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Wonders why mandatory info not part of timeshares

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POSTED November 29, 2013 7:59 p.m.

RESPONSE FROM A READER:  I have given some thought to the timeshare thing – and yes we had one and paid money to get rid of it.

Many things amaze me about timeshares particularly why there isn’t more mandatory information before you buy one, your signature required, for example under the sentence that says words to the effect, the fees associated with this timeshare will be due and payable forever and ever, either by me or my heirs, even if I don’t want it anymore or can’t use it.

It’s the same thing as taxes due on regular real estate, like my house, say; someone will always be required to pay the taxes on it, either me, my estate or the next buyer - the important difference being you can eventually SELL a house.

I wonder if anyone has ever successfully sold a timeshare? Linda.

A:Dear Linda. I couldn’t have said it better. I know that the industry (and their lawyers) will take the position that anyone who buys a time-share had the opportunity to review the sales contract before they signed, and thus are obligated for what they signed. That’s a technical – but usually valid – position. It is unfortunate that too many people do not bother to read the documents before they sign. This applies not only to time share contracts but to condominium documents as well. In fact, I wonder how many people check “I agree” to the terms and conditions when they are downloading an app on their I-phone.

I have heard of time-share owners who have advertised on ebay or craigs list and have sold for peanuts – some as low as $1.00. That’s an option; what is not an option, in my opinion, is to pay some company money up front based on their promise to sell your time share. Too many of these companies have been indicted for fraud.

There is a website that provides some helpful information about time shares and resale tips, but keep in mind that it is a spokesperson for the time-share industry. It is the American Resort Development Association (ARDA.org).

Q:RESPONSE FROM A READER:  Read your recent column regarding the house rehab project which stopped in the middle. Just a thought: most building permits have an expiration date, which local authorities may enforce, or ding the homeowner with some sort of violation or fine. Also, wouldn’t it be a building or safety code violation for a house to remain unfinished for that period of time?  These should be explored by the neighbors. Denise.

A:Dear Denise. Thanks for the helpful suggestions. You are correct that most building permits have expiration dates. Unfortunately, many government agencies are not equipped to monitor these routinely, and rely on neighboring homeowners to file complaints. Equally significant, many of these projects are done without permits, and unless a neighbor does some research, one will never know if there was a permit at all. I have heard of some homeowners who phony up a building permit and post it prominently on their property.

But the moral of your message: complain to your local government and to your local politicians if you see an unfinished home that has not been worked on for a long time. Not only can it reduce surrounding property values, but can be a haven for homeless trespassers.

Q:I bought a lot in 2008 in North Carolina.  Everything was completed except the sewer/water system. Developer did not complete, the bonds ran out and nothing happened for a couple of years. Work started again this year but system sitting that long has expensive problems. County is dragging their feet.

 I financed the lot purchase, but am no longer able to make my monthly payment since I am now unemployed.  Although it is assessed for over $150,000, I probably cannot get more than $20,000 for it on the open market.

This would still leave a balance of approximately $75,000.00. I tried to get the bank to take the land back but they would not, I asked for an extension, nope, They suggested I refinance using my personal home in Virginia as collateral. However, if I cannot make a payment on the lot, how am I going to make any payment?

 The question is since my house in VA was not used for collateral on this lot in NC can they place a lien on my house in VA? Who should I go see, a  real estate lawyer or a  bankruptcy lawyer who can help me out of this mess? Nancy.

A: Dear Nancy. You should see a lawyer who understands both real estate and bankruptcy. Here is the problem: if the lender on the NC property forecloses, it may be able to get a deficiency judgment. (A deficiency judgment means that if you owe $100,000 and the foreclosure only nets $90,000,you may owe the bank the difference, namely $10,000. I did a web search on North Carolina deficiencies, and there are some limitations, such as if the lender does a non-judicial foreclosure –i.e. does not use the court process – it cannot go after the former homeowner for that difference)

But in most states, deficiency judgments are permitted. In that case, once the lender gets a judgement against you, they can take that judgment and enroll it in the courts where you live. Then, they can take all appropriate collection actions, including garnishing wages, attaching bank accounts and even trying to force a sale of your house so as to get the money.

Q: I refinanced a two year ARM into a 30 year fixed loan. Does that equal a new note? Or does the original note of  the prior two year fixed ARM continue on to the new bank or servicer? Joann.

A: Dear Joann. Great question. When you obtain a mortgage loan, there are two important legal documents you will sign: a promissory note (IOU bank the money) and a deed of trust (some states still use mortgages). The mortgage document is recorded among the land records in the jurisdiction where your property is located. Why? This puts the world on notice that there is a lien (a cloud) on your title, so that the lender interest is secured.

When you sell that property, the loan is paid off and the lien is released by recorded a formal document on land records. The promissory note should be returned to you, marked “paid and cancelled”.

Basically, when you refinanced, it’s the same as a brand new loan. The original ARM will be released from land records, the new mortgage document will be recorded and you will sign a new promissory note.

Bottom line: when you pay off a mortgage loan with a refinance, make sure it is released from land records. Most commercial lenders will  file it themselves on the appropriate land records. But some lenders do not release but send you the note marked paid and cancelled and put the burden of preparing and filing the release on you. Often, the clerks at the Recorder of Deeds office can be helpful.

And, if your seller took back financing – or you obtained a mortgage loan from a private party – you must make sure that you get the note back and arrange for a release. My suggestion: have the release prepared, and you should personally give the final payment to your lender and at the same time have him/her sign the release, get it notarized, and get back a copy of the note marked “paid and cancelled.”

In situations where you cannot personally deal with the lender, have the final payment sent to your attorney with instructions that it will be released to the lender only when the release and the note have been returned.

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Q:      My daughter and a friend put down a deposit on an apartment that they rented.  Their lease expired in July and they were to receive their deposit as stipulated in their lease agreement within 3 months.  My daughter has tried repeatedly to contact both the owner and his rental manager, only to be put off with an excuse (“It must have been mailed in the wrong envelope.” !) or not responded to at all.  She has called and left numerous messages; she has emailed; and still nothing.

  What is the girls’ recourse in a situation such as this?  The deposit is over a thousand dollars and neither girl can afford a court action nor to lose their monies.  Is there legal aid available to them? Elizabeth.

A:    Dear Elizabeth. Many local governments have agencies that handle Landlord-tenant disputes. Also, some local law schools have “lawstudents in court” programs whereby the students get “on-the-job” training and the “client” gets free legal services.

If those options are not available, the young ladies can file a lawsuit in the small claims court where the property is located. Usually, the clerk of the court can assist them in preparing the paperwork, and often (not always) the defendant pays up rather than spending time and money in court. From my experience, most Plaintiffs in these small claims courts do not have attorneys.

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