It’s been a couple weeks since the last update and a month since I started this round of negotiating.  If all goes well, we will have this wrapped up this weekend and the countdown begins for move-out.  I expected it all to be done in a week.  Yeah, right.

Today, after a ridiculous series of document corrections and delayed responses eating up day after day, I visited the attorney’s office to do the signing.  This is the process that my co-owner and I are taking.  Of course some parts can vary, but this is one option.

I signed two copies of the quit claim deed and two copies of the contract.  The contract was just a signature; the deed was notarized with two witnesses.  These two originals are going to be overnighted to my co-owner’s attorney.  My co-owner will sign the deed with two witnesses and a notary and also sign the contract.  Then the papers will be brought back to me and together we will go through the house contents determining what stays and what goes.  When I get the fully signed deeds (yes, both) in hand, I hand over the check.  I get to keep one copy of the contract as does my co-owner.

I requested next Monday off work so I can do the final step of this process.  I will take both signed originals of the deed to the county clerk and have them “recorded”.  What happens is the clerk takes both copies of the deed and stamps them as recorded.  The clerk keeps one copy and I get one copy.  If my co-owner wants a copy of the recorded deed, that can be provided, but I keep the original forever.  So that’s why there are two originals of the deed.  Believe it or not, but you don’t have to record the quit claim deed with the county.  Why anyone wouldn’t do it is beyond me.  You’d be asking for a huge headache in title searching when you go to sell the property.

Also on Monday, I’ll contact the mortgager and find out what steps are needed to modify the mortgage.

Now, all that cost me $3000 just in attorney fees.  Could you do it yourself?  Absolutely.  The only thing this gained me with the deed drafting was a sense of propriety – the deed was pretty much a fill-in-the-blank form.  The contract being professionally prepared might be worth a little because self-authored contracts could have their wording picked apart in court and you could lose out.  The contract is the defense against someone claiming the quit claim deed was forced upon them.  The contract states what the person is receiving in return for the deed and that the transaction is voluntary.

Again, the process isn’t that important, but I gave it a lot more weight than it probably deserved.  At different points, I thought we would all meet together in a room and sign everything all at once, or that the documents would be emailed (or mailed) blank, mailed back signed, then I would sign them, and also sometimes I stuck a document review step in there.  I had no idea how to do the process effectively.  In the end, it doesn’t seem to matter.  All you need is an executed deed and a contract to cover your ass.  How you get there isn’t important.  We both chose to involve attorneys so that there would be uninvolved parties making sure neither of us got taken advantage of.  It’s costly protection, for sure.

If all goes well, next week is a fresh start and this blog will become what it was intended to be.  A home makeover documentarium.

Quite a bit has happened in the two months since the last post.  Since then, I got both appraisals done, had the attorney draw up an offer letter and have gotten an acceptance.  As you probably know, an acceptance is nothing until it is signed, and I’ve been holding myself back from posting anything so I don’t jinx it.  But, here’s some details on what happened so far.

The second appraiser was completely different from the first.  He used comparables from a totally different part of my neighboring area and they came back much higher.  I disagreed with his choice of properties because they were in a completely different development.  He used values from the local government sites, whereas the first used information from a service called CoreLogic, which I felt was more accurate.  In the end, I ended up with a $20k difference between the two appraisals.  I didn’t have the money to do a buyout at the highest appraisal, so I took the midpoint of the two values, then subtracted my co-owners unpaid obligations.  The result was almost exactly the original purchase price of the house.

I took supporting documentation and the numbers to my attorney and had him do his thing.  That cost me $1500.  I thought that would be the end of it.  My co-owner contacted me with questions and after we hammered those out, I contacted my attorney to write up the revisions.  This is where I was a little surprised.  The original $1500 was just to write the offer letter – nothing more.  For another $1500, he will draw up the actual purchase contract and quit claim deed.  Whew, that’s not cheap.  But I think that’s the last step, at least I hope it is.

The contract states that within 14 days of signing, we will exchange payment for the signed deed.  Then, within 60 days after signing, my co-owner will have all personal property removed from the house.  And then, freedom.  What does freedom cost?  $475 in consultations with three lawyers, $400 in a failed offer by one lawyer (you get what you pay for?), $750 in appraisals, and $3000 in a (potentially) successful offer and contract by another lawyer.  That’s a total of $4625.  but it’s less than the $5000 to do a partition and possibly lose even more by having a forced sale.

In the future, I also have to contact the mortgage company and refinance the property into my name only.  That may have some details worth recording.  I’m not sure what may need to happen with the county property appraiser.  Maybe the quit claim deed gets filed with the county?  More to come.

Not a whole lot to report on this.  I had scheduled the first appraiser for yesterday and I had to call the other appraiser and get a date scheduled, which will be Friday.

I showed up after work and Steve the appraiser was just finishing up his outside review.  We went inside and he snapped some pictures of each room and made some notes about the layout of the house.  Oddly, he took a picture of the kitchen faucet running.  He said “They like to know the utilities are working.”  It’s probably just a habit for him, dealing with banks, but it’s kind of out of place for my needs.

As if he realized what he had done, he asked again what the appraisal was for, and we discussed the situation.  He shared his preliminary research which was pretty insightful.  As far as recent comparable sales, my house could be valued at 56% to 105% of its original purchased value or 88% to 164% of its payoff value.  It’s pretty unlikely it will be at the upper range and I have the funding to do a buyout at 100% of original purchase value.

So, appraiser two on Friday, waiting for probably a week to get the reports, set up an appointment with the attorney to draw up the purchase agreement, probably another week waiting for that.  Then 30 days for my co-owner to review the offer.  That gives me a timeline somewhere in the middle of March.  Let’s just try to get that far first.

Although this blog was intended to focus on the purchase of a new property without really discussing the current property situation, I’ve come up with some information that may be beneficial to record, so now there’s a new category on this blog.

To be frank, I am in a situation where my current home is co-owned with another party and quite simply, this situation needs to end.  An offer to buy out the co-owner’s share was fruitless.  That is what lead me to pursue a second home of my own.  Recently, I was searching for more information on how I can resolve my situation and I discovered a process called a “Partition Action”.

Here’s the gist of a partition action:  No one can prevent you from selling your interest in a property.  That might sound confusing.  What I am trying to do is force my co-owner to sell to me.  But go forward one step – The partition action forces a sale of the property and the proceeds of the sale are split evenly between the owners.  My co-owner and I then have equal opportunity to purchase the property.  I have the means to purchase it and my co-owner does not.  So, in effect, my co-owner gets half of the sale proceeds, which is exactly the same thing as accepting my purchase offer.

The downside of a partition action is that it is very expensive.  Thousands of dollars expensive ($5000 non-refundable retainer to begin).  And a little detail I learned yesterday is that the legal fees come out of the sale price of the property, which means my co-owner bears half of that expense as well.  This is an excellent means of leverage in negotiating.

Step one in this process is to create a fair and equitable purchase offer based on the appraised value of the house.  I plan to get two appraisals as documentation that the offer is fair.  So, let’s get some appraisals.  This simple task gave me some interesting information.

First lesson learned: appraisers don’t answer their damn phones.  Out of a list of seven candidates, only two answered the phone.  One was answered by a receptionist and the other was a groggy “Hello?”.  Out of seven, these are my winners?  Second lesson: appraisals aren’t cheap.  The number I had in my head was $280, but I ended up with $350 and $400.  $700 in total just to make this fair offer (lawyer fees are more than double that so far).  Third lesson: It’s not a quick service.  Both appraisers had at least a week backlog and would take almost a week to get the report back after the service.

But here’s the interesting thing I learned.  When I spoke to these people, the first question they asked was, “What is this appraisal for?”  I explained it was for a buyout offer and both clarified, “this isn’t going to be used for a mortgage, right?”  And I said no, but that was weird.  The receptionist said they would only do appraisals requested by a bank.  The groggy appraiser explained that they won’t do appraisals for mortgages at a person’s request because people would take appraisals to banks and say, “See?  This is the value.”

I thought I was allowed to choose my appraisal/inspection companies in my last effort, but the post reports that it was the title company I was allowed to choose.  So I guess I can understand that situation.  And since it was just for my use, “market value” was the term used, they didn’t have any problem after that.

Future posts in this category will discuss some of the details of the purchase offer, since it will involve some non-standard elements, like the quitclaim deed and terms of how the co-owner will remove personal property.  Hopefully, there will be a happy resolution, but if not, expect more posts of the details of the partition suit and how it’s going to be used to force the sale of the property to me.