Wednesday, February 19, 2014

Q: We bought a nice piece of property two years ago with the intention of building our retirement home there.

We just met with a King County technician to find out how we start the building permit process, and he informed us that we can’t build without a water share. No one said anything about a water share when we bought it. We just assumed that the property would have water. We talked to the people who run the water system yesterday and they said there might not be any new shares for years, if ever! I think we were taken advantage of by the seller. Could you recommend a good attorney? We intend to sue the man we bought it from for false representation.

A: I can recommend an attorney for you, but before you head into a lawsuit it’s important to ask yourself some questions. From everything you told me in our follow up conversation, the seller made no specific representations about the property. You bought it directly from the seller without a real estate broker to represent you. That might have helped in this case. You didn’t check with the local water purveyor to be sure water shares were available. You also didn’t have a septic design done which would have alerted you to the need for a water share and is prudent when buying land.

This seems to be what we call "recreational" land. That means it’s not buildable for some reason. Looking at the map of your parcel it appears far too small to drill a well. That means you really can’t do much of anything with it. Had you done your due diligence before closing you could have avoided this costly mistake.

The price you paid for this land was far below the average price for a similar buildable parcel. That should have given you a clue that something was wrong. We have a lot of unbuildable land on Vashon and often the owners don’t know it’s not buildable until they try to sell it or build on it. I’m really sorry.

Wednesday, February 05, 2014

Q: My son and his wife really want to buy a home and I’d like to help them.

They asked me if I could be a co-signer for their mortgage and, of course, I said yes. It just means they combine my credit score with theirs to get a good loan, doesn’t it? I’m happy to do it but not sure what it really means.

A: I’m glad you asked before you sign any documents. It’s very important that people know exactly what they’re signing up for. You will be equally responsible for the mortgage should your son and daughter-in-law be unable to make the payments. As a co-signer you are guaranteeing the loan. If, let’s say, your son loses his job and they can’t make the mortgage payment on just your daughter-in-law’s income, you would have to make those payments.

I’m not a financial advisor or a loan officer, but I would recommend that you have a talk with the lender involved and read through your documents carefully before you sign anything. If you aren’t acquainted with legal documents it would be money well spent to have an attorney review everything and explain your responsibilities.

It may be that you will feel comfortable enough to go ahead with the co-signing of the loan but it’s best to do so when you really understand your financial exposure. This isn’t to cast doubts on your son or his wife. It very well may be a great idea to step in and help them purchase a home. Just be clear about it all before you sign anything.

Keep in mind that you can also give them a gift of money. That’s legal and can often be free of tax implications for either party if done correctly. That added cash can make their down payment larger which may get them a better interest rate. It will also lower their monthly payments and that might make all the difference as to whether they can afford to carry the mortgage on their own. Do some exploring and talk it over with trusted advisors.