Whether buying a home with someone else or simply renting an apartment, it's important to establish basic rules to help avoid a nasty court battle later.
Q. My buddy and I have decided to move into an apartment together in order to save on rent and other expenses. Neither of us has ever had a roommate before. Can you offer some tips?
A. Sure. A growing number of friends or even total strangers are teaming up to rent an apartment or small house together, in part because rents nationwide have soared more than 20 percent over the past two years.
The first issue, of course, is to determine how the two of you will split the rent, utility, bills and other expenses. Though most roomies divide the household bills evenly, others reach an agreement for one to pay more than the other if, say, one will occupy a bedroom that's larger or has a terrific view.
It's also important to agree that those bills will be paid on time. If your roommate doesn't have the cash to pay a bill when it comes due, you will have to foot the full amount out of your own savings or risk getting a black mark on your own credit report.
Also work out issues regarding food. Whether you're buying a place together or simply renting it, the two of you could agree to evenly split the grocery bills and share in the cooking and cleaning duties. But if one of you is a budding Wolfgang Puck, he or she may want to handle most of the preparation duties if the other promises to clean up after meals. Should one of you be a vegetarian but the other is not -- or if the two of you simply have different tastes or a dietary restriction -- it might be better to buy your food separately.
Pets can be a major source of problems, unless you live in a "no-pets" building. If one owns a pet but the other doesn't, the pet owner should be responsible for any extra security deposit the landlord may charge, not to mention the costs of its food, cleaning up its mess and any damage it may cause.
Of course, both of you will need renter's insurance. Sometimes it's cheaper for roomies to buy a single policy together, but other times it's cheaper to purchase them separately, especially if you can bundle your renters' coverage with the same company that insures your car. Get at least three quotes, and supplement your search using websites such as Insurance.com and InsWeb.com.
You'll also need to formulate a plan that will swing into action if one of you wants to break the shared-lease agreement before it's set to expire. A broken lease is costly, typically including a hefty penalty levied by the landlord and the loss of some or all of the security deposit. The fairest way to handle this potential pitfall is for the person who wants to leave early to pay for all of those costs.
You can find a thorough, free sample roommate agreement at the website operated by legal publishing giant Nolo.com. And once everything is in writing, both you and your roomie should sign it and have it notarized -- just in case a minor disagreement turns into a legal battle.
Q. We have interviewed several real estate agents to pick the one we want to sell our house. Two of them want us to sign a 90-day listing contract, but another wants a four-month deal and the other wants up to six months to market our house. What's a reasonable time frame here?
A. It's usually best to insist on a listing contract that lasts no more than 90 days. That's typically enough time for a good agent to find a buyer, but also allows the seller to release the agent without paying any money if the salesperson can't sell the house within the three-month time frame.
Q. We are refinancing our house. We are OK with the $45 that our mortgage broker is charging us for our credit report, but why does he want to charge an extra $35 for a debit bureau fee?
A. The $45 fee for your credit report, in your own words, is OK. The $35 fee for a debit-bureau check, in my own words, is bogus.
A credit bureau tracks how well you have handled your credit payments in the past. Pay them on time, your credit score goes up; pay them late, your score goes down.
Debit bureaus are different. They can track most bounced checks you may have made over the past few years, but usually can't report them to a credit bureau. If you're current on your bills and haven't bounced a check before, tell your mortgage broker to waive his debit-bureau fee. If he won't, find another one before he can nickel and dime you to death with other unexpected charges.
Real estate trivia: Development of on-campus housing is expected to soar in coming years, experts say, as the supply of off-site rentals continues to dwindle and cash-strapped universities open their land to builders to cover their budgets and keep tuition as low as possible.
• 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.