How to buy a home is no small question even for the experienced.  Buying a home these days is full of traps for the unwary.  You can be the smartest buyers in the history of Sequim or Port Angeles, and you can be the most experienced buyer on the Olympic Peninsula, and yet you can still get caught by a trap for the unwary, even if you are wary.  If you’ve been reading this real estate blog, you already know that I practiced real estate law for 20 years, and I’ve been in real estate going back 37 years.  So I’ve seen good people, smart people, get caught by many of these traps.  Some traps cannot possibly be seen in advance, but there is a way to avoid getting caught.  It’s very simple, and it may sound too simple.  You may even say, “Well, for Pete’s sake, I knew that!”  And you probably will, but then why do so many buyers keep getting caught?  Because they don’t know or they don’t heed this advice.

How to Buy a Home – Couple Find Perfect Home

My retired clients and I viewed many homes until finally we found the perfect home.  It was vacant, needed some loving care, but otherwise was a gorgeous custom built home less than five years old.  Everything checked out on the site, nothing wrong with the home.  The acreage was fenced and just fantastic.  The location was great.  The neighbors were all good folks.  The price was right.  Nothing wrong with the driveway, the septic, the well, or any other physical aspect of the property.  These clients knew how to buy a home.  So what is the trap for the unwary here?  (more…)

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• Sequim Utilities – How to Get Connected When You Buy a Home
• Contingencies When Buying a Home

Buying Real Estate in Sequim and Port Angeles is full of traps for the unwary.  Today a past client contacted me about a challenge in their neighborhood.  I sold this couple a gorgeous high bluff lot with a stunning water view of the Strait of Juan de Fuca with Victoria, B.C. across the water from them. 

Buying Real Estate in Sequim – The Question

Here is the question I received:

Need to bend your ear for a little advise if you would be so kind.  Appears a builder named [name deleted] is about to build some homes in the culdesac that are smaller than the covenants allow.  Has the two property owners that live in the development up in arms and of course with the knowledge that I [have some experience with these things] all eyes are on me. Appears that [someone] failed to look over the plans prior to release for City permits. Anyway, if possible would like to connect for a couple just to catch up and see if you have any ideas.

Buying Real Estate in Sequim – The Answer

And here was my answer:

Great to hear from you.  I’ve seen that scenario many times.  I’m always surprised when builders don’t do their professional due diligence and check on covenant restrictions.  I sold a lot on Marine Drive recently, and my clients planned a 2-story home to take advantage of the water view and the view of the lighthouse.  I reviewed the CC&Rs when we got the preliminary title report as part of my due diligence for my clients, and lo and behold, there was a building height restriction of 20 feet, limiting the lot to a one story home.  All the surrounding homes were two levels, and none of those homeowners knew about the restriction, and apparently none of their builders ever bothered to read the covenants.  Amazing.  So for my buyers we asked the seller to obtain a signed amendment from everyone removing that height restriction.  It took a couple of months, but we got it done. 

In your case, if the builder (and homeowner) are not stopped with an injunction post haste, the doctrine of waiver will take effect.  In my humble opinion, if the homes are built in violation, this will reduce the future value of all those lots, because homes of lesser architectural style and size and value will be built.  How much it would reduce the value of the other lots and homes is debatable, but the development moves slightly from a subdivision of premier luxury homes to a subdivision with a mix of average homes.  Maybe that over emphasizes the point, but it’s a valid point.

As a matter of procedure, the homeowners’ association could commence the lawsuit, or any one (or more) homeowners have the legal standing to commence the lawsuit.  Perhaps the builder would stop with a letter from you or a letter from an attorney stating that a lawsuit will be filed and construction stopped if they do not amend the plans to comply with the covenants.  If he ignores the letter, that letter could be used as part of the motion for an injunction showing how the builder blatantly ignored the covenants with reckless disregard of the rights of the homeowners even after he was put on notice.

The building department isn’t usually much help with these matters.  As I recall the building ordinance doesn’t address the issue of whether building plans breach covenants in a subdivision, so they typically defer to civil attorneys.

This is water over the dam, but this is another reason buyers should have a Realtor who knows how to do this kind of due diligence on their behalf.  Apparently the homeowners who now are trying to build homes that are in breach of the covenants did not have a Realtor who warned them about the restriction in the covenants, and obviously their own builder not only did not read the covenants, but is going to charge ahead to build homes in breach.  The builder’s actions could actually cause the homeowners to become defendants in a lawsuit, and this whole thing could cost these homeowners tens of thousands of dollars in attorney’s fees just because the Realtor and the builder didn’t do their jobs for the homeowners.  The builder’s actions will also cause the homeowners to have to hire an architect again to redesign their homes, which could also cost thousands of dollars in architecture fees, not to mention the added cost of the home for materials and labor (which adds to the builder’s profits).

Buying Real Estate in Sequim – Be Cautious

Too often it’s “buyer beware” for retirees who are buying real estate in Sequim or in Port Angeles.  My clients often tell me they are glad I was a real estate attorney so I can watch their backside.

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• Contingencies When Buying a Home

Can Foreigners Buy Property in the U.S.?  The simple answer is yes.  Foreigners are buying a lot of property in the U.S. in this real estate recession, and the laws of the United States welcome buyers from almost anywhere.

One of the challenges can be financing.  If you are a foreigner and want to buy property in the the U.S., you may be required to put down a larger down payment, but in these challenging times for real estate financing, it is not uncommon for buyers, local or foreign, to put down 20% or more.  Depending on your financials, you may be required to put down as much as 50%.  If you’re a cash buyer, this simplifies everything.

Foreigners Buy Property Across U.S.

As a nonresident, you will still have to pay U.S. real estate taxes.  If you do not have an individual taxpayer identification number or U.S. Social Security number when you sell the property, you may be subject to 10 percent withholding tax.  There are some rules and procedures for buying and selling if you are a foreigner, but it is not bad.

Property can be searched in the entire Northwest region of Washington state at:  Search Real Estate Listings.

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• Buyer Hit by Identity Theft and Fraudulent Credit Card Charges
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• Contingencies When Buying a Home

We all hear about identity theft in the news and about fraudulent credit card charges, but don’t we really expect that it will happen “to someone else” and not to us.  Alas, a Sequim home buyer found out that it can happen to them.  In 37 years in real estate, I’ve never had a buyer get hit by fraudulent charges on their credit card, but it has happened, and the timing is most unfortunate.  The fraudulent credit card charges showed up during the loan application process.

Identity Theft

Identity theft raises two issues.  The first is the loss of your money and how to prevent that.  There is a lot of help on the Internet on how to protect your identity and your accounts.  I would recommend a service that helps to track potential uses of your identity 24/7 in hundreds of places.  That service is called LifeLock.  I receive no referral or affiliate fee for mentioning the company, but they are very good at protecting you from identity theft. 

Identity Theft and Your Home Loan

When you are buying a home in Sequim, this could kill your loan, but identity theft that steals money from your bank account does not necessarily mean your home loan will not be approved.  If the theft changed the formula on your income to debt ratio, your loan could be effected.  But if the amount of money stolen is small and the bank covers it as they should, your loan should proceed according to plan.

Identity Theft Resources

Learn more about identity theft at:

http://www.lifelock.com/identity-theft/types/

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Connecting Sequim utilities or transferring the electric and other utilities from seller to buyer can be confusing, especially if you’re trying to do it long distance.  Here’s a short primer to clarify how it all works for you as a buyer.

Sequim Utilities Company

Sequim Utilities Transfer Application

The Clallam County PUD will transfer Sequim utilities so that on the day of closing it will be done, but you have to complete the application and fax it to the PUD prior to closing, and it would be best not to wait until just before closing.  The PUD told me that it would be best to call them as early as you can, and I should think that two weeks prior to closing would be reasonable.  Once they have your completed application,  they can get it all done very quickly.  I would recommend getting your application faxed to PUD one week prior to closing so there is no delay in getter your Sequim utilities transferred.

Sequim Utilities – Make a Phone Call

You can call PUD and they will email the application (or fax or send by snail mail), and once you’ve filled in the information and faxed it back, you are done.  It’s not hard. 

What happens if you don’t get it done?  The utilities get disconnected, and the seller is charged a fee (about $30), and then you have to schedule an appointment to get the utilities re-connected.

You can call the PUD at 360-452-9771 to transfer your Sequim utilities.

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• Contingencies When Buying a Home

Contingencies are an important part of buying a home in Sequim or Port Angeles. In fact, once you arrive at mutual acceptance on the price, that just completes the first phase of your negotiations. Completing a home inspection, a septic inspection, a well inspection, and perhaps follow-up inspections will lead to the second phase of negotiations if there are items to be repaired or if major problems are discovered that were not previously revealed.  How you handle inspections and negotiate with the seller in this second phase could make or break your deal.

Contingencies Must be Identified

Contingencies Without Ambiguities

It is critical for your own protection as a buyer that the language used to describe the contingencies (and the request for repairs or a credit) be articulated without ambiguities.  The last thing you need is to get into a legal dispute over what was intended, and if you leave any ambiguities, you could lose your transaction in a dispute.  Notice how clean and concise and without ambiguities the language is in this Notice to the Seller.  There must be only one way to interpret every single sentence, so there will be absolutely no possibility that there could be a misinterpretation.  This language does exactly that.

Attached as Exhibit 1 is a copy of the Home Inspection Report.  Attached as Exhibit 2 is a list of the issues of primary concern to Buyers.  Attached as Exhibits 3 and 4 are two bids for window replacement in the Sun Room.  Attached as Exhibits 5 and 6 are the well report and the estimate to replace the well pump and repair the water softener. Buyers request that Seller address all items on Exhibit 2 to Buyer’s satisfaction, or in the alternative that Seller credit Buyers $3,000 at closing, which is less than the actual repair costs of all items in the Inspection Reports.

Contingencies Discussed in This Video

Contingencies can finalize your home purchase and bless you with a pleasant and exciting experience you will remember for the rest of your life. But if not handled correctly with great attention to detail and with the experience to draft legal clauses with precision, you could end up in trouble or find out after closing that you have some huge repair bills you did not anticipate.  Handling contingencies is just as important as reaching mutual acceptance on the price in the first place.

Possibly Related Posts:

• How to Buy a Home and Traps for the Unwary
• Be Careful Buying Real Estate in Sequim and Port Angeles
• Can Foreigners Buy Property in the U.S.?
• Buyer Hit by Identity Theft and Fraudulent Credit Card Charges
• Sequim Utilities – How to Get Connected When You Buy a Home