In-law apartment is only for family

Q: Good day! I’m buying a single house that has an in-law apartment. The apartment has a bedroom, full bathroom, laundry, kitchen-dining-living room combination and an independent entrance. I’m thinking about renting it out.

* Is this considered a one-bedroom apartment?

* Would Section 8 approve it?

* Are there any specific regulations, codes or risks I need to know before renting it? — R.L.R.

A: Yes, that’s a one-bedroom apartment — sounds nice. No, it probably wouldn’t be approved as a Section 8 rental. And that’s because of the answer to your third question. An in-law apartment is just what it says — intended for a related small family. You had better inquire at your city or town’s zoning department. In most jurisdictions, renting it out would violate the law.

Are Co-Signers Owners?

Q: My question is if someone is a party to the mortgage, (such as a co-signer) do they have to be recorded as an owner on the deed? — S.M.S.

A: No.

The buyer who borrows money to purchase real estate signs two documents. The note is a personal promise to repay the debt. Then the mortgage (in some states, a trust deed) pledges the real estate as security for the loan.

When a borrowers’ credit rating or income isn’t considered good enough to qualify, a kind-hearted parent, employer or friend may agree to co-sign the note. They take on personal liability for the debt — the whole debt, by the way — without receiving any ownership in the property. Not being co-owners, they won’t sign the mortgage.

In some cases it can be unwise, helping the kids get in over their heads. And even when timely payments are made, the debt will show up as a liability on the co-signer’s credit record.

What About the Lease?

Q: We are renting a house but have just purchased a house and will be moving in eight weeks. We need to break our lease five months early. Our landlord said we are responsible for paying the entire lease. We’ve heard by law he is only able to charge us for half the lease that remains. Is this true? — askedith.com

A: I haven’t read your lease, but I’ll bet you’re responsible until it runs out. I’ve never heard of a law such as you mention. Your landlord must, however, make normal efforts to re-rent the property. You do not have to pay for any month in which he has new tenants. Unfortunately, in many states, winter is not so favorable a time for renting, as spring would have been.

Be forewarned: the date for closing on a new house — the day of final settlement that’s mentioned in your purchase contract — is just a target. It’s not set in stone. Complications sometimes arise, so don’t be surprised if it doesn’t happen in exactly eight weeks.

Selling As Is

Q: Is it possible to sell a house “as is?” The house is livable but needs a lot of updating. We’d like to sell in the spring, but don’t have money for updating the house. We had no problem getting a mortgage, but that was 30 years ago and things are a lot different now. — askedith.com

A: Yes, it’s possible to sell a house in any condition if the price is right.

“As is” has a specific legal meaning, though. The buyer agrees to take the house in its present condition but doesn’t agree to accept any hidden defects the seller knew about but did not disclose.

Again — the usual advice: It won’t cost anything, or obligate you, to call in a few real estate agents from different brokerages that are active in your neighborhood. You’ll get useful advice from brokers who know your area and can see your home for themselves. They can advise on what you must disclose to potential buyers, and whether a lender is likely to require any repairs or updates before buyers could place a mortgage.

Value of Solar Panels

Q: Would investing in solar panels for a house increase the later sale price? — R.V.

A: Appraisers tell me that there isn’t yet enough data for them to say. The answer might differ from one geographic area to another; my best guess is maybe some increase, but not all that much.

Another with PMI

Q: I read your article regarding PMI Insurance. My daughter refinanced her condo with a 30-year mortgage and was required to pay PMI monthly. You stated in your article: “It must end when the debt is 78 percent of original value.” Does my daughter qualify for this rule? I am a father trying to reduce my daughter’s living costs. She is a public school teacher. — R.P.

The homeowners who asked that question had an older mortgage. If your daughter refinanced after June 3, 2013, she must carry private mortgage insurance for the full term of the loan.

Edith Lank will respond personally to any question sent to www.askedith.com, to edithlank@aol.com, or to 240 Hemingway Drive, Rochester NY 14620.