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December 2009
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RENTAL PROPERTY MANAGEMENT DIVISION
Changes to North Carolina Residential Rental Contracts

The standard Residential Rental Contract (form 410-T) has been updated in response to recent legislation enacted by the NC General Assembly. The purpose of this article is to summarize some of the changes.

Landlord’s Obligations (paragraph 6). Effective October 1, 2009, landlords are required to repair or remedy any “imminently dangerous condition” once the landlord has actual knowledge of the condition or receives notice of it from the resident. That obligation is set forth in new subsection (e) of paragraph 6. According to the new law, the term “imminently dangerous condition” means any of the following:

� Unsafe wiring

� Unsafe flooring or steps

� Unsafe ceilings or roofs

� Unsafe chimneys or flues

� Lack of potable water

� Lack of operable locks on all doors leading to the outside

� Broken windows or lack of operable locks on all windows on the ground level

� Lack of operable heating facilities capable of heating living areas to 65 degrees Fahrenheit when it is 20 degrees Fahrenheit outside from November 1 through March 31

� Lack of an operable toilet

� Lack of an operable bathtub or shower

� Rat infestation as a result of defects in the structure that make the premises not impervious to rodents

� Excessive standing water, sewage, or flooding problems caused by plumbing leaks or inadequate drainage that contribute to mosquito infestation or mold

Although the landlord must repair such items whether or not the damage was caused by the resident, the new law specifically provides that the landlord may recover from the resident the reasonable cost of repairs that are the resident’s fault. This obligation applies to all residential leases, not just those entered into on or after October 1, 2009.

Smoke and Carbon Monoxide Detectors (paragraph 7). Effective January 1, 2010, the law will require the installation of battery-operated or electrical carbon monoxide detectors on each level of any residential rental unit that has (1) a fireplace, (2) a fossil-fuel burning heater or appliance, or (3) an attached garage. The new law’s provisions regarding responsibility for repairs to carbon monoxide detectors and installation and replacement of batteries in battery-operated devices are the same as the current law regarding smoke detectors. This obligation applies to all affected leases, not just those entered into on or after January 1, 2010.

Please be aware that we will be taking the necessary steps over the next few months to make sure that all of the investment properties we manage are in compliance with these new requirements.

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COMMUNITY ASSOCIATION DIVISION
Timeline for Association Collections

In an ideal world, every homeowner would pay their assessments on time.  But we all know the world is far from ideal.  So Boards of Directors sign delinquency policies and the process is theoretically smooth and simple.  So why does it seem to take so long for a homeowner to go all the way through the process to eviction?  The short answer is that it’s a process.  The long answer explains that process.

Many associations require a first, “friendly” notice that assessments haven’t been paid, usually after 30 days delinquent.  If still unpaid after 45-60 days, a second, “demand” letter is sent.  Some associations vary on the timeline, but this is the legally required letter; the one with the big font, warning of legal action if assessments aren’t paid within the time specified in the letter.

At this point, anyone who hasn’t paid is delinquent anywhere between 30-90 days already and the association is ready to place a lien.  The lien amount can only be for what is 30 days past due.  A request for action is sent to the attorney’s office by the Henderson Properties Legal Accounts Coordinator.  Typically it takes about two weeks for the lien to actually be put into place as it navigates its way through the legal red tape.  Some associations include automatic lien to foreclosure phraseology in their delinquency process, which helps make the process more “automatic” on the attorney’s end.

After the lien has been placed on the property by the association’s attorney, typically 30 days later according to delinquency policies, the association is ready to file for foreclosure.  Again, if an automatic lien to foreclosure policy is written into the delinquency policy, this takes place without any further action on the association’s part.  When the foreclosure is filed, it takes about two weeks for the foreclosure paperwork to process through the legal system.  The homeowner is now almost five months delinquent.

When the foreclosure suit is officially in place, a hearing date is set.  This hearing typically takes about 6 weeks from the date of the foreclosure filing.  There are legal requirements before the hearing can be held, including notification to the homeowner in very specific forms.

This is where the new legal extensions kick in.  The Clerk of Court now have the ability (since October 1, 2009) to postpone a hearing for another 60 days if they believe there is a reasonable possibility that the homeowner will pay the outstanding amount.  This can tack on two more months to a homeowner who is now over six months delinquent.

When the hearing is finally held and if no payment is received, a sale date will be set by the courts.  This is at least 21 days from the date of the hearing as again there are legal requirements of notification.  After the sale is held, another ten days must pass for any upset bids to come in.

Once that time period has expired, if the association is the high bidder at the foreclosure auction, the process of eviction can begin.  A request is filed with the sheriff’s office, legal notification takes place, and an eviction date is scheduled.  The sheriff’s office is overwhelmed with requests recently, so the time frame on this can be anywhere from two weeks to two months, depending on the workload.

If all this accumulated time is tallied up, this process could be as long as nine months to a year until a homeowner is evicted from the property for non-payment of assessments.  The good news is that by diligently following the lien and foreclosure process 88% of all owners that are delinquent pay the outstanding amount of assessments, legal fees and late fees before the foreclosure sale.

While it does happen, it is rare that a homeowner is actually evicted.  So while the process is long, it does yield results for the association.  It just takes time and patience.

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REAL ESTATE SALES DIVISION COMMUNITY ASSOCIATION DIVISION
A Real Estate Tax Break for ALL!

Income Tax Credit has been extended to Everyone

Congress has extended and expanded the homebuyer tax credit until June 30, 2010. Initially the credit was for 1st time homebuyers which would have expired. If you have thought about purchasing a new home this is a great time to act.

For the “First Time Homebuyer”

• The credit would be $8000 for married couples filing a joint tax return; $4000 if filing separate tax returns
• Eligibility is for those that have not had an interest in a principal residence for 3 years prior
• Income limits: $75,000 single; $150,000 married couples
• No limitation on cost of purchased home

For the Existing Homeowner

• Credit of $6500 for married couples filing a joint tax return; $3250 if filing separate tax returns
• Eligibility: The owner must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 yrs
• Binding contract rule: So long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until June 30, 2010 to close
• Income limits: $125,000 single; $225,000 for married couples
• Anti fraud rule: Purchaser must attach documentation of their purchase to their tax return

We are truly in a buyer’s market. Do not let the media fool you; people are buying and selling homes in Charlotte and the surrounding areas. Prices have not been this low in years. While the tax credit is not an option for investment properties, investors are the ones that are taking advantage of the foreclosures. In fact, 42% of investors are purchasing foreclosures and expect to gain a profit the day the sale is closed. Two- thirds of those that have purchased homes this year in general are buying at 20% below market value.

For the “1st timer” trying to buy a home you may ask “how do I come up with the money?” Now more than ever you have options! Use a government assisted program that requires no money down, borrow from a family member in some cases or simply cut down on your spending each month. Ask yourself if you really need to go out to eat or is basic cable enough? A home that is $125,000 may require only a down payment of $2500 or possibly less depending on the circumstance. Cutting back in spending each month will help you acquire this amount in no time. Persistence and perseverance is the key; make your goal and stick with it.

Henderson Properties predicts that the housing market will continue to be a buyer’s market for several more months. Home sales were up 10% in October; the best since February 2007. Our sales team is ready to assist you in answering questions. The only thing you have to lose is time. Buying a home is the best investment you can make with your money and your future. Take advantage of the tax credit and the low prices. Whether you are a seasoned investor, an existing homeowner or a 1st time homebuyer, we are here to help. Henderson Properties offers you the best. Come through the red door and see where it leads you. But don’t delay. The tax credit expires in June and the low prices won’t stick around forever! If we can help please call the sales office at 704-544-0253.

If you’d like more information or just want to ask a couple questions don’t hesitate to contact me, Kerry Stecher ABR, CSP,  at 704-544-0253 or kstecher@hendersonproperties.com

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PROPERTY MAINTENANCE DIVISION
Helpful Holiday Maintenance Tips

Christmas is right around the corner and winter is even closer.  Many people will be spending more time than usual away from home; shopping, parties, visiting family, etc..  Aren’t the holidays wonderful?

Make sure your home, or your investment property is prepared to cooperate with your holiday schedule and budget.  Preventive maintenance is almost always less expensive and more convenient than any emergency repair and a lot less stressful.

Here’s a short list that can go a long way in preventing some fairly disruptive and costly repairs right in the middle of such a great time of the year.

• Clean gutters and remove accumulated leaves from roof valleys.  Water will always follow the path of least resistance.  Any obstruction in gutters or roof valleys may be sufficient enough to alter the normal path that carries water away from your property and instead diverts it into your property.
• Check the hoses that connect the washing machine to the water supply.  If any wear is evident, arrange to have them replaced.  If the hoses are more than five years old you may want to have them replaced.  Remember, the water to your washing machine is ALWAYS on.  Any break in the supply line can wreak havoc.
• Check the water heater for any signs of leaking and arrange for repairs if any water is evident.  Water heaters are just like washing machines in that the water is ALWAYS on.

If you haven’t already replaced HVAC filters and smoke detector/carbon monoxide batteries there’s no better time than now.

Henderson Properties is available to assist you in any preventive maintenance or property repair you may have.

Check back to our archives at www.hendersonproperties.com for more helpful hints and useful information.

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