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 Last Monday, July 21, 2014, the Pennsylvania Supreme Court entered what should be the final opinion with respect to whether a home seller in Pennsylvania needs to disclose that a murder/suicide took place in the home.  I had posted two previous blog articles, one on February 28, 2012, entitled “What Do You Mean My House Is Haunted”, and a second one on January 30, 2013, entitled “Real Estate Disclosures – Does It Matter If My House Is Haunted”.

You may remember that this case involved a lawsuit by a home buyer who, after settlement, discovered that the home she had bought and improved had been the site of a murder/suicide where a previous owner had allegedly killed his wife and himself on the property. She contended she would not have bought the house had she known of this crime. Originally a three judge panel of the Superior Court held, in a two to one decision, that the murder/suicide could be a material defect in the property requiring disclosure under Pennsylvania disclosure law. In January of 2013, the Superior Court reversed the panel’s decision on the basis that the disclosure of psychological defects would be a descent down a very slippery slope. 

The case was appealed to the Supreme Court and, in Monday’s decision, the Supreme Court, in what they stated was a matter of first impression, decided the underlying question . . . whether psychological stigmas are material defects. The Court determined that to require the disclosure of psychological defects would clearly be beyond the intent of the disclosure law. The Plaintiff argued that the psychological stigma on the property reduced its value and that the failure to disclose this tragic event constituted a material defect. The Court, again mentioning the slippery slope of determining what a particular buyer may find objectionable, stated that efforts to define those that would warrant mandatory disclosure would be a Sisyphean task. (We will all remember that Sisyphus was punished for chronic deceitfulness by being compelled to roll an immense boulder up a hill.)…

Continue Reading Real Estate Disclosures – Murder/Suicide Not a Defect

The deadline for challenging your 2014-2015 Lancaster County property assessment is August 1, 2014.  Appeals filed after August 1, 2014 won’t be heard until 2015 and won’t take effect until 2016.  And if you are relying upon an appraisal to support your appeal, the written appraisal report must be filed with the Lancaster County Assessment Office by August 15, 2014.  This means the time to act is now.

How do you know whether an assessment appeal is warranted?  We look at the current assessment, the common level ratio, the current total tax millage rate and evidence of current fair market value.  Current assessments and property account numbers are posted online. (The property account number, and in some cases, the assessment, is listed on recently issued school district real estate tax notices.)  The common level ratio (CLR) is the factor applied to the assessment that converts the assessed value into fair market value. As of July 1, 2014, the common level ratio increased to 1.26. Total tax millage rates now include 2014-2015 school district taxes.     

Property owners should multiply their assessment by the CLR (1.26) to see if the fair market value is accurate. For example, an assessment of $100,000 implies a fair market value of $126,000 [$100,000 times 1.26]. …

Continue Reading Countdown for Annual Tax Assessment Appeal Filing

In February of 2012, I wrote a blog post entitled What do you mean, my house is haunted?   I commented on the case Milliken v. Jacono where the purchaser of a home had sued the seller and the seller’s real estate agent for fraud and misrepresentation when, three weeks after closing, she learned that a previous owner had allegedly killed his wife and himself in the property. She contended that she would not have bought the house had she known of this crime.  A three judge panel of the Superior Court, at that time, by a two to one decision, held that the murder/suicide could be a material defect in the property requiring disclosure under Pennsylvania’s Disclosure Law.  The panel decided that a jury could decide if this event was a material defect in the property.

The panel’s dissent pointed out that psychological defects may vary greatly from person to person and questioned whether or not disclosure is limited only to murder/suicide. Requiring disclosure of psychological defects would be a “descent down a very slippery slope”. 

The slippery slope argument was persuasive to the entire panel of the Superior Court who recently issued a six to three opinion and found that psychological damage to a property cannot be considered a material defect in the property which must be revealed by seller to buyer.   In reaching this conclusion, the majority of the Court noted that certainly, in the age of the internet, the modern homebuyer has a powerful tool to uncover the notorious history of a house or neighborhood.  …

Continue Reading Real Estate Disclosures – Does it matter if my house is haunted?

Just when you think interest rates are the lowest they’ve ever been, they drop again. This past year has seen such low rates that people are increasingly considering refinancing their mortgages. Refinancing has many advantages, including lowering monthly payments, the possibility of paying off your mortgage earlier, and the potential to eliminate private mortgage insurance (PMI).

Suppose you owe $180,000 on your 30-year mortgage and your interest rate is 6.0%. By refinancing at 3.75%, your monthly principal and interest payments would drop from $1,079.19 to $833.61. Also, if you financed your home with a loan that required less than 20% down, you could eliminate your monthly PMI payment, depending on an appraisal and your principal balance. Refinancing in this situation would dramatically reduce your monthly mortgage payment.

The two biggest decisions you make when refinancing your home are choosing your bank and the title company. Banks’ underwriting fees can vary greatly, as can their interest rates. Many people will look solely at the monthly payments when making this decision; however, consider the amount of time it would take to make up the difference of a $25 monthly payment if the bank with a lower interest rate had an origination charge that was $2,000 higher than another (without considering the time value of money, that’s 80 months, or almost 7 years). Keep in mind that in addition to origination fees, there are the additional costs of the bank obtaining your credit report, an appraisal and tax certifications.

In addition to selecting a lender, you also have the ability to select a title company. Banks require title insurance to be obtained on their mortgages, and this requires a title company to issue the insurance. Many borrowers do not know they have the ability to choose their title company. While the price of the title insurance premium is set by the state and therefore will not vary between title companies, the service a borrower receives will. Some title companies offer the added benefit of a lawyer reviewing and explaining your loan documents and answering any questions you may have at closing.…

Continue Reading The Anatomy of a Refinance

Only 19 days left to challenge tax assessments. In Lancaster County, all appeals of the assessment must be filed by August 1, 2012. An appeal filed after that date will be heard in 2013. 

New common level ratio (CLR) numbers are in place for the period 7/1/12 – 6/30/13. Lancaster County’s CLR dropped from last year’s 1.31 to 1.27. In addition, total tax millage rates now include 2012-2013 school district tax rates. This information is relevant in deciding whether to file an assessment appeal. CLR is the factor applied to the assessment that reflects the ratio between assessment value and fair market value. For example, an assessment of $100,000 infers a fair market value of $127,000 [$100,000 times 1.27]. Residential and commercial property owners can multiply the assessment by the CLR to see if the fair market value is accurate. If not, an assessment appeal may be in order. 

The millage rates determine the total annual property tax load. The first three digits of your property account number correspond to the municipality in which it is located.  Assuming the property with the $100,000 assessment is in Manheim Township, line 390 tells you that Manheim Township residents pay a total of 24.0285 mills annually, representing annual total taxes of $2,403.

You can find your property’s account number and check your property’s assessment online. In addition, the account number is listed on the school district real estate tax notice.…

Continue Reading Lancaster County Real Estate Taxes: Making Sense of Common Level Ratios and Millage Rates

Buyers want to make an informed decision when they purchase a house because their home is where they spend most of their time. Unfortunately, it is impossible to know the entire history of any particular property. Unwelcome "surprises" may lurk behind walls or under carpets and remain undiscovered until remodeling time. That is why looking over the seller’s disclosure statement, ordering a property inspection and obtaining title insurance are such important steps in the home buying process.

Buyers use all of their senses in choosing a property. The first step while walking through the home is to look for problems. Smelling mold or smoke can deter some homebuyers, as can feeling extreme dampness in the air or hearing floors and windows rattle in the wind. All of this can help, but what about the sixth sense?

Very few people want to buy a house that is supposedly "haunted." (Yes, there are some who consider supernatural activity a selling point; see Haunted Real Estate is Scary Good Investment.) Realtors know that homes adjacent to cemeteries, on top of ancient burial ground or with disturbing histories, otherwise known as stigmatized properties, can be difficult to sell. In Pennsylvania, a three judge panel of the Superior Court recently decided that a jury may determine if a home seller is required to disclose a murder/suicide as a substantial defect in a home.…

Continue Reading What Do You Mean, My House is Haunted?

Some say it takes a village to raise a child. Others say it takes a family. I recently became convinced that it takes a law firm to advise a pastor who is administering a church. While preparing to participate in a class on church administration as part of the ministerial formation requirement for students at the Lancaster Theological Seminary, I became convinced that any pastor in a parish setting needs a law firm on call. Anecdotes related by the adjunct professor, the Reverend Dr. Barbara Kershner Daniel, about her years in the parish ministry further illustrated the need.

Pastors face many decisions in the course of their work, from choosing a form of organization for their church to managing property matters. Depending upon denominational polity and local requirements, pastors face concerns in the buying, selling and mortgaging of real estate in addition to those which an individual or commercial enterprise would encounter. Real estate law and church law such as the United Methodist "trust clause" intersect.

Changes in worship style and advances in technology now necessitate that each pastor become familiar with licensing and permissions. The new intellectual property issues go far beyond the standard church performance exception to copyright law that for many years made such concerns unnecessary. Printing hymns in bulletins, using screen projections, not to mention sharing podcasts and streaming videos, now demand that each pastor become his or her own intellectual property lawyer.

Having some working knowledge of real estate and intellectual property law is hardly enough. In what can be a highly competitive fundraising environment, pastors must also understand the administration of estates and trusts. The more estate planning knowledge pastors have, the more effective they will be in raising funds for their churches.…

Continue Reading It Takes a Village: Pastors and the Law