Check with zoning and HOA before building anything
Q: I have a large lot and I’m thinking of adding a rental unit to my existing property, what do I need to do first?
A: Rental properties can be an excellent opportunity for income, but there are many aspects to consider before breaking ground. The first thing is land use. Can you build a guest home or rental unit on your lot? If you live in a common-interest community (homeowners association), find out any requirements or restrictions. Check with the zoning department. The area we think of as Las Vegas is made up of six different jurisdictions. Based on your address you will need to contact either city of Las Vegas, Clark County, Henderson, North Las Vegas, Boulder City or Mesquite. Zoning has many requirements regarding rental properties, so be sure to get a copy of the code requirements. Hire a licensed contractor or architect who will submit plans to the building department. Also, consider the reasons you are adding a rental unit.
• Is it to make room for an existing family member or do you want potential added income from this unit?
• How will you feel about compromising some of your privacy by adding a rental?
• How about utilities, are you going to charge a flat fee or install separate meters?
• Is there adequate parking?
Being a landlord can be personally rewarding and a smart move financially, but there are many aspects to consider before posting the “For Rent” sign.
— Nancy Hancock, Realtor, Berkshire Hathaway HomeServices
Getting out of sales contract
We had a few comments about last week’s Ask The Expert feature about getting out of a sales contract. Several industry experts wanted to clarify specific points or add to this topic that Realtor Gianno Buonaguro covered in the Nov. 22 edition of RJRealEstate.Vegas.
• In simple terms, there are no “outs” for a buyer with a change of heart. Yes, a buyer can cause the purchase contract to be canceled if he cannot obtain financing as set forth in the purchase agreement. However, the buyer must show what steps he took to obtain the financing and show that he exercised his best efforts in obtaining the financing required by the purchase agreement and was unable to do so. He cannot merely state that he was unable to obtain financing. He would have the obligation of showing that he did everything a reasonable person would do to obtain the financing on the terms and conditions contained in the purchase agreement and was unable to do so.
Similarly, the buyer must act as a reasonable person in an attempt to obtain the necessary appraisal. The buyer must choose a licensed appraiser familiar with the area in question, obtain the report from the appraiser and the appraiser must be able to defend his work, which would show that the appraised amount is less than the amount set forth in the purchase agreement. The purchase agreement normally requires the buyer to perform certain acts during the “due diligence period.” The buyer is required to exercise his best efforts in performing those acts, and then show why the information he obtained does not satisfy the requirements of the purchase agreement.
There are legitimate reasons why a buyer can get out of the purchase agreement. The buyer is required to act in good faith and perform all of his/her obligations under the purchase agreement and after performing those obligations and after acting in good faith, he is unable to satisfy the requirements of the purchase agreement, it can be canceled.
— Jason G. Brent, Las Vegas Realtor and retired California judge and attorney
• The “walk-through” provision in the Greater Las Vegas Association of Realtors purchase agreement is not contingent on the close of the property. It is only there to ensure the buyer that the property is in the same condition it was at the time of the signing of the contract and to check to see if any repairs requested by the buyer and agreed to by the seller were completed.
In addition, if the property is in a common interest community (homeowners association), which all condos are, and also includes many single-family properties in our area, a buyer can reject in writing acceptance of the association rules and regulations within a specific time frame, and if he does, the buyer may cancel and receive all his earnest money back with no questions asked. This is one of the biggest “back-outs” of the purchase agreement.
Regarding appraisals. Yes, a cash buyer can order an appraisal, but in order for it to be used as an “out” it would have needed to be a contingency within the purchase agreement. Although sellers would like to get an appraisal done in a timely manner, but since the banks and their appraisers are not part of the agreement between the principles, the timing of the appraisal is out of the control of the buyer and the seller.
A major way a buyer could back out is by not approving the preliminary title report.
The Nov. 22 article also mentioned financing terms. Be aware that because of the new Consumer Financial Protection Bureau rules, GLVAR is looking into removing that verbiage from its purchase agreement regarding “not to exceed” terms.
Yes, our purchase agreement has many outs for the buyers and if used properly will protect the buyers from default and possible loss of their earnest monies. It is very important that the buyers and their agents understand all the terms of the purchase agreement.
— Neil Schwartz, real estate broker, Coldwell Banker Premier Realty; and real estate continuing education instructor
