All Forum Posts by: Mike C.

Definition of "installment loan" from Capital One:
"An installment loan is a credit account that provides a lump sum to be paid off over time in equal monthly payments."

Text excerpts from my lease (state of VA):

1. "Tenant agrees to pay rent to the Landlord during the term of this Lease 12 equal monthly installments of $9999, each payment being due and payable on or before the 1st day of the month..."

2. "[In case of default by tenant], Tenant expressly agrees and understands that upon Landlord’s termination of this Lease, the entire remaining balance of unpaid rent installments for the remaining term of this Lease shall ACCELERATE, whereby the entire sum shall become immediately due, payable, and collectable."

Sounds to me like a loan for a clearly defined "lump sum" equaling exactly 12 months rent, with "installment payments" and a penalty for default. The lease clearly defines the use of the property for exactly one year as the item being financed.

I'm not suggesting that tenants often default and then actually pay off the amount legally due under the lease, but only pointing out the legal structure of the lease agreement whereby landlords are essentially owner-financing the use of the property for a very specific time to the tenant, and for all practical purposes it IS a loan from the landlord the tenant is applying for, and should be treated accordingly, otherwise we should require the entire year's rent up front in exchange for the year's use of the property.

Thanks Oren and Joe.

Good to verify the lease is contingent on all parties remaining committed. The remaining three tenants (all family) would definitely need a well-employed fourth unless something has changed significantly since they applied last year.

Good point about updating the lease to clarify regarding one tenant leaving and financial re-qualification--our update list is maybe 8 items now. Lease gets longer every time!

Seeking advice on where we stand with SFH rental on a one-year lease that expires midnight, 31 March.

There are four adults on the lease, a married couple and two singles. One married person and one single have income and are both active military, and the combined income of both were required for financial qualification for them to lease.

CURRENT LEASE INVALID UPON EXPIRATION?

The single military member was deployed OCONUS and departed a couple weeks ago, but stated his intention in writing to remain a part of the lease until it expired, at which time he will withdraw from the lease.

My take is that the lease was made with all four co-tenants, and that if one of the financially-critical co-tenants withdraws at its normal expiration, the lease is then invalid, as the tenants have significantly changed the terms under which it was made. Does this seem correct?

Lease excerpt:

All Lessees are jointly, severally and individually bound by, and liable under, the terms and conditions of this Lease. A judgment entered against one Lessee shall be no bar to an action against other Lessees. Lessees will hereinafter be referred to collectively as "Tenant".

NEW LEASE REQUIRED?

For the remaining three adults to continue as tenants, it seems to me that a new lease will have to be made, including new financial qualification criteria of either a new co-tenant, or the remaining three tenants presenting evidence of some yet-undisclosed financial resources. Does this seem correct?

Any observations will be appreciated.

@Bob Norton:

Thanks much.

Was searching for IRS mention of the "50 miles" you specified. Found nothing on that, but this seems relevant, from IRS Pub 463 for 2019:

You are traveling away from home if:

...

• You need to sleep or rest to meet the demands of your work while away from home.

This rest requirement isn’t satisfied by merely napping in your car.

I do my own rehab, maintenance and management. One of my properties is about 160 miles from my hometown and that can be a drive of 3 to 5 hours, depending on traffic. Recently I did what I used to call a day trip to that property and I'm now curious if it qualifies as "business travel" for tax purposes per the IRS "Topic No. 511 Business Travel Expenses":

"You're traveling away from home if your duties require you to be away from the general area of your tax home for a period substantially longer than an ordinary day's work, and you need to get sleep or rest to meet the demands of your work while away."

I file taxes as a Real Estate Professional and so keep a work log to document my active participation.

Per my log that day I was "on the clock" at 0515 when I arrived at my latest rehab project, about 20 minutes from home. Some of my tools were there and after assembling and loading the tools and materials needed for the day, departed the rehab about 0545, arriving at the distant property about 0900. Worked there and drove to store for needed items about midday, then departed distant property about 1730 bound for the rehab property. I drove in very heavy stop-n-go traffic for a few hours until very sleepy, and about 2000 stopped at rest area and caught a 90-minute nap in the reclined seat. Then resumed driving and arrived at the rehab just before 2330, where I offloaded the tools in about 5 minutes, logged "off the clock" at 2230, then drove home.

So, to my mind this was 16.75 hours of "on the clock" working (including driving), and 90 minutes of sleeping. But in my in my work log this was booked as 14.75 hours of work. Then another entry on the next line for 90 minutes of sleep (not counting as "work" toward my 750 hours, but just in case...). Then on the next line, two hours of work.

Meals were drive-through fast food eaten on the fly (Yuk! Right?).

The IRS "Topic 511" criteria:

o  My duties required it.

o  I was away from the general area of my work home, where I have three properties, or not?

o  16.75 hours of work. I was definitely away for "a period substantially longer than an ordinary day's work"--at my age it takes a day or more of light duty to recover from a day that long. If the requirement to qualify to file as REP is 750 hours per year, an ordinary day's work, by the IRS own definition, is 3 hours, given a 250-day work year (Ha! Work Years that short would qualify as a vacation the way I've worked most of my life.).

o  And I'm not the marathon driver I was 40 years go. I don’t drive tired--its too dangerous! So, I did "need to get sleep or rest to meet the demands of [my] work while away."

Questions:

o  Would you go ahead and deduct the mileage and take the "Standard Meals Allowance" for the destination zip code? Or not?

o  Does it matter if I start from home on a trip like that, or if I am driving from investment property to investment property?

It seem almost incomprehensible to me that the IRS would not count that trip as business.

Thanks for your reply. 

I guess my concern is that without a licensed real estate agent acting on my behalf as buyer, I'm wondering about the owner's title insurance coverage I am being offered--is it standardized by law throughout the industry, or should I hire a lawyer to determine if it is suitable for my needs, or just sign on the line and go with the flow? It might take me a week to work my way through the policy, looking things up as I go, and I still would likely not understand what it all means for me if there is some sort of a claim against the title in the future.

Bottom line, am I being offered the same title insurance, as a buyer of a FSBO, as I would be if I were represented by a licensed RE agent?

Buying SFR FSBO. Below is text from a form from the title company (large, national) that states I will pay title insurance for lender coverage, but title insurance for owner is an option, and not necessarily the same as the lender insurance. I must sign this, and also indicate if I want title insurance, which I understand from other posts here that I absolutely should buy.

Regarding the optional owner title insurance, my questions are:

Per item 4 below, why is the coverage offered to the owner possibly not the same as that provided to the lender? Do owners not have the same need to protect against the same risks as lenders?

They don't seem to be offering me options, just buy what they offer, or not. Is this controlled by law, that is, could I end up paying for coverage that may not cover, or is it just different because of the difference in positions of lender and owner?

Any comments will be appreciated.

--------------------------------------------------------

NOTICE TO PURCHASER OF RIGHT TO OBTAIN

OWNER'S TITLE INSURANCE POLICY

In connection with the settlement of a real estate transaction involving a Purchase Money Mortgage or Deed of Trust on property located in MD, NOTICE is hereby given in compliance with Md. Code Ann. Ins. § 22-102 (a) (2).

1. That a Mortgage Title Insurance policy will be issued by Chicago Title Insurance Company insuring the Lender in the amount as set forth on the Purchase Money Mortgage or Deed of Trust in a premium amount as set forth on your Settlement Statement.

2. That this policy will provide protection only to the Lender and does not protect you as property owner.

3. That your name has been placed on a Commitment for Title Insurance furnished to you and you are hereby given the right to obtain a SIMULTANEOUS Owner's Title Insurance Policy for an additional premium, if you request it at this time.

4. That the Owner's title Insurance policy will be subject only to the contingencies and conditions contained in the Commitment and the Conditions and Stipulations that will appear in the Owner's Policy.

5. You have a right to review a sample form of the policy in which said contingencies, Conditions and Stipulations will be inserted.

6. The Owner's Policy will be effective upon payment of the premium, subject to the satisfaction of the requirements and contingencies as set forth in the commitment.

ACKNOWLEDGEMENT OF NOTICE, etc, etc...

Thanks for all the input.

As for paying taxes on the property, its part of our yard and so we have of course been paying the property tax right along.

I'll go with pulling old fence, marking the actual line with survey flags and giving neighbor a copy of plat and deed, and only hiring surveyor if I cant find pipes on corners as per plat and/or if neighbor objects (gotta figure out how to use new Harbor Freight metal detector first--its very well rated.)  They are somewhat elderly and seem laid back, but pretty knowledgeable about things real estate and have made many expensive improvements to their property over the years.

We bought a SFR on .6 acre. From the previous owner we obtained a plat that is quite detailed but does not seem to have been recorded as when I went to the county records office there was no plat found recorded for our lot nor for any of the neighbor's lots, although we did find one for the entire neighborhood development that seems to corroborate the accuracy of our plat.

Our plat shows the upper corner of our chain link fence, near the house, on the lot line, but shows that the straight fence angles inward such that the back fence post down by the creek (back lot line) is some 19.6' in from the actual property line (a pleasant surprise for us). The fence gives the appearance that our lot is much narrower in the rear than the plat indicates, and in fact our neighbor on that side has been using a grassy flat spot at the bottom of that otherwise lightly wooded portion, on our property, to stack his branches, leaves and other lawn debris for many years.

Especially given the position of the fence, and that we, and I guess they, believed it to be their property and not ours, this seem to constitute hostile, actual, open, notorious possession and exclusive and continuous use of the property by them. And I understand that if a fence without a gate is in place that this somewhat legally certifies that we had no intention of ever using the property.

As it happens, that neighbor received his deed and moved into his property 27 May 2004, or about 14.89 years ago, of the 15 years required for an adverse possession claim in Virginia.

Now, this is possibly the most friendly neighborhood we have ever lived in and I don’t want any conflict. But I also have no way of knowing if they would, out of the blue, file an adverse possession claim of the portion of our land on "their side" of the fence, which I guess we all believed to be their property. And it may come as an unpleasant surprise to them when I remove the chain link fence and build our planned privacy fence on the actual line, on what they may have perceived as "their property" for all these years. And I just can't quite rest easy knowing that they actually may know the real situation and are just biding their time before filing a claim we might never even notice until its too late.

Does this seem a reasonable plan (a few questions)?

1) Remove the existing chain link fence this week and place stakes and string along the actual line. This would be seen by reasonable people as very temporary and thus much less aggressive to them than actually installing 4x4 posts in concrete. It would present an opportunity for them to open discussion if they had any issue.

2) If they protested we could provide them a copy of our plat, and if they still protested, I would be willing to hire a surveyor to mark the line officially prior to building our new fence. At that point, if they still had a problem, it would be with the surveyor or the county, is this correct?

3) If, upon removing the fence and placing the stakes and string on the actual line, we were to clean up and remove "their" pile of yard debris, would this legally constitute "use" of the property by us and thereby negate any claim they could make to "exclusive" use of the property over the past 14.89 years?

Any comments would be most welcome. Sorry for the long post--this is a serious-but-delicate matter for us as we greatly value the neighborly atmosphere here, yet have no intention of giving up any of our property if we can help it.

These are represented as relevant points of the law in VA, as summarized at: https://statelaws.findlaw.com/virginia-law/virginia-adverse-possession-laws.html

• 'Hostile' Possession - The property is taken without permission from the property owner.
• 'Actual' Possession - The claimant must physically possess the property in order to claim title [the fence...].
• 'Open and Notorious' - Possession of the property must be open and obvious to casual onlookers.
• 'Exclusive and Continuous' for a Specified Period of Time - The person claiming title must have been the exclusive possessor of the property for 15 years (in Virginia).