How to X-ray an HOA #6 – Lawsuits, Judgments and Insurance

Pending lawsuits must be disclosed on Minnesota’s Resale Disclosure Certificate when the HOA is a party to it.  If you are considering a home where the association is in litigation, it is imperative to know what’s at stake.  Is someone suing the HOA over a $2,000 invoice or is the association suing the builder for a multi-million dollar construction defect?  Banks generally don't want to lend money for houses with pending lawsuits and may insist on a higher interest rate to do so.  If you are determined to buy in that complex, first consult an attorney for advice.  I also recommend that you … [Read more...]

How to X-ray an HOA #4 – HOA Reserve Funds

Good HOA’s, like all good businesses, plan ahead.  Every HOA budget shows how much goes to the reserve fund which pays for capital expenditures as the need arises.   Whether the reserve fund balance will actually meet those needs has been a hot topic in recent years. … [Read more...]

How to X-ray an HOA #1 – Overview and MN Disclosure Law

This post kicks off a 9-part series on "How to X-ray a Home Owners Association (HOA).”  The posts will help you discover the inside scoop on an HOA’s financial health and social environment so you can decide if it's where you want to live.  The series will cover these topics: … [Read more...]

Dangerous Deficiencies

A common question posed by homeowners in financial distress is "Can the lender get a deficiency judgment against me?"  A deficiency judgment is a charge imposed on the owner when the foreclosure sale price fails to fully pay the mortgage balance.   Whether such a judgment is possible depends upon the property's location because each state has crafted its own rules for this situation.    Numerous websites attempt to explain the mortgage foreclosure process and often provide a list of the states where deficiency judgments are allowed.  Unfortunately, these lists can be wrong.  Many … [Read more...]

Ten Things We Forget to Clean

A clean house improves the chances of selling faster and at a higher price.  You may have also heard the real estate maxim that "the way we live in our house is not the way it should be staged when up for sale."  Similarly, properly cleaning a house that's on the market differs from routine cleaning.   Sellers too often become oblivious to the details in their familiar surroundings while buyers are on high-alert to spot anything dirty.  So after your thorough cleaning is done, check the list below to see if you should keep scrubbing. Clean all lighting fixtures, both inside and outside.  … [Read more...]

The Pants of Truth

A lie can run around the world six times while the truth is still trying to put on its pants. Mark Twain It's Halloween and there's nothing more frightening than the damage caused by lies masquerading as truth. The lies spawned during election season are especially dangerous because they feed on ignorance and incite fear. And the most effective political lies contain a drop of truth in the vat of swill. One such currently-circulating lie concerns a new tax on home sales. The claim is that all home sales are now subject to a 3.8% tax due to the new Health Care Bill. And the Democratic … [Read more...]

Showing Prep for the Truly Clueless

OK, most of you can skip this post.  You already know this stuff.  But some people don't and they also don't know just how clueless they are.   So here are some of the most basic rules to prepare for a showing: A pile of dirty dishes is not a "domestic sculpture" that will be appreciated by others.  If there's no time to wash and put them away before a showing, at least hide them in the dishwasher.  Better yet, put the dirty dishes in a plastic bin and take them with you.  Ditto for that basket of dirty laundry.   Sinks.  Clean.  No hair, toothpaste residue or soap scum allowed.  And use … [Read more...]

Rant on Private Transfer Fees

Yesterday's post provided a definition of private transfer fees and the rationale of developers who use them.  Here are a few reasons why they are a terrible idea: The fees are supposedly to fund the development's infrastructure elements - the original infrastructure.  Minnesota's freeze/thaw cycle is very tough on exposed elements.  Most infrastructure cannot last even 20 years without needing a major rehab or replacement.  That replacement cost will be borne by either the current homeowners and/or the local government.  So what is this 99 years nonsense? If the development pro forma shows … [Read more...]

A New Way to Screw Real Estate Buyers and Sellers

Private Transfer Fees are a relatively new device in the real estate developer's toolbelt.  A private transfer fee results from a covenant filed in the property records that requires a payment to the original developer each time the lot is sold.  The typical fee is 1%  percentage of the purchase price and the requirement can last as long as 99 years!!!   This covenant creates a lien on the property, so title companies must collect the fee at closing or absorb the cost if they fail to do so. Developers justify the fee by saying it allows them to spread the costs … [Read more...]

Painting for Profit and Pizazz

Fresh paint offers the highest return on investment for home improvements, but choosing just the right color can be difficult.  Wouldn't it be great if you knew what a professional home stager would recommend?   To assist my real estate clients, I gathered the colors that home-staging professionals use most often.  This list focuses exclusively on Benjamin Moore paint because it was the favorite brand of the surveyed home-stagers.   If you want to see these colors without leaving home, Benjamin Moore's website has a virtual fan deck and other tools for paint selection.  Go to … [Read more...]

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