Home Buyers: What Don't You Know About Your New House?

April 07, 2009 02:55 PM
by Cara McDonough
Higher property taxes and a house with a shady past have one couple wondering if they could have done more to protect themselves.

Unpleasant Surprises for New Home Owners

When the Gustafsons moved into their new home in Crystal, Minn., last August, they were nothing short of shocked to receive a letter from the county explaining that their real estate taxes would be 35 percent higher than what they were told during their closing.

Mike Gustafson had recently lost his job as an environmental consultant, so the extra $1,000 was no small matter. The incident was “truly insane,” Mary Gustafson said to the Star Tribune.

What happened? The Gustafsons found out that as they were closing on the two-story, $320,000 home, Hennepin County was fixing a mistake in its property-tax database, and in the process, mixed up the tax value of an older house next door with the Gustafson’s newer and larger house.
The tax fiasco wasn’t all. Shortly after they moved in, a neighbor stopped by to tell the Gustafsons that a few months before, police had broken into the home in search of drugs, leaving a broken door frame, dented door and missing vent covers.

Mike Gustafson lamented that it can be extremely difficult for the average person to protect their family from a similar situation: “If you're not knowledgeable, how do you even know to ask the questions?"

Some states do have laws that are supposed to protect homebuyers from such problems. In 2002, New York State enacted The Property Condition Disclosure Act, which required the home seller to inform the buyer of problems with the home before the sale contract is signed.

But even laws with good intentions, such as New York State’s, can’t protect buyers from everything. ''It is important for buyers to understand that the disclosure provided by the seller is not to be considered a guarantee that there are no defects in the property,” Edward I. Sumber, a real estate lawyer, told the New York Times in December 2001. He went on to explain that the law only “requires the seller to set forth what he knows about the property.”

The rules apply to more gruesome topics, too, such as murder. In fact, an Anoka County, Minn., couple recently filed a lawsuit against their real estate company when they found out that a murder had been committed in the home they had just purchased.

According to the Star Tribune, “Minnesota law requires licensed agents to disclose anything that they know of that could affect an ordinary person's use or enjoyment of the property,” and murder falls into that category.

Taking disclosure laws even further, many states require that sellers disclose any “stigmas” about the property, which could include that the property was the scene of a violent crime, any “pesky ghosts,” or even if the seller had AIDS, Forbes reported in 2002.

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Related Topic: Homebuyers beware

Buying a home comes with many questions, and various media outlets have dedicated stories to smart home buying, especially in the current economic climate.

SmartMoney recently listed the 10 “all-too-common” mistakes that first-time home buyers make, including failing to find a good agent, not realistically knowing how much you can afford and skipping a home inspection. According to the story, “The seller isn’t likely to tell you there’s mold in the basement or the walls are poorly insulated.

In 2002, when homes were selling much faster than they are currently, CNN Money urged potential buyers that even though the market was good, avoiding home-buying pitfalls was still a top priority.

"The problem is people get caught up in a wave and they get steered into a transaction," Richard Roll, president of the American Homeowners Association, told CNN Money. "They think, 'If I don't [buy] now I'll never be able to do it.'...You've got to do your homework."

Reference: Home Buying


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