Debt-ridden homeowners can pose dilemmas for grown children
It's especially sad when older people face foreclosure of a longtime home. It also can force some tough decisions upon their grown children, too.
Q. My parents and I have a serious problem. They are both in their 60s and retired, but they have fallen behind on their mortgage payments and credit card bills. They have borrowed virtually all the money they had in the equity in the home to pay for a series of major medical problems and are now facing foreclosure. The mortgage lender won't help because their credit record is shot, and an attorney said they should file for bankruptcy after the foreclosure is over in order to wipe out their other debt. I want to move them closer to me so I can take better care of them, but I'm afraid they won't be able to get an apartment because of their lousy credit. Any suggestions?
A. I'm sorry to hear of your folks' recent problems and hope they clear up soon.
When your parents start shopping for an apartment that's nearer to you, they'd probably have better luck focusing on properties owned by small mom-and-pop investors rather than those owned or operated by big investment firms or management companies. That's because small, "hands-on" owners tend to have more flexibility when dealing with prospective tenants who have troubled credit histories.
If your folks are still short of cash after the foreclosure and bankruptcy, perhaps you're in the fortunate financial position to loan or give them some money to land a rental or could let them live with you until they can rebuild their savings.
You also need to get a firm grip on all of the factors that got them into this mess. Necessary medical bills aside, they might benefit by visiting one of the many free or low-cost credit-counseling agencies that dot the landscape if they seem to be chronic overspenders. Two agencies that are recommended by AARP to help find a counselor near you are the National Foundation for Credit Counseling, (800) 388-2227, www.nfcc.org, and the Association of Independent Consumer Credit Counseling Agencies, (866) 703-8787, www.aiccca.org.
If you suspect their recent financial troubles are partly due to diminishing mental or physical capacity, you may want to visit an attorney who specializes in elder-care issues to discuss taking control of their finances through a living trust or other means. One of the top-rated websites to find such a lawyer in your area is the nonprofit National Elder Law Foundation, www.nelf.org, (520) 881-1076, which requires its members to pass a variety of extra legal tests to join the group and to take yearly courses to keep abreast of new trends.
Q. I heard a real estate agent use the term "casket home" to describe a property she had viewed. What is it?
A. Wow, I haven't heard that phrase in more than 20 years!
A casket home is a property that looks really nice from the front, but has lots of problems in the back — things like peeling paint, a cracked patio foundation or a backyard that's filled with dead grass or a bunch of junk. The derogatory name is believed to be derived from the mortuary business, in which professionals once focused only on a corpse's cosmetics and did little else.
Q. We hired a contractor to remodel our kitchen and add a new bathroom. We were happy with his work, except for one problem: He didn't remove the hundreds of pounds of lumber, old tile and other debris that was left over from the job because he wasn't contractually obligated to do so. Isn't debris removal part of a contractor's duties?
A. Not necessarily. Though some contractors automatically haul away debris or excess material that's left over from a job, others won't do so unless the chore is included in the remodeling contract.
Although most boilerplate remodeling contracts do a good job of covering major issues, your case is a classic example of the little details that are often overlooked. Those details include who will be responsible for cleaning up at the end of the workday and at completion of the entire job, and who will pay any fees if the debris must be taken to the local dump.
A thorough contract also will specify the days and hours when work will be performed. For example, you might not want the contractor to hammer away on weekends or into the wee hours of the morning. It's also worth noting that many cities and counties limit the hours or even the days work can be performed, and homeowners who violate those ordinances can be hit with big fines or even have their building permit revoked.
Owners should make sure the contract specifies which type of materials the contractor will use. You wouldn't be happy if, say, the remodeler installed a ceramic wash basin but you wanted one made of marble, or if you expected a new fence to be made of redwood but the contractor used cheaper pine instead.
Real estate trivia: The average rent for a single night in a Manhattan hotel room for Super Bowl weekend was $1,740, according to rental group HomeAway.com. That's more than three times the typical average of $530.
• For the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 4405, Culver City, CA 90231-4405.
© 2014, Cowles Syndicate Inc.
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