The copious home sale contract

home sale contract
Home buying process (infographic from floridarealtors.org)

If you’ve recently bought or sold a home in Montgomery County MD, you probably recognized that the home sale contract was quite lengthy.  In fact, depending on the situation and additional addenda, a contract can be fifty-plus pages. It seems as if that the home sale contract gets fatter as every year passes. It’s no wonder why I am often asked “Why are home sale contracts long winded?”

Why is our home sale contract so long?  Our local home sale contract has a number of required addenda and disclosures.  There is a simple reason for this, but let’s look at the foundation and need for the contract.

It’s important to mention that property sale contracts around the country are not the same.  Every jurisdiction has their own criteria for a home sale contract.  A recent client who relocated from New Jersey shared their home sale contract, which was a fraction of the size of our local contract.  Likewise, a colleague asserted the same about the property contracts in Arizona, where he was licensed for a number of years.

Property sale contracts go back into antiquity.  Most likely, ancient contracts formed a basis of ancient record keeping.  These ancient contracts were also “promises” that were enforced in some manner that was keeping with the time.  For example, The History Blog (thehistoryblog.com) tells the account of the Mogao Caves which are located in the Gobi Desert and date back to the fourth century.  One of the caves held a cache of financial documents from medieval China, including property sale contracts and records!

According to the legal historian A. W. B. Simpson, modern English contract law has roots in the middle ages (A History of the Common Law of Contract: The Rise of the Action of Assumpsit; Clarendon Press; 1987).  The contract was founded in the concept of “assumpsit,” which was the basis for resolving “broken promises.”  Assumpsit allowed individuals to bring claims of broken promises to local courts.  Although the practice was traced back to the thirteenth century, court hearings were routine in the sixteenth century.  This model became the basis for enforcing a private contract.

It wasn’t until 1677 when the English Parliament enacted “An Act for the Prevention of Frauds and Perjuries,” known today as the Statute of Frauds.  According to Russell Decker, the Parliament enacted the law that required contracts to be written, because parties obliged by a contract were not allowed to provide testimony in court (The Repeal of the Statute of Frauds in England; American Business Law Journal; 1973; 11:1 p55).  The written contract was the “witness” to a promise.  However, most of the Statute of Frauds was mostly repealed in England in 1954.

The Statute of Frauds is still alive and well in the US and the basis for the real estate contract in Maryland.  Statute of Frauds is a subtitle of the Real Property Act of the Code of Maryland.  Section 5-104 Executory Contracts states: “No action may be brought on any contract for the sale or disposition of land or of any interest in or concerning land unless the contract on which the action is brought, or some memorandum or note of it, is in writing and signed by the party to be charged or some other person lawfully authorized by him.”

So ok, home sale contracts need to be in writing, but why are our contracts lengthy?  The reason is because many of the addenda and disclosures are generated because of statutory requirements to provide specific information in a contract of sale. Besides  the expected list of notices and disclosures (such as property condition), there is a compendium of additional required notices and disclosures that is found in Code of Maryland  Miscellaneous subtitle of the Real Property Act section 14-117 Contracts for Sale of Property.  Additionally, jurisdictions around the state include additional addenda and notices for home sales within the respective county and/or locality.  Of course, Montgomery County has added a number of disclosures and notices (such as the Utility Cost and Usage History Form and the Real Property Estimated Tax).

Make sure your agent is knowledgeable about the jurisdiction in which you are buying or selling.  As a buyer, you need to make sure you receive all the relevant notices and disclosures.  As a seller, you may incur a fine for non-disclosure of certain notices.

Original located at https://dankrell.com/blog/2018/09/20/copious-home-sale-contract/

Copyright© Dan Krell
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Prime housing move by Amazon

prime housing
Insight into Amazon (infographic from geekyedge.com)

Amazon is about to make a decision on their “HQ2.”  The highly anticipate decision can be a prime housing move not just for the chosen city, but the region.  As you now know, Montgomery County is on the short list.  Some even have it pegged to be in the top five.  Although many local residents are excited at the prospect of increasing home values, many others are anxious how a Montgomery County Amazon HQ2 will affect their quality of life.

If Amazon chooses Montgomery County, the county will likely see a similar impact that Seattle experienced.  However, rather than be purely speculative, let’s look how Amazon has shaped Seattle.  Stephen Cohen offers interesting statistics looking at how Seattle has changed after Amazon (How Seattle Changed After Amazon Came to Town; seattlepi.com; September 22, 2017).  Cohen points out that Amazon has been based in Seattle since the mid 1990’s, and that the major impact on the town happened when the company moved to the South Lake Union campus (SLU) in 2010.  Since the move, Amazon’s stock price skyrocketed and its market cap exceeded (and has since doubled) that of Walmart.

Cohen’s data goes beyond the pros and cons of having the business giant in the community and compares statistics that span from 2010 to 2017.  During that time, Seattle’s population grew 17.3 percent.  However, it remained as the 18th most populous US city.  Although Seattle followed the national trend of becoming more diverse, its African American population slightly decreased (which was counter the national trend).  Cohen describes Seattle’s population as “skews male,” probably because Amazon’s “workforce is 63 percent male.”

housing
Seattle Case-Shiller home price index (graph from businessinsider.com)

But the home values…Seattle has had one of the hottest and prime housing markets in the country. Seattle’s average home price increases are almost double the national average.  Finding housing in Seattle is very difficult, as the town’s vacancy rate significantly decreased to about half that of the national average.  The city’s median gross rent is 47.6 percent higher than the national average.

Other interesting facts from Cohen’s data…one-person households decreased from about 15 percent to slightly more than 10 percent.  There was a 25.2 percent increase in commuters.  And, the city’s mean household income increased 41.3 percent, which is more than double the national average.

Prime housing is not for everyone.  Cohen cites the sharply increased cost of housing and high cost of living for negatively affected the poor, as well as the middle class.  And although Seattle is the 18th largest US city, it has the third largest homeless population (according to a December 7, 2017 Seattle Times expose “King County homeless population third-largest in U.S.”).

But, Lisa Stiffler reported that Amazon’s philanthropic corporate culture has noticeably changed (What gives? Tech giant Amazon finally boosts its philanthropic rep in its hometown; geekwire.com; December 14, 2016).  She notes that it is evident that employees are volunteering and getting involved with such activities as the Amazon “Non-Profit Expo.”

Seattle’s SLU is described by Stephen Cohen as an “Innovation District,” which is a Brookings Institute term for a “geographic areas where leading-edge anchor institutions and companies cluster and connect with start-ups, business incubators, and accelerators.”  SLU is similar to Montgomery County’s Technology Corridor.  An Amazon move to MoCo’s Tech Corridor would likely dovetail with a $100 million plan to improve I-270 (the infrastructure plan was reported by the Washington Post last April).  Such infrastructure improvements would open up Maryland’s western real estate market, which would ease some of the upward pressure to MoCo’s already tight prime housing market and already increasing home prices.

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Living with a ghost in your home

haunted houseTV shows such as Ghost Hunters and Ghost Adventures may have glamorized the paranormal, but they may have also made us more aware about the possibility of other-worldly activity in our homes. Increasing reports of ghosts and other phenomenon are due in part to the proliferation of video cameras that document anything living or dead; however, it must be said that many videos asserting ghost activity are very good hoaxes created with readily available professional editing software. Regardless if you’re a believer or not, everyone has an opinion on haunted houses.

Trulia’s House Of Horrors

A recent Trulia poll (infographic at right) revealed how men and women differ about living in a home associated with the paranormal or macabre (Trulia’s House of Horrors; trulia.com; October 13, 2015). Respondents (45% of women and 36% of men) answered that they would prefer to be haunted by a “vengeful ghost” rather than a demon, evil leprechaun, or possessed doll. When asked, 59% of women respondents indicated that they would lose interest in the “perfect” home if they knew the home was a former crime scene; while 47% of men indicated the same. Additionally, 32% of women indicated that they would rule out an otherwise perfect home knowing that a person died there; while 23% of men indicated the same. Apparently, living next to a cemetery was not a detractor from purchasing an otherwise perfect home, according to 61% of the men and 50% of the women who responded.

Ghost or not, the “creep factor” is definitely an issue for many home buyers. So much so that home buyers are turning to services such as DiedInHouse.com to determine if a death occurred in a home they are considering buying. For a fee, DiedInHouse.com will provide a report indicating if a death has occurred and the cause, as well as other information about the home including any reported meth-lab related activity or fire incidents.

Although many alleged haunted homes are old and in many cases have historic significance, new homes can also have ghostly activity. Local historian, Karen Yaffe Lottes, re-tells this story on her blog Montgomery-Ghosts (montgomeryghosts.wordpress.com) about a modern Germantown home where a police officer lived. The officer reported that the house shook and he heard heavy footsteps on the stairs, when putting on “dress blues.” Apparently, the house was built on the site of the farm where Lincoln conspirator, George Atzerodt, was arrested by a uniformed Union soldier – the Union Army uniform was blue. Atzerodt, was subsequently jailed and hanged for his part in the conspiracy. Could Atzerodt still reside on the site where he was apprehended and sent to his demise?

Karen knows a thing or two about local haunted homes, and told me that she uses ghost stories as a medium to tell a history. Along with co-author Dorothy Pugh, years of stories from their “In Search of Ghosts (ISOG)” event at the Montgomery County Historical Society was published as In Search of Maryland Ghosts: Montgomery County (Schiffer Publishing, October 28, 2012).

When asked what to do if paranormal activity is suspected in a home, Karen explained that people try various methods to rid their home of ghosts; some work and some do not. She pointed out that not everyone is uncomfortable with the thought of living with apparitions. Some people actually welcome the spirit to stay; and in some cases ask the ghost to move with them to their next home.

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Stories behind home sales tell of a meaningful history

by Dan Krell
DanKrell.com
© 2013
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housing developmentIt’s entertaining and interesting to take a look at the unusual and extremes of the housing market during the year that just ended. Besides some of the notable sales of this past year, consider the least and most expensive single family homes that sold during 2012. The stories of these two homes go beyond recent sales and economic conditions; they tell a story of suburbanization and the growth Montgomery County.

One of the lowest priced single family homes that sold in Montgomery County during 2012 was a home located on Sigsbee Road in Silver Spring. The home, located in Veirs Mill Village, was listed in the MLS (Metropolitan Regional Information Systems, Inc) by Real Home Services and Solutions, Inc. as a foreclosure and sold for $86,199. Veirs Mill Village, a community that seemed to have its share of foreclosures in recent years, was built as part of the post World War II housing boom.

According to the Maryland Department of Transportation State Highway Administration’s “Suburbanization Historic Context and Survey Methodology” (roads.maryland.gov), Veirs Mill Village was one of the largest post war housing developments built in Maryland. There was a housing shortage immediately after World War II, and a scramble ensued to build homes to accommodate returning veterans as well as the quickly growing Federal workforce. Because of the speediness of the construction, neighborhood aesthetics was not a priority; initially, there was little thought to community, commerce, or municipal services. Built to be affordable housing, the community initially attracted young families; the average age was stated to be 21. The completed development consisted of 1,105 four room bungalows, each with a 1948 price of $8,700.

Consider that at the height of the housing market in 2006, the average home sale price in Veirs Mill Village was $390,337 and ranged from $325,000 to $485,000. The average sale price during 2012 was $218,950. And although this home on Sigsbee Road was not expanded from its original 648 sf, it is not uncommon for neighborhood home owners to have expanded these homes over the years.

In contrast, one of the most expensive homes that sold in Montgomery County during 2012 is located on West Lenox Street in Chevy Chase. The 100 year old home sold for $7,050,000. The MLS listing stated that the home, listed by Long & Foster Real Estate, Inc., was built in 1913 and was expanded and renovated in 2006.

real estateAccording to the “Suburbanization Historic Context and Survey Methodology,” the development of Chevy Chase began as part of the suburbanization of Montgomery County of the 1880’s. Although other Montgomery County developments at that time were priced for middle class civil servants (due in part to the Civil Service Act 1883) , Chevy Chase was developed to attract affluent home buyers. Chevy Chase expanded in the 1890’s when a rail line was built to encourage growth in a suburb that was considered inaccessible; and became an established affluent neighborhood when the economy flourished during the 1920’s housing boom.

The MLS listing and sale and sale price information is compiled from Metropolitan Regional Information Systems, Inc. (MRIS.com); the information is not an opinion of value, nor should the information be misconstrued as an appraisal. Additional neighborhood suburbanization and historical information can be found on the Maryland Department of Transportation State Highway Administration’s website (roads.maryland.gov).

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of January 7, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

Understanding property tax assessments in Montgomery County MD

homesIt’s the time of year when property tax bills are issued to home owners. Unless you’re an educational, religious, or charitable organization, you’ll most likely receive your property tax bill. A common question among home owners and home buyers is, “how are property taxes calculated, and what is the money used for?”

Information about property assessments and taxation is conveniently posted on the internet by the Maryland Department of Taxation and Assessments (www.dat.state.md.us) and the Montgomery County Department of Finance (www.montgomerycountymd.gov). There are two factors that determine your property tax bill, the property assessment and the property tax rate.

According to the Maryland Department of Taxation and Assessments (MDTA), “Properties are reassessed once every three years and property owners are notified of any change in their assessment. Assessments are certified by the Department to local governments where they are converted into property tax bills by applying the appropriate property tax rates.”

Because Maryland does not impose any restrictions or limitations, property tax rates vary throughout the State. This means that counties and cities are free to set the rates needed to fund government services. According to the Montgomery County Department of Finance, “The real property tax rate, which is set each year by the County Council, is an ad valorem tax, meaning it is applied to the assessed value of the property. The fully phased-in assessed value equals the full cash value of the property…”

The total tax rate is a combination of the State, county, and (for some home owners) municipal tax rates. The rate is typically expressed in dollar amount per $100 of assessment; the MDTA gives this example to understand how property tax rates are expressed, “for a property with a fair market value of $100,000 the property taxes would be calculated by dividing the assessment by 100 and multiplying the product by the property tax rate. Using an overall tax rate of $1.08 per $100 for this example ($1.00 local property tax plus $.08 state property tax), the amount of property taxes due would be calculated: $100,000 divided by 100 times $1.08 or $1,080.00.”

The MDTA explains, “The property tax is primarily a local government revenue. Counties and cities depend on the property tax and a portion of the income tax to make up their budgets.” Montgomery County levies a general tax to fund basic services, such as police, elementary and secondary education, the community college, transportation, health and social services, and libraries. Additional county taxes are levied to fund public transportation, fire and rescue services, and acquisitions by the Maryland-National Capital Park and Planning Commission. Seven additional county taxes are also levied on residents in “specially defined areas.”

If you disagree with your property assessment, you can appeal it by following the instructions provided by the MDTA. The assessment notice has an appeal form, which must be filed within 45 days of the date on the notice (a home buyer has 60 days from the date of property transfer to appeal the property tax by submitting an appeal of the property value, but only if the transfer of the property occurs after January 1st and before the next taxable year).

Know your rights throughout the property assessment and appeal process; SDAT provides  “Property Owner’s Bill of Rights”   (https://dat.maryland.gov/realproperty/Pages/Bill-of-Rights.aspx) to summarize sections of the Tax-Property Article which deal with appeals, assessment notification, and public information.

Original published at https://dankrell.com/blog/2012/06/13/understanding-property-tax-assessments-in-montgomery-county-md/

By Dan Krell

This article is not intended to provide nor should it be relied upon for legal and financial advice.  Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.