October 12, 2016
Wednesday’s Academic Roundup
- Childhood Housing and Adult Earnings: A Between-Siblings Analysis of Housing Vouchers and Public Housing, Anderson, Haltiwanger, Kutzbach, Palloni, Pollakowski, & Weinberg
- Housing and Mortgage Dynamics: Evidence from Household Surveys, Jansen
- Mortgage Market, Housing Tenure Choice and Unemployment, Lisli
- The Time Value of Housing: Historical Evidence on Discount Rates, Bracke, Pinchbeck, & Wyatt
October 12, 2016 | Permalink | No Comments
October 11, 2016
How to Break a Lease Early
Realtor.com quoted me in How to Break a Lease Early. It reads,
It’s Murphy’s Law, rental edition: You find the perfect apartment, sign the lease, move in, start to get settled in, then something happens. Maybe you get transferred to another state for work, maybe you meet the love of your life and decide to shack up together (congrats!), or perhaps your parents fall ill and you need to move closer to them.
Unfortunately life and rental laws don’t always coincide, all of which might mean you may have to entertain the idea of breaking a lease. What would happen if you do? Answers are ahead, along with some advice on how to handle this sticky scenario.
First things first: Read your lease
If you find yourself needing to break your lease, your first step should be to read it again—carefully. You could get lucky: Some leases have an “opt out” clause, meaning that you can terminate early for an agreed-upon fee. Depending on that financial amount, it might make sense for you to just pay the penalty and make a clean break, says David Reiss, academic program director for the Center for Urban Business Entrepreneurship.
Then again, some leases will say that you’re responsible for the rent due for the remainder of the term of your lease. Still, even in this worse-case scenario, you may have some wiggle room based on how benevolent your landlord is.
Talk to your landlord
If there is no opting out or the fees are too steep for you to financially absorb, it would probably behoove you to speak directly with your landlord or rental company.
“Your landlord may be willing to let you out of the lease early,” says Reiss. “You could also try to negotiate a lower amount for early termination than the lease calls for by forfeiting your security deposit.”
All in all, it never hurts to ask (and pray you catch your landlord in a good mood). It’s possible he may not mind your moving out since this means he could raise the rent sooner.You won’t know until you ask.
Find a new tenant
Another option is to offer to help your landlord find a new tenant for your apartment.
“It generally is not allowed without landlord consent, but you can discuss it with your management to see if they would consent to a sublease and under what terms,” says Reiss. You may also need to check local laws that may be applicable to subleases. If it is allowable, you might try a site like Flip, where renters can post leases they need to break in search of qualified renters who are looking for someplace to live.
Don’t just walk out
The one thing you absolutely cannot do without legal ramifications is just walk out and stop paying your rent. You won’t be trading your apartment for a cell with bars (it’s a civil, not criminal, matter), but Reiss warns you can get in a lot of financial hot water if you handle this incorrectly.
“You cannot be arrested for nonpayment of rent—unless you live in 19th-century London—but you can be sued in court; have a judgment against you; have your wages garnished; and [have] liens placed on your property to satisfy the judgment,” says Reiss.
Did we mention that this will mess up your credit scores? It will mess up your credit scores.
That said, there are a couple of cases where you could break your lease without consequences, but they are extenuating circumstances.
“If the apartment becomes unlivable—for instance, no heat in the winter—you could argue that you have been constructively evicted from the unit,” says Reiss. “Also, some states allow domestic violence survivors to break a lease in order to ensure their safety.”
October 11, 2016 | Permalink | No Comments
Tuesday’s Regulatory & Legislative Roundup
- New York City’s mayor plans to change the affordable housing requirements so that more people are eligible regardless of their credit history or housing court disputes.
- Policy makers in New York analyze the sale of homes in New York that are delinquent in taxes. Public advocates found that many of the homes for sale were in extremely poor conditions which they deemed unacceptable.
October 11, 2016 | Permalink | No Comments
October 10, 2016
Columbus Day on the Red Planet?
Elon Musk
In honor of the explorer’s drive to plunge into the unknown, take a look at Elon Musk’s plans to colonize Mars. They are stunning, visually and otherwise. His immediate mission objectives give you a tiny sense of the challenges he faces:
- Learn how to transport and land large payloads on Mars
- Identify and characterize potential resources such as water
- Characterize potential landing sites, including identifying surface hazards
- Demonstrate key surface capabilities on Mars
Who knows, maybe we will celebrate Columbus Day on Mars one of these years . . .
October 10, 2016 | Permalink | No Comments
Monday’s Adjudication Roundup
- A local Connecticut resident will not allow her home to be foreclosed by CitiMortgages, Inc. The local resident recently filed suit in a Connecticut court alleging the company has violated state and local foreclosure laws.
- An Arkansas couple will not let Bank of America and Nationstar Mortgage Holdings off the hook. The parties are in court over a dispute regarding inflated mortgages. The couple are the first to argue this case in front of a judge; however, a potential class action suit is arising.
October 10, 2016 | Permalink | No Comments
October 8, 2016
REFinBlog Nominated As Best Legal Blog, Again
REFinBlog has been nominated for the second year in a row for The Expert Institute’s Best Legal Blog Competition in the Education Category. Please vote here if you like what you read, or click on the image above.
The competition will run from October 3rd until the close of voting at 12:00 AM on November 14th.
Each blog will compete for rank within its category, while the three blogs that receive the most votes in any category will be crowned overall winners.
Some of the other lawprof blogs that have been nominated are
- Eric Posner Blog
- Jonathan Turley Law Blog
- Law Professors Blogs Network
- PrawfsBlawg
- Stanford Law School Blog
- University of Chicago Law School Faculty Blog
- Volokh Conspiracy
Please vote here if you like what you read, or click on one of the images below.
October 8, 2016 | Permalink | No Comments
October 7, 2016
Can Seniors Get Mortgages? Should They?
TheStreet.com quoted me in Can Seniors Get Home Mortgages? Should They? It reads, in part,
Senior citizens can and are getting approved for mortgages, and we are not talking reverse mortgages or home equity lines of credit, but – in many cases – 30-year fixed loans. Even when the borrower might be 85 and the actuarial probability of making it to the end of the loan term is nil.
The federal government is blunt: age cannot be used to discriminate against applicants for home loans. Capacity to repay is a factor – for seniors and every other borrower – but a lender cannot turn down an applicant just because he is 65…or 75…or 85. And loans are getting made.
Which raises the other question: is it wise for the borrower? Bankers can take care of themselves, but seniors need to ask: should I be borrowing a lot of money on a house at my age?
In Vancouver, Wash., Dick Kuiper – who said he is “approaching 70,” as is his wife – “just purchased a new home last year and got a 30 year mortgage at just under 3%, and we both believe this was a brilliant move.”
“We first made sure we made a large enough down payment so we would always have positive equity in the home,” Kuiper elaborates. “With that calculated, we looked at the alternatives, either pay in cash – which would naturally come out of our savings – or take out a mortgage. We looked at what we could get by putting the same amount of money into a retirement annuity with a downside guarantee. That annuity pays a minimum of 5% for life and currently is paying in the 8% to 9% range. Do the math. We’d be crazy to pay cash for the house.”
Kuiper’s right. For his wife and him, it made no sense to pay cash for a house – not when mortgage rates are breathtakingly low.
Case closed? Not at all.
Ash Toumayants, founder of financial advisors Strong Tower Associates in State College, Pa., said that in his experience few seniors ever want another mortgage in retirement after they settled up on their first one. “Most are excited when they pay it off and don’t want another one,” Toumayants says.
Another fact: to get a mortgage, a senior has to demonstrate to a lender a capacity to repay. Age cannot be used against a senior, but lack of cashflow can. And many seniors just have sizable trouble qualifying for a mortgage. “The trick is whether they have enough income to qualify or not,” said Casey Fleming, a mortgage expert in Northern California who said that he right now is working on a loan for an 85-year-old client.
Brian Koss, executive vice president of Mortgage Network, an independent mortgage lender in the eastern U.S., elaborated: “For seniors thinking about getting a mortgage, it’s all about income flow. If you have a consistent source of income, and a mortgage payment that fits that income, it makes sense. Something else to consider: if you have income, you have taxes and a need for a tax deduction. With a mortgage, you can write off the interest.”
* * *
But then there is an ugly issue to confront. Is the senior arriving at this purchase decision on his own steam? Brooklyn Law professor David Reiss explained why that needs to be asked. “Seniors should discuss big financial moves with someone whose judgment they trust (and who does not stand to benefit from the decision). Elder financial abuse is rampant.”
Reiss added: “What has changed in their financial profile that is leading them to do this? Is someone – a relative, a new friend – egging them on or leading them through the process?” Reiss is right in the caution, and that’s a concern that has to be satisfied.
October 7, 2016 | Permalink | No Comments
