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KASS: Carefully consider short-term rentals

DEAR BENNY: The rules and regulations of my condominium association prohibit the leasing of units for less than six months. I am on the board of directors. Recently, we learned that several owners have signed on to Airbnb, and have been renting their units for one or two days. The board is conflicted; some of us want to amend our rules so as to allow short-term rentals, while others want us to start enforcing our rules and fine those owners. Do you have any suggestions? – Cate

DEAR CATE: You have to enforce your rules. Otherwise, every owner in your condominium complex will start using Airbnb – or some similar arrangement – and you will have a mess on your hands. Security will have to be enhanced, trash and garbage expenses will increase, and mortgage lenders will be reluctant to loan money for new purchases or even for refinancing.

As for amending the rules, I suspect the six-month requirement is in your bylaws and not merely in a rule. If so, then you have to follow the procedure spelled out in your state law and/or your legal documents as to how to enact bylaw amendments. Talk with your association lawyer.

But even if the requirement is only in your rules – and even if the board has the authority to change the rules – this is too important an issue. You need to present any proposed changes to the membership and hold a special meeting for the sole purpose of getting a “sense of the house.”

I would also do a lot of research on Airbnb. Not only is it an important issue, but a controversial one also.

DEAR BENNY: I am a newly licensed real estate broker and want to learn as much as I can. A potential client asked me about a loan program called “Home Ready.” Do you know what that is? – Connie

DEAR CONNIE: Keep learning; the world – including real estate – changes every day. I have been practicing law for many years, but continuously learn new things from readers like you.

Home Ready is a fairly new program developed by Fannie Mae. Its stated purpose is that it is designed for creditworthy, low- to moderate-income borrowers. It offers “expanded eligibility for financing homes in designated low-income, minority, and disaster-impacted communities.”

Many of the typical lender requirements – which in the past have been a deterrent to obtaining a mortgage loan – are now modified. For example, financing can be available for up to 97 percent of the loan-to-value (LTV) ratio; or income from non-occupants or non-borrowers (such as parents or grandparents) will be taken into consideration when determining ability to borrow.

This is not available to everyone. Your income must meet the income limits for where the property is located. Fannie Mae has eligibility maps on its website.

If you do qualify, you have to complete an online course provided by Framework. You will learn such things as how big a loan you can afford, how and where to choose the best loan, and avoiding pitfalls before and after closing. For more information, go to Fanniemae.com.

DEAR BENNY: I just received a letter from a government agency telling me that it is imperative that I immediately get a copy of the deed to my house. I was asked to send them a check for $80. Isn’t there a less expensive way to get a deed? – Anne

DEAR ANNE: This is yet another scam; please ignore it.

First, why would you need to get a copy of the deed to your house? When you first bought it, the title (escrow) company recorded it among the land records in the jurisdiction where your house is located. When you sell your house, the title (escrow) company does not need to see your deed; they can access it either online or by going to the local recorder of deeds.

However, if there really is a need for a copy, in most jurisdictions you can access – and print – the deed online, usually free of charge. Search your local recorder of deeds and call the clerk of that office to learn how to access the deed on your computer. And in the worst case, go down to the recorder’s office and get a copy. At most, it should not cost you more than $8 to $10.

As we move into the summer, more and more scams are popping up. Please be careful and don’t give money – or personal identification – to anyone you don’t know.

Benny Kass is a practicing attorney in Washington, D.C. and in Maryland. He is not providing specific legal or financial advice to any reader. He wants readers to e-mail him, but cannot guarantee a personal response. He can be reached at: mailbag@kmklawyers.com.

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