DEAR BOB: On Jan. 3, 2003, we moved into our brand-new house. When we signed our purchase contract, we did so based on the builder’s brochure stating our home was approximately 1,875 square feet. However, recently I noticed other nearby homes seem bigger than mine. While I was measuring my basement for finishing, I decided to measure my home’s square footage. I measured the outside perimeter and discovered it is only 1,710 square feet. Even at a modest price per square foot, I feel the builder ripped me off for at least $16,000. What legal options do I have? – Dave S.

DEAR DAVE: Measuring square footage of a home is a controversial topic. I can cite you court decisions where even experienced appraisers disagreed about a home’s square footage.

Purchase Bob Bruss reports online.

If your measurement is correct, you are missing the size of a very roomy extra bedroom. The general rule is a house is measured around the outside perimeter, excluding the unfinished garage area.

If you believe your home is 165 square feet less than was represented to you, it’s time to have a very polite conversation with your home builder. Maybe there is a reasonable explanation.

Should you still be convinced the builder misrepresented the house’s square footage, it’s time to consult a local real estate attorney to see if legal action against your builder would be worthwhile.

MORTGAGE BROKER CLARIFIES HOME LOAN PRE-APPROVALS

DEAR BOB: You were absolutely right. But you should have been clearer in a recent article explaining home loan pre-approvals and how they are different from pre-qualifications. I’ve been a mortgage broker since 1993. During that time, the mortgage lending business has changed dramatically. As an independent, I have an established clientele of realty agents and satisfied borrowers who keep me prospering. However, some of my mortgage broker competitors mislead prospective borrowers by saying they are “pre-qualified” for a home loan. As you correctly state, that’s worthless because the mortgage broker is just a “middleperson” who is not the actual lender. However, you failed to emphasize mortgage brokers can “shop” loan applications to many actual lenders and obtain written mortgage pre-approval letters valid for 60 to 90 days. That’s what I do every day for my prospective borrowers. One mortgage broker advantage you failed to emphasize, however, is we have lender contacts with “unusual” lenders who will finance unique situations, such as combination residence and retail property. We also know which lenders offer mortgages at reasonable terms to borrowers with low FICO (Fair Isaac and Co) credit scores – Alicia H.

DEAR ALICIA: Thank you for your great e-mail. I couldn’t have stated the situation better for mortgage brokers. Misleading mortgage pre-qualification letters from mortgage brokers are virtually worthless because the broker isn’t lending the money. All that matters is a written mortgage pre-approval letter or certificate from an actual lender (which mortgage brokers can obtain) who promises to loan money to buy the home.

CONSEQUENCES OF SIGNING A BLANK IRS FORM 4506

DEAR BOB: When we closed our recent mortgage refinance, we were told the IRS required us to sign a blank Form 4506 to verify we weren’t laundering money. We signed the form with only our names and address, as requested. The name of the lender was left blank, as was the date. Within a month, we were notified our mortgage was sold. I phoned the IRS yesterday, after reading your article about IRS Form 4506, and was told we could mail a letter to the IRS requesting our Form 4506 not be honored. Is there any way we can rescind our signing of that blank form? My husband and I do not want this new lender or any other company to have unlimited blank access to our tax returns every year. This seems very scary and like “creepy” Big Brother to me – Kathy B.

DEAR KATHY: Now you know why it is so important for home mortgage borrowers to sign, date and name the originating lender on the IRS Form 4506, which most mortgage lenders ask borrowers to sign.

As you discovered, when your home loan was sold to another lender in the secondary mortgage market, as happens to most home mortgages, if you have an undated IRS Form 4506 in the file with no lender’s name on it, that is a virtual invitation to the eventual loan owner to pry into your private tax returns years from now. Sorry, I am unaware of any method to rescind the blank IRS form you signed.

REVERSE MORTGAGE LETS SENIOR HOMEOWNER CHANGE HIS MIND

DEAR BOB: I got a reverse mortgage three years ago and thought it would take care of my lifetime financial needs. But I have since encountered medical and automobile problems that required I use my credit cards to pay. Now I need to pay off my credit cards. I have contacted local banks about a second mortgage but they won’t make a second mortgage loan behind a reverse mortgage. What should I do? – Frank W.

DEAR FRANK: You have several alternatives. The easiest one is to contact your reverse mortgage loan servicer to ask for a lump-sum advance to pay your debts. However, this choice will reduce your lifetime monthly payments to be received on your reverse mortgage.

Another alternative, if your home has substantially appreciated in market value since you obtained your reverse mortgage three years ago, is to refinance it with a new reverse mortgage.

In the last three years, the loan limits of reverse mortgage lenders have increased substantially. Although there will be up-front reverse mortgage refinance fees, it might be worthwhile to pay off those unexpected debts. More details are in my new special report, “Secrets of Tax-Free Reverse Mortgage Income for Senior Citizen Homeowners,” available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet download at www.bobbruss.com.

WILL INSURANCE PAY IF TENANTS BURN UP APARTMENT BUILDING?

DEAR BOB: Our town (wisely, in my opinion) recently enacted an ordinance prohibiting outdoor grills on apartment balconies. I am an investor-owner of an apartment building that has many outdoor balconies. Due to the nice weather, I recently observed several of my tenants using their outdoor grills on their balconies. But I didn’t want to spoil their enjoyment so I didn’t say anything. Since the ordinance isn’t being enforced, if a fire damages my building, could my insurance company refuse to pay because a local ordinance was violated? – Alfonso H.

DEAR ALFONSO: Congratulations to your town officials for enacting such a wise ordinance.

But unless your fire insurance policy prohibits outdoor grills on the apartment balconies (highly unlikely), your insurer will be obligated to pay a fire damage claim if one of your tenants’ grills causes fire damage to the building.

However, after paying the fire damage claim, your insurer then is likely to subrogate (which means “stand in the shoes”) to your rights to sue your tenant for negligence. The local ordinance is strong evidence of the danger of grills on apartment balconies.

To prevent such a fire loss, I suggest you (1) politely notify your tenants in writing of the new ordinance and (2) contact the local fire prevention officer to suggest he or she mail a notice of the new ordinance to local apartment building owners and to “occupant” tenants. You will be amazed how eager most fire prevention officers are to avoid fire losses.

MUST CONDO OWNER PAY FOR FIRE INSURANCE BILL?

DEAR BOB: I just received a bill for $265 to pay the fire insurance policy on the condo building where I live in a 12-unit all-brick complex. I have lived in three other condos and have never had to pay for fire insurance. Shouldn’t the insurance bill be paid by my monthly assessments? – Arlene C.

DEAR ARLENE: Yes. You should not receive a special assessment for the annual fire insurance premium for your condo complex.

The condominium homeowner’s association is responsible for buying adequate fire and liability insurance for the common areas of your 12-unit complex, including the structure.

It is very unusual for a homeowner’s association to bill the individual owners for their share, which should be paid from your monthly fees.

I will presume this bill is not for your personal condo owner’s insurance, which every condo owner needs. An individual condo owner’s insurance policy insures the contents of your condo from loss due to fire, water damage, theft and other causes. It also includes liability coverage in case your guest is injured within your condo.

Unless your condo homeowner’s association is broke, it is extremely unusual for an insurance bill to be sent to each condo owner. I suggest you consult the president of your condo homeowner’s association for an explanation. Something appears to be seriously wrong with the homeowner’s association. For more details, please consult a local real estate attorney.

The new Robert Bruss special report, “Secrets of Real Estate Leverage to Buy Your Home or Investment Property for Virtually No Cash,” is now available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736 -1736 or instant Internet download at www.bobbruss.com. Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

***

Send tips or a letter to the editor to newsroom@sandbox.inman.com or call (510) 658-9252, ext. 124.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×