These Times We Live In Are Dizzying!

⚖️  The Complexities of Legislation and Corporate Maneuvering 

Sometimes life seems so complicated, and a lot of the legislation and corporate maneuvering that goes on actually affects our lives rather profoundly.

We must monitor many fronts, including wildfires, insurance issues, and the various propositions we all voted for (or didn't vote for).

⚡ New Energy Conservation Ordinance in Berkeley

As I write this in Berkeley, they are considering yet another point-of-sale ordinance, this time for energy conservation, that will essentially be untenable for anyone who is not very wealthy. There is a proposed $7,000 fee upon closing escrow to address various issues, but the required fixes may be burdensome for most individuals after they have just spent their life savings to purchase a home. These may include insulating all the walls and the roof, modifying how electricity is accessed in the house, replacing water fixtures, installing heat pump water heaters, and more. These will considerably raise the initial cost of homeownership in our city.

I understand that enhancing energy efficiency is vital and better for the planet, but the continuous imposition of expensive regulations on homeowners primarily fills the city coffers and makes homeownership in our area much less appealing.

🔥 The Rising Insurance Crisis in California 

Another problem we all face is insurance in our area. Buyers must check the availability of insurance in the area they are buying in. Insurance costs have skyrocketed due to all the natural disasters, and most companies are unwilling to provide coverage in California. The California Fair Plan was established to require insurers to cover policies, but it costs up to 50% more than other companies' plans. You have to carefully examine the actual coverages to ensure they adequately insure you!

🏠  Proposition 19 and Its Unintended Consequences 

Proposition 19 has many good aspects, but as always when legislating anything related to real estate, there have been unintended consequences: If you inherit a property and do not intend to live in it, the taxes will be based on fair market value.

If you plan to reside in it, then one million dollars of value will be excluded from your property taxes. This can pose a challenge for siblings inheriting a property together or for anyone who expects to rent the property out.

⚖️  A Cautionary Tale on Reverse Mortgages

Recently, I encountered a reverse mortgage situation involving a young woman who inherited a property from her client. The client had taken out a reverse mortgage over 20 years ago for $75,000, and the mortgage company charged compounding interest of 13% on that property. Now, with the house valued at about $1,100,000, there is a lien of over $850,000 against it! This is excessive, to say the least, and the poor woman cannot afford to pay off that mortgage; therefore, even though she inherited the property, she will have to sell it.

Be very cautious when considering a reverse mortgage (or any mortgage); the fine print can be very burdensome! When setting up any sort of inheritance for whomever you wish, please follow all the rules and safeguard your intentions! Please work with a terrific attorney specializing in estates to ensure you are doing everything right.