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Blog: Homeowner Information

Mechanic’s Liens

property lien

The Mechanics’ Lien law provides special protection to contractors, subcontractors, laborers and suppliers who furnish labor or materials to repair, remodel or build your home.

If any of these people are not paid for the services or materials they have provided, your home may be subject to a mechanics’ lien and eventual sale in a legal proceeding to enforce the lien. This result can occur even when the homeowner has made full payment for the work of improvement.

The mechanics’ lien is a right that a state gives to workers and suppliers to record a lien and ensure payment. This lien may be recorded where the property owner has paid the contractor in full and the contractor then fails to pay the subcontractors, suppliers, or laborers. Thus, in the worst case, a homeowner may actually end up paying twice for the same work.

The theory is that the value of the property upon which the labor or materials have been bestowed has been increased by virtue of these efforts and the homeowner who has reaped this benefit is required in return to act as the ultimate guarantor of full payment to the persons responsible for this increase in value. In practice, a homeowner faced with a valid mechanics’ lien may be compelled to pay the lien claimant and then pursue conventional legal remedies against the contractor or subcontractor who initially failed to pay the lien claimant but who himself was paid by the homeowner. Another justification for this result relates to the relative financial strengths of the parties to a work of improvement. The law views the property owner as being in a better situation to absorb the financial setback occasioned by having to pay the amount of a valid mechanics’ lien, as opposed to a laborer or material man who is viewed as being less able to absorb the financial burdens occasioned by not being paid for services or materials provided in connection with a work of improvement.

The best protection against these claims is for the homeowner to employ reputable firms with sufficient experience and capital and/or require completion and payment bonding of the construction work. The issuance of checks payable jointly to the contractor, material men and suppliers is another protective measure, as is the careful disbursement of funds in phases based upon the percentage of completion of the project at a given point in the construction process. The protection offered by mechanics’ lien releases can also be helpful.

Even if a mechanics’ lien is recorded against your property you may be able to resolve the problem without further payment to the lien claimant. This possibility exists where the proper procedure for establishing the lien was not followed. While it is true that persons who have provided labor, services, or materials to a job site may record mechanics’ liens, each is required to strictly adhere to a well-established procedure in order to create a valid mechanics’ lien.

Needless to say, this is one area of the law that is very complex, thus it may be worthwhile to consult an attorney if you become aware that a mechanics’ lien has been recorded against your property. In the event you discover that a lien has been recorded but no effort has been made to enforce the lien, a title company may decide to ignore the lien. However, be prepared to be presented with a positive plan to eliminate the title problems created by this type of lien. This may be accomplished by means of a recorded mechanics’ lien release from the person who created the lien, or other measures acceptable to the title company.

As in all areas of the real estate field, the best advice is to investigate the quality, integrity, and business reputation of the firm with whom you are dealing. Once you are satisfied you are dealing with a reputable company and before you begin your construction project, discuss your concerns about possible mechanics’ lien problems and work out, in advance, a method of ensuring that they will not occur.

Mello-Roos

In purchasing your new home, your future monthly payments will be made up of principal, interest, real property taxes, and insurance. But what is the tax for the Community Facilities District, otherwise known as a Mello-Roos District? The Land Title Association (LTA) has answered some of the most commonly asked questions about the Mello-Roos Community Facilities Act.

What is a Mello-Roos District?

A Mello-Roos District is an area where a special tax is imposed on those real property owners within a Community Facilities District. This district has chosen to seek public financing through the sale of bonds for the purpose of financing certain public improvements and services. These services may include streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police protection to newly developing areas. The tax you pay is used to make the payments of principal and interest on the bonds.

Are the assessments included within the Proposition 13 tax limits?

No. The passage of Proposition 13 in 1978 severely restricted local government in its ability to finance public capital facilities and services by increasing real property taxes. The “Mello-Roos Community Facilities Act of 1982” provided local government with an additional financing tool. The Proposition 13 tax limits are on the value of the real property, while Mello-Roos taxes are equally and uniformly applied to all properties.

What are my Mello-Roos taxes paying for?

Your taxes may be paying for both services and facilities. The services may be financed only to the extent of new growth, and services include: Police protection, fire protection, ambulance and paramedic services, recreation program services, library services, the operation and maintenance of parks, parkways and open space, museums, cultural facilities, flood and storm protection, and services for the removal of any threatening hazardous substance. Facilities which may be financed under the Act include: Property with an estimated useful life of five years or longer, parks, recreation facilities, parkway facilities, open-space facilities, elementary and secondary school sites and structures, libraries, child care facilities, natural gas pipeline facilities, telephone lines, facilities to transmit and distribute electrical energy, cable television lines, and others.

When do I pay these taxes?

By purchasing an interest in a subdivision within a Community Facilities District you can expect to be assessed for a Mello-Roos tax which will typically be collected with your general property tax bill. These special tax payments are subject to the same penalties that apply to regular property taxes.

How long does the tax stay in effect?

The tax will stay in effect until the principal and interest on the bonds are paid off along with any reasonable administrative costs incurred in collecting the special tax or so long as it is needed to pay the expenses of services, but in no case shall exceed 40 years.

What happens if a general tax payment is not made on time?

Because the Mello-Roos tax is typically collected with your general property tax bill, the Facilities District that obtained the lien may withdraw the assessment from the tax roll and commence judicial foreclosure.

What is the basis for the tax?

Most special taxes levied on properties within these districts have been structured on the basis of density of development, square footage of construction, or flat acreage charges. The act, however, allows for considerable flexibility in the method of apportionment of taxes, and the local agencies may have established an entirely different method of levying the special tax against property in the district in question.

How much will the Mello-Roos payment be?

The amount of tax may vary from year-to-year, but may not exceed the maximum amount specified when the district was created. In the case of the purchase of a new house within a subdivision, the maximum amount of the tax will be specified in the public report. The Resolution of Formation must specify the rate, method of apportionment, and manner of collection of the special tax in sufficient detail to allow each landowner or resident within the proposed district to estimate the maximum amount that he or she will have to pay.

How is the special tax reflected on the real property records?

The special tax is a lien on your property, essentially like a regular tax lien. The lien is recorded as a “Notice of Special Tax Lien” which is a continuing lien to secure each levy of the special tax.

How are Mello-Roos taxes affected when the property is sold?

The Mello-Roos tax is assessed against the land, but is not based upon the value of the property, therefore, the possible increased value of the property does not affect the amount of the tax when property is sold. The amount of the tax may not exceed the original maximum amount stated in the Resolution of Formation. Any delinquent payments must be satisfied before the sale of the real property since the unpaid amounts are a lien against the property.

Understanding Foreclosures

It is an unfortunate commentary, but when economic activity declines and housing activity decreases, more real property enters the foreclosure process. High interest rates and creative financing arrangements are also contributing factors.

When prices are rapidly accelerating during a real estate “bonanza”, many people go to any lengths available to get into the market through investments in vacation homes, rental housing and trading up to more expensive properties. In some cases, this results in the taking on of high interest rate payments and second, third and even fourth deeds of trust. Many buyers anticipate that interest rates will drop and home prices will continue to escalate. It is possible that neither will occur and borrowers may be faced with large balloon payments becoming due. When payments cannot be met, the foreclosure process looms on the horizon.

In the foreclosure process, one thing should be kept in mind: as a general rule, a lender would rather receive payments than receive a home due to a foreclosure. Lenders are not in the business of selling real estate and will often try to accommodate property owners who are having payment problems. The best plan is to contact the lender before payment problems arise. If monthly payments are too hefty, it may be that a lender will be able to make some alternative payment arrangements until the owner’s financial situation improves.

Let’s say, however, that a property owner has missed payments and has not made any alternate arrangements with the lender. In this case, the lender may decide to begin the foreclosure process. Under such circumstances, the lender, whether a bank, savings and loan or private party, will request that the trustee, often a title company, file a notice of default with the county recorder’s office. A copy of the notice is mailed to the property owner.

If the default is due to a balloon payment not being made when due, the lender can require full payment on the entire outstanding loan as the only way to cure the default. If the default is not cured, the lender may direct the trustee to sell the property at a public sale.

In cases of a public sale, a notice of sale must be published in a local newspaper and posted in a public place, usually the courthouse, for three consecutive weeks. Once the notice of sale has been recorded, the property owner has until 5 days prior to the published sale date to bring the loan current. If the owner cures the default by making up the payments, the deed of trust will be reinstated and regular monthly payments will continue as before.

After this time, it may still be possible for the property owner to work out a postponement on the sale with the lender. However, if no postponement is reached, the property goes on the block. At the sale, buyers must pay the amount of their bid in cash, cashier’s check or other instrument acceptable to the trustee. A lender may “credit bid” up to the amount of the obligation being foreclosed upon.

With the recent attention given to foreclosure, there also has been corresponding interest in buying foreclosed properties. However, caveat emptor: buyer beware. Foreclosed properties are very likely to be burdened with overdue taxes, liens and clouded titles. A buyer should do his homework and ask a local title company for information concerning these outstanding liens and encumbrances. Title insurance may or may not be available following a foreclosure sale and various exceptions may be included in any title insurance policy issued to a buyer of a foreclosed property.

Your local title company will be happy to provide additional information.

Common Ways of Holding Title

How Should I Take Ownership of the Property I am Buying?

Real property can be incredibly valuable and the question of how parties can take ownership of their property is important. The form of ownership taken -- the vesting of title -- will determine who may sign various documents involving the property and future rights of the parties to the transaction. These rights involve such matters as: real property taxes, income taxes, inheritance and gift taxes, transferability of title and exposure to creditor’s claims. Also, how title is vested can have significant probate implications in the event of death.

The Land Title Association (LTA) advises those purchasing real property to give careful consideration to the manner in which title will be held. Buyers may wish to consult legal counsel to determine the most advantageous form of ownership for their particular situation, especially in cases of multiple owners of a single property.

The LTA has provided the following definitions of common vesting as an informational overview. Consumers should not rely on these as legal definitions. The Association urges real property purchasers to carefully consider their titling decision prior to closing, and to seek counsel should they be unfamiliar with the most suitable ownership choice for their particular situation.

Common Methods of Holding Title

SOLE OWNERSHIP

Sole ownership may be described as ownership by an individual or other entity capable of acquiring title. Examples of common vesting in cases of sole ownership are:

  1. A Single Man/Woman:

    A man or woman who has not been legally married. For example: Bruce Buyer, a single man.

  2. An Unmarried Man/Woman:

    A man or woman who was previously married and is now legally divorced. For example: Sally Seller, an unmarried woman.

  3. A Married Man/Woman as His/Her Sole and Separate Property:

    A married man or woman who wishes to acquire title in his or her name alone.

    The title company insuring title will require the spouse of the married man or woman acquiring title to specifically disclaim or relinquish his or her right, title and interest to the property. This establishes that it is the desire of both spouses that title to the property be granted to one spouse as that spouse’s sole and separate property. For example: Bruce Buyer, a married man, as his sole and separate property.

CO-OWNERSHIP

Title to property owned by two or more persons may be vested in the following forms:

  1. Community Property:

    A form of vesting title to property owned by husband and wife during their marriage, which they intend to own together. Community property is distinguished from separate property, which is property acquired before marriage, by separate gift or bequest, after legal separation, or which is agreed to be owned only by one spouse.

    Real property conveyed to a married man or woman is presumed to be community property, unless otherwise stated. Since all such property is owned equally, husband and wife must sign all agreements and documents of transfer. Under community property, either spouse has the right to dispose of one half of the community property, including transfers by will. For example: Bruce Buyer and Barbara Buyer, husband and wife as community property.

  2. Joint Tenancy

    A form of vesting title to property owned by two or more persons, who may or may not be married, in equal interest, subject to the right of survivorship in the surviving joint tenant(s). Title must have been acquired at the same time, by the same conveyance, and the document must expressly declare the intention to create a joint tenancy estate. When a joint tenant dies, title to the property is automatically conveyed by operation of law to the surviving joint tenant(s). Therefore, joint tenancy property is not subject to disposition by will. For example: Bruce Buyer and Barbara Buyer, husband and wife as joint tenants.

  3. Tenancy in Common:

    A form of vesting title to property owned by any two or more individuals in undivided fractional interests. These fractional interests may be unequal in quantity or duration and may arise at different times. Each tenant in common owns a share of the property, is entitled to a comparable portion of the income from the property and must bear an equivalent share of expenses. Each co-tenant may sell, lease or will to his/her heir that share of the property belonging to him/her. For example: Bruce Buyer, a single man, as to an undivided 3/4 interest and Penny Purchaser, a single woman, as to an undivided 1/4 interest, as tenants in common.

Other ways of vesting title include:

  1. A Corporation*:

    A corporation is a legal entity, created under state law, consisting of one or more shareholders but regarded under law as having an existence and personality separate from such shareholders.

  2. A Partnership*:

    A partnership is an association of two or more persons who can carry on business for profit as co-owners, as governed by the Uniform Partnership Act. A partnership may hold title to real property in the name of the partnership.

  3. As Trustees of A Trust*:

    A trust is an arrangement whereby legal title to a property is transferred by the grantor to a person called a trustee, to be held and managed by that person for the benefit of the people specified in the trust agreement, called the beneficiaries.

  4. Limited Liability Companies (L.L.C.)

    This form of ownership is a legal entity and is similar to both the corporation and the partnership. The operating agreement will determine how the L.L.C. functions and is taxed. Like the corporation its existence is separate from its owners.

*In cases of corporate, partnership, L.L.C. or trust ownership - required documents may include corporate articles and bylaws, partnership agreements, L.L.C. operating agreement and trust agreements and/or certificates.

Remember:

How title is vested has important legal consequences. You may wish to consult an attorney to determine the most advantageous form of ownership for your particular situation.

How to hire a contractor

This is a topic that is very dear to our hearts. It is hard to know sometimes how to hire a contractor.  Whether it is for a room addition, just a simple remodel job or for building your home from start to finish, it is very important to do your due diligence. We have seen more people be taken advantage of by unprofessional contractors including ourselves.  More than once we have hired someone because we liked them,  or we wanted to help them out, or they gave us the most affordable bid.

Please take our advice on this.  Check with friends, neighbors, co-workers 1st for recommendations and if you find a contractor outside your circles make sure and contact the contractor’s past clients and see what they have to say before you hire them.  Check out some of their completed projects to verify the quality of their work.

Here are a few more questions you want to make sure and ask:

  • Are they are insured… Personal liability, workers compensation, property damage coverage
  • What are their timelines so you completely understand what to expect as far as timeliness.
  • Who is providing all the major materials
  • Who is providing all the small hardware like nails, screws, plumbing, wiring etc…
  • Do they have the proper license
  • Who is getting the permit’s if they are required
  • Will they be using sub-contractors ( this one is important because you want to know who is working on your home)
  • Who is responsible for clean up at the end of the day and the end of the project
  • Again ask for a list of references

If you need to hire a contractor there are many services to help you find a good one on the market today, depending on your location.  Home Advisor and Angie’s List are two very good ones.  Do your research the internet is full of valuable information check out the Better Business Bureau

A Beautiful Home with a Dog

Some would say it’s impossible: You can’t have a beautiful home with a dog living there because they’re destructive and make a mess. Fortunately, they’re wrong.

It may take a little more effort on your part to have a beautiful home with a dog as pups do have a habit of causing trouble, but that’s not an insurmountable obstacle if you have a system in place to keep your house clean as well as accessories that resist damage while giving your interior a touch of elegance that matches your tastes to a T. Here’s a closer look at the specifics.

Opt for Durable Flooring

Ceramic tiles and concrete are all the rage in some real estate markets, and they make a perfect fit for you thanks to their imperviousness to nails and claws of all kinds. Moreover, you won’t need more than a mop and bucket to do away with any “accidents” that might occur. Vinyl and laminate are other options, but you should stay away from hardwood. 

Buy the Right Upholstery

You need furniture made of something that’s easy to clean and stands up to teeth without getting torn to shreds. According to The Spruce, a website dedicated to interior design and decor, the best choices would be leather or microfiber with the latter in a multicolored pattern so that whatever stains do arise aren’t immediately visible.

Stick With Metal

Brass, copper, chrome, and steel have a stately appearance that adds a touch of class and they’re almost indestructible to your pup no matter how hard they chew. That’s something to consider next time you’re out shopping for cabinets, chairs or fixtures and are wondering how long they’ll last. Best yet, they’re extremely easy to clean.

Schedule Your Housework

It is always a challenge to have a beautiful home with a dog but a housework routine will help because dirt, hair, and odors can build up without you even realizing it once you become used to them. However, by making a routine out of cleaning, you’ll nip these problems in the bud before anyone even notices a paw print on the rug. A lifestyle writer with Money Crashers even has a checklist to help you stay on track.

Set Up a Cleaning Station

Builders are increasingly being asked to add cleaning stations to homes, so you should be able to find one near you who can do the job. The ideal place for the station would be near the entrance for a quick scrub down before the dog tracks mud all over the house. It should include a handheld sprayer and a tub or basin that’s large enough to accommodate your best bud.

Find a High-Powered Vacuum

A few stray hairs, or even a full-scale shedding, are nothing to furrow your brow over if you can clear them up quickly. This is no small task, however, and requires weekly (if not daily) attention from you and a high-quality vacuum cleaner built to adequately handle pet hair and dander. Read reviews to find the best pet-friendly options, including Hoover UH30010COM Platinum Collection and Oreck Commercial XL2100RHS, both of which are lightweight and ideal for cleaning up pet hair. 

Learn the Wonders of Baking Soda

A beautiful house doesn’t just look great, it smells great as well, and baking soda is your best weapon in removing odors and providing that fresh scent of springtime that you’ve been striving for. Not only can you use it to remove scents from carpets and furniture, experts at The Pet’s Home suggest using on your four-legged friend themselves.

Get a Dog Bed That Matches

There’s no reason it can’t be a stylish accessory no matter what room your pooch claims as their own. Comfort should still be the No. 1 priority, and that means buying a dog bed in the right size, shape, and texture, but that still leaves plenty of options when it comes to the color and pattern, so find one that goes with the overall scheme.

Once you master these cleaning hacks, you’ll no longer need to think twice before inviting guests over for dinner and enjoy their compliments about your home. Hopefully, they’ll say something nice about your pup as well.

IF A  NEW HOME IS IN YOUR FUTURE START YOUR SEARCH HERE 

 

Why You Need An Emergency Home Repair Fund

Emergencies happen when you least expect them. Perhaps you need plumbing repair or a tree landed on your roof during a storm. Whatever the case may be, have you given any thought to how you will cover these costs?

As a homeowner, when you create your homeownership budget, you should factor repairs and emergencies into the equation. Having an emergency home repair fund will save you a lot of worry and help keep your finances secure.

General Repair Funds To Cover Basic Home Needs

For repairs like a new boiler or a repair on your air conditioning unit during a hot summer, having a general repair fund can help cover these costs. The general rule of thumb is to save at least 1% of the home’s purchase cost.

So if you home costs $150,000, you should budget at least $2,000 per year. It is important to remember that this is a recommendation. Where you live, how old the home is, and other factors can affect how much you will need to save.

Funds For Dire Emergencies

When the unexpected happens, like a tornado or flooding, having a second emergency repair fund for will be a lifesaver. If you do not have funds available to cover these costs, you could be at risk of losing your home. This fund can also help in non-home repair emergencies like the loss of a job, illness, or a death.

For dire emergency home repair funds, it is recommended to save an upward of 20% of your mortgage balance.

Options If You Do Not Have A Repair Fund

If you do not have an emergency repair fund and find your home in need of repairs, you do have some options to help cover the costs. You could use your home equity.

There are two ways you can do this:

  • Home equity loan, which is a lump sum you borrow against your home and is paid in installments. This option is preferred when you know how much you will need to borrow.
  • Home equity line of credit, which acts similar to a credit card in that you have a limit and can borrow on an as-needed basis over the term of the loan. Your lender will often issue you a card for easy access to these funds. This option is preferred when you are unsure how much you will need to borrow.

If you opt to use these options, use them responsibly. You do not want to borrow more than you can reasonably afford and lenders will often require a good credit score.

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JULY 26, 2018 BY 

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