All Forum Posts by: Sam Leon

Quote from @Will Gaston:

@Sam Leon I'm not sure if this 100% answers your question, but many cities (especially near colleges) have an ordinance limiting the maximum number of unrelated persons.

In Columbia, South Carolina that number is 3. The current Governor for the state went to the state Supreme Court over this. And lost.

https://stromlaw.com/s-c-supreme-court-upholds-ordinance-all...

So, in Columbia, even if you wanted to rent to 4 roommates, it would not be allowed.

Good to know.  I have heard some place has a limit based on a max occupant per bedroom.

Quote from @Janice R.:

This is a interesting question! From my research, the FHA law on familial status protects adults living with children under 18 years of age only - see

https://www.nolo.com/legal-encyclopedia/whos-protected-again...

Adult roommates are not a protected class as "familial status".   However, all the other protected classes (race, religion, etc.) would apply to each prospective tenant individually.  

My understanding the "familial status" is the family status of the applicant or tenant.  I have always operated on the understanding that this refers to equal treatment of those who are married, divorced, widowed, single, with children, pregnant.

So if you selected an applicant who is single over one who is divorced, it's a violation.
If you charged a higher rent for a divorced applicant with 2 children vs a single no children, it's a violation.
If you selected a married couple over an unmarried couple, it's a violation.

Obviously, most of the time, the decision landlords make are not based on a single reason, often times it's a combination of factors, once you have gone through the process of background checks, employment verification, tenancy history verification, there is still a subjective element on how your interactions with the applicant went...I have personally selected one tenant over another because one followed instructions, and one did not (incomplete application, showed up late during a showing, sent back an application with a camera taken photo of the form in dim light and out of focus etc...), and I have even selected one over anther because one has tattoos every inch of his body, and no I didn't tell the applicant he was turned away for excessive body markings and piercings.

Getting back to familial status, if it is a violation to select a married couple over an unmarried couple, and if you tuck "roommates" under the umbrella of unmarried couples, then it may apply, perhaps loosely?  I don't know, hence the question.  In my case, I just prefer not to rent to roommates who are basically strangers to each other, and yes, I cannot always tell easily the relationship between the applicants.  If two people show up and attend a showing, it's not like I can openly ask whether they are related by blood, marriage, couples living together, friends or otherwise.

Quote from @Theresa Harris:

I can't see how they would be a protected class.  You don't have to tell people why you didn't pick them.  You can evaluate them the same as anyone else and simply pick someone who you think will be a better long term tenant.

While it's true that I do not have to disclose my reasoning to choosing applicant A over applicant B, I still want to make sure I can defend my decision if it comes to that.  If I have a married couple vs two roommates who do not know each other, and if qualifications like employment/income/credit/background/rental history are about the same, and it boils down to the married couple feels like a more stable and hassle free tenants and the roommate strangers not so much...

and I wonder how close to the line of familial status that is, or not at all.

kind of like the landlord in Los Angeles who decided not to rent to non-English speaking applicants, but got into trouble because a judge ruled that discrimination of applicants who speaks other languages is the same as discrimination based on national origin.

I have a question regarding the Fair Housing Act's Familial Status.

The intent is to prevent anyone from refusing to rent to or give preferences to people based on their family status...single vs married, with or without children etc...

Familial status covers:

• families with children under the age of 18,
• pregnant persons, and
• any person in the process of securing legal custody of a minor child (including adoptive or foster parents).
• persons with written permission of the parent or legal guardian

Where do roommates factor into all these?

Example, you are renting a two or three bedroom property.  Tenants can be married with or without children, unmarried couples, or friends, I don't have any preferences, nor should I.

However, I am seeing more and more people who want to rent together but they do not know each other.  In other words, they met through social media, may be Jill wants to rent a 3 bedroom house and posted that on Facebook, and Laura and Julian responded.  So Jill contacted me and says she and two friends want to rent my house and set up a viewing.  At the viewing they call came in different cars, I can tell they do not know each other because they greeted each other with "you must be Laura" and "hi I am Julian".  So basically you are renting to three strangers who have never met each other.

This creates a few problems.  I went through this twice...because they do not know each other, they do not trust each other, so the first thing they want are interior doors with dead bolts.  Next is instead of one point of contact for "rent" and maintenance, they soon all want to be individually notified for everything, or they no longer want to be collectively responsible for damages and fees, even though my leases specifically stated I don't care who breaks a window, everyone on the lease is responsible.  Of course then one person wants to leave before the lease ends but the other two want to stay, which again, not my problem because the three collectively signed a lease.

Bottom line is renting to roommates who are complete strangers to each other, is exactly like student rentals.

Is it legal to avoid such arrangements? Is it a violation of FHA? I am not even sure I can easily tell if they make an effort to hide this from me.

I guess I am just ranting.

who is the property manager?

who's making repairs when things break?  Do you have a property manager doing this or are you sending over tradesmen you trust to the property to investigate and resolve?

I visit my property monthly when I do preventative manintenance - test smoke alarms, test GFCI receptacles, flush WH T&P valves, change AC filters and flush condensate drains, feel the bottom of sink drains, blow leaves off the roof etc etc etc...

For a while I did the "call me when you need me" thing, until one day a tenant moved out after 1 year, and I went to the AC closet, and I saw 11 filters untouched.  The original filter I put in 12 months ago has disintegrated.  I showed the tenant on checking in and he said sure, I'll change this every month, it's easy!

To answer some of the questions, and ask some more.

(1) the property is a condo, and is being financed, and i just went through their process a few weeks ago, responding to the lender's condo questionairre, provided master insurance information, prepared condo financial statements and estoppel etc...all of those were done as a person.  Now, the request to sign an addendum to change buyer name from a person to an LLC.
(2) I will check the LLC to see if the person who is the buyer is tied to the LLC.  However that can change at any time right?  Even though the contract stated that this is not assignable, bu changing it to an LLC it makes it technically assignable just by transferring control of the LLC from John Doe to Julie Smith right?  Or the LLC is a joint investment of John, Julie, Bob and Mike right?
(3) My HOA has approved the sale to the buyer based on the personal name, had to pay an application fee plus do a background check including criminal, credit etc...and the estoppel was issued based on the idea this is a person who is buying.  If changing to an LLC I believe I will have to re-process the HOA application as an LLC, and if the LLC is now a different person or control additional people, who knows what would happen.  If my HOA needs to re-evaluate, I cannot believe the lender would not require to go back through underwriting?
(4) If the loan was approved based on a person's name, and now with a name change the loan is denied, how does the loan contingency work?  Can buyer walk away because the loan gets denied based on a name change?
(5)Yes buyer is asking to sign an addendum for the name change, but it is not as simple as a name change, it will have a ripple effect I think.
(6) I don't think there is an loan approval of the LLC, the loan is approved to the person, IF i signed the name change addendum, then the lender will react to the name change, I am not sure at this point I can ask the lender "hypothetically if buyer name changes from John to an LLC will the loan approval still stand?"

Selling a property and went under contract in early July scheduled to close in two weeks.

So far all contingencies have been met and suddenly the buyer wants to sign an addendum for a name change from "John Doe" to "whatever LLC".

Since the buyer is seeking financing from a conventional lender, and I think most residential lenders do not lend to LLCs, I am thinking the name change will cause the loan to be denied, and my attorney suspects this may be a way for the buyer to seek to exit without any penalty.

It seems unusual to do a name change like that in the last minute, any thoughts on the best way to navigate this

Quote from @Stephanie Medellin:

Just reading your question again -

Say the buyer is still paying $250,000 and putting $100,000 down.  Originally that was 40% of the property value, but now the property value is only $235,000.

$15,000 of the $100,000 is now going to cover the difference between the value and the purchase price, since the lender won't lend on that.

Now the buyer has $85,000 left of the original $100,000.  That's 36.17% of $235,000.  So the buyer's down payment is 36.17%, not 40%, and he's paying the $15,000 difference in cash.

I hope that makes sense.

That make sense, but the confusion I have is since I have always assumed the 80% LTV ratio, I thought that when 80% of the appraised value (188K) is higher then the financed amount (150k), then there is no issue, but apparently there still is.

On hypothetically, if the purchase price is 250K, and the buyer is paying 90% down, which would be 225K, and the property appraised to 235K, the bank would still ask the buyer to put up 225K plus the 15K, making the total to be 240K?

Let me answer with what I know.

Regarding the comps, there is no other sale of similar properties near by except that one which happens to be this single sale at the end of June 2023, and we knew a low sale price may be trouble for the appraisal.  I do not have visibility to the buyer's appraisal report so I don't know how it arrived at that number, my guess is that single sale was the biggest influence.  As a matter of fact, there are a few other similar properties listed nearby in addition to mine, all listed at prices higher then my contract price, and they all went from UNDER CONTRACT to ACTIVE again within the last week, and my guess is, the low sale price of this single unit, affected not just me, but it is what it is.

Right now, the contract numbers look as follows:

PURCHASE PRICE: 250,000

INITIAL DEPOSIT: 25,000

ADDITIONAL DEPOSIT: 75,000

FINANCING: 150,000

My understanding is the lender will only approves 80% of the appraised, so that will be 0.8*235,000 = 188,000

Since 188,000 is less than the 150,000 the buyer is asking, the appraisal should not be a show stopper.  I accepted the offer partly because of the high deposit, because I thought that makes the offer a strong one, less likely to run into a lending hurdle.

But reading what I am reading here, that regardless of the down payment amount or percentage, the lender requires from the buyer the difference between contract and appraised value, the 15,000, so the buyer has to pay 100,000 + 15,000 = 115,000 at closing.

If that is the case, then it would be better for the buyer to not use such a high deposit, instead put down 10,000 for initial deposit and another 20,000 for additional deposit, ask to finance 220,000.  When the appraisal comes out to 235000, and the lender says I can only approves up to 188,000 and you need to make up the difference with cash and put up an additional 15,000, then do it at that time it would still be less than the 100,000 he already put into escrow, right?

Unless the high deposit was done for a reason I don't know about, such as favorable rates, or bad credits, or other whatever, and the appraisal coming in low represented added risks.

I have a situation where the property I have listed appraised below contract price.

This is a condo unit in south Florida with an HOA.

As an example, the contract price is 250k, there is an adjacent condo that recently sold for 235K.  There is no other recently sold data point to use, that condo unit is the only single data point.  The buyer's lender ordered an appraisal, it came back with the 235K number.

I had mentioned to the appraiser that the adjacent unit that sold for 235K sold for that number for good reasons. The owner is in Europe and wanted to get out quick, it has deferred repairs and maintenance issues, it was listed on the MLS and sold to a cash buyer sight unseen in less than one day. But the appraiser did what he did and came back with the same price. Fine.

My understanding with conventional lending is, if the appraised price is 235K, then the lender will typically approves up to 80% of that which is 188K, this means the buyer will have to pay 62,000 of down payment to make up the difference to the contract price.  In this case, the buyer is paying a high down payment of 40% (100K) on the contract and asking 150K from the lender, which in my mind should cover more than the difference between the appraised value and contract price.

But I was told that is not how this works.  In this case, the lender has asked the buyer to put up an extra $15000 (the difference between contract and appraised value), which prompted the buyer to ask for a price reduction because of the extra "out of pocket" cost to buyer.

I am trying to understand this, because I did some asking around, and no one can explain this to me, why would the lender ask for extra money from the buyer to cover the difference if the buyer already has a high down payment that more than cover the difference?  The explanation I got is this is a complicated algorithm and unrelated to the down payment.  So I guess I am trying to understand how this works or is this just voodoo math?