Common Interest Developments

Posted on September 8, 2015September 8, 2015 by mrn event

Jonathan Smith, Bradley Real Estate

Common Interest Development (“CID”) sales in Marin are strong and prices are soaring (see, August 8^th Marin IJ article). What exactly are CIDs? What are some of the benefits of CID ownership? What are some special considerations to keep in mind when considering the purchase of a CID? This article tackles these questions and more.

What is a Common Interest Development?

The simplest definition is: a housing complex where owners share in the ownership of common areas.

Essential characteristics of a common interest development

The essential characteristics are:

Common ownership of private residential property;
Mandatory membership of all owners in an association that manages the use of the common property;
Governing documentsthat outline the procedures for governing the association as well as the rules which the owners must follow; and
Owner assessments to finance the operation of the association and maintenance of the association common areas.

Types of common interest developments

Condominiums
Planned Developments or PUDs
Stock cooperative
Community apartment project

The two most common forms of common interest developments in California are:

1) Condominiums

With a Condominium, the owner of a condominium unit generally owns 100% of the unit and a fractional interest in all common areas of the condominium project.

2) PUDs

With a PUD, the PUD owner will own the lot along with the added structure and improvements. Also, PUD owners receive rights and easements to use in common areas owned by their homeowner’s association.

Fun Fact:

Don’t judge a book by its cover! Generally speaking, you cannot determine what type of CID a dwelling may be simply by looking at the physical characteristics of the building. So, a townhouse might legally be a condominium, a unit or lot in a PUD, or a single-family residence.

Benefits to owning a common interest development

Benefits of owning a CID include:

– often more affordable than a single family residence

– lower maintenance time and expense for owner

– access to attractive amenities, such as: pools, exercise facility, game rooms, rooftop decks

– heightened security and safety due to close proximity to neighbors

– governing documents help with keeping neighbors accountable to an agreed upon set of rules

Special considerations in purchasing a common interest development

Governing Documents Review: All documents MUST be closely reviewed by a person with expertise and familiarity with association related documents, including: Articles of Incorporation; By-Laws; Conditions, Covenants & Restrictions (“CC&Rs”); Reserve studies; Operating budgets; and Meeting minutes

Community Inspection: In addition to inspecting the specific unit or lot for purchase, it is very important to inspect the community as a whole for issues such as: A) Condition of the community buildings; B) Attractive amenities in disrepair; and C) obvious nuisances (e.g., cars blocking driveways)

HOA Board and Management Company: Pay close attention to all communications with the association and management company. Are they: responsive, courteous, and helpful OR do they seem: difficult, evasive, or inconvenienced? Also, if available, it is a good idea to check for public information available on the management company (e.g., Internet, owners)

Association Financial Management: Are monthly assessments either above or below the average monthly assessments for the area and CIDs with similar amenities/responsibilities? Pay attention to monthly assessments as they can sometimes be a red flag to financial mismanagement; also, pay close attention to reserve account funding percentage – if low, a heightened possibility for a special assessment exists (e.g., $25,000 per unit assessment)

Insurance and Financing Concerns:

Special insurance for CIDs: Check with Governing Documents to determine insurance responsibility and work with an experienced insurance professional to make sure you are covered

Financing for CIDs: Lenders evaluate both you and the association, so actual rates may vary drastically from the advertised rates. Accordingly, working with someone who understands the financing of CIDs is another good idea.

Jonathan G. Smith

Bradley Real Estate

www.jonathanofmarin.com | jonathan@jonathanofmarin.com | 415-944-0632

Broker Associate for Bradley Luxury Division and Trusted Real Estate Counsel

What to Expect When Buying a Home

Posted on May 14, 2015July 30, 2015 by mrn event

What to Expect When Buying a Home

The home buying and mortgage process can be overwhelming even for seasoned home owners. Knowing what to expect and how to navigate ‘the maze’ will help.

Paperwork, Paperwork and more paperwork… ~

There are really two transactions when buying a home. One involves the property and the other involves the mortgage. And with both comes paperwork.

Below are some documents you’ll receive and sign at the escrow/title company ~

• HUD 1 – this is probably one of the most important documents to review carefully, as it will contain all the actual settlement costs and who is responsible for which cost, buyer or seller. The closing agent will go over this document thoroughly with all parties.
• Deed of Trust – this is a document wherein legal title in real property is transferred to a trustee, which holds it as security for a loan (debt) between a borrower and lender.

Below are some documents you can expect to receive and sign regarding the mortgage loan ~

• Monthly Payment Letter: this document reveals the breakdown of your monthly payment into principal and interest, as well as property tax and/or home insurance, if applicable.
• Truth In Lending Statement: this important piece of paper will disclose the interest rate, annual percentage rate, amount financed and total cost of the loan over its life. These are very important numbers to check and double check before signing. This isn’t a time for surprises.
• Itemization Of Amount Financed: this document is like an addendum to the Truth in Lending, summarizing finance costs and points.
• The Note: this paper puts a lien against the house as security for the loan — allowing the bank to foreclose if you default on the note mentioned above.

Some other documents you will receive and sign during the process ~

• Name Affidavit – this document certifies that you are, in fact, who you say you are.
• Search or Abstract of Title – this document gives a history of every document that’s been recorded about this particular piece of property.

Show me the money ~

The buyer and sometimes even the seller are expected to have money ready to hand over. You should be informed of the amount you need to provide before you sign the loan documents. If you aren’t informed, do call and ask. You’ll want to bring a certified check for the correct amount.

Here are a few things a buyer will be paying for at the closing ~

• Closing costs – these include loan fees, title/escrow and appraisal. These can vary from state to state and county to county.
• Payment for the house – this includes the down payment minus any earlier deposit(s). It’s given to the closing agent (title/escrow), along with the lender’s check for the balance of the purchase price.
• Escrows/Impounds – this is when the property taxes and home insurance are paid with the mortgage payment to the lender. An account will be established prior to closing. The amount due depends on closing date

Timing is essential, so here are a few things to keep in mind ~

If you’re renting, you’ll want to schedule the closing around your lease expiration date.

If you plan to fix up the new home before moving in, schedule the move in date a couple of months before you have to move from your rental.

If you’re selling your current home, you’ll be juggling between two closing dates. Most people require the cash from the sale of the current home to pay for the new home, so be sure to calendar the closings accordingly. But take heed! Two closings in one day will make for a stressful experience, but if timed correctly, it will go off without a hitch.
• Make sure the closing date is set before your interest rate lock expires.
• If you’re closing on the new home purchase at the end of the year, keep taxes in mind. Any points and interest paid before the New Year can become deductions for this year’s taxes. Check with an accountant for the timing of any other deductions.

Keys Please…The End, or is it ~

A closing may be the end of the buying process, but it’s the opening act of your new life as a homeowner.
I’m here to help in any way I can. Please feel free to contact me.

Stacie Strassberg

Banc Home Loans

sstrassberg.banchomeloans.com | sstrassberg@firstcal.net | 415-308-1604

Your ‘Go To’ Mortgage Advisor for Residential Home Purchases and Refinances

THE DROUGHT: What does it mean for your landscape?

Posted on April 10, 2015June 4, 2015 by mrn event

The grass is always greener on the other side…

Other side of what? Other side of the country, mostly.

Your tradition white picket fence, green lawn, Partridge family style home was not meant for California, Traditional sod lawns are more appropriate in areas that receive summer rainfall, i.e. the east coast.

Don’t let this winter’s rain fool you, and do heed the Governor’s warnings: We are having a Drought, with a capital D. So how can we save our landscape, something we have invested way too much time, love, energy, and hard earned dollars into, to allow to turn to dust?

You can have a wonderful, vibrant and artistic landscape that will wow your friends, and have you saying drought, what drought?

The first premise is that you really should sacrifice some, if not all, of your lawn. Picture your lawn three feet deep in water. That’s how much it takes to keep it alive from the end of the rainy season to the beginning of the next. Here are some alternatives

The Before – nothing but lawn and some ugly vines

No more lawn. This example shows three alternatives to lawn. Pebbles, artificial turf, and mulch.

Let’s take a closer look at each:

The pebbles and boulder highlight the sculptural quality of the cactus;

The artificial turf provides a soft counterpoint to the sculptural, spiky desert plants, while providing an inviting walking surface;

The mulched planting bed is alive with interesting, drought tolerant plants that draw humming birds to them like a magnet.

These are just a few ideas to show that, at least in the garden, there is life beyond water.