Lawyer is essential when buying rental property

Q. I recently purchased a four-unit building from a bank "contingent upon a parking problem being cleared up." There was a parking lot next door with an easement guaranteeing parking for this building. Now the new owner of the lot denies me access and the city says they cannot force him to comply with the easement.

At the closing the bank's representative assured me the problem had been taken care of and I went ahead. But now it seems I may have to sue to get the parking spaces, and what's more the city says I'm responsible for a share of lot improvements amounting to $70,000. I was unaware of all this.

Can I hold the bank responsible for all these additional expenses? After all, the contract said the closing was contingent on clearing up the problem. I would appreciate advice. I'm 75 years old and have neither the means to pursue a lawsuit nor the energy. I'm in this mess through no fault of my own.

A. I'm not so sure about that. It sounds as if you didn't use an attorney - and you're still trying to get along without one.

If you'd written me at the start, I would certainly have advised three things: work with a lawyer, don't close until all loose ends are tied up, and get everything in writing. And if you'd had an attorney, you wouldn't have needed the rest of the advice.

Additionally, I'd have questioned whether becoming an amateur landlord is a wise move in the first place for an older person with limited energy. And how I know you're an amateur is that experienced investors use lawyers every step of the way.

I hope you have a written document proving what the bank's representative told you. Perhaps your title company bears some responsibility. It's possible, though, that when you closed you legally accepted the situation as it stood then.

At any rate, contact a lawyer immediately. Some people think attorneys are needed to get you out of trouble, but their best use is to head off trouble in the first place. That's a lot less expensive in the long run.

Q. What is a reasonable bid when buying a house that is listed at $250,000? What is a good place to start to receive a counter bid?

A. If the property has been on the market for a year and the owners are desperate, a good starting bid is $240,000.

If it's priced low because the seller hates haggling and wants a quick sale, a good starting bid is $250,000.

If the sellers are unreasonably attached to the place and don't really care whether they sell this year or next, don't even bother negotiating.

In other words, it all depends and there's no one right answer. But if you expect to start a series of back-and-forth counteroffering, I must warn you: When that happens, emotions can run high and the deal often falls apart.

Q. If someone quitclaims a deed to me, but still owes the mortgage, can the mortgage be quitclaimed as well? How does that work?

A. Most mortgage loans must be paid off when title changes.

An FHA or VA mortgage, though, can sometimes be taken over. Paperwork is involved, and in most cases the new owner must prove financial qualification to carry the payments.

Q. We were told our credit rating of 793 was excellent, out of a possible 800. Now, however, I see the highest rating is 840. So I wonder what we did so as not to be even higher than 793.

Also, someone said each time an entity looks at your rating it goes down a few points. If so, why would we check it on a monthly basis?

A. The method for calculating credit scores was changed recently, giving more weight to some factors and less to others. I don't know why your score isn't higher, but I'm willing to bet no one has a perfect one.

Frequent recent inquiries by lenders do pull your score down. The credit bureau's computers interpret it as a sign you're in some difficulty and trying frantically to borrow money.

Your ordering a report, though, doesn't appear on your record and doesn't hurt your score. I must say, though, that checking every month seems a bit excessive. Still, if it gives you peace of mind I suppose it's worth it.

For many careful people checking every four months, with one of the three free annual reports (www.annualcreditreport.com), is enough. That site will give you a full report, but the actual score, if you want it, costs about $10.

• Edith Lank will personally respond to any questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.

2008, Creators Syndicate Inc.