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Category: NAR Settlement

I Want My Kids To Have The Best Start Possible

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Right? Who doesn’t? Well, Debbie Downer is back with some stories of parents who helped their kids get a start in the world by co-signing student loans, mortgages or otherwise becoming financially obligated for their kids’ debts.  Picture this: your daughter has the wedding of her dreams and after a year of wedded bliss in an apartment, they decide it’s time to become first-time home buyers.  How exciting! Soon you’ll have grand-kids playing in the big back yard just waiting for grandpa and grandma to visit!

House hunting, the kids fall short of the lending requirements for that dream house and it looks like the dream of home ownership is about to go up in flames.

But wait! The lender asks if anyone can co-sign for the kids and you are only too happy to help.  Several years go by, and right on target arrive grandchild #1, the #2.  Life is good and you and your wife are looking at another 10 years until retirement.  You decide to downsize.  There’s not a lot of equity in your home, but getting rid of the debt and into a smaller, less expensive property is a high priority, so you do some home shopping of your own.

This is where Debbie Downer enters the picture.  Your lender runs your credit and sees your obligation on your daughter’s home as well.  This new debt/income ratio leaves you unable to even downsize.  WHAT! HOW CAN THAT BE?

So you ask your daughter and son-in-law to refinance and take you off the mortgage.  Well, guess what (don’t forget about Debbie’s role in this story please) – during that conversation the kids break the news that divorce is filed and your son-in-law recently quit paying the mortgage.  It’s not hit your credit report yet, but it won’t be long now.

What to do?

If you could do it again follow the famously coined advice of Nancy Regan and “just say no.” It’s not tough love – it’s reality.  If the kids do not qualify for the mortgage in the first place, that means they cannot afford it.  Go smaller, less expensive or remain a tenant until circumstances change.

How about those student loans? If you sign on the dotted line, the interest rate is better and as we all know, the kids will have to pay back any student loan obligation because there is no way out of it.  Right?  So with your signature (encouragement, love, blood, sweat and tears) your kid gets through 4 years of undergraduate, and 4 years of graduate school leaving with an advanced degree and the prospect of a long and lucrative career.  He also graduates owing Uncle Sam about $200,000 dollars, but that six figure salary easily offsets the monthly obligation.

Wait a minute…Debbie is back and WHAM…right after graduation your son is tragically killed.  As if losing your son is not enough, what do you think happens to those loans?

You guessed it – Uncle Sam will be knocking on your door looking for that $200,000.  Now there are ways to mitigate Debbie’s horrible scenario, such as getting a term life insurance policy in an amount to cover the loan in the event the unthinkable happens.  But remember,  that life insurance policy, although a great idea to cover the most tragic of circumstances, does not help if your kid can’t find a job, or runs into financial trouble down the road.

What can we at Bergmann & Good do to guide you through these daily financial decisions? Lending and credit obligations are our specialty.  Give us a call before you sign.  If you own a business, there may be even more creative ways to offer your kids the best, while protecting your nest egg for retirement. Call us first and hopefully you’ll never have to meet Debbie Downer.

Buying or Selling a House in New Jersey? Well Read On….

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Bergmann & Good believes a lawyer by your side through the process of buying or selling property is always in your best interest. Having an attorney present at the closing table helps the process go faster and smoother and offers you protection and assistance if something goes wrong. Your real estate agent may be the best in the business, but a Realtor cannot offer legal advice, interpret contract provisions or offer the legal implications of any exception a title company may reserve in your title policy.  Only a lawyer can do that. But if you are still not convinced, read on…

In October, some major changes at both the state and federal level have been implemented.  The Consumer Financial Protection Bureau (CFPB) has taken over administration of the Real Estate Settlement Procedures Act (RESPA) from the Department of Housing and Urban Development (HUD). Not only does this mean new forms, contracts but it also means new rules and regulations surrounding waiting times and mandatory legal review periods.

And if that is not enough, the New Jersey standard contract has also been overhauled.  While the intent may have been to make things easier, that is not always the outcome.  For instance, if you are a Seller, the new contract may leave you open to lots of repair requests or as some Buyers like to say “a second bite at the apple” in negotiating purchase price.  If you have a buyer and think you are susceptible to them “taking a second bite” talk with us.  Maybe the standard form contract is not in your best interest, and having an attorney draft your agreement will save you time and hassle on your way to the closing table.

While it will take time for everyone to get comfortable with the new processes, rule and forms, now more than ever it is important to consider having strong representation with you at closing. It’s a brave new world in real estate- give Bergmann & Good a call before you start your journey!

Has Your Tenant Demanded that You Allow Her Pet Llama to Move in as Well?

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Being a landlord in New Jersey is fraught with both risk and reward.  The ADA laws are vast and can confound even the most experienced landlord, but what if you are threatened with a lawsuit for denying a Tenant’s pet llama?

For starters you should know the difference between The Fair Housing Amendments Act of 1988 (“FHA”) and the Americans with Disabilities Act (“ADA). The FHA created a right for disabled persons to live in the housing of their choice.  Recently, emotional support animals have been included in the reasonable living standards guaranteed under FHA.  Emotional support animals are not to be confused with service animals protected under the Americans with Disabilities Act (“ADA”).  Service animals are much more protected than emotional support animals.  Even asking too many questions to a person with a service animal can result in large fines.  The two questions a landlord can ask a tenant with a service animal under the ADA are:

1) Is the animal required because of a disability?

2) What work or task has the animal been trained to perform

Beyond those questions your inquiry about the disability and reason for the service animal is off-limits.  However, do not confuse a service animal with an emotional support animal because the protections are not nearly as sweeping.

A tenant, or proposed tenant, with an emotional support animal will probably flash a letter or a certification from either a doctor or support group asking the tenant be allowed to have his or her emotional support animal with them in places you would not suspect, such as a llama in the grocery store, or a turtle at the movies.  After asking the two questions above and hearing that the animal is an emotional support animal, business owners have the discretion to either allow the emotional support animal on premises, or deny admission.

There are two areas where emotional support animals have been specifically allowed: specifically pursuant to the FHA and the Air Carrier Access Act (“ACA”).  Both a landlord and an airline have to allow persons with disabilities to have their emotional support animals with them.  But outside the FHA and ACA, no matter how much a person needs their cuddly pet squirrel in the restaurant, the owner can legally deny them access.  Public concerns, as well as the rights of the business owners trump in the case of the emotional support animals.

So keep in mind the rights afforded to owners with service animals are close to absolute, while a business owner’s rights trump those of the owner of an emotional support animal. If you are a landlord or business owner faced with a tenant or customer with that llama on a leash, Bergmann & Good is uniquely qualified to help you sort out the “do’s and dont’s.”  Give us a call.