Love's Real Stories

Answering all the real estate questions you never knew you had.

Category: Laws

Air Force

Two laws that govern the movements of objects inside houses are important to learn.

Law Number One: “If you slam the front door of a house with sufficient force, it will cause the interior walls of that house to vibrate to the extent that a shelf as far away as 24 feet from the point of impact will eject a vase from its surface and send it crashing to the floor below.”

Law Number Two:: “If all the windows and doors in an air-tight house are closed, and you turn on the whole-house fan, and if that whole-house fan is of sufficient size and capacity, it will cause an air suction of such force so as to cause ashes from within a fireplace to be instantly sucked out through the fireplace opening with the appearance of confetti shot from a cannon. A 12-foot radius of flooring in front of the fireplace opening will acquire an ashy-gray hue similar to the surface of the moon.”

I learned of the two aforementioned laws one afternoon while showing a house to my clients Bob and Denise Carlson, and more importantly, their eight-year-old son Mason.

Bob and I stood in the hallway of the house admiring the whole-house fan built into the ceiling. I had never seen one so big and Bob had never seen one at all.

“A whole-house fan,” I said, “is designed to pull stale warm air out of your house. When the outside temperature cools in the evening, you open a few windows, turn on the fan, and it pulls fresh outside air into the house quickly.”

Mason raced around the house opening and closing doors and flipping wall switches on and off. Neither Bob nor Denise showed any concern or any interest in controlling the curious and energetic child.

Mason went outside and rang the doorbell at least 47 times, then slammed the front door, a big heavy oaken mass, with enough force to enact Law Number Two.

A vase wobbled and tumbled off a shelf on the wall beside the fireplace. But the carpet below was thick, plush, and the whitest of white, and cushioned the fall. The vase remained intact.

It was then that Mason found the wall switch for the whole-house fan. I noticed that Mason had opened the glass doors to the fireplace and I was just about to close them, when Law Number Two was enacted.

I forgot to mention in my description of Law Number Two that any objects within the 12-foot radius of the fireplace will also acquire an ashy-gray hue similar to the surface of the moon.

The Czar

I could have saved us all millions of dollars if I had been appointed the Real Estate Czar of the United States, if only there really was such a position as the Real Estate Czar of the United States (RECUS).

If I were RECUS, I would be in charge of all the banks and I would compel them to handle their foreclosures and short sales the right way, instead of their way, which is inept and idiotic, and causes people to shake their heads, pull their hair out, and blow their tops.

The President of the United States (POTUS) should have appointed me RECUS when it was needed the most, back in 2006 when the housing bubble burst and the Great Recession was on the horizon.

My first act as RECUS would have been to notify every bank that I am in charge of all sales; that I have direct access to POTUS and therefore, all bank bailout funds. Then I would have issued the following directive:

“RECUS’ New Short Sale and Foreclosure Rules”

  • Banks may no longer refuse a short sale for no good reason. If in RECUS’s opinion, the seller has a legitimate hardship necessitating a short sale, and the price offered by the buyer is Fair Market Value, the bank must approve the sale.
    For every short sale refusal for no good reason, RECUS will direct POTUS to subtract $10,000,000 from the bank’s bailout money (BOM).
  • Banks may no longer demand 40 pounds of paperwork to be submitted “for the bank’s sole perusal in settling the aforementioned sale” and then claim “non-receipt of the aforementioned documentation”.
    For every pound of paper required by the bank over one single pound, RECUS will direct POTUS to subtract $10,000,000 from the bank’s BOM.
    Additionally, the bank will be charged $1,000,000 for every use of the word “aforementioned” more than once.
  • Banks may no longer refuse a short sale, then foreclose on the property, and subsequently sell the property for less than the short sale price the bank had in hand in the first place. For every dollar less than the original offered price the bank accepts, RECUS will direct POTUS to subtract $10,000,000 from the bank’s BOM.
    Additionally, if the property deteriorates during the bank’s ownership after foreclosing, $10,000,000 will be subtracted from the bank’s BOM for every dollar needed to bring the property back to the same condition in which the bank received it.

Actually, I wouldn’t have saved us millions; make that billions.

Sad Facts

Here in California sellers of real estate are obligated to disclose everything from cat dander to noisy neighbors. We have some of the toughest disclosure laws in the nation.

Not so in Pennsylvania. Just ask Janet Milliken, who moved from California to Pennsylvania and bought a house unaware a murder-suicide had taken place on the property the year before, and no one told her.

Janet’s husband had recently died, and she left California with their two daughters to be closer to family. In the small town of Thornton, Pennsylvania, Janet found a two-story home for sale on a quiet street. She made the purchase and the family moved in, ready to start a new life.

Not surprisingly, soon after Janet moved into her new home a neighbor asked, “So you heard about what happened in your house, right?” The neighbor told Janet the facts of the story that everyone else on the street already knew: A former owner of the property had shot and killed his wife and then himself in the master bedroom of the home. A few months later, the home was bought at an auction by Joseph and Kathleen Jacono, who knew of the murder-suicide, and a few months after that, sold it to Janet Milliken. The Jaconos bought the place for $450,000 and sold it to Janet for $610,000.

After Milliken learned the truth, she struggled with what to say to her kids or whether to even tell them at all. Then the kids had friends over to visit, who broke the news.

“Janet’s kids were very upset and disturbed,” said Milliken’s attorney. “They were already dealing with the death of their father.”

Janet wants the sale rescinded, and her money back. She and the kids would prefer to leave, but can’t afford to without selling the house.

“I would in good conscience have to disclose the horrible tragedy if I sold, and I know the house would sell for far less than I paid,” said Janet.

Janet has filed a law suit against the seller and their Realtor.

Pennsylvania is a few thousand miles from California, but apparently it is light years away in the world of disclosure. In California, death on a property is a disclosure no-brainer. All sellers here are required by law to disclose any death on a property within the last three years. California sellers are also obligated to disclose any “material fact” that would “affect the value or desirability” of a property, regardless of the three-year rule.

Janet Milliken’s Pennsylvania seller argues they faced no such requirement.

If Janet Milliken had bought her house in California, and the seller hid the fact of a murder-suicide, that seller would be a dead-bang loser in a lawsuit. Janet would undoubtedly have all her money back and more.

Can a seller in Pennsylvania really get away with such non-disclosure?

The trial judge ruled in favor of the seller. Milliken has appealed to the State Supreme Court.

Milliken’s attorney said, “We hope to have Pennsylvania recognize that having a horrific event occur within a property can be just as damaging and troubling to a future homeowner as a physical defect, or perhaps even more so. Physical defects in a house can be fixed. Something like this never goes away.”

The attorney said that sellers should be required to disclose troubling events, “at least for a period of time.”

That should be a no-brainer.

The Heart of the Deal

Guess which of these Old-World phrases is found in all modern-day real estate contracts:

“E Pluribus Unum”; or “Time is of the Essence”; or “Thou Shalt Not Kill”?

My old mentor, KDV, knew real estate contract language the way you and I know our own names. KDV spoke Old-World dialect, too. He said things like, “Right on, brother”; and “She’s a great broad”; and “Man, that’s some jive turkey.”

KDV loved to point to real-life situations to demonstrate the meaning of contract language. A good example of the phrase in question is a situation in which KDV himself was involved.

KDV fired up his hand-rolled cigarette and leaned against the back door of our office building. He snapped shut the Zippo lighter, and motioned his thumb toward the parking place where his car was parked a few feet away. “This dame just doesn’t get it, babe.”

“You mean the little grey-haired lady in the back seat of your car? I’ve noticed she’s been riding around with you for a while,” I said. “Is that a cat on her shoulder? And what’s that on the front the seat, a beanstalk?”

“It’s a rubber plant, man. Her dog is on the floor, and her suitcase and boxes are in the trunk.”

“Where are you taking her?”

“You got any room out at your place, bro?”

“Sorry, my house is packed with kids, and we just got another horse, so the barn is full, too.”

The little grey-haired lady in KDV’s car was one Mrs. Swenson, who had just sold her home through KDV. Mrs. Swenson was mad at everyone, and refused to leave, though she no longer owned the home. The buyer’s moving van was idling in the driveway when KDV convinced her she really had to leave.

“She doesn’t get what?” I asked.

“Only the most important language in all binding agreements between members of the human race!” he said. His voice climbed in volume. “Only the clause empowering enforcement of the promise we make to each other to act with diligence in the performance of our contractual obligations!”

He stared into my face, apparently hoping for a glimmer of comprehension. Finding only the dim look of a cow chewing its cud, he said patiently, “Come on, sweetheart, you remember Contract Class, right? It’s the phrase that keeps us all on the straight and narrow.”

“Thou shalt not kill?”

“Ha! Very funny, Jokemeister! You are joking…..?

“E Pluribus Unum? I asked.”

My mentor lowered his head and shook it slowly. Then he straightened up and stood tall like the Statue of Liberty, chin up, and arm held high, clutching his cigarette like the statue’s flaming torch of enlightenment.

In his deepest booming voice he pronounced: “Time is of the Essence!”

Mrs. Swenson stared at him through the car window and shook her head, as if she had heard this before. KDV continued his pronouncement: “Time is of the Essence, my brother! The contract is speaking to us. It is telling us the timelines are for real. It sayeth thou shalt not ignore, bend or mutilate the contract deadlines or thou couldst lose some serious bread!”

He nodded toward Mrs. Swenson. “I had to save this dear damsel from the distress from a lawsuit,” he said. “I talked her down off the ledge of contractual suicide. One more day in that house would have cost her big-time, babe.”

“Wow,” I said, “what now?”

“Well, right now, I gotta hustle for home. I’m late for a lunch date with my wife, and she knows what I know, babe.”

“What’s that?”

“Time is of the Essence!”

The Deal

Twenty-five billion dollars used to sound like a lot of money. But next to the trillions we’ve seen thrown around in bank bailouts, tarp funds, and mortgage scandals, it’s no surprise we barely lifted an eyebrow and had to stifle a yawn at the new National Mortgage Settlement. The government has settled with the five biggest banks for a collective fine of $25 billion as compensation for mortgage and foreclosure fraud. The money is supposed to go to homeowners who were wrongly foreclosed upon or wrongly denied loan modifications.

Depending on which politician, consumer advocate, or analyst you listen to, the deal is either a boon or a bust.

Version one, boon:

The government has finally gotten somewhere with their commitment to justice by nailing the banks for their fraudulent loan practices. This is the biggest money settlement in our nation’s history, and it’s just the beginning. The banks are also obligated to open up loan modifications in the form of principal reductions for hard-working people who are “underwater” in their homes, whose loans are more than their homes are worth. If the banks don’t play this right, they will be whacked for more fines. This will break the back of the foreclosure crisis, our economy will straighten up, and home values will rise.

Version two, bust:

The big bank boys are slapping each other on the back, lighting big cigars, and clinking their drinks together in celebration of being let off the hook once again. For the equivalent of a parking ticket in their big-buck world, they are absolved of high crimes against the people of our country. No banker has been brought to justice in this scandal, and they have just been given a new “Get Out of Jail-Free” card. Now with no fear of lawsuits they will drop the hammer on foreclosures they’ve been stalling, which will further depress home values.

Twenty-five billion is a big number. Get out the calculator and start dividing. Please, let’s figure out who gets how much, and if it will make a difference.

No yawning.

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