real estate litigation lawyers

Beware if Buying Home From Investor

Question: We purchased a home in central Phoenix last summer from an investor who had bought the home at a foreclosure sale and had never lived in the home. The investor had simply “renovated” the home and sold the home. We had a home inspection which found no major problems. In addition, the Seller’s Property Disclosure Statement furnished to us by the investor showed no major problems.

The home had no washing machine, so when we moved into the home we had to buy one. When we hooked up the washing machine, however, we immediately had a drainage problem. We hired a plumber who told us that the interior plumbing lines were completely rotted. Our homeowner’s warranty will not pay for the $2,000 repair cost because the drainage problem was a “pre-existing condition.” Do we have a claim for the $2,000 repair cost against the investor who sold us this home?

Answer: Probably not. Unless you have evidence that the investor knew of this drainage problem with the interior plumbing lines when the home was sold to you, you probably have no claim against the investor. If a buyer purchases a home from someone who has never lived in the home — that is, an investor, a bank or a probate heir — the rule of caveat emptor (“let the buyer beware”) is generally applicable. Therefore, this buyer should do an extremely thorough home inspection, and even should consider having home inspections done by two different home inspectors.

Seller Carry-Back Financing Is Booming Again

In today’s Arizona real estate market, with many homes still being lost to foreclosures, many investors today are paying cash to buy a home and then “flipping” the home with seller carry-back financing. The advantages to the investor are two fold.

One, many buyers cannot qualify for conventional financing, and an investor using seller carry-back financing can sell the home for a price higher than fair market value.

Two, the investor can require the buyer to make a significant cash down payment, and the investor will then have a secure investment earning interest at higher than the market interest rate for investments.

The advantage to a buyer, who often has just lost their home to foreclosure, is that the buyer can get back into a home while housing prices are low, take advantage of tax deductions for mortgage interest and real property taxes and build equity in the home.

Because of Recorded Deed Dad’s Girlfriend, Not Daughter, Gets Home

Question: After my mother passed away eight years ago, my father purchased a home in Sun City. Last year, he had a serious heart attack and I took care of him full time. Recently, my father passed, and since I am an only child, I thought I would be the owner of the home. However, the title company, is telling me that two years ago my father recorded a deed to his former girlfriend. I called this woman and she said that she did not know that my father had conveyed the home to her. The home is free and clear and worth $80,000. According to Arizona real estate law, is his former girlfriend entitled to the $80,000 sales proceeds if the home is sold because of the deed?

Answer: Yes. First, although the Arizona real estate law requires either actual or constructive delivery of a deed to a grantee, the recording of the deed is constructive delivery to the former girlfriend. Second, the law presumes acceptance of any conveyance of real property. Therefore, the fact that the former girlfriend was unaware of the recording of the deed is irrelevant. In other words, the former girlfriend should be entitled to sell the home and take all of the $80,000 sales proceeds.

Pros and Cons of Arbitration Versus Litigation

If you have a legal dispute with another person, do you arbitrate or litigate?

The advantages of arbitration versus litigation are that arbitration is generally quicker, less formal, and less expensive than litigation.

The disadvantages of arbitration versus litigation are the following:

Waiver of the right to trial before a judge or jury.
Requirement to pay the individual arbitrator’s fees, plus the fee of any arbitration company such as the American Arbitration Association.
Lack of full discovery proceedings such as depositions and production of documents and other evidence from the opposing party.
No right to appeal in the event of an arbitrator’s wrongful (and sometimes absurd) decision.

The “bottom line” in my opinion is that arbitration is advantageous with “small” disputes, while litigation is advantageous with larger disputes.

Note: The boilerplate language in many contracts of large companies such as homebuilders provides for mandatory arbitration. The consumer is usually required to “take it or leave it” as arbitration with the waiver of a right to a jury trial is deemed to be advantageous to large companies.

Must Keep Common Fence

Question: We live in a rural area in west Phoenix. There is a chain-link fence on the property line between our backyard and our neighbor’s backyard. Our neighbor has built block walls on the sides of his home and now wants to enclose his backyard with a block wall replacing the chain-link fence between our backyards.

We are opposed to this block wall because the chain-link fence is in good condition, and block walls give us the feeling of being in a prison. Our neighbor said that he would pay for the cost of tearing down the chain-link fence and building the block wall. We are not familiar with Arizona real estate laws, can we object to the building of this block wall?

Answer: Yes. The chain-link fence on the property line is a common wall. Both of you are responsible for the maintenance and repair of the chain-link fence. If the chain-link fence is in good condition, neither of you has the right to tear down the chain-link fence. Therefore, if your neighbor wants to build a block wall to enclose his back yard, your neighbor will have to build the block wall inside his property line.

Property Deed Can be Prepared by Arizona Real Estate Agent

Question: For over seven months we have had our Glendale home listed with an Arizona real estate agent because we are hoping to move permanently to our summer home in Prescott. Our son would like to live in our home while he attends graduate school at Arizona State University. Our real estate agent has agreed to cancel the listing since we have decided to give our home to our son. Since our real estate agent has put in time trying to sell our home, we want to be fair and pay her $1,000 if she would prepare the deed and other paperwork required to transfer the title to our home to our son. Is it legal to pay our real estate agent the $1,000 to prepare the deed and other paperwork?

Answer: Yes. Prior to the 1960’s only an Arizona Real Estate lawyer was authorized to prepare the deed and other paperwork to transfer real property. In the 1960’s, however, Arizona voters overwhelmingly passed an amendment to the Arizona Constitution authorizing real estate agents to prepare the deed and other paperwork to transfer real property for a client, provided that this paperwork was incidental to the sale or leasing of the real property. Article 26, Arizona Constitution. Although your real estate agent can draft the paperwork, a title company should be used for closing the transaction, including title insurance.

Mortgage Assistance Relief Services (“MARS”) Disclosures No Longer Required in Short Sales

Combs Law Group is happy to annouce some very good news…. After extensive negotiations between the National Association of REALTORS® and the Federal Trade Commission (“FTC”), the FTC has ruled that listing brokers representing sellers in short sales are not required to make the MARS disclosures.

See FTC press release dated July 15, 2011. http://www.ftc.gov/opa/2011/07/mars

Cracks in Living Room Wall Could Be Homebuilders Liablity According to Arizona Law

Question: We purchased a new home last year in Flagstaff from a homebuilder. We were given a one-year written warranty from the homebuilder. Shortly after moving into our new home we noticed a large crack in the living room. The homebuilder spackled over the crack. Then three months later the same crack reappeared, and again the homebuilder spackled over the crack. Once again, the crack has reappeared along with another crack on the opposite side of the room. The homebuilder says that he has no liability to us because the home is no longer under the one-year written warranty. I am concerned the reoccuring cracks may mean that have a structural problem in our home. Is there anything we do?

Answer: First, the Registrar of Contractors can require a homebuilder to repair any construction defects discovered in the first two years after the purchase of the home. Second, if you are not satisfied after working with the Registrar of Contractors, I would recommend that you hire an engineer or other construction expert to determine the reason for this cracking in your living room. Third, all homebuilders by Arizona law impliedly warrant the proper construction of the home. Generally, a lawsuit for a breach of this implied warranty may be brought within eight years after substantial completion of the home. Therefore, if your expert determines that the cracking is caused by a structural problem due to faulty construction, the homebuilder should have liability now to you for the cost to remediate the structural problem.

Note: A homebuilder is not required by any law to furnish any written warranty, and can therefore limit any written warranty to a certain time period.

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