Archive for the 'Legal Stuff' Category

Title Is Everything When Buying With Family

said on March 5th, 2010 categorized under: Buying A Duplex, Legal Stuff

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Realty PuzzleIt’s often said that blood is thicker than water.

With that in mind, I often have two family members express an interest in buying a duplex together. Each intends to live in one of the units.

Sometimes the buyers are a grown child and a parent who winters in warmer climates.

Sometimes the buyers are siblings.

In one case I even encountered a former husband and wife who saw a duplex as a way to co-parent their children, but continue on with their respective lives.

Sharing a multifamily property can be a workable solution for some people. And while family may well look out for each other’s interests more reliably than friends or acquaintances, it’s important to remember life circumstances can change.

And that’s why deciding how your going to take ownership at closing is so very important.

There are two ways a pair of buyers can take title; either as joint tenants or tenants in common.

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Don’t Cheat On Your Minneapolis Duplex Agent

said on February 22nd, 2010 categorized under: Legal Stuff

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two too manyOne of my buyers cheated on me last week.

He called another agent about a property the agent had listed.

After he told me he’d see only me!

It could cause me not to get paid.

See, in real estate there’s something called “procuring cause”.  And it belongs to the agent who caused the buyer to purchase the duplex.

If my client called and asked me to help him see or write an offer on the property, I could have to split my commission with the listing agent. Why? Because that Realtor could argue that he was the one who was responsible for the purchase; having provided my client with the information that caused him to write an offer.

The same could be true if you asked another agent to show you a property, walked through an open house and spoke with the agent, or even called on a newspaper ad.

It doesn’t matter how long I’ve been working with that buyer, how many duplexes I’ve shown him, nothing. And I’d have to split my check because of that one phone call.

Of course, I do practice safe real estate and have a Exclusive Right to Represent Buyer contract in place. However, even that may not protect me entirely.

So my buyer and I had a talk; one in which I reminded him to always disclose to other agent that he’s working with another Realtor.

As part of our understanding, he can’t ask another agent to show him a property, call listing agents for information, and must always tell open house agents he’s working with me.

He understood. And since he’s a good guy, I forgave him.

What’s Different About Buying A Minneapolis Duplex?

said on January 22nd, 2010 categorized under: Legal Stuff

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????What one thing do you have to do after closing on your new duplex or rental property that you don’t have to do when you buy your own house?

Get a license.

Whether you’re owner occuping your duplex or intend to operate it as an investment, many cities require you to have a rental license.

What does that take?

Rules vary according to municipalities. In Minneapolis, however, a new rental property owner must fill out an application, as well as provide the city with a copy of either the Minneapolis Truth & Housing Certificate of Approval or Buyer Certificate of Completion.

If the property is owned by an LLC, partnership or corporation, articles of incorporation are also required. New owners must also attach proof of ownership, which is generally covered by a HUD Statement, copy of a Certificate of Real Estate Value or Bill of Sale.

The fee, at least in Minneapolis, is $65 for the first unit, and $19 for each additional unit. This covers licensing from September 1 to August 31 of the following year.

And if you don’t get a license? Fines can run north of $500, and tenants can file a rent escrow case, where rental income is escrowed until the situation is resolved. Tenants may not, however, withhold rent simply because you don’t have a license.

You Mean I Need A License For That?

said on September 17th, 2009 categorized under: Legal Stuff

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Adorable border collie and her homeIs there ever a reason you don’t need a rental license in the city of Minneapolis? For any kind of house?

What if you’re selling your Minneapolis duplex, do you need one? After all, you’re almost done with the property, right?  How about if you live there?

The answer is yes. To all of the above.

As long as there are tenants, the city of Minneapolis requires any type of  rental dwelling to have a license; whether it’s a single family home, duplex, apartment or rooming house, regardless of or whether or not it’s for sale.

And yes, if the duplex is owner occupied, it too needs to be licensed.

The rental license application fee is $84. The fine for not having a license is $500.

What if you buy a Minneapolis duplex?

Provided the property has been a licensed rental property in the past, your license application fee is the same $84.

As of June 8, 2009, however, the city doesn’t stop there. When the property changes ownership, you are required to pay a $450 “change of ownership inspection fee”.  A truth in sale of housing report doesn’t count, nor does the independent inspection you paid for prior to purchasing it. The city wants to look at it again to make sure it’s in compliance.

What if you’ve decided to rent out your house instead of selling it? Well, as it’s never been a rental property before, the city requires not only the $84 application fee, but an additional $1000 for inspections.

Are you surprised? After all, these are the folks that require us to license dogs.

Minneapolis Encourages Duplex Tenants To Get Married

said on August 13th, 2009 categorized under: Legal Stuff, Tenants

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wedding ringsSometimes government rules and regulations just don’t make sense.

Take, for example, the city of Minneapolis’ rule on the number of unrelated people who can occupy a rental unit.

If a property has a zoning designation of R 1-3 (residential 1- 3 units), a maximum of three unrelated people can live in each of the units.

The number of bedrooms or amount of square footage in each is irrelevant. In other words, if you own a duplex with a five bedroom unit, you can only have three unrelated people living in it.

If the multi-family property is zoned R 4-6, however, you can have up to five unrelated people in each unit; even if there’s only one bedroom in each apartment.

Of course, if the other people occupying a unit are related by blood, marriage, or adoption, an R 1-3 property can house the family plus two unrelated people.

In a R 4-6 zoned multi-family building, a family can have up to four unrelated people living with them; again, regardless of the number of bedrooms in the apartment.

What happens if the city discovers there are more residents than allowed in a duplex? The landlord can lose his rental license.

So if you have a Minneapolis duplex, say, by the U of M or in Uptown with a couple of four bedroom units, how can you make sure you’re in compliance?

Get your tenants to marry or adopt each other.

Why Working With A Realtor Is A Lot Like Dating

said on July 27th, 2009 categorized under: Legal Stuff

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relax in my heartWorking with a Realtor is a lot like dating.

But with a contract.

And without those perks.

Once you’ve reached a certain point in your relationship with your agent, she may ask you to sign what’s known as a Buyer Representation agreement. There are many types of representation, but most often, she’ll ask you to sign a document that gives her the exclusive right to represent you.

If you think about it, this document makes sense. Agents work long and hard to find the right properties for our buyers.  And once we do, we want to have the legal assurance we’ll be paid for our efforts. After all, we don’t get paid a thing; not a salary, not mileage, not base pay…nothing, until you buy your duplex.

So it makes sense that you should be committed to your agent. And, your monogamous relationship with that agent is considered so sacred you may even walk into an open house and have other Realtors ask whether you’ve signed a buyer representation agreement.

Why do they ask? Because the state of Minnesota says if you have, they’re not allowed to talk with you in any way that could be perceived as a violation of that pact. This law is so thorough that even if you’ve successfully negotiated a purchase agreement, but have yet to close, you aren’t allowed to speak with the agent representing the seller unless it’s through your Realtor.

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Minneapolis Requires Owners to License Relatives

said on May 11th, 2009 categorized under: Legal Stuff

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A family photo near house. Isolated on a white background.The Minneapolis Star Tribune reported last week that the city of Minneapolis has changed the rules for “relative homesteading”.

Relative homesteading is when an individual owns a second home, and allows a relative to live there, rent free. This helped the property owner qualify for owner-occupied property tax status, and, until now, avoid paying a $65 rental license fee and the avoid the required city inspections for rental property.

A 2008 change in state law requires a property to be registered with the city if the owner receives any kind of compensation for allowing occupancy of any part of the property.

Compensation does not have to be in the form of rent. It may be as simple as the relative living there maintaining the property in lieu of rent.

As a result of the new statute, the City of Minneapolis’ Inspections Department decided to require all single-family relative homesteaded properties to get licensed. This was done with a goal of increasing the safety of these properties through inspections.

The new rule doesn’t apply to small multi-family properties like duplexes and triplexes.

Bed Bugs Bite Minneapolis Duplex Landlords

said on May 1st, 2009 categorized under: Legal Stuff

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bedbugs_bedbugandswarm_s2When I was a kid, my dad often said just before he turned out the lights in my room, “Good night, sleep tight, don’t let the bed bugs bite.”

I’m glad I didn’t know what bed bugs really looked like; or what they did.

Bed bugs have been in the news a lot lately. After disappearing from the U.S. for 50 years, they seem to be making a comeback.

So what exactly are bed bugs? They’re small, wingless insects that feed on the blood of warm-blooded animals and tend to take up residency where those animals nest.

In other words, in places like beds.

What does this have to do with duplexes? Well, if you or your tenant experience a bed bug infestation, who’s responsible for cleaning it up?

The landlord.

See, bed bugs are considered pests. And while it may be a reasonable assumption that the little critters came in with a tenant, unfortunately, they don’t wear name collars or have microchips. There’s no way to prove it.

A reader recently shared a frustrating experience with a reoccurring case of bed bugs in her tenant’s unit.  After the considerable cost of hiring an exterminator, not to mention the inconvenience, her tenants continued the bad habits (such as excessive clutter) conducive to bed bug infestation.

Needless to say, the bed bugs came back.

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Comments Off on MHA Offers Simple Explanation of Minneapolis Duplex Tenant Laws

mha20french20roastI scanned the Minnesota Multi-Housing Association’s web site earlier this week and happened upon a brochure I hadn’t seen before.

Offered free of charge as a download, MHA’s “Apartment Living & The Law” is a flyer designed as a mean of informing tenants of their legal rights.

The brochure clearly explains which repairs landlords are and are not responsible for, proper ways of contacting landlords about repairs, how to make sure a security deposit is returned, and the eviction process.

A simple True/False quiz also effectively dispels many landlord/tenant myths, including the infamous “24 hour rule”.

As more people purchase their first duplexes, either to live in or investments, this information may be especially useful for not only tenants, but new landlords as well.

Disclosure Rules Differ for Minneapolis Duplexes

said on April 17th, 2009 categorized under: Legal Stuff

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linternaAmong the many duties a Minnesota Realtor owes her client is that of disclosure.

As defined by the state, this consists of sharing “all material facts of which broker/salesperson has knowledge which might reasonably affect the client(s) use of the property.”

Both the listing and selling agents are bound by this. For example, if you’re walking through the basement of a great old Craftsman duplex and I point out the presence of asbestos on the pipes, I am disclosing what I know (or see).

Conversely, if I am the listing agent, both the owner-occupant seller and I are bound to share adverse information. This may be as innocuous as an incident where there was water in the basement when a downspout was kicked off, or as serious as a murder.

Are there exceptions?

Yes.  According to Minnesota Statute 82.22, Subd.8, neither the seller nor listing agent are required to disclose the property was ever inhabitied by a person with HIV or AIDS, or was the site of a suicide, accidental or natural death.  While other states (such as California) do require the disclosure of suspected paranormal activity, it is not the case here.

That doesn’t mean if a buyer’s agent knows, for example, that the property was the site of a heinous crime, however, they can’t mention it. With over 20,000 properties on the Minneapolis MLS at any given time, tracking it all would be humanly impossible.

There are also no disclosure requirements for the presence of a group home in the neighborhood, nor the presence of a registered sex offender.

In the case of a registered sex offender or criminal activity, Realtor’s are actually prohibited from disclosing the information, if they are in fact, even aware. (Hence all of the warnings on both the state’s listing forms and purchase agreements.) 

A seller may also choose to have the property professional inspected before placing it on the market in lieu of disclosing information he may or may not have. He must then make this report readily available to any potential buyer.

Are landlords required to disclose a suicide? Murder? Asbestos?

No. In fact, Minnesota’s Landlord/Tenant Handbook makes no mention of a landlord even having to disclose anything.

So while it’s important to perform your due dilligence before you buy, and it is largely your responsibility to do so, remember you have the same responsibilities as a tenant.