Denver Real Estate Blog » Denver Real Estate

THE 10 SECOND RULE

Jerry — Tue, 13 Oct 2009 17:06:07 +0000

TEN SECOND RULE

In real estate, every day presents itself with visiting property; sometimes alone-sometimes with clients. As realtors were are made aware of the 10 Second Rule to survey our surroundings and ensure personal safety. I thought this might be useful to everyone.

Inattention is one of the main reasons people find themselves in danger. Use the 10-second rule each day to assess your surroundings and make sure that you’re taking the right precautions in case an emergency or an uncomfortable situation arises.

Here’s how the 10-second rule works:

Take two seconds when you arrive at your destination to ask yourself:

 Is there any questionable activity in the area?

 Am I parked in a well-lit, visible location?

 Can I be blocked in the driveway by someone’s vehicle?

Take two seconds after you step out of your car to ask yourself:

 Are there suspicious people around?

 Do I know exactly where I’m going?

Take two seconds as you walk towards your destination to ask yourself:

 Are people coming and going or is the area unusually quiet?

 Do I observe any obstacles or hiding places in the parking lot or along the street?

 Is anyone loitering in the area?

Take two seconds at the door to ask yourself:

 Do I have an uneasy feeling as I’m walking in?

 Is someone following me in?

Take two seconds as soon as you enter your destination to ask yourself:

 Does anything seem out of place?

 Is anyone present who shouldn’t be there or who isn’t expected?

In just 10 seconds total, you will have taken in your surroundings so you could spot and avoid danger, whether you’re shopping, visiting someone, and especially in unfamiliar surroundings. Make the 10-second rule a habit, and share it with your friends and family.

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Colorado CO Alarm Law

Jerry — Thu, 24 Sep 2009 19:17:09 +0000

A new state law in Colorado effective July 1, 2009 requires the seller of every residence to be responsible for having carbon monoxide (CO) detectors in the home prior to closing.

The detector(s) must be installed in all homes with a fuel-fired heater ar appliance, a fireplace (both wood burning & gas log), or an attached garage. Additionally, a CO detector must be installed within 15 feet of the entrance to each room lawfully used for sleeping. The installation may be at ceiling height as well as pluged in above a baseboard. All hardwired and plug-in detectors should have a battery backup.

CO detectors are a great idea, but I’m sure more lives are saved by smoke alarms, that ironically are not required for a real estate sale.

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PERSONAL REPRESENTATIVES-WHERE TO BEGIN?

Jerry — Thu, 26 Mar 2009 23:47:29 +0000

Congratulations! You just found out you have been named as the personal representative of an estate! So, now what? Well first you need to understand how you got here. You may have been selected personally by the decedent to carry out this responsibility; as such you may consider this an honor and a curse. If the decedent died without a will (intestate), you were probably nominated by either family or friends; in this case just consider it a curse!

Your Authority

You will be issued “letters” from the court, which say that you have been appointed personal representative. These letters are evidence that you have authority to act on behalf of the estate. You will need to show or send them to various third parties, such as banks, insurance companies, etc., when you are administering the estate.

Opening and Closing of the Estate

Generally, you can choose how you will formally open and close the estate and the extent of court supervision over your activities as a personal representative.

Formal proceedings will result in final and binding court orders and involve notice being sent to interested parties (beneficiaries, creditors, etc.) about actions to be taken. There may be a court hearing if an interested party objects to your actions. This option is also used if something in the case is out of the ordinary. For example, statutes may require formal opening if the will is irregular. Formal proceedings may also be used to settle a dispute, such as if family members disagree over who should be the personal representative. With informal proceedings, there is no advance notice to parties and no binding orders from the court. This option is chosen when there are no controversies or aspects of the case that are out of the ordinary. Sometimes estates are opened informally, but closed formally, so as to get the protection of a court order for the personal representative that everything has been done correctly.

Your Specific Duties

collecting and taking an inventory of estate assets, and be sure they are protected during your time of administration;
you must manage the assets until the estate is closed, paying the estate bills, including claims of creditors, expenses of administration and any taxes; and
making distribution to the heirs or the beneficiaries under a will.

The law expects you to be impartial to any one creditor or beneficiary. You cannot favor one person or yourself over others involved in the estate. Remember, you have a fiduciary responsibility to properly handle the money and assets of others.

Detail of Responsibilities

1. Prior to appointment: A person named PR in a will has the power, prior to appointment by the court, to carry out written instructions of the deceased relating to the body, funeral, and burial arrangements. The PR may begin to take and protect the decedent’s property.

2. Accounting: The PR sets up an estate accounting system at the beginning of administration of the estate. For your protection, keep records of all cash and other financial transactions of the estate and provide written accountings to the beneficiaries. This is very important and often not done correctly. In a supervised administration or with a formal closing, the accounting forms are filed with the court. This information will also be required for tax purposes.

3. Inventory: Within three months, you must prepare a written inventory of the estate assets on a court-approved form. If you decide to close formally, the inventory must be filed with the court. Otherwise, just give a copy to interested parties.
Making sure that all proper bills are paid is an important part of your job. Send a Notice of Appointment to known creditors such as credit card companies, physicians, banks, etc. that the person has died and you are the personal representative.

4. Notice of Appointment: Promptly after your appointment, the PR must prepare a Notice of Appointment form and send this to all those interested in the estate (such as beneficiaries and unpaid creditors) and file proof with the court that this notice was sent. This notice form is to let the interested persons know the facts and ground rules regarding administration of the estate, including your name and address, and the court in which the papers are on file.

5. Creditor’s Claims: Making sure that all proper bills are paid is an important part of your job. Send a Notice of Appointment to known creditors such as credit card companies, physicians, banks, etc. that the person has died and you are the personal representative.

You should publish another notice in the newspaper for unknown creditors. If creditors don’t send you a bill within four months after first publication the claim should be forever barred. If you don’t publish a notice, the time for unknown creditors to make a claim against the estate is extended to a year from the date of the decedent’s death.

A claim may be given to you or filed with the court. No specific form is required. A bill that comes in the mail is a properly presented claim (but don’t pay bills that are only presented orally). If you disagree with the claim, you have 60 days to tell the claimant in writing. They then have 60 days to begin proceedings to enforce the claim.

It’s a good idea not to pay any claims until you’ve determined what they are, and until you’ve reached the end of the time in which someone can make claims.

6. Family Protection: Allowances: Monetary allowances for certain family members, such as surviving spouse or minor children, during the period of administration are set by probate code but may be modified by court order. Where the family is entitled to these allowances, they have priority over creditors.

7. Management and Investment: As personal representative, you’re responsible for managing the estate until it is distributed. What you can and can’t do may be specified in the will or by Colorado’s probate code.

Once you’re appointed, you have full authority and control over the assets the decedent owned in his name alone or as a co-tenant with others. (Property held in joint tenancy with right of survivorship is not a probate asset, nor are proceeds of life insurance that are payable to a named beneficiary other than the estate.)

To put others on notice of your authority, re-register the decedent’s assets in the name of the estate with you listed as personal representative (you will use your letters of appointment as evidence of your authority). For registered stocks and bonds, submit your letters of appointment to the transfer agent, along with the securities and an affidavit of domicile, which you get from a broker or a bank. If you need to sell some securities to raise money for estate expenses, you can do so without having the securities registered first, although it usually takes longer to get the proceeds. Bearer bonds need not be re-registered. When you sell or distribute any real estate, you will need to use your letters of appointment.

8. Tax Responsibilities: The PR files the final income tax returns for the decedent as well as any gift tax returns. Both Federal and State estate tax returns must be filed if the estate is of sufficient size. There is also a separate income tax return that must be filed for the estate. When a person dies, his taxable year ends on the date of death and his income and deductions are reported through that date. The estate is a separate income tax paying entity and the PR must get a separate tax identification from the IRS.

9. Bond: A surety bond may be required by the terms of the will or by court order, and bond premiums are payable out of the estate as an administration expense.

10. Compensation: You may choose to be compensated for your duties as personal representative. Your compensation and that of your attorney is subject to a “reasonableness test” under the Colorado Probate Code. Family members often serve without pay, except for out-of-pocket costs. If you do this, consider filing a fee waiver with the court. If you take compensation, you must keep a detailed record of tasks performed and the time spent. Your attorney should also. Your compensation will be taxable as ordinary income.
The assets of the estate belong ultimately to the beneficiaries and not to you. Make distributions to beneficiaries as soon as it can be done safely.

11. Distribution: Generally, estate assets are paid in this order: those held by the decedent as a fiduciary, such as if the decedent was serving as a trustee of a trust at the time of death; family allowances; expenses of administration; funeral costs; debts and taxes under federal law; amounts expended by Colorado under Medicaid; expense of last illness; debts and taxes under state law; bills; specific gifts under a will; beneficiaries under a will, or heirs, when there is no will.

12. Termination: The estate does not terminate automatically. You may elect to close formally or informally. In informal closings, a closing affidavit form is filed with the court, indicating that the estate has been fully administered. This limits the time to one year when those who receive assets and creditors can challenge your administration and distribution of the estate.

In formal closings, the administration and proposed distribution of the estate is approved by the court and the personal representative is immediately discharged or released from liability by court order. A formal closing usually does not require an actual hearing before a judge.

Liability

You are liable to the beneficiaries for any loss to the estate and for any gain the estate should have realized but did not, if that loss cannot be shown to have been a reasonable risk, taking into account the term of the investment. Also, you are liable if you were negligent or intentionally did something you shouldn’t (or failed to do something you should have done).

This information has been condensed from material published by the Colorado Bar Association.

-Jerry Hart

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2009 Housing Stimulus Package Complete

Jerry — Mon, 16 Feb 2009 23:00:25 +0000

The American Recovery and Reinvestment Act of 2009 is expected to be signed by President Obama, in Denver, on Tuesday 2/17. According to the National Assn. of Realtors (NAR), the home buyer tax provisions could stimulate up to 300,000 additional sales by December 1, 2009 when the provisions expire. While the new tax credit falls short compared to other sponsored proposals, it is a maor improvement over the current first time buyer tax credit of $7,500 which required repayment. The new credit effective 1/1/09 allows a credit of up to $8,000 and is not required to be repaid as long as the borrower owns the home for at least 3 years. The Bill also reinstates the 2008 higher loan limits for FHA, Fannie Mae, and Freddie Mac loans.

First time home buyers make up a whopping 41% of all home purchasers.

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Credit Unions Step Up to the Plate!

Jerry — Tue, 30 Dec 2008 20:06:11 +0000

While Banks and Savings and Loan institutions nationwide have been busy lining up to the public trough for bailout funds, another institution has been busy writing home mortgages, your neighborhood credit union! Surprised? Don’t be, since credit unions have been writing home mortgages for years- they just have a different business model than the big boys.

Credit unions are non-profits that exist to make money, just not profit. Their basic business plan is simple: credit unions receive deposits, and use that money to make loans. They then charge more on those loans than is paid on deposits. Ta-Da! A business that thrives. And of course, they are very conservative when it comes to their lending standards. Subprime and option ARM mortgages have never been in their portfolios, nor did they sell and repackage loans as investments on the secondary market.

What credit unions did do is loan only to credit worthy members on mortgages that truly were not greater than what the member could afford. They also did this without creating fraudulent applications and wildly inflated appraisals-just like banks used to do in the old days!

Joining a credit union is generally based on membership requirements such as living in a certain area, working for a particular employer or industry, or belonging to a certain group. The largest advantage of credit union membership is that loan rates are lower and returns are greater on savings and CD’s than usually found at banks. Unlike banks, credit unions are member owned with excess earnings either passed back to members in the form of lower rates, greater earnings, or shares paid.

They hold most loans to maturity, and fewer than 1% of credit union mortgages are 60 or more days late according to the Credit Union National Administration (CUNA). While their mortgage business is a fraction of that of other mortgage lenders, credit union originations increased 10% in the first 6 months of 2008 (according to CUNA), while mainstream lender originations dropped 18% during the same period as reported by the Mortgage Bankers Assn.

Not surprising, with car sales down and the difficulty dealers are having arranging financing, especially for the used car market, credit unions are more than willing to once again step up to the plate to assist. As a result, credit union membership is growing by leaps and bounds, all thanks to sound business practices.

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COLORADO HOA DISCLOSURE REQUIREMENTS

Jerry — Wed, 17 Dec 2008 22:51:39 +0000

Homeowners Disclosure

With the passage of SB100, Colorado statues now require that every Homeowners Association in the state deliver at least annually, within 90 days following the end of each fiscal year, the following information to all owners upon reasonable notice:

The date upon which the fiscal year commences and the operating budget for the current fiscal year.
A list, by unit type of the owner’s current assessment, including both regular and special assessments.
Its annual financial statements, the results of any audits, and a list of all Association insurance policies.
The Association’s bylaws, articles, and rules and regulations.
All minutes of the executive board and member meetings for the fiscal year preceding the current annual disclosure.
The Association’s responsible governance policies

This information must be readily available at no cost to the owners at their convenience. Availability means it may be published on a web page as long as an accompanying notice is sent via first class or e-mail; it can be maintained as part of literature table or binder at the Association’s place of business; or it may be mailed or personally delivered to the homeowners. The cost of any distribution is to be accounted for as a common expense liability.

Home Buyer Disclosure by Seller

SB 100 states that, except in the case of a foreclosure sale, the seller of a property in a common-interest community must mail or deliver to the purchaser the most current copies of the following documents:

the bylaws and rules on the Association;
the covenants;
the Association’s operating budget;
the declaration;
the association’s annual income and expenditures statement;
minutes from the most recent annual owner’s meeting and any executive board meetings that occurred within the six months immediately preceding the title deadline; and
the Association’s balance sheet.

This law requires the seller to provide the outlined HOA information to the buyer by title deadline, or, in the case of a for sale by owner, no later than 10 days prior to closing.

The new law states also that “written notice of any unsatisfactory provision in any of the documents listed above shall be cause for termination of the contract, if signed by the buyer or on the buyer’s behalf and given to the seller on or before the governing documents deadline.” Time share units are not included in these requirements.

HOA Responsibility

The association must use its best efforts to accommodate a seller request for documents. The Association may charge a reasonable fee, not to exceed the Associations actual cost per page, and must make documents available within 5 days of receipt of notice.

Disclosure Documents/ Receipt of Documents

Additionally, the seller must provide the buyer with a disclosure statement in bold-faced type. It is the seller’s responsibility to obtain from the purchaser a signed acknowledgement of receipt of this information and disclosure statement at closing. This signed form must also be sent to the HOA in a reasonable time frame.

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The 2008 Cost vs. Value Report- an early look

Jerry — Fri, 12 Dec 2008 17:30:37 +0000

Each year Remodeling Magazine, in cooperation with REALTOR® magazine, produces the Cost vs. Value report detailing the average return of value for selected home improvement projects. This report is further refined for each major regional area of the country.

The full 2008-2009 report will be available in December, but here are some early observations. Like last year’s report exterior remodeling projects lead the pack for recovery on dollars spent. In fact those projects that boost curb appeal give you the greatest chance for recouping money spent, and still compare well with kitchen remodels.

From a national level here is what you can expect, showing expected recovery:

· Upscale fiber cement siding (86.7%)

· Midrange wood deck (81.8%)

· Midrange vinyl siding (80.7%)

· Upscale foam backed vinyl siding (80.4%)

· Midscale minor kitchen remodel (79.5%)

· Upscale vinyl window replacement (79.2%)

· Midrange wood window replacement (77.7%)

· Midrange vinyl window replacement (77.2%)

· Upscale wood window replacement (76.5%)

· Midrange major kitchen remodel (76.0%)

Home owners often wonder where their money will be safest during a sour financial market and as it has always been, investing in your home always pays off! These numbers reflect a payback upon sale one year after the remodel, and are only averages. If you provide most of your labor the recovery will be even stronger

Many regions, the west coast in particular, often see recovery greater than 100%, while on the flip side Midwestern cities such as Cleveland, Chicago, and Milwaukee have some of the lowest recovery numbers.

Does it make sense to perform a major remodel just prior to a home sale? Depends. If the cost recovery is less than 100%, not really. If your work will actually produce a gain, or a sale at a reasonable price is being hampered due to the lack of the project, then it may be to your advantage to proceed. Your best direction is to always consult a Realtor to assist with which path to take.

Jerry Hart Check out Denver Real Estate here

Adverse Possession in Colorado-New 2008 Laws Reduce the Abuse

Jerry — Mon, 01 Dec 2008 23:14:27 +0000

Adverse Possession is a method to acquire title to land that is owned by another through use. Examples of use might include a fence, driveway, footpath or even a structure being placed on the property of another party. The person claiming ownership must prove the following elements exist in order to have a case:

The possession must be OPEN and NOTORIOUS, that is it must be open for all to see. This includes the owner, even if he/she has never actually seen the possession.
The possession must be HOSTILE to the actual owner, and must conflict with the owner’s rights and interests in the property. The possession must also be EXCLUSIVE in use to the possessor.
The possession must be CONTINUOUS and UNINTERRUPTED. For Colorado the statutes specify at least 18 years, and may also be combined with the same possession by a prior owner.

If this all sounds criminal (for some it may be), the legal theory is that by not disputing a neighbor’s use of your property by way of a lawsuit, you, as the actual owner have abandoned your rights to the property, either right or wrong.

The Need for Change

A land dispute by two neighbors in Boulder, Colorado in late 2007 that made national headlines and stirred public opinion prompted state legislators to change the law that allowed it to happen. The whole story as reported by The Daily Camera can be read here.

Two State Representatives, Rob Witwer of Evergreen and Ron Tupa of Boulder co-authored a bill to stop what they determined to be outright abuse of the current law. Witwer said “the current law was out of balance and needed to be fixed. It was clear that abuse of adverse possession was much easier in Colorado than in most, if not all jurisdictions.”

The New Law

On July 1, 2008 HB 2008-1148 was signed into law by Governor Ritter, and applies to all adverse possession cases following this date.

In addition to the current requirements, the following is also required:

“The person claiming adverse possession had a good faith belief that the person in possession of the property of the owner of record was the actual owner of the property and the belief was reasonable under the particular circumstances.”

Also included in the law, judges will have the power to force adverse possessors to pay for the land they do win in court, and to compensate the original owners for back property taxes, and interest.

With the new law the burden of proof will lie with the possessor to prove they have evidence they were the actual owner which should reduce the number of cases appearing before the court. Unfortunately the new law was a little late to apply to the Boulder case.

And, One Other Law-

In the Boulder case, the possessors were a former judge and an attorney. This fact prompted another law to be passed which will restrict judges from hearing cases involving other judges from the same jurisdiction, in an effort to avoid conflicts of interest or the appearance of favoritism.

Jerry Hart

Jerry is a full time Realtor serving the needs of Buyers and Sellers in the Denver Real Estate market.

Editors note: this article is not meant to provide any legal advice. Always consult an attorney for a particular application.

The First Time Buyer Tax Credit-Buyer Beware!

Jerry — Sat, 15 Nov 2008 03:20:25 +0000

The Background

One benefit of the Housing and Economic Recovery Act passed in July of this year is that qualified homebuyers may receive a one time tax credit of up to $7,500. With the intent of stimulating the economy and encouraging Buyers to get off the fence, this credit is limited to first time buyers (those that have not owned a home in the past 3 years) and is set at a percentage of the home purchase price, 10%, and not to exceed $7,500. This credit applies to all residential sales between 4/9/2008 and 7/1/2009. Buyers can take this credit in 2009 for homes purchased in 2008; 2009 purchases can take the credit in 2010.

The Problem

The federal government requires the credit to be paid back on each year’s tax return beginning in 2011 in small 6.67% increments over 15 years, or about $500 a year for the full $7,500 credit. This amounts to an interest free loan from Uncle Sam! How could you possibly go wrong?

The best strategy would be to take the $7,500 (in the form of a refund or the reduced tax paid amount) and put it a safe investment. Currently the stock market may not be your best choice-think money market or CD. The rest of this post now refers to the 98% of buyers not following this advice!

Human nature being what it is, most buyers will pocket the credit and spend it on something which is an excellent way to jump start the economy. Remember that this will have to be repaid each year or until the home is sold. This is where the problem may begin. You see, when the home is sold the remaining tax credit still due must be repaid in full, upon closing. Assuming the buyer sells after 5 years (a not unrealistic time frame), and having made three years of repayment of the credit, the buyer will have $6,000 less equity upon sale. No problem you say, what’s $6000? In a declining or flat market it may be the difference between walking away with a little cash or being upside down if the purchase was done with 97 to 100% financing. The current national housing market is depressed. When will the market rebound(which it eventually always does) and begin positive appreciation gains? That is the $64 question. The choice is up to each buyer to determine if taking the tax credit will be in their best interest.

On a positive note, the National Association of Realtors® asked Congress to do away with the repayment provision of the tax credit to all buyers, not just first time buyers. The proposals were part of a four point housing stimulus plan submitted in October by the association. I would doubt Congress will take any action prior to the new administration taking office in 2009.

Jerry Hart Check out Denver Real Estate here