Owner Has A High Price To Pay For Condominium Life

Posted: November 10, 1991

I live in a condo complex where most of the owners are much wealthier than I am. I own the only one-bedroom condo, and all the other units have two or three bedrooms. It is luxury development that I enjoy very much. My problem is the board of directors recently made a $2,500 special assessment to pay for a new roof and necessary exterior maintenance. Being a widow on a fixed income, I can't afford to pay $2,500, even if I deplete my savings account. I talked with the manager, and she says I have to pay or the condo association will foreclose on my condo. Can they do this?

Yes. However, most condo owner's associations are very reluctant to enforce assessment liens except as a last resort if the condo owner refuses to cooperate. The condo manager is not the final authority. I suggest you write a letter to the board of directors explaining your situation and the payment plan you suggest. For example, if you can pay $250 per month for 10 months, that might be acceptable to the directors.

Your situation shows one of the pitfalls of condo ownership. Although I'm sure your $2,500 per-condo special assessment was necessary, it is unfortunate that the directors had not been setting aside adequate reserves for routine expenses such as you describe.

We plan to put our home up for sale in January. Already, we have interviewed two real estate agents about listing it for sale. Both want six- month listings, but I think that is too long, don't you?

Yes. Most real estate agents want as long a listing term as possible. But the best agents aren't afraid of short listings, such as 30 or 60 days. Perhaps you recall the agent mentioned in this column who takes 30-day renewable listings. The shorter the listing, the more motivated the realty agent becomes.

Although we are in a slow buyer's market, 90 days should be the maximum listing term you sign. However, be sure the agent understands that if he or she is doing a good job, but the listing expires, you will renew the listing for an additional 30 days.

We have only about $10,000 for a home down payment, and we live in a high- cost area. We found a nice three-bedroom, two-bath home. But it is on a small corner lot at the intersection of two very busy streets. The seller, an elderly widow, will carry the first mortgage for us at only 8.5 percent interest. Do you think we should buy?

I'm certain you realize that the home you describe has an incurable defect, the heavy traffic on two streets. But apparently the widow has become accustomed to the noise. Perhaps you will get used to the traffic too, especially since the financing is so attractive.

We sold our summer home for a net profit of about $60,000. Can we avoid paying tax on our profit by purchasing a Florida winter home?

No. The tax-avoidance rules that apply to the sale of principal residences are not applicable to the sale of second or vacation homes. Even if you buy a replacement vacation home, there is just no way to avoid paying tax on your sale profit.

We are considering buying a "for sale by owner" house. These sellers are extremely difficult, but the house is beautiful and my wife wants it very much. The problem is the sellers insist on carrying back a 10-year mortgage at 9 percent "interest only." My wife is concerned we won't be building up any equity on the mortgage. Do you think this is a such a bad deal we should give up the seller financing?

No. An interest-only mortgage can be good for both buyer and seller. As a buyer, you will only have to pay the fully tax-deductible interest. But the seller needs only pay tax on their interest received, with no tax due on the principal. For both buyer and seller, an interest-only mortgage can be a good deal.

My question is about financing the new townhouse we plan to buy in Florida next January. The builder offers financing with as little as a 5 percent down payment. But he says most people pay cash. At ages 72 and 67, do you think my wife and I should pay all cash, make a big down payment, or buy with just a 5 percent down payment?

I always suggest making the smallest possible down payment and obtaining the largest available mortgage. Your age is irrelevant. The reasons for getting the biggest possible mortgage include tying up as little cash as possible, maximizing your income tax "acquisition mortgage" interest deductions, leveraging your purchase, and minimizing your risk just in case the property doesn't turn out as well as expected.

As retirees, an additional advantage of a big mortgage is you conserve your cash for investments and emergencies. Borrowing large amounts of money at your ages is usually not easy, especially if you should become sick. Take the mortgage money while you can get it.

We contracted to buy a new house. The salesman promised us upgraded carpets, top-of-the-line appliances and quality landscaping, all at no extra charge. By the time our house was completed in October, the salesman had either quit or been fired. The builder claims he knows nothing about the promised upgrades. We had to close the sale or lose our $5,000 deposit. I feel we got cheated out of at least $10,000 of promised extras. Since the salesman has left the area, what recourse do we have against the builder?

Your situation shows why it is critical to get all real estate agreements in writing, as required by the statute of frauds. Don't believe oral sales representations when a salesperson will not write down the promises. Since you have no written evidence of the alleged promises, you can't blame the builder for refusing to provide these expensive extras. Perhaps your attorney can

pressure the builder into a reasonable settlement.

Readers can address real estate questions to Robert J. Bruss c/o Tribune Media Services, 64 E. Concord St., P.O. Box 119, Orlando, Fla. 32802.

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