Category Archives: Real Estate

Some Helpful Tips For Investing In Real Estate Using Retirement Funds

Most people mistakenly believe that their retirement accounts must be invested in traditional financial related investments such as stocks, mutual funds, exchange traded funds, etc. Few Investors realize that the Internal Revenue Service (“IRS”) permits retirement accounts, such as an IRA or 401(k) plan, to invest in real estate and other alternative types of investments.  In fact, IRS rules permit one to invest retirement funds in almost any type of investment, aside generally from any investment involving a disqualified person, collectibles and life insurance.

One of the primary advantages of purchasing real estate with retirement funds is that all gains are tax-deferred until a distribution is made or tax-free in the case of a Roth account (after-tax). For example, if one purchased a piece of property with retirement funds for $100,000 and later sold the property for $300,000, the $200,000 of gain appreciation would generally be tax-deferred. Whereas, if you purchased the property using personal funds (non-retirement funds), the gain would be subject to federal income tax and in most cases state income tax.

The two most common vehicles for purchasing real estate with retirement funds is the self-directed IRA or an employer sponsored 401(k) plan.  However, most employer 401(k) plans do not offer real estate as a plan investment option and, thus, the self-directed IRA has become the most popular way to buy real estate with retirement funds.  Establishing a self-directed IRA is quick and relatively inexpensive and can be done in just a few days.  The most challenging aspect of investing in real estate using retirement funds is navigating the IRS prohibited transaction rules.  In general, pursuant to Internal Revenue Code (“IRC”) Section 4975, the retirement account holder cannot make a retirement account investment that will directly or indirectly benefit ones self or any disqualified person (lineal descendant of the retirement account holder and related entities), perform any service in connection with the retirement account investment, guarantee any retirement account loan, extend any credit to or from the retirement account, or enter into any transaction with the retirement account that would present a conflict of interest.  The purpose of these rules is to encourage the use of retirement account for accumulation of retirement savings and to prohibit those in control of the retirement account from taking advantage of the tax benefits for their personal account.

Aside from navigating the IRS prohibited transaction rules, the following are a handful of helpful tips for making real estate investment using retirement funds:

  • The deposit and purchase price for the real estate property should be paid using retirement account funds and not from any disqualified person(s)
  • All expenses, repairs and taxes incurred in connection with the retirement account real estate investment should be paid using retirement funds – no personal funds from any disqualified person should be used
  • If additional funds are required for improvements or other matters involving the retirement account-owned real estate investment, all funds should come from the retirement account or from a non-“disqualified person”
  • Partnering with yourself or another disqualified person in connection with a retirement account investment could trigger the IRS prohibited transaction rules.
  • If financing is needed for a real estate transaction, only nonrecourse financing should be used. A nonrecourse loan is a loan that is not personally guaranteed by the retirement account holder or any disqualified person and whereby the lender’s only recourse is against the property and not against the borrower.
  • If using a nonrecourse loan to purchase real estate with a self-directed IRA, the unrelated business taxable income (“UBTI”) rules could be triggered and a tax rate reaching as high as 40 percent could apply.  Note – an exemption from this tax is available for 401(k) plans pursuant to IRC 514(c)(9). If the UBTI tax is triggered and tax is due, IRS Form 990-T must be timely filed.
  • No services should be performed by the retirement account holder or any “disqualified person” in connection with the real estate investment.  Please see: Finally Some Clarity On What You Can And Cannot Do In Your Self-Directed IRA for additional information
  • Title of the real estate purchased should be in the name of the retirement account. For example, if Joe Smith established a Self-Directed IRA LLC and named the LLC “XYZ, LLC”, title to the real estate purchased by Joe’s Self-Directed IRA LLC would be as follows: XYZ LLC.  Whereas, if Joe Smith established a self-directed IRA with ABC IRA Trust Company (custodian), and the custodian purchased the real estate directly on behalf of Joe without the use of an LLC, then title would read:  ABC IRA Trust Company FBO John Doe IRA.
  • Keep good records of income and expenses generated by the retirement account owned real estate investment
  • All income, gains or losses from the retirement account real estate investment should be allocated to the retirement account owner of the investment
  • Make sure you perform adequate diligence on the property you will be purchasing especially if it is in a state you do not live in.
  • Beware of fraud if purchasing real estate from a promoter.
  • If using a self-directed IRA LLC to buy real estate, it is good practice to form the LLC in the state where the real estate will be located to avoid any additional filing fees.  Also, be mindful of any annual state LLC filing or franchise fees.

Using retirement funds to buy real estate can offer retirement account holders a number of positive financial and tax benefits, such as a way to invest in what one knows and understands, investment diversification, inflation protection, and the ability to generate tax-deferred or tax-free (in the case of a Roth) income or gains. The list of helpful tips outlined above should provide retirement account investors looking to buy real estate with a guideline of how to keep their retirement account from running afoul of any of the IRS rules.  However, retirement account holders using retirement funds to invest in real estate must be mindful of the broad application of the IRS prohibited transaction and UBTI rules and should consult with a tax professional for further guidance.

Post courtesy of Forbes.

How Much House Can You Really Afford?

Just because a lender approves you for a mortgage doesn’t mean you can comfortably afford it.

If you ask Google “how much house can I afford,” you’ll find a number of online tools and mortgage calculators to help you find a fast answer. You might also find quick but somewhat confusing advice like “your mortgage payment shouldn’t take up more than 35% of your monthly income.”

Quick. Do you know what 35% of your monthly income is? If not, you’re not alone. While online housing tools are a helpful starting point for the early stages of your house hunt, it’s important that you understand how the pieces all fit together, and that you take your personal financial situation into account.

Why a calculator can’t tell you how much house you can afford

  1. 1. Financial rules of thumb may not apply to you

    While 35% seems like a straightforward figure, your financial picture is a lot more complicated than that number would make things seem. Your ideal monthly housing costs could vary depending on things such as debt and other monthly payment obligations — not to mention how much you’ve saved for a down payment.

    If you have high credit scores and a clean financial background, a mortgage calculator can be a great starting point for mortgage shopping. You’ll get a much better sense of what your price range might be instead of a blanket rule of thumb. But they’re only as accurate as the information you provide, so if you forget to add regular budget line items such as food, day care, or gas costs, you won’t get a complete picture.

  2. 2. Your lender may approve you for more than you can realistically afford

    Lenders are now legally required to ensure borrowers can “reasonably afford” to repay a loan before they approve a new mortgage. But there’s a difference between being able to reasonably afford something and being able to realistically afford something.

    When looking at what’s reasonable, lenders account for your income and any current debts that you need to repay each month. If you make $5,000 per month after taxes and need to pay $500 toward your car loan each month, a mortgage payment of $1,500 may seem perfectly reasonable.

    In this (extremely simplified) example, you’d have about $3,000 per month left over to handle all your other expenses. And perhaps you can afford your living expenses on this budget.

    But what about the other goals you want to achieve? What about saving for retirement or investing for your future?

    If you commit to a large monthly mortgage payment, you may find yourself squeezed to make your remaining money cover your living expenses, plus monthly bills and loan repayments. While a lender can give you a mortgage you can reasonably afford, it could mean not being able to handle other financial priorities.

  3. 3. You’re the only one who can determine what’s comfortable

    Only you can examine your life and values to determine what you are willing to spend on your mortgage budget — and what you’re not.

    You might be perfectly happy to take on a larger monthly mortgage payment in exchange for reducing meals out, cutting back on vacations, or sticking with your old phone instead of going for the upgrades just because you can. Or you may decide that renting makes more sense for you because you can mitigate costs, take on less financial responsibility, and enjoy more flexibility.

    Either way, you need to determine what you feel comfortable with. You need to decide what works within both your budget and your long-term plans to reach goals that matter to you.

  4. 4. Ask yourself these questions to decide how much house you can really afford

    Once you set your financial priorities, here’s where you’ll need to do the math:

    • What’s my current income? What are my basic living expenses? What are my fixed costs?
    • How much do I want to put away each month into savings or investments?
    • How much will it cost to maintain my new home?
    • What kind of down payment do I have? (The more you put down, the smaller your monthly mortgage payment will be.)

    Now you can factor a mortgage into all of the above, and see how much you can really afford. When doing so, don’t forget to count both the mortgage principal and interest — along with property taxes, homeowners’ insurance, and other extras such as HOA fees.

Post courtesy of trulia.com

Pro Tips for Making the Most of Your Kitchen Remodeling Budget

Two experts weigh in on how to put your money where it counts.

A high-end kitchen remodel could easily drain your wallet. The nationwide average for a major kitchen remodel — replacing all appliances, installing a sink and faucet, and repainting walls — is $62,158, according to Remodeling magazine. And in cities like New York, those costs edge even higher.

A modest kitchen remodel, in which the cabinets are left in place, is $20,830 on average, and that’s not even accounting for labor delays or electrical issues from outdated wiring, which is common in kitchens.

Fortunately, there are ways to keep costs down without going batty. Here, two renowned interior designers share their tips for renovating a kitchen.

Consider how long you’ll be in the home

“Do you plan to be there two to three years, which means reselling is very important? Or do you plan to be there five to 10 years?” says Elena Frampton, creative director at Frampton Co in Manhattan. “That makes a difference in terms of design direction.”

If reselling is a factor, focus on basic, clean cabinetry and new appliances. If you’re staying longer, it’s about personalizing the space.

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Evaluate the layout

“Ask yourself if you want your kitchen to be open or closed,” Frampton says. The answer will determine not only the kitchen’s layout, but also how it interacts with adjacent spaces.

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Factor in pantry space

Homeowners forget this frequently used storage space all too often. Frampton recommends including it in your plans.

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Choose cabinets wisely

When remodeling a kitchen, you really need to understand how you live, how you cook, and how you like to organize things. “Know what you prefer and not necessarily what the marketplace is offering as a standard,” Frampton says. After all, the kitchen has to be functional.

If you’re annoyed by setting the toaster on top of the microwave every time you finish using it, you may want an appliance garage to keep gadgets and gizmos more accessible. “Focus on how it works for you,” Frampton adds.

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Forget name-brand appliances

Concentrate instead on getting the right dimensions for the space, and appliances that fit how you live. “Looking at those practical elements is really important if you’re on a budget,” Frampton adds.

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Buy a counter-depth refrigerator

“A space-saving unit that barely protrudes past the edge of your countertop is a worthwhile investment,” says Michael Tower, architect and partner at Studio Tractor in Brooklyn. “I hate fridges that are so deep that they take up a lot of your footprint. You’re always bumping into them.”

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Select the right countertop material

“Countertop trends change year to year, so understand your tolerance for each material’s character,” Frampton advises. “Do you want something that’s aesthetically quiet, something dark, something light with grout lines, or something without grout? Can you live with the patina of natural stone? Or do you need some sort of man-made conglomerate material?”

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Avoid cheap hardware

“You want your cabinets to last a long time,” says Tower. “You open and close them how many thousand times a week?” Splurge on durable materials that look good and will last.

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Save on lighting

While quality lighting is important from a functional perspective, Tower says, “From an investment point of view, it’s not a big deal any longer.”

Most standard cabinets feature some kind of LED underlighting. And when it comes to decorative fixtures, there are plenty of options to choose from at flea markets or resale design sites like Chairish. Just be sure to measure your finds before swiping your credit card.

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Post courtesy of Zillow.com

What You Need to Know About Buying a House This Summer

Planning on buying a house this season? Go in prepared with advice from the pros.

Summer brings longer days, warmer weather and more people out house-hunting — particularly families hoping to get settled before the school year begins in September. But there aren’t necessarily more houses on the market—and this year that’s truer than ever. “Inventory is the lowest I’ve ever seen it,” says Denver, CO, agent Susie Best. Recent Trulia research bears this out, showing inventory falling for 8 consecutive quarters. The reasons are varied: investors bought up homes during the crash and are renting them out now; prices have risen so much that homeowners can’t afford to trade up; or some homeowners are still underwater and can’t afford to sell yet. This means “multiple offers are driving up prices,” says Best. How to up your chances? Here’s what agents are advising buyers to do in this hot market — at the hottest time of year.

7 Tips for buying a home in the summer

  1. 1. Research trends based on your market location

    While many markets are red hot in the summer, that isn’t true across the board. For example, Chicago winters are long and many families seize the all-too-brief summers for vacation, so single-family home sales slow down a bit from June to September. “Right now we’re really a tale of two markets,” says Jennifer Ames, a Chicago, IL agent and a broker with Coldwell-Banker. “There’s a home surplus at the high end; the starter homes are where the competition is. I tell buyers, ‘Understand the dynamics of your particular market.’ They’re not all the same.” You can use Trulia Maps to check out historical pricing trends in the housing market where you’re looking.

  2. 2. Line up your financing

    This one applies year-round. And although interest rates will probably keep creeping up, “it’s still relatively cheap to borrow,” says Ashley Kendrick, an agent in Kansas City, MO. Even so, sellers are much more apt to consider buyers who present a loan preapproval letter up front. And make it from a known lender like a bank—not an application completed online.

  3. 3. Be clear with yourself on what matters most

    Make a list of your must-haves, your wants, and your it-would-be-nices so you’re ready to decide right away. “This is no time to be a lookie-loo,” Best says. “There’s no more, ‘Let me see if I qualify for this and come back.’” Know what you can live with and what you can’t live without.

  4. 4. Don’t quibble on price

    As the inventory for starter and trade-up homes continues to shrink, the competition for what’s available on the market is fierce. In markets where this is happening, “the price is never the price,” says Anthony Gibson, an agent from Austin, TX — buyers may need to offer more to stand out. “A healthy down payment always appeals,” Kendrick adds, since it suggests you’d have cash to cover any difference between appraised value and a higher asking price; you may be asked to sign a waiver agreeing to that. That’s not raising the overall price, Best notes—just how much you’d pay outside the loan.

    A bigger earnest-money payment (the good faith deposit you pay to a seller to show you’re serious) could also provide an edge, says Jennifer Ames. “A typical initial check might be $1,000; I might advise a buyer in competition to start with $5,000.”

  5. 5. Get your own real estate representation

    Particularly when timing is everything, a house-hunter needs the right agent. “Make sure yours can provide accurate information the minute a home hits market—for example, whether the seller is reviewing offers as they come in or after the weekend,” Best says. And do get your own agent to represent you: This is no time to try enticing a listing agent to handle both sides of the deal in an effort to curry favor with the sellers. With competing bids flying, you want someone fully focused and advocating on your behalf.

  6. 6. Craft a strong offer

    Top bid doesn’t always mean highest price. For sellers, flexible terms may be what clinches the deal—say, letting them pick the closing date, or a generous leaseback period that lets them stay put until they close on buying a home. Be sure not to load up your offer with unnecessary contingencies. “It’s important owners know they’re getting what they want,” Gibson says. And don’t forget the personal touch: “A letter to the seller always helps,” Kendrick suggests.

    Need some inspiration for that a letter to the seller? Here are three offer letter templates to get you started.

  7. 7. Don’t sweat it if it doesn’t happen by August

    Even when deals fizzle, the waiting and offering will probably pay off. “I tell my buyers, ‘You’ll find a house,’”  Kendrick says. “It’s a patience game.”

Post courtesy of Trulia,

10 Tips for Spring Home Buyers

Follow these 10 tips to make the home-buying process a happy one.

The arrival of spring means it’s time to start fresh. Along with pulling out your warm-weather wardrobe and tackling spring cleaning, you may have a bigger project on your to-do list: buying a new home.

Before you start on your home-shopping journey, check out these 10 home buying tips to save you both time and money.

Find the right agent

Real estate expert Joe Manausa says the key to happy spring home buying is finding the most qualified agent to guide you through the process.

With reviews available at your fingertips, finding a real estate agent you trust can be easy — provided you take the time to do some research.

Check for agents with the best reviews, and give them a call. They’ll relieve some of the pressures of home buying, and walk you through all the necessary steps.

Think location

Sure, the three things that matter most in real estate are “location, location, and location.” Nonetheless, some buyers end up purchasing a home in a location that’s not right for them, simply because they make their choice for all the wrong reasons.

“They’re looking at a house in the wrong area or the wrong school district, but they buy it because they like the kitchen,” Manausa says.

Use the new open house

The internet has completely changed the home-buying process, making it easier to choose which homes to go see in person.

With 3-D tours available on the web, buyers can tour a home from their mobile device or a computer. Eighty-seven percent of home buyers use online resources during their home search, according to the Zillow Group Report on Consumer Housing Trends.

Buy a home, not a project

Buyers who purchase a fixer-upper can end up spending the same (if not more) than they would on a new home.

“When buying a home, pay close attention to the ‘bones’ … and avoid getting caught up in the cosmetic features,” advises Dan Schaeffer, owner of Five Star Painting of Austin.

If the kitchen cabinets are in good shape, but you want the space to be brighter, adding a fresh coat of paint is easier and less expensive than replacing all the cabinets.

Ka-ching! Be a cash buyer

Sellers are more likely to choose the buyer who already has money in hand over an offer that’s contingent on a mortgage loan.

But if you can’t pay cash, getting pre-qualified for a loan can help the seller feel more confident that you’ll be able to secure financing.

Avoid disaster — get a warranty

The last thing you want after buying a home is for something to go wrong. You protect your car, so why not your home? Manausa recommends purchasing a home warranty: “[They’re] very affordable, and cover all the things that go wrong.” Your wallet will thank you.

Make inspection time count

Small problems eventually turn into big problems. The wood could rot, drains could leak, or the electrical panel may not be up to code. “Hire experts, and always get your home inspected,” adds Nathanael Toms, owner of Mr. Electric of Southwest Missouri.

If the inspection reveals issues, be sure to deal with them effectively. For example, “it’s very important that a licensed electrician makes sure all circuits work properly,” say Dana Philpot, owner of Mr. Electric of Central Kentucky.

Put safety first

No matter the neighborhood or the home, your family’s safety should always be the number one priority after purchasing a home.

“Even if the previous owner promised to return the copy of every key, it’s always a good idea to change the locks throughout the exterior of the home,” says J.B. Sassano, president of Mr. Handyman. “If the house has an alarm system, remember to change the code — and don’t forget the garage door.”

Fix common repairs

Repairs may come in the form of patching up small nail holes or weatherproofing electrical outlets. Whatever the need, Schaeffer recommends fixing the repairs before moving in your belongings. “An empty house is easier to maneuver and clean,” he says.

For bigger jobs, find a professional to complete the repairs. Sites such as Neighborly can help you find home services providers.

Add the finishing touches

The best part about buying a new house is making it a home. Change the color of the walls, update the lighting, or add a more personal touch with a photo gallery wall.

“It’s important to find the right gallery layout by measuring the wall space, which determines the size of photos you can use,” Sassano says. “Lightweight frames are the safest option, especially when hanging on drywall.”

Courtesy of zillow.com

Become a Real Estate Investor With 3 Easy Investments

Becoming a real estate investor is much more feasible than most people think. There’s no question that real estate investing comes with risk, like any investment. But with risk can come reward, and real estate has that in spades.

“Real estate is one of the few investments where your upside is truly unlimited,” says Than Merrill, CEO of San Diego’s FortuneBuilders and CT Homes. “With the right property in the right location, you can make 15% to even 30% on your money.”

“You can make money in hundreds of different ways through investing in real estate, and that keeps it interesting,” says Realtor® Ed Laine, partner and broker at Miller Laine Properties in the Seattle area.

Here are three great ways the average investor can start a real estate portfolio.

Savvy investment No. 1: Rentals

People will always need to rent houses, says Laine, which can provide a steady income for landlords.

“A rental property is an investment that pays itself off over time,” says Laine, adding that he named his first two rentals “Son No. 1’s college account” and “Son  No. 2’s college account.”

Owning a property and renting it out allows you to grow your monthly income—or at least make enough to cover your costs.

“I don’t think of it as ‘buy and hold,’ but ‘buy and collect checks,’” Laine says. Of course, he’s partly kidding—anyone who’s been a landlord knows there are times you have to deal with renters who pay their rent late, flooded toilets, and other costly hassles.

Being a landlord can also offer major tax benefits. Most rental property owners can write off the mortgage interest and depreciation and generally don’t pay taxes on the income, Merrill notes. You can also use your rental property to claim deductions, such as repairs and insurance.

Savvy investment No. 2: House flipping

When you’re flipping houses as a real estate investor, on the other hand, it’s anything but “buy and collect.” In fact, this is a real estate investment strategy that requires a lot of work, acknowledges Merrill.

“Rehabbing properties remains one of the most lucrative real estate exit strategies, but it requires an acute attention to detail and a lot of experience to master,” Merrill says.

To make flipping profitable, carefully consider your property and how much needs to be done. Start with the purchase price and then figure out how much you’ll need to invest (whether it’s time, money, or both) to get it sparkling and sale-ready.

Collaborate with a trusted contractor to come up with the “after repaired value” and then compare it with the selling prices of properties in the area. Make sure the comparable properties are in the same school district and have as many similar characteristics as possible, from bedrooms and bathrooms to lot size and garage type.

Don’t forget to factor in closing costs and “carrying costs,” the mortgage and insurance you will be paying until the home sells.

Savvy investment No. 3: Real estate investment trust

Boy, does that sound complicated. But investing in a real estate investment trust, or REIT, could be the easiest real estate investment of all. A REIT is a way to increase the amount of real estate in your financial portfolio without requiring you to actually buy a piece of property. Modeled after mutual funds, REITs allow anyone to purchase stock in large-scale properties.

“I describe mutual funds as a pooled investment which allows a group of co-owners to employ the services of a professional asset manager. A REIT is the same thing, related to real estate,” says Warren Ward, owner of WWA Planning & Investments in Columbus, IN. “The main advantage of owning a mutual fund also applies to a REIT—immediate diversification.”

If you own a rental property or are flipping houses, you are dependent on that market specifically. If you’re not in the right area, your investment could be plunging. By contrast, owning a REIT allows you to diversify geographically and in the types of real estate owned—from residential to commercial.

Ward’s advice if you want to jump into the world of REITs is to stick with widely traded ones.

“Lots of brokers have sold their clients nonpublicly traded REITS, but their pricing is not transparent. That makes them hard to value and very difficult to sell if you need to,” he says.

Another benefit of REITs? You don’t have to collect rent checks or manage subcontractors, and you still own real estate. Maintaining a rental or preparing a house to flip takes a lot of work, says Rycal Investment Group founder and CEO Simon Calton.

“Countless arduous tasks will eat into your time and, if you’re not careful, your capital,” he says.

By contrast, he considers REITs to be an “armchair” investment, as there are no management requirements and no surprise maintenance issues.

“REITs and real estate funds will often yield higher returns and have more security, but cost less and hold less risk for the investor than direct property investment,” he says.

Courtesy of realtor.com

What Is a Certificate of Occupancy? Proof Your Home Is Safe

Everyone wants to know the home they’re purchasing is safe to live in. That’s why some municipalities go a step beyond the standard home inspection and require a special permit, called a certificate of occupancy, to ensure the houses in their area meet safety codes. To obtain the permit, an additional inspection must be done. Read on to learn what the inspection covers, who pays for it, and the effect it could have on the real estate settlement process.

What is a certificate of occupancy?

Simply put, a certificate of occupancy—sometimes referred to as a use-and-occupancy certificate, or a U&O—is a document that says a building is safe to be lived in. Not all municipalities require them, but in the ones that do, these permits are usually issued by a local building or zoning authority. The permit affirms that the property has been built and maintained according to the standards laid out by local government officials.

Typically, these certificates are first issued when a property is built, and additional inspections are performed any time the property changes hands.

Certificate of occupancy inspection

The inspection will typically focus on things like making sure the home meets fire codes and that all electrical work has been properly done. But since the exact requirements will vary according to the municipality, there may be more.

“The scope of a U&O ranges from small safety measures such as the installation of railings and smoke detectors to bigger items like ensuring that the proper permitting is in place for renovations,” explains Michael Kelczewski, a real estate agent in Pennsylvania.

Some U&O permits also require that inspections be performed on specific amenities in the home to verify that they are still in good condition. For example, a chimney inspection, a heating inspection, and even a sprinkler system inspection could all fall under the use-and-occupancy umbrella.

Who pays for a certificate of occupancy inspection?

Sellers typically bear the brunt of the certificate of occupancy inspection process. If this permit is required by a city, the seller will pay a fee for the initial inspection, as part of a charge by the real estate agent for the process of transferring property. The seller will also be responsible for conducting any subsequent inspections requested by the zoning authority in order to have the permit issued.

Who pays for the house repairs?

Once the results of the inspections come back, both parties will negotiate who will handle any necessary repairs. Ideally, these repairs will be completed before settlement, and an agent of the municipality will be brought out to reinspect the property before issuing the permit. However, as long as all sides are in agreement, a conditional U&O may be issued under the assumption that work will be done after closing. In the event that no agreement can be reached, both the buyer and seller have the right to dissolve the transaction.

‘As is’ or bank-owned homes

Keep in mind that properties being sold “as is” or that are bank-owed are an exception to the above scenario. In these cases, by submitting an offer, the buyer often agrees to accept financial responsibility for this requirement and any associated repairs. When dealing with this type of transaction, be sure to read the purchase agreement carefully so that you’re aware of the scope of your responsibilities before committing to buying the property.

A note for renters

Certificates of occupancy aren’t just for homeowners. Some areas require landlords to keep them on file for their residents and to have subsequent inspections performed at regular intervals. This ordinance is aimed at making sure that rental properties aren’t allowed to lapse into such a state of disrepair that they become uninhabitable.

Courtesy of realtor.com.