illegal, but the new law makes it clear that Washington lawmakers are increasing their efforts to punish those who perpetuate fraud.

What is considered mortgage fraud under House Bill 2770?

Section 9 of House Bill 2770 states that it is unlawful for any person, in connection with obtaining a residential mortgage loan to directly or indirectly: (1) defraud or materially mislead any lender or borrower; (2) knowingly make any misstatement, misrepresentation, or omission during the mortgage lending process knowing that it may be relied upon by a mortgage lender or borrower; or (3) use or facilitate the use of any misstatement, misrepresentation, or omission during the mortgage lending process with the intent that it be relied upon by a mortgage lender or borrower.

Section 10 of House Bill 2770 provides that any person who knowingly violates section 9 or who knowingly aids and abets in the violation of section 9 is guilty of a class B felony. ”

I don’t know about you - but I think that this might qualify if everyone just hopes that the appraiser misses the problem.  Anyone else got a comment on what they think of the situation?  I’ve told my clients to run, not walk, away from this one.

As an associate member of RHA, I get a chance to meet a lot of really great local professionals. One of them is Chris Benis, a local attorney who I have much regard and respect for in the Seattle area.  He is teaching an upcoming class for RHA that anyone who is a landlord should consider attending to bone up on issues that could impact them down the road.  You never know when a difficult tenant situation could arise, and the best plan is to have tools and information on your side when it happens.  Info on the upcoming class is noted below.   If you are considering getting into the landlord arena, this and many other RHA classes are items you should check out!

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This is a composite account of many cases we have worked on over the years.  The names and events have been changed to avoid disclosing confidential client information.

Frank Sinatra says that love is wonderful the second time around, but the couples’ estate planning can be complicated.  Often, each person has an established career and/or significant assets.  While each of them may be ready for the emotional ties of marriage, the economic ties give some pause for thought.  The good thing is that people entering into second marriages often have “both feet on the ground” and are able to talk openly and objectively about how they want to manage their finances during their marriage, and the provisions they want to make for each other and their heirs at death.

Premarital agreements are common in remarriages – a couple can clarify what each has, how they want to handle living expenses, how they may acquire assets together, and what happens to each of their assets at death or divorce.  Frankly, whether a couple signs a premarital agreement or not, it is critically important for them to discuss the financial side of their marriage.  The community property laws can complicate things for remarriages.  Often it makes sense for couples to agree to keep not only their assets separate, but also their income.  For example, without a premarital agreement, a person’s salary is community property.  Thus, post-marriage employee benefits and contributions to retirement accounts and the growth of those contributions would be community property, while the account balance on the date of marriage plus growth would be separate.  This can create an accounting problem in the event of death or divorce.  Another problem is making sure the survivor of a married couple has sufficient assets to live comfortably, while also taking care of your children and grandchildren or other heirs.

When kids have to wait for their step-parent to die to get their inheritance, it can be awkward for the step-parent and the kids.  Our experience is less that the kids’ begrudge the step-parent the use of the assets, but rather they fear those assets will end up with the step-parent’s family.  Yet, often your spouse needs access to your assets to live comfortably, and this is when good planning can minimize suspicion and/or hard feelings between your spouse and your heirs.  An example of a bad plan would be for dad’s Will to give everything outright to step-mom, as dad’s children will have little assurance of receiving their inheritance and they may be tempted to challenge dad’s Will.  A better plan is to use a properly drafted trust for the step-parent administered by an independent trustee.  Such a trust can allay a lot of suspicion and fulfill the dual goals of providing for your spouse and your children.

These are many important issues to consider the second (or third . . ) time you fall, but consulting with competent counsel will help assure that you’ll be glad you met “the second time around.”

Up until the last 6 months, I was the Block Watch captain for my little neighborhood in Phinney Ridge.  One of the benefits of being in contact with so many neighbors was the involvement in the annual Seattle Night Out which usually happens in early August - for 2008 it’s on Tuesday, August 5th. 

Most neighbors thought the party was just a big block party and didn’t always realize that it’s tied into a crime prevention.  I got my usual email providing me the link to register our block.  For neighbors that want to throw their block party they must register their street with the city so they know who is going to be blocking off their roadway.  One of the fun things that also happens at these events, at least in some neighborhoods, is that the local fire department and police department employees will get out to meet the folks that they help protect.  It’s pretty cool.

If you want to invite your neighbors you can use this invitiation that the city has prepared.  It’s a great way to get to know the people in your neighborhood, which helps to make a safer environment for everyone because when you know people it’s hard to turn your back when you see something bad happening to them. Given the sad things we read in the paper or see on the news on a daily basis, it’s always nice when there is an event that can help create a positive effect for the beautiful place where we live, work and play.

This is a composite account of many cases we have worked on over the years.  The names and events have been changed to avoid disclosing confidential client information.

The out of state vacation home can be a wonderful family retreat – generating years of happy memories for your family.  Dennis and Margaret adore their waterfront home on Maui and own it in both their names.  Sam and Betty love the desert and own a home in Tucson through their limited liability company (LLC).  Robert and Alice are looking to buy a vacation home in British Columbia - close to Robert’s family.

However, things that can be so wonderful during life can cause some real headaches at death, unless you plan ahead.  When Dennis or Margaret dies, it will be necessary to open a probate in Hawaii to transfer title to the survivor of them and if the survivor does not take corrective action, another probate in Hawaii will be needed at his or her death.  A Probate in Hawaii often costs eight to ten times more than one in Washington.  Those extra fees can be avoided by transferring title to a revocable trust.

Sam and Betty’s interests in their LLC will not be subject to Arizona probate, but may be subject to the Washington estate tax.  Depending on the value of their estate, their heirs may unnecessarily pay state estate tax on the property.  At present, Arizona does not have an estate tax so if Sam and Betty transferred title from their LLC to a revocable trust, they would still avoid the Arizona probate system and would also avoid the Washington state estate tax.

Robert and Alice need to be cautious of the Canadian tax system.  Canada does not have an estate tax, but its income tax applies to many transfers that are tax-free in the U.S.  For example, transfers at death are subject to income tax in Canada.  Moreover, the Canadian real estate excise tax applies to a transfer by gift, which is not the case in Washington.  A combination of a Canadian revocable trust and a Washington LLC will allow Robert and Alice to avoid the Canadian probate and income tax systems at their deaths.

Consult with your attorney before buying real estate outside of Washington – do not tarnish years of happy memories for your family by failing to plan properly for your vacation property.

We believe estate planning is about people; let us know if we can be
of service to you or those you care about.

For assistance, questions, comments or to be added to our mailing list, please contact Timothy C. Burkart, Garvey Schubert Barer, 1191 2nd Avenue, Suite 1800, Seattle, WA 98101-2939, tburkart@gsblaw.com, (206) 816-1467

A new series of laws are coming into effect on June 12th in Washington State and some are sure to affect the loan originators, agents, buyers and sellers.  Read the full text below that came from the Washington Association of Realtors recent Friday Facts, Legal Q&A column, written by Annie Fitzsimmons.

I’m happy to see things like fraud for lying about the loan being for an owner occupied purchase when an investor is actually buying to rent the place or flip it.  Team Reba has walked away from a lot of business over the past many years when we’ve heard the plans a prospective client would share with us regarding their loan strategy.  I’ve actually said to several people that my business, career, and reputation isn’t worth the extra $5,000 or whatever else they’d make in interest savings.  It’s actually been astounding to learn how many people didn’t even realize that doing this was mortgage fraud and a felony. 

About 3-6 months ago when I was speaking with a reporter on a different topic of real estate we somehow got diverted into a discussion about this.  She was shocked when I shared with her the stories I had about walking away from clients because of this issue.  At the time she thought about turning that over to an investigative segment of their news office but I never heard back from her about it.  Odd to see it turning up in the legislative session, but not surprising given the number of folks who did this when buying property over the past many years.

I have to say from an agent liability standpoint some of the language is a little scary because while agents are often involved in our client’s financing, there are many buyers that are reluctant to get agents involved in financing issues for fear of feeling pushed or thinking that their agent will try to oversell them if they know the full level of their buying capacity.  To these buyers I say, if you don’t trust your agent on this issue, you’re with the wrong agent.  These kinds of topics should be discussed up front and the buyer should feel confident that the agent is looking within a range of prices that are comfortable for the client, no matter what the actual pre-approval cap is set at.

Enjoy Annie’s article below!

Criminal Sanctions for Mortgage FraudMuch like there is no way to be a little bit pregnant, there is no lawful way to engage in just a little bit of mortgage fraud. There is no forgiveness for the “little white lie”. Pursuant to SHB 2770, it is a felony to receive a commission or any other funds paid from the proceeds of a buyer’s loan if the recipient of the commission knows that the borrower engaged in any effort to deceive or mislead the lender. Said differently, if the borrower, seller or any other person makes any misrepresentation to the lender during the lending process, that person is guilty of a felony and any person who receives any of the proceeds of the loan is equally guilty if the recipient of the proceeds had knowledge of the misrepresentation. Many may shrug this off knowing they do not engage or participate in mortgage fraud. That would be a mistake. REALTORS® must be aware of this law and the minimal involvement required to result in significant consequences. Think of all the times that you, as an agent, have been aware of any of the following things occurring in one of your transactions: the list price is increased to match the sale price; a financial issue is handled “outside of escrow”; the seller feigns a carryback intending to destroy the note or deed of trust after closing; a buyer claims to purchase owner-occupied when that is not true; an inflated value is assigned to a property by an appraiser; borrowed down payment funds are labeled as gift funds; or a borrower overstates their income or exaggerates their financial condition. While this list is not exhaustive, it represents a variety of ways that an agent could be guilty of a felony if the agent is aware of any of these circumstances in a transaction and takes a commission from the transaction. Likewise, seller will be guilty of the felony if seller is aware of the deception and accepts the sale proceeds. The felony level associated with this mortgage fraud crime is serious. Conviction under this statute would most likely result in jail time. Be aware of this new law and be diligent about policing the affairs of the transactions in which you are involved.