New water heater? Not on landlord's dime

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Rent it Right

Janet Portman
Inman News

Q: I've developed a painful skin condition that requires treatment with large amounts of very hot water. The water in my apartment isn't hot enough and it takes too long to heat up the amount of water I need, so I've asked the landlord to install a new water heater or give me a device that makes hot water at the sink. He's refused, saying, "You don't look disabled to me." I thought landlords were legally required to respond to a request like this -- aren't they? --Sherry S.

A: To figure out whether your landlord is legally required to install (or let you install) a new water heater, you'll need to understand the Fair Housing Act and Fair Housing Amendments Act, or "FHAA" (42 U.S. Code ?§ 3604 and following). Both you and your landlord appear to be mistaken in at least a couple of key areas.

First, the FHAA protects only those who have a disability as defined by the law: a physical or mental disability that substantially limits one or more major life activities. Unless someone has an obvious disability (for example, the person is blind or uses a wheelchair), a landlord is entitled to ask for a third-party professional's opinion. Most people get this documentation of their disability from their doctors, therapists or other professionals (documents such as Social Security Disability Insurance cards will also suffice).

Once you present your landlord with credible evidence that you have a disability, that issue is resolved, no matter what your landlord's personal observations may be. However, you'll still have to show that the action you're seeking -- a new water heater -- is necessary in order to allow you to live safely and comfortably in the rental. Again, this is a matter for the third-party professional to decide, and your landlord must grant the request if it is reasonable (it must not seriously impair his ability to run his business). Unless you're in Massachusetts or living in a federally subsidized building (or in some states, a state-subsidized building), you will have to pay for the modification.

Q: I and other members of my apartment association recently had an interesting conversation concerning the ability of illegal immigrants to pursue discrimination claims. I think that because these people are here illegally, they aren't entitled to a free lawyer supplied by the state, even if they have a good case. My friends think that our state's attorney general or the federal prosecutors will take the case anyway, because the point is to prevent landlords from discriminating. What do you think? --Nathan J.

A: As you point out, tenants may bring discrimination claims by filing a complaint with a state fair housing agency or the state prosecutor, or by contacting the federal Department of Housing and Urban Development or the Department of Justice. If any of these outfits determine the case has merit, they will pursue it and settle or litigate, at no charge to the tenant. Even if the case doesn't proceed, the complaining tenant doesn't pay for the lawyers who work on it.

Your friends' theory is a novel one, perhaps grounded on the belief that because illegal immigrants aren't entitled to government welfare, disability or health services, they shouldn't be entitled to government legal services, either. While it's true that the federal 1996 welfare reform legislation did place welfare, disability and health services out of reach, it didn't mention legal services. For support, your friends would have to argue that legal representation is part of the legislation's denial to illegal immigrants of "any other similar benefit for which payments or assistance are provided to an individual." That's a stretch, although one public official -- Nebraska's Attorney General -- advanced it in May 2008, when defending his refusal to prosecute what appeared to be a blatant case of discrimination based on race or ethnicity, which happened to be brought by illegal immigrants. Interestingly, an illegal immigrant will fare better when facing discrimination on the job -- the Equal Employment Opportunity Commission will prosecute and enforce antidiscrimination laws without regard to immigration status.

Step back a moment to consider whether it's in everyone's best interests if state or federal prosecutors do not represent illegal immigrants when their civil rights are denied. Although it is possible for wronged tenants to hire private attorneys to handle their cases, most do not and would not, mainly because finding an attorney and paying up front for costs is beyond their means. This is precisely why the government has made it possible to easily file a fair housing complaint (one can do so online). If we deny government representation to illegal immigrants, most law-breaking landlords will get away with their misdeeds, and may continue to discriminate against others. Remember, the landlord in the Nebraska case was discriminating on the basis of race or ethnicity, not immigration status, and having gotten away with it once, there's every reason to expect that he'll do it again. The next targets may be perfectly legal residents, and while they will presumably have access to a government lawyer, it would have been cheaper, more efficient and just to have taught that landlord his lesson the first time.

Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord's Legal Guide" and "Every Tenant's Legal Guide." She can be reached at janet@inman.com.

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Tenant: Splitting cost of new floor is unfair

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Despite causing damage, he justifies paying only 20%

Robert Griswold
Inman News

Q: I live by myself and have a large home. To help cover my mortgage I decided to rent out a couple of the extra bedrooms. My two roommates each have their own bedroom and bathroom, and we share the living room and kitchen and rest of the house.

Last weekend, one of my tenants was dying a leather belt in the kitchen and he accidentally tipped the bottle over and spilled dye all over the linoleum flooring. He tried in vain to clean it up quickly, but there is nothing that will take this permanent dye out of the flooring. This is sheet vinyl and the damage is permanent and will require the entire linoleum to be replaced.

My tenant at first balked at paying anything but has now approached me with a proposal that he'd pay for 20 percent of the new flooring. He justifies this amount based on this type of flooring having a lifetime expectancy of 15 years, and it is now approximately 12 years old. Therefore, he calculates that the remaining life is three years, or 20 percent of the lifetime expectancy (3/15 or 20 percent).

The linoleum may be 12 years old, but it is my favorite pattern and is in excellent condition. I had no plans to replace it for many years. I have received three bids and want to be reasonable so I would be willing to evenly split the $500 for the cost of materials and labor to replace it. He thinks that is unfair, as I will get a new floor. What is your opinion?

A: I think you are being very reasonable in offering to pay half the cost. While it was an accident, the tenant caused the damage through his negligence. He could have taken precautions to avoid any potential damage to your property. While he may feel that the flooring had only three years of remaining life, because it is in excellent condition there is nothing that would require you to replace your kitchen linoleum at this time except for the damage they caused.

Many homeowners have kitchen flooring that lasts for much longer than 15 years, especially if the linoleum was good quality and is properly maintained and is not damaged by sunlight. The tenant should accept your offer and be glad that you did not do your own calculation that you intended to keep the flooring for another 25 years!

Q: I recently signed a one-lease year to rent an apartment in a two-family house. It wasn't until a week or so later that I discovered the main vehicle access to the property is on an extremely narrow driveway. I have an oversized SUV and can squeeze by only after backing up and going forward about 10 times! I have only about six inches on both sides when driving in the driveway as the house is on one side and a block masonry wall is on the other. My fear is that next winter it will be impassable and I will not be able to get out.

I am trying to break the lease; however, the owner is saying she will not do this. If in fact there is bad weather and the driveway is impassable, can I sue for time lost from work? Maybe I could just withhold the rent that month. I work as an hourly consultant so damages would be easy to access.

A: It is my opinion that a narrow driveway is not a legal reason to break a lease unless the landlord made you specific promises or guarantees in advance about the driveway that were a material part of the lease. In other words, you would have had to have an agreement with your landlord in advance and made the use of the driveway a condition of your acceptance of the terms of the lease. For example, maybe you told the landlord that you are not willing to lease the property unless the landlord promised that the driveway would always be usable throughout the entire year or was even widened. Then if the driveway became impassable and the landlord failed to take appropriate measures, you may indeed have a breach by the landlord of a material element of the lease. But absent such an agreement, I do not believe that you have the right to sue the landlord if the driveway were to become impassable in the winter.

Also, I would not advise withholding rent without first contacting a tenants rights attorney in your area. You can always contact the landlord and see if she will agree to let you out of the lease, but otherwise I would say that your lease is binding.

This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of "Property Management for Dummies" and co-author of "Real Estate Investing for Dummies."

E-mail your questions to Rental Q&A at rgriswold.inman@retodayradio.com.

Questions should be brief and cannot be answered individually.

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Facing foreclosure? Hound lender weekly

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Staying in touch with loss mitigation department can pay off

Ilyce Glink
Inman News

Q: Please answer my questions: What is the average time in months a family is involved with loss mitigation? And what suggestions can you please give me to help me maintain my home over the next 12 months? I am single parent with two special-needs children. Thanks for your help.

A: If you want to save your home, then you should be on the phone with the lender every week, leaving the loan officer a message about what's going on and staying in touch. The process can take months, but you have to be the driver of it.

A few Sundays ago, I received a call on my weekly radio show from a listener who was in the same position you're in now. He confirmed that each week for three or four months, he would call the lender and either speak directly to his contact in the loan mitigation department or leave a message.

He was ultimately able to refinance his home and work it out. The lender told him that the only reason he got the attention is that he was really on the case -- almost to the point of annoyance.

Although I'm sure your children are the most important part of your life, the lender isn't going to care if they're special needs. All the lender is going to care about is whether you can afford to pay the mortgage each month, and what has to happen to get you there (and off the lender's desk).

You'll be in the strongest position if you call your lender before you've been late on a payment. If you're already late, call as quickly as possible to start the ball rolling.

You may need some extra help. A real estate attorney who works in the world of foreclosures may be able to guide you better. You might also try a local housing counselor. You can find one on the Department of Housing and Urban Development's Web site or by calling 888-995-HOPE, or by going to Consumer Credit Counseling Service of Greater Atlanta, an organization that works nationally and is a certified housing and bankruptcy counselor.

Good luck.

To get even more valuable advice from Ilyce, visit her Personal Finance and Real Estate Center.

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Condo 'passes financing' but is it structurally sound?

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Buyer wise to investigate quality before purchase

Bill and Kevin Burnett
Inman News

Often our response to a question posed by a reader triggers another question from another reader on a related but different topic.

A couple of weeks ago a reader wanted to know if it was necessary to have the interior of a condominium inspected before purchase. We encouraged him to do so. That column sparked this question from another reader:

Q: Should a buyer be hiring a building inspector if the building is old? I am thinking of buying a condo in an old building that's recently been made into new condos -- all new everything, including interior walls. I am not so much concerned with the interior as I am in finding out about the condition of the building -- its foundation, if there was old damage from previous earthquakes, etc.

Supposedly it was earthquake retrofitted to city codes in 1997, but I don't know what that means. At the planning department they said it means the floors and ceiling were braced to the walls. The mortgage broker is telling me not to worry because it wouldn't pass financing "if it wasn't OK."

A: Do not believe what the mortgage broker tells you. He's full of hooey. For the past several years, qualification standards for home loans have been practically nonexistent. Mortgage brokers don't care about the condition of the property. They care only that the buyers qualify and that the property is appraised for the amount of the loan.

Some of the loan products used to get underqualified buyers into a property bordered on criminal, in our view. The excesses of the past years are the reason we are in the mortgage mess of today.

We've bought and sold residential real estate for almost 40 years. Some of the homes we've purchased were in pretty sad shape. Some had brick foundations, and some had holes in the walls. All had antiquated plumbing, electrical and heating systems. We financed them all, and none of them would have come close to passing muster under the Uniform Building Code.

So no, just because it "passes financing" doesn't mean it's OK. Kudos to you for trusting your gut and acting with due diligence before laying out your hard-earned cash.

The building is probably OK. By your description it sounds as if you're buying into a condo conversion. Occasionally, properties originally built as apartments are converted and sold as condominiums. The process of conversion is rigorous and strictly overseen by city and county inspectors and planners.

Also you report that the building was retrofitted in 1997. Generally that means more than simply tying the floors to the walls. Another big part of retrofitting is making sure that the foundation is sound and that the building frame is adequately tied to the foundation. All of this was probably done under the supervision of the local building inspectors.

To explore the scope of the work done in 1997, go to the city building department and ask to look at the plans and permits that were submitted when the work was done. If you are not familiar with reading prints, ask someone at the counter to explain the scope of the work done. Ask questions, but be brief. At the very least you should be able to get the name of the contractor who performed the work.

Give the company a call, explain your reason for the inquiry and they should be happy to explain to you what they did. After this, you should be in a position to decide if an inspection of the entire building is in order.

We suspect that a full-blown inspection is not called for. But if you decide it is, rather than spend the money, you may want to consider voiding this deal and finding another condo.

If you decide to go forward, we stand by our previous advice and suggest that you have the interior inspected and that you consider purchasing a home warranty to get you through the first year of ownership.

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First-time home buyers can tap IRA

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Up to $10K can be used for down payment, closing costs

Tom Kelly
Inman News

A friend of mine is a single mom who became a real estate salesperson several years ago following her divorce. She had a consistent flow of buyers and sellers until the beginning of the year when the market slowdown became even more apparent in many Pacific Northwest neighborhoods.

She postponed a long-awaited kayak trip because an out-of-state buyer was coming into town with a reportedly all-cash offer for a waterfront cottage. I laughed and teased her about postponing the trip when I found out the man was single.

"That's got very little to do with it," she said. "Gone are the days when you relied on an associate to handle any legitimate customer. This one looks like the first great chance in weeks. He's buying the place with his IRA to use as a second home."

I stopped laughing and took a deep breath.

"If he's going to use his IRA, I hope he plans to rent it out."

The rules for purchasing real estate with an individual retirement account are specific and differ greatly from those that govern conventional rentals and second homes. For example, you cannot buy a second home with an IRA and use it partly for personal use, even though you might rent it to unrelated persons the rest of the year. And, your IRA cannot purchase a real estate asset and then have a "disqualified" person (family member) use it while it is in the IRA. The purchase must be investment property.

For investors, the biggest mistake made with an IRA-purchased property is the misapplication of the 14-10 rule. Under current federal tax laws, the owner of a rental vacation home can use it for 14 days or 10 percent of the amount of time the house is rented, whichever is greater, without jeopardizing its status as a rental property and tax shelter. This is not so with a property purchased with an IRA.

Here are the four basic "no-nos" of real estate IRAs:

• Personal use (unlike rental property)
  
• Renting IRA property to family, or a partner
  
• Paying yourself with its income
  
• Personally guaranteeing a loan

To prepare for your real estate IRA, designate the amount of your retirement funds that you wish to use in the property deal and open a new IRA account with an independent administrator. The best place to start is an independent community bank. Many banks will not service real estate IRAs (some will say "never heard of it") because it must act as owner, such as paying the taxes and collecting servicing fees -- paperwork that many lenders don't want or need.

The only exception to IRA funds being used for a personal residence is reserved for first-time home buyers. A provision in the 1997 Taxpayer Relief Act that allows penalty-free withdrawals of up to $10,000 for the down payment and closing costs. Withdrawals can be made from established IRAs of spouses, parents, children, grandchildren or ancestors as long as they total no more than $10,000. While not be subject to the Internal Revenue Service's 10 percent early withdrawal penalty, normal income taxes will still apply.

Misinformation given by local IRS offices has added to the IRA confusion. According to a federal tax-court case, a couple was charged income tax for withdrawing their IRAs to buy a home even though their local IRS public-assistance representative said the funds would not be taxable.

Emma and James Clarke each withdrew $16,000 from their IRAs. They wanted to be certain the amounts were not taxable because the Clarkes said they would not be able to purchase the house and pay taxes on the $32,000 withdrawal. According to the Clarkes, they were told no penalty would be assessed. The court ruled that when IRS employees give incorrect interpretations of the law, the IRS is not bound by that advice.

In fact, the IRS is not generally bound by the language of its own publications. The court ruled the Clarkes' withdrawals were taxable under the rules that generally apply to IRA distributions.

Owning a home is a "forced savings plan." The money that you put in to home ownership is usually returned -- with appreciation -- when it's time to sell. Sometimes the appreciation can offset the amount of interest the borrower has paid on the home loan.

If you are a first-time home buyer, however, and using your IRA funds is the only way you can afford the down payment, check with a tax professional before making the move. He might tell you the "R" in IRA is to be used in retirement and not before.

And, he absolutely will tell you that you cannot use your IRA funds to buy a second home.

To get even more valuable advice from Tom, visit his Second Home Center.

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