Save Yourself a Little Time and Hassle: Fill Out the Right Forms

 

Each time a property’s ownership changes hands, a small avalanche of documentation must accompany the transaction. Your Realtor will walk you through the process, but it’s still nice to know what’s coming. Here’s some information on a couple forms, forms that will save you time and money if you complete them in a timely and thorough manner.

The first form is the Preliminary Change of Ownership Report (PCOR), a short document that informs the county about the change of ownership. Each time a property is transferred to a new owner, the county reassesses the property’s fair market value in compliance with Proposition 13: the PCOR aids them in this process.

In 1978, Proposition 13 declared that the maximum amount of any ad valorem tax on real property shall not exceed one percent of the full cash value of such property, and that annual increases of the tax would be limited to an inflation factor not to exceed two percent. A reassessment of the property tax can only be made when the property ownership changes or when construction occurs. (California Constitution Article XIII)

Given this information, you can understand why the county is eager to know about ownership changes: it’s one of the few times a big jump in the taxable value of a property happens. There are exceptions to the reassessment rule. For example, if one family member transfers ownership to another family member, the property’s tax base remains unchanged; but typically (if not a family member) a new tax base is established when the property changes hands.

Be aware that fair market value does not necessarily mean purchase price—a common misconception. The county assessor’s office independently researches the value of the property based on other properties in the area and current market conditions. So if you got an incredibly good deal when you purchased the property (or if you overpaid), your purchase price may have little to do with the fair market value assessed by the county.

When you sign the Preliminary Change of Ownership Report, you are certifying the information is correct under penalty of perjury. This is not a time to stretch the truth to try to get out of paying more taxes. Just dutifully complete the information that identifies the property, the seller, the buyer, and the terms of the sale. As with many regulations, if you don’t, the penalties get expensive.

The next form is the Statement of Information (SI), frequently required by your title company. It establishes that you are who you say you are, and prevents you from being confused with someone else. Sounds basic, I know, but you don’t want to be confused with someone of a similar name who has a problematic financial or legal history. This confidential form helps prevent a mistaken identity issue. It asks for information including your full name, social security number, date of birth, driver’s license number, and marital status. It also asks for ten years’ worth of residences and work history.

You may recall that title insurance is different from traditional insurance in that it attempts to protect you and your lender from problems in the past, rather than the future. The SI helps assure that problems that could impede the sale of the property are, in fact, related to the buyer and/or seller involved in this transaction. Clearly, if you have a common name like Smith or Jones, you’re more likely to have issues, but by collecting a detailed history, the SI is often able to prove you were not, for example, the John and Nancy Jones involved in a lawsuit in Los Angles when you’ve been living in Ukiah your whole lives.

So although these forms are mundane, take the time to complete them properly. You’ll be glad you did.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 Preliminary Title Reports Are Really Helpful, Especially If You Read Them

I know I’ve said this before, but it bears repeating: when it comes to real estate documents, the large print giveth and the small print taketh away. When you decide to purchase a home, your preliminary title report will include many paragraphs full of boring (but important) information, and potentially a few paragraphs with information that could change your mind about buying the property. Be sure to read the whole thing.

Vesting

Much of the information in a preliminary title report is information your Realtor and the seller’s Realtor will take care of; it won’t require any action on your part. For example, if the title of the property is in the name of a corporation, the seller’s Realtor will have to obtain documents from a vested owner authorizing someone to sign on the dotted line. While it’s not something you, as a buyer, have to deal with, it’s important; because if the corporation is not in good standing with the state, the seller may have trouble transferring the title.

Taxes and Assessments

While you will not be responsible for paying outstanding balances of taxes and assessments, it’s good to see what they are to get a sense of what your future liabilities will be. A local example of an assessment you may start to see are those from Property Assessed Clean Energy (PACE) loans. Mendocino County recently approved these loans that help people finance energy efficiency upgrades or renewable energy installations. PACE assessments totaling many thousands of dollars will need to be paid by the seller or taken into consideration when determining the purchase price.

Deeds of Trust

Preliminary title reports also show any deeds of trust that have not been reconveyed (released). Normally, this deals with loans the current owner is obligated to pay. On occasion, an old deed of trust from decades ago appears, and it must be addressed to avoid future problems. Conceivably, a beneficiary of an old deed of trust that was never paid off could make a demand for the outstanding principal plus accrued interest. While compounding interest in your retirement account works in your favor, compounding interest from an old debt does not.

Identity

One of the critical elements of a preliminary title report is to see who exactly owns the property. If an owner’s deceased ex-wife passed her ownership stake to her children when she died, and those children refuse to speak with the owner, it may take some time to clean things up. Start right away. Also, something as simple as an incorrect middle initial can cause problems if not detected and dealt with early.

Pending Actions

Likewise, you’ll want to clean up any legal disputes. If the neighbor’s lawsuit over the encroachment of your shared fence remains unresolved, it can do more than delay the closing of an escrow, it can kill it altogether.

Maintenance Agreements

The most common maintenance agreements are road maintenance agreements. Be sure you understand both the scope of the agreement and your obligation to pay for it. Other maintenance agreements can cover common areas such as greenbelts or shared wells. Read the details.

Legal Description

In the vast majority of cases, the legal description is routine. After all, if you buy a house at 123 Main Street with a fence around the property’s perimeter, the property line is probably obvious. However, a vacant lot in Brooktrails is tougher to determine, and the boundary line on a 350-acre parcel at the end of Spy Rock Road is harder still.

Property in Default

If a notice of foreclosure exists because of the current owner’s default on a loan, your timeline may be affected. The process may be delayed or a pending public sale may rush the escrow.

No matter how boring you may find the details of your preliminary title report, I’m confident you’ll be glad you read it.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

New State Law Governs Granny Units

 

Recently, the State of California passed a law eliminating the ability of local governments to unreasonably restrict homeowners from adding a second unit to their property. One of the first considerations was to change the name of these units. They are no longer mother-in-law units or granny units; they are now Accessory Dwelling Units (ADUs).

The State regulation defines minimum guidelines for ADUs, but the language is still a bit vague, saying local jurisdictions cannot “unreasonably” limit square footage. Clearly, the second unit must be big enough to include a kitchen, bathroom, and living space. As of this writing, the City Planning Commission is considering a 1200 square foot maximum for a detached ADU (one that is not part of the main dwelling), which does, in fact, seems reasonable.

If you’re a homeowner who may want to build a detached ADU, one of the biggest benefits of this new law is the prohibition for local governments to charge any water or sewer hookup fees (the combination of which can run about $20,000 in Ukiah). The law also precludes charging additional service fees, but it does not prevent higher rates based on usage. Since water is metered, your water bill will go up, and increased water usage can impact your sewer bill, too.

When most people think of ADUs, they picture a separate structure, but you can create an ADU inside your house. Consider, for example, creating a separate living space above a garage, one with its own entrance. The ADU would share a roof with the main house, but have plenty of privacy. If you create an ADU within your house, there is no size limitation with regard to square footage; however, you cannot make the ADU larger than 50 percent of your house. Honestly, this rule is a little silly because there’s nothing stopping you from living in your ADU and renting your main house, but such is the nature of bureaucracy. I do think it’s good to enable people to divide their homes. This allows empty nesters or single people who want to downsize to stay in their home rather than having to sell and relocate.

On the bright side, ADUs may help reduce the housing shortage in Ukiah. There are some drawbacks, however. In the older Westside, for example, if a third of homeowners added an ADU, we’d see a significant increase in traffic and decrease in the availability of street parking. I’m also concerned about how our issue-laden sewer system would manage the increased load.

Another potential problem could arise if people do not position their new ADUs appropriately. Imagine if your neighbor built an ADU five feet from their back fence that aligned with your side yard, where your main dwelling is only five feet from the property line. The ADU could be positioned only ten feet from your house, and potentially provide a clear view into your master bedroom. Hopefully, people will be considerate as they contemplate where to build.

All in all, I am in favor of allowing property owners to make decisions affecting the future of their properties. My only concern about the loosening of ADU restrictions is that current homeowners bought their homes knowing the rules at the time of purchase, and now the rules are changing. I don’t really expect to see too many new ADUs with construction costs currently in excess of $200 per square foot, but things can always change.

If you feel strongly about this issue, consider contacting a member of the City of Ukiah Planning Commission or a city councilmember. Better yet, attend upcoming public hearings. They’re very informative.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

Realtor Safety Training Helps Keep Realtors and Others Safe

Usually, I write columns to inform the public about matters pertaining to real estate and/or property management. However, this time I thought I’d write to Realtors directly about ways to remain safe. Many of these safety tips can be amended for anyone who meets with clients they do not know.

Realtors often work with new clients—people they’ve never met and know nothing about. While most Realtors work in the industry for decades and never feel threatened; occasionally, a situation arises that makes the hairs on the back of their neck stand on end. I’m unaware of any recent problems in Mendocino County, but a recent news story in Phoenix reminded me of the dangers Realtors can face (www.12news.com/news/local/valley/after-brutal-murders-self-defense-training-still-not-required-for-realtors/412356141).

When you think about it, Realtors make obvious targets. They are in a business where both the Realtors themselves and members of the public fully expect them, as lone individuals, to show a complete stranger to a vacant house, sometimes in a remote location. While this happens all the time with absolutely no problems, it could be a recipe for disaster. Both men and women are at risk, because a bullet will go through either, so here are some safety tips to keep in mind.

First, ask prospective clients to meet you at your office before going anywhere with them. This provides an opportunity for you to evaluate them and perhaps eliminate the exposure to danger altogether by declining to go. It also means others in your office have seen and can identify the person, and potentially their vehicle.

If your instincts tell you not to go, pay attention. Ask anyone in law enforcement, and they’ll tell you to listen to that little voice in your head telling you something’s wrong. Ukiah Police Chief Chris Dewey says if the situation feels off, make up an excuse if you must, but don’t go.

If the prospective client seems okay, it’s still better to be safe than sorry: make sure someone in your office knows whom you’re with, what properties you plan to visit, and when you expect to return. Turn on your cell phone’s GPS tracker and be sure to put an emergency contact on speed dial. Also, you should be the one to drive, even if the prospective client offers to. This gives you a little more control over the situation—you determine where to go, when to leave, and you can lock yourself in the car if it comes to that.

If you’ve indicated to your office that you’ll be back by a certain time, be sure to let them know if that time changes. If you do this in front of the client, he or she will know there are people waiting for you and it may deter bad behavior.

Consider taking a self-defense class. It will teach you physical defensive techniques as well as heighten your awareness of your surroundings, like being sure you have unfettered access to the only exit to a room or property. This helps you to expect the unexpected.

On the property management side of the business, we insist that anyone who wants to view a vacant property must allow us to take a photocopy of their driver’s license. In the event that something happens, this makes it easier to identify the individual; more importantly, the individual knows he can be identified.

If you’re the For-Sale-By-Owner type, consider asking a friend or family member to wait at your house with you when a prospective buyer comes to view it. Collect the interested party’s contact information up front and verify that it’s accurate (when you call back at the phone number they provided, do you reach the same person?). If you’d like to avoid this risk altogether, allow me to make a shameless plug for hiring a Realtor.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

Landscaping and Hardscaping May Prevent Buyers from Escaping

 

When you decide to sell your house, it’s important to show off its best features: the updated kitchen, the vaulted ceilings, the hardwood floors, and other amenities. However, if you forget to pay attention to the landscaping and other exterior features, prospective buyers may never set foot inside your house. According to recent studies, attractive landscaping can help your property sell faster and increase the sales price.

Most Realtors are aware of situations where prospective buyers have driven up to a house and refused to get out of the car to go inside. Their rationale is simple: if the sellers cannot take care of the outside, why would they waste their time looking at the inside? This reinforces that old adage about only getting one chance to make a first impression. And Murphy’s Law being what it is, those prospective buyers who drove away were probably the ones who would’ve made the highest offer.

Leaving the exterior unkempt is a mistake, but thankfully one that can typically be rectified with a few weekends worth of yard work and maybe a couple trips to Mendo Mill.

While good landscaping makes prospective buyers excited to see more, be careful not to over-landscape. You don’t want those buyers imagining they’ll have to spend every spare moment of their lives trying to keep up the yard. I’m picturing the perfectly manicured flowers that greet you at the main entrance to Disneyland. Are they attractive? Certainly. Would I want to be responsible for their upkeep? Not unless I had an army to help me.

Upkeep is not the only landscaping consideration. You’ll also want to think about water consumption: we’ve had many years of drought and a lawn that requires massive watering may not be appreciated. A low-maintenance yard that employs mulch effectively can reduce maintenance requirements and conserve water while providing an attractive view.

And don’t forget to look at the trees. Are they arranged to provide relief from the summer sun but allow winter sun to add warmth and cheer? Deciduous trees (the ones that lose their leaves) should provide shade in August when it’s 110 degrees but welcome sunlight through its bare branches in January and February. Are the trees too close to the house? When winter storms soak the ground and trees fall, it’s far better to lose a fence than a living room.

Once you’ve got the landscaping attended to (i.e., trees, shrubs, flowers and lawn), it’s time to look at the hardscaping—concrete walkways, decks, fire pits, pools, ponds and lighting. Are tree roots lifting the concrete path to your front door, causing a tripping hazard and looking messy? Is that deck railing that prevents a 10-foot drop sturdy enough to lean against? For safety and visual appeal, make sure your hardscaping is in good repair.

If you like yard ornaments, feel free to use them, but do so sparingly. It’s best if your yard resembles a cover shot from Better Homes and Gardens as opposed to a yard that looks like it was recently attacked by a flock of flamingos. With both interior and exterior décor, it is not the seller’s taste that matters; it is the prospective buyer’s taste. Less is more. Neutrals are better than extreme colors. Provide something close to a blank canvas that the prospective buyer can paint on with his or her imagination.

If you have used your yard as a de facto dog park, it may be worth hiring a professional to spruce things up, or at least create a plan to do so. The elbow grease can be yours, or as some of us have learned, that’s why God invented teenagers.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

We Can Keep Complaining About the Housing Shortage or We Can Support Those Who Want to Address it

 I attended a meeting on May 4 hosted by property developers Guillon, Inc., where a dozen or so of the 80 neighbors who were invited came to hear Steve Honeycutt present information regarding a proposed development on the north side of Lover’s Lane in Ukiah. Guillon would like to buy 23 acres from the Dolan family and rezone the land so they can build single-family homes in the $325,000 to $375,000 range.

After the meeting, I pulled a list of all single-family homes currently for sale in Ukiah priced at under $400,000. We had a total of eleven.

Ukiah’s had a housing shortage for years, and up to this point, no one has stepped up to address it. Just talk to some of the bigger employers in town and they’ll tell you how detrimental the housing shortage can be. Both Adventist Health/Ukiah Valley and Mendocino College have said they plan to hire 20 new people in the next 12 months, but they don’t know where these people will live. In two years, the hospital hopes to open a family medicine residency program, which will bring six doctors and possibly some support staff. I don’t know where they’ll live, either. Even Mendocino County has been trying to hire people to administer the new cannabis ordinance and they’ve lost prospective employees because they couldn’t find housing.

On March 27, the Ukiah Daily Journal noted, “Two out of three biologist positions essential to the cultivation permitting program are still vacant after half a year of recruitment efforts, said interim agricultural commissioner Diane Curry. Of more than a dozen applicants the department has interviewed since November, none have been able to accept the job because of a lack of available housing in the area.”

To address this lack of housing, Guillon would build houses in a price range that’s affordable for many Ukiahans. Unlike some developers who would rather not deal with inconvenient feedback from neighbors, Guillon invited all property owners within 550 feet of the perimeter of the project site to the meeting of their own volition and on their own dime, to gain the neighbors’ perspective and feedback early in the process. While people voiced a few concerns, the overall response seemed positive, so I’m not sure why the newspaper article that followed focused on the downsides of the project. Really, the only concern of any consequence is the potential traffic issue, and Guillon is willing to take care of it. The other issues were often inspired by NIMBYism. Everyone wants more housing, but not in their backyard.

A question was raised about why we should take agricultural land out of production to build houses, but vineyard owner Paul Dolan said the soil on the proposed 23-acre building site isn’t good for grapes. In fact, he said it produces about half of the tonnage of the rest of the vineyard—he loses money farming that section. However, because he and his family are committed to keeping fertile agricultural land in farming, they plan to put the remaining 150+ acres of the Lover’s Lane vineyard into a land trust. So, I have no problem with rezoning 23 low-producing acres for this project.

I’ve lived in Ukiah for more than 60 years. I am the father of five children and, candidly, I’d like them to have an opportunity to move back to Ukiah, to find jobs and places to live. Unfortunately, unless something changes, it seems less and less likely that anyone’s children will be able to return.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

Springtime Maintenance

As April showers make way for May flowers, it’s time to start tackling annual upkeep to keep your home in prime condition.

You can start by grabbing a pad and pencil, and walking around your house to note all the miscellaneous maintenance needed in the coming months: the board in your deck that’s begun to lift out of place (the toe-stubber), gutters that need cleaning, debris on the roof that needs removing, a tree with roots encroaching on your home’s foundation, and anything else that grabs your attention.

Sadly, I just had to remove an oak tree that was growing up through my deck. The tree died, so it was a fire hazard, a visual blight, and its branches could’ve dropped on unsuspecting family members at any time. While it can be expensive to take care of some maintenance, the cost of not doing so can be far more costly.

As you walk around, be sure to check the eaves for birds’ nests or hornets’ nests. To eliminate hornets’ nests, there’s a nifty product on the market with a directional nozzle that allows you to spray a nest from 20 feet away—giving you an excellent head start before a swarm of angry buzzing comes your way.

If you have a wood-burning stove, spring is the perfect time to buy wood. Buying it now gives the wood all summer to dry out, and plenty of time for your teenagers to stack it. Do not stack the wood against the house—that’s a recipe for a termite or powder post beetle disaster.

Many of us don’t think about termites or other pests after we purchase our homes unless we see clear evidence of their work. However, pests do a lot of damage before you know they’re there. Each spring, you should put on your overalls and grubby shoes and crawl under your house to look for anything out of the ordinary—moisture, a loose or broken heating/air conditioning duct, and any evidence of pests.

I once had to crawl under a house to re-route a dryer vent. The space was so tight I had to slide on my back, pulling myself along using the joists. As I pulled myself deep into the space, I came nose-to-nose with a black widow nest teeming with baby spiders. It’s amazing how quickly you can move in a tight space with proper motivation. Hopefully your crawl space experience will be less exciting than mine.

As you inspect your crawl space, pay special attention to moisture, either standing water or damp earth, because hot weather will cause that moisture to evaporate and condense on the subfloor, which can lead to dry rot and termite infestations, according to Matt Miller of Mendo-Lake Termite. If you find termite mud tubes (Google this if you don’t know what they look like), black widow spiders, or other unwelcome creepy crawlies, my advice is to call Matt Miller immediately.

The solution to moisture under the house is almost always more ventilation. It may not solve the problem completely, but it will help. Matt says, “I’ve never seen a house with too much ventilation in the crawl space.” Just make sure you cover the vents with screens to keep out the unfriendlies: raccoons, squirrels, skunks, and the neighbor’s cat.

Once your crawl space under the house has been attended to, head up to the attic to make sure nothing is amiss there—no leaks causing fungus or dry rot, and no critters. If you don’t have an attic fan, consider getting one. In Ukiah, attics can get up to 160 degrees, taking years off the life of your roof and wasting electricity because your air conditioner is working harder than it has to.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

Hope for the Best, Prepare for the Worst — Prevent Wildfire Damage

With summer right around the corner, now is a good time to prepare your property for the threat of wildfires. Most fires start small. If you are ready, you may be able to stop a fire from spreading. Be sure you know where the closest fire hydrant is, as well as your garden hoses and hose bibs. If you have a well that produces at least two gallons per minute, consider filling a 2000-gallon storage tank so it’s ready if you need it.

Clear flammable brush 100 feet from your home and trim trees 10 feet off the ground. Make sure tree limbs do not hang over your roof and clear any debris off your roof. If you have aboveground utilities in your neighborhood, keep an eye on electrical lines that go through trees—make sure there’s plenty of clearance. A good tip from the University of California Agriculture and Natural Resources Department is to locate woodpiles and other fuel sources at least 30 feet from all structures and maintain a 10-foot clear area around them.

Unfortunately, even with all this preparation, your home can go up in flames. Just ask the families who returned to find ash where their houses used to be in Lake County in recent years. For insurance purposes, you should create a photo or video log of all your possessions. While tedious, it’ll be time well spent if you need an insurance company to pay a claim.

It’s important to know what your homeowners insurance covers, especially in light of a new clause included in some policies, called the brush warranty. The brush warranty says your insurance company won’t cover your home for wildfire damage if your home is within 100 or 200 feet (depending on policy) of brush vegetation, even if the brush is on someone else’s property. With the Valley Fire in 2015 and the Clayton Fire in 2016, insurance companies are doing their best to reduce the risk of huge payouts. If your policy is up for renewal, be sure to read the whole thing before signing it. As I’ve said before, “The big print giveth and the small print taketh away.”

Most renters hear the term “homeowners insurance” and assume it isn’t for them. They’re wrong. While they may not own the structure they’re living in, they have a home where everything except the structure can be covered by a homeowners policy. Much to some people’s surprise, homeowners insurance can cover everything from fire damage to the mailman slipping on your driveway.

When it comes time to buy insurance, I strongly urge you to go with a local agent who can walk you through the various options. When you buy an online policy, no one explains the details. The “deal” you think you’re getting may include a 200-foot brush warranty, for example. As I said, insurance companies are taking a hard look at rural Northern California. Certain areas in Mendocino County have “brush hazard scores” above 80 (on a 100-point scale). Anyone with property with a score in the mid-80s or higher is going to have a hard time finding affordable insurance.

While homeowners insurance is helpful after a disaster, it’s best to be prepared, because some items cannot be replaced. In addition to food, water, and medications for you and your pets, you’ll need clothing and, depending on the situation, you may need your own shelter for a while. You may also need fuel for your vehicle.

If you have time to pack more than the essentials, I recommend grabbing the irreplaceables: photo albums, family heirlooms and keepsakes, important documents, and if you can, your computer. For more information about disaster preparedness, go to www.ready.gov.  They have a wildfire safety toolkit, as well as many other resources.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

All Properties are Sold “As-Is” Unless You’re Paying Attention – Part II

As I said last week, when you buy a property in California, you’re buying it “as-is” unless you negotiate an agreement pertaining to a specific item. Without that special agreement, you’re accepting the property in its current condition.

This is why it’s worth investing in several inspections. Once you’ve had the inspections pertaining to structures, land, and features (reviewed in last week’s column), it’s time to get the inspections pertaining to ownership, property definition, and natural hazards.

Title insurance takes care of ownership and property definition issues. Without title insurance, you cannot be sure that your claim on the property has priority over someone else’s. With title insurance you’re really paying for the research—which is why I’m including it with other inspections. With most insurance, your premium is based problems happening in the future. With title insurance, you’re paying to see if a problem has already occurred.

In addition, title insurance provides a legal definition of the property, including its shape and location. I know this sounds crazy, but people have actually purchased the wrong property before. I know a contractor who built a house to sell on the lot he thought was his. Sadly, it wasn’t. (Surveys aren’t included with the title insurance, so if you want precise location measurements, talk to your Realtor about hiring a surveyor.)

Long story short, you definitely want title insurance so you can be sure of what you’re buying, and so you don’t buy a property only to discover there are back taxes or recorded liens which weren’t paid; or worse yet, that the deed you were given was not signed by the true owner of the property and therefore worthless to you.

Moving on to natural hazard disclosures (NHDs), the inspection for NHDs includes a review of public records to see whether your property is in a flood zone, on an earthquake fault line, near an old dump site, or any number of other hazards. Depending on the findings and your intended use of the property, you may decide to do an environmental inspection.

A Phase I environmental inspection is a public records search for suspected contamination: did there used to be a gas station at this location? A Phase II environmental inspection is an on-site inspection to see whether any concerns from Phase I appear grounded in fact. A Phase III environmental inspection basically requires the world to come to a screeching halt. You dig big holes to remove toxic material. It’s called “remediation.” It’s not fun, it’s not cheap, and it’s not quick, but hopefully it will make the property usable.

As important as inspections are, they are no replacement for walking the property yourself. And, regardless of what the inspections uncover, the seller and Realtors involved in the transaction must disclose anything they know (or should reasonably be expected to know) about the property.

Any inspection is limited to what can be seen without destructive testing. In other words, if an inspector has to cut a hole in the wall to see a problem, that problem won’t be included in the findings.

Remember, it’s always better to check things before you close escrow, when fixing the problem may be a joint effort of the buyer and seller, rather than afterwards when the responsibility is yours alone.

As an aside, property boundaries are based on surveyors’ monument points. In Mendocino County, we use the Mt. Diablo base meridian to the south and a landmark in Humboldt County to the north. Surveyors have put “pins” in the ground between those two landmarks to precisely identify distances from those landmarks so people can more easily determine boundary lines. This works well unless someone makes a mistake, which they did years ago. A surveyor’s point near Boonville Road has caused many of those properties to be misidentified by about three feet.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

All Properties are Sold “As-Is” Unless You’re Paying Attention

When you buy a property in California, you’re buying it “as-is” unless you negotiate a different agreement pertaining to a specific item with the seller. Without that special agreement, you’re accepting the property in its current condition.

This is not to suggest that sellers can announce they are selling their property as-is, and then skip required disclosures. Regardless of whether they intend to address problems with the property, sellers are legally obligated to share known material facts and defects with buyers.

However, to protect yourself as a buyer, it is imperative to get as many inspections as you can. First and foremost, you’ll want to inspect the structure. The first inspection is often the pest and fungus inspection, which discloses any problems related to dry rot, termites, powder post beetles, earth-to-wood contact, or other issues related to pests and fungus. It is an inspection of all that’s visible, so any problems that exist inside the walls or under the tile in the subfloor will not be identified.

The next inspection is often the home inspection, which reveals structural issues resulting from substandard workmanship or deferred maintenance, as well as any safety hazards, including faulty electrical connections caused by an inexperienced electrician or old technology/building standards. A roof inspection is sometimes included as part of the home inspection, but not usually—and it’s really important, as is the heating and air conditioning inspection. The inspection that evaluates the condition of heating and air conditioning equipment can save your life. If a heater has a cracked heat exchanger, for example, it can pump deadly carbon monoxide into your house.

The last thing to consider with respect to the structure is whether it is standing on solid ground. When a house is located near a cliff, most people can see it’s worth an inspection to make sure the land won’t slide out from under the house. However, when a structure is sitting on a flat lot, problems can still arise.

In years past, building requirements for testing soil were quite different. Depending on the type of soil (and what’s buried in it), the weight of a house can cause the earth to compress, leading to cracks in a house’s foundation. If you’re considering a property on a hillside, hire an engineer to inspect the integrity of the land. If you’re interested in buying a house on a flat lot, you probably don’t need to hire an engineer unless you see red flags like damage to a foundation, floors, or walls—specifically, cracks that seem to indicate the house is settling more than it should. As with all inspections, it’s better to be safe than sorry. Sure, inspections can be expensive, but not nearly as expensive as purchasing a property that slides down a hill or becomes an unstable mess.

In addition to structural inspections, you’ll want to evaluate specific functions like a pool, well, or septic system. Some problems are obvious; others are not. A pool inspection will not only note the crack in the bottom of the pool, but also the condition of the pumps, filters, heater, and piping. Well and septic system inspections are important because they can identify problems that the current use may not have triggered. A well or septic system may work beautifully for a retired couple, but when you and your spouse and your four kids and your in-laws move in, the well and/or septic system may not be equipped to handle the volume. Be sure to test the well for both quantity and quality of water.

Next week, I’ll review inspections done for natural hazard disclosures and title insurance, so you’re sure you are, in fact, buying the property you intend to buy—and no one else can lay claim to that property.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.