DEAR BOB: When I purchased a new condominium last year, Iwas told it would be an owner-occupied building and investor-speculators wouldnot be allowed. But I later learned friends, family and acquaintances of thebuilder were allowed to invest and buy all the best units at the lowest prices.Now my building is mostly renters rather than owner-occupied units. This hurtsthe value of my condo, which I must now sell due to job relocation. Do I haveany legal recourse against the builder for misrepresentation or fraud since helied to me? –Michele C.
DEAR MICHELE: You were very wise to inquire if any condoswould be sold to non-resident investor-speculators. But unless you can provethe builder’s misrepresentation with a written statement to comply with theStatute of Frauds, you don’t have any legal recourse against that builder.
Purchase Bob Bruss reports online.
If non-residents own a large percentage of units, themaintenance quality usually declines and problems develop. Many mortgagelenders refuse to lend — or charge higher interest rates — if the percentageof renters increases above 25 percent.
Your situation shows the importance for any house or condobuyer to obtain all representations by the builder, developer, or salespersonsin writing just in case the statement was a lie, as in your situation. Withoutwritten documentation, you have no reliable proof. For full details, pleaseconsult a local real estate attorney.
HOW TO OBTAIN A RETROSPECTIVE APPRAISAL
DEAR BOB: In a recent article you advised a reader to obtaina retrospective appraisal for an inherited property. You gave the admonition tokeep market value records for inherited real estate. What type of informationshould I keep? –Claudia B.
DEAR CLAUDIA: If you inherited real estate title from adeceased owner, you need to establish your “stepped-up basis” tomarket value on the date of the decedent’s death.
Your first stop should be the local property tax assessor’soffice to learn the assessed value on the date of death. If this amount isacceptable to you, obtain written evidence and keep it to establish your newstepped-up basis as of the date of inheritance.
However, in many property tax jurisdictions, the assessedvalue is far below the fair market value. In that situation, you should hire aprofessional appraiser to establish your market value stepped-up basis as ofthe date of the decedent’s death. The appraisal expense will be very worthwhilewhen you eventually decide to sell the inherited property. For more details,please consult your tax adviser.
INCOME PROPERTY TAX-DEFERRED EXCHANGES
DEAR BOB: Name the Internal Revenue Service program thatlets you exchange income property tax-free? –Chet S.
DEAR CHET: What prize do I win if I successfully answer yourchallenge? That’s too easy. Don’t you have a more difficult quiz question?
Internal Revenue Code 1031 allows you to make a tax-deferredexchange of your real estate held for investment or use in a trade or businessfor another such property. To qualify for tax deferral, you must trade equal orup in both market value and equity.
In other words, you can’t take out any cash or net mortgagerelief. If you do, that’s “taxable boot.” For more details, pleaseconsult your tax adviser or read my special report, “How the NewTax-Deferred Real Estate Exchange Rules can Make You Very Wealthy,”available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or bycredit card at 1-800-736-1736 or instant Internet delivery at
(For more information on Bob Bruss publications, visit his
Real Estate Center).
Copyright 2006 Inman News