Dear Michael: I am closing escrow in two weeks and the tenants who are occupying the property are moving out on the day we close escrow. I am worried that they may not move out on time. What can I do to guaranty they move out?
Answer: Your best bet is to delay the close of escrow. The purchase contract clearly states that the tenants shall vacate the property at least 5 days prior to the close of escrow. Schedule your final walk-trough the day after the tenants move out. This is the only way to be certain they have moved out of the property. While your seller may be in breach of contract, it may also be beyond your seller’s control if tenants are not cooperating. Hold off depositing your down payment funds to escrow until you’re guaranteed that tenants are out. Timing is of the essence, the cut off time to stop the transfer (closing) is between 2 and 4 p.m. the 2 business days prior to the close of escrow. If you close escrow with tenants occupying the property you then become a landlord; a position I am sure you do not want to take on.
Dear Michael: How come I’m paying more in property taxes than some of my neighbors who have similar houses?
Answer: Your taxes are not based on your neighbors assessed value, but are based on the price you voluntarily agreed to pay when you purchased your home. Before Proposition 13, the average property tax rate in California was 3% of assessed value and there was no limit on annual increases. In those days, if a house on your block sold for much more than you paid for your house, you trembled in fear when you received your next property tax bill. Chances are, your new taxes would be based on what your new neighbor was willing to pay for his home. The situation got so bad in the late 1970s that people were actually losing their homes because of uncontrolled tax increases. The assessment rate in California is now 1.25% and annual tax increases are limited to no more than 2%. When real property is sold, it is then reassessed at market value, but the rate remains at 1.25% and the new owner is then protected by the 2% cap on annual increases. The property may be reassessed under certain conditions other than a change of ownership, such as when additions or new construction occurs.