Specialty Residential Property

1
Chapter 14

• Specialty Residential Property

2
Chapter Outline

• Apartments
• Condominiums
• Cooperative
• Home Owners Associations
• Construction
• Mobile Homes
• Time-shares

3
Chapter 14

• At the conclusion of this chapter, you will be
  able to
• 1) Understand the differences between an escrow
  for residential property and a specialized
  residential escrow
• 2) Give a definition for timeshare ownership
• 3) Outline a mobile home escrow
• 4) Differentiate between a condominium and a
  cooperative
• 5) Determine the distinguishing characteristics
  for new home construction

4
Apartment Escrow

• Usually handled through escrow
• Rent Roll (for prorations)
• Security deposits (for transfer)
• Usually handled outside of escrow
• Rental Agreement for each unit
• Estoppel Agreement signed by each tenant

5
Lender and/or Buyer Requests

• Profit and Loss (3 years )
• Capital Improvements
• Personal property Inventory for
• Bill of Sale
• Buyers Depreciation Schedule for tax purposes
• Existing Insurance policy coverage
• Health Safety matters
• Fire extinguisher vendor and permit date
• Smoke detectors
• Existing vendors and contracts
• Tenant concessions, assigned parking

6
Single Family Residence vs. Non Owner Occupied

• Risk and Liability
• Liens and title problems
• Consumer protection
• Less disclosures
• Personal property / Bill of Sale
• Title rate negotiable
• 1031 Exchange

7
Tenant Issues

• Tenants Rights
• Residential Tenancies Act 1997 (RTA)
• Notice of Intent to Sell and Reasonable Access
• Non paying tenant (no action )
• Non paying tenant (unlawful detainer)
• Assignment of Rents / Security Deposits
• Eviction
• Vacating units

8
Setup Sheet
9
Setup 2
10
COOPERATIVE

• Purchase contract between the principles
• Title search is ordered
• Request for demand is ordered
• Property inspection is requested
• Appraisal is performed
• Title insurance issues a leasehold policy
• Escrow prorates
• Property taxes
• Homeowner association dues
• Loan payment insurance
• Utilities, as applicable

11
At COE Buyer receives

• Stock certificate
• History of the property
• Loan statement
• Reserve studyFinancial statement
• Articles of Incorporation, CCRs
• Occupancy agreement
• Homeowner disclosure statement
• Termite report and clearance
• Management company information
• Recording fees, demand statement, lease

12
Homeowner Association

• A non-profit corporation
• Articles of Incorporation
• Board of Directors
• Covenants, Conditions and Restrictions (CCRs)
• Mandatory membership
• Proportionate share of ownership based upon
• number of units owned
• square footage of the property or similar
• Conventional Suburban Development (CSD)
• Neighborhood Association (NA)
• Responsible for common area and exterior

13
Mobile Home Escrow

• In a mobile home park
• Common area and amenities
• The pad
• Cash or financed?
• New dealer
• Not handled by DRE licensees
• Handled much like transfer of an automobile
• Placed on permanent foundation with land
• Handled by DRE licensee
• Principals may handle between themselves

14
Housing and Community Development (HCD)

• Escrow must order the park rental agreement and
  hold in the escrow file
• Escrow has no responsibility for contents
• Certificate of Registration
• Existing lender payoff
• Statement of Facts
• Mobile Home Residency Law

15
Mobile Home TransferPersonal Property

• Notice of Opening Escrow
• DMV Certificate of Title
• Notice of Sale
• Tax Clearance Certificate
• Certification of Retail Value and Purchase Price
• Security Agreement
• Promissory Note
• Bill of Sale

16
Mobile Home TransferReal Property

• Certificate of Title and Registration
• Payoff existing lien holders
• Decal plates
• Certified copy of recorded HCD 433A
• Taxes
• Grant Deed
• Termite Report
• Statement of Facts

17
Time Shares

• Sales transaction information contract
• Title information
• Request loan, tax, association status
• Prepare recording document
• Collect funds
• Pay off existing loan and set up new loan
• Prorate income, expenses, taxes, dues, fees
• Obtain title insurance policy and request
  recording
• Notify time share management firm of transfer
• Disburse funds to appropriate parties

18
Think About It!

• The buyer of a mobile home park wants to upgrade
  the park to increase the income above what the
  seller is receiving. The seller has a very casual
  management style in the handling of the park. The
  mobile home nearest the entrance is a
  dilapidated, very old trailer with who knows how
  many cats running around the unit. The owner
  claims to own no animals.
• The buyer puts an amendment into the escrow that
  the run down unit must be removed prior to close
  of escrow. The seller claims that the resident
  pays all rent and fees on time, complies with the
  park rules and that the seller cannot terminate
  the lease for the unit due to the Mobile Home
  Residency Law.
• Can the buyer or the seller give the tenant a
  Notice of Termination?

19
Think About It! (Answer)

• No.
• However, if someone buys the unit, the owner can
  require that the unit be moved from the park
  because it is significantly run-down and the
  purpose is to upgrade the park.