Mold: Remediation and Litigation Issues for Consumers

Lead Poisoning

Home Equity Loans

Texas Reverse Mortgage

The Landlord’s duty to repair

Mold: Remediation and Litigation Issues for Consumers

Mold insurance claims have reached staggering numbers in Texas over the past few years. The cost of these claims goes directly to the policy holder. It is important for property owners to assess if they have a mold problem and what precautions should they take to remediate the problem if there is one.

There are 70,000 identified species of mold, yeast and mildews. Of this 70,000 roughly 100 of these pose a health risk to humans. Mold propagates in moist, warm materials such as porous construction material. Mold is usually hidden underneath floors and behind walls. It is not always easy to detect. A close inspection of carpets, bathroom and refrigerator floors should be conducted to detect black mold or trichoderma. A professional can help you determine which mold you find. Physical reactions to mold may include ere infections and respiratory problems. 

Before buying a new home it is in your best interest to have a reputable mold inspector check the property. Also check with your insurance agent to be sure that your house can be reasonably insured against mold. If there is a mold problem in a building you currently own, the first step is to determine if the problem will require professionals or if you can do it yourself. It may require a professional in which case there may be litigation issues that you should consult with a lawyer to handle. 

There are no standards or certifications for mold remediation specialists. It is important to do background checks on companies you may be considering. Call the Better Business Bureau to see if any complaints have been filed against the company. Request bids and references from no less than three companies and check those references closely. Request a scope of work and work plan in writing. 

Because there are many variables involved in mold problems along with differences in homeowner’s insurance policies the extent that is covered can be difficult to determine. Also because of recent litigation it may be necessary for you to consult your attorney.

Source:
July 2003, Mold: An Overview of Remediation and Litigation Issues for Consumers. www.texasbar.com
  

Lead Poisoning

It is estimated that 75 percent of privately-owned residences in the U.S. built before 1978 contain dangerous lead-based paint. To reduce the threat of lead poisoning Congress outlawed the manufacture and use of lead based paints. The law does not apply to the layers of paint that may already be on your older home. The possibility of lead poisoning should be considered when renovating or living in your older home. 

Lead is a highly toxic metal that is virtually indestructible. Lead poisoning can happen if you swallow or breathe too much air. The most common source of dangerous deposits of lead is lead-based paints. It can be found in paint chips and the dust of paint that has flaked off the wall. Symptoms of lead poisoning can include headaches, stomach-aches, tiredness, moodiness and digestive problems. Long-term effects depend on the length and amount of exposure. Low levels of exposure can cause developmental problems such as ADD and high levels can possibly cause brain damage, coma or even death. Infants and young children are most at risk for lead poisoning. They are the most vulnerable because the lead can be absorbed into their bodies. 

To protect yourself against lead poisoning it is important to inspect your surroundings and ask questions. If you are about to purchase a house built before 1978 it is required by law that the seller discloses the existence of lead-based paint. If you are renting, ask the landlord for written assurance that no lead-based paint exists. 

To determine if you have lead poisoning get a blood-lead test. A lead level of 10 micrograms per deciliter or above may indicate that you have poisoning. If you believe that you have lead-poisoning it is important for you to consult an attorney. For more information on lead poisoning you can visit www.epa.gov/lead/nlic.htm

Sources:
June 2003. Lead Poisoning and You. www.texasbar.com 

Home Equity Loans:

The Texas Constitution has protected homesteads from forced sale for 158 years. This changed in 1998 when a voter-approved amendment to the Texas Constitution took effect. Now certain loans can be secured against the equity in a house. With these home equity loans if the loan is not repaid or the terms of the loan are not met, the lender can foreclose or sell the home. 

If you have a problem with a home equity loan or lender it is best to consult an attorney. The Office of Consumer Credit also has a help line at (800) 538-1579. 

With a home equity loan homeowners can borrow money using up to 80 percent of their home as collateral. Equity in a home is the value of a home minus any liens or mortgages that are secured by that home. 

A home equity loan will usually have lower interest rates than other consumer loans or other first mortgages. The rate is determined by competition among creditors and the borrower’s credit history. A borrower cannot be required to pay fees in addition to interest that are in excess of 3% of the principal amount borrowed. 

There are two types of home equity loans. A first mortgage and a second mortgages. The first mortgage is secured when an individual buys a home or refinances an existing mortgage. The secondary mortgage is a loan secured by the homestead that has at least one mortgage or lien. 

The money received from a home equity loan can be used in any manner. Different lenders may set their own limitations on the use of the proceeds from a second mortgage. 

The law requires a 12 day waiting period after a consumer submits an application and receives notice of their consumer rights. This gives you 12 days to change your mind before the loan is closed. 

Only one home equity loan can be open at a time and this loan and the loan cannot be refinanced more frequently than once a year. 

Source:
April 2002.Home Equity Loans: Common Questions and Answers. www.texasbar.com
  

Texas Reverse Mortgage

On Nov. 8 2005 Texas voters approved proposition 7. This amended the Texas Constitution to authorize line of credit advances under a reverse mortgage that will empower senior homeowners to control the amount and costs of their home equity borrowings by requesting advances only when needed and only in amounts needed. 

A reverse mortgage is a home equity loan that allows senior Texas homeowners, age 62 or older, to borrow against the equity in their home without having to repay any of the mortgage debt during their lifetimes so long as the continue to live in their homes and keep property tax and home insurance current. It is intended to help seniors finance the cost of living by converting their home equity into annuity like periodic payments to the homeowner over their life.

It is called a “reverse” mortgage because payments on the mortgage are said to flow in reverse from the lender to the homeowner. Disbursements to the homeowner under a reverse mortgage accrue interest including interest on interest, until maturity when the full loan balance of principal and interest is repaid to the lender in a final lump-sum payment.

A reverse mortgage has several advantages over a home equity loan. A reverse mortgage is tailored to the financial needs of senior homeowners who are living on fixed income and may not qualify to repay a home equity or conventional mortgage loan. There are no income or credit-history requirements for eligibility for a reverse mortgage. Senior homeowners will not have to demonstrate credit worthiness or have a source of income or assets with which to repay the loan. 

Texas residents who are age 62 or older who own and occupy a principal dwelling, a home, a qualified condo unit or town home, a permanently attached and qualified manufactured home should be able to qualify for a reverse mortgage. If the homeowner is married both spouses must be 62 or older to qualify. All loan applicants must first complete mandatory counseling by an approved non-profit counseling agency on the risks and benefits of a reverse mortgage. 

The proceeds from the reverse mortgage may be used by the senior homeowner for any purpose. Most often the loan proceeds are viewed as a supplement to social security benefits. Advances under a reverse mortgage are not taxable as income and do not affect senior homeowners eligibility for Social Security or Medicare benefits. 

The maximum loan amount for a reverse mortgage is determined according to underwriting guidelines that are based on numerous factors. The age of the homeowner, the method of optional advances the homeowner chooses (lump sum, line of credit, term or tenure), the appraised value of the home, home equity and current interest rates are some of the factors taken into consideration. 

Compared to a home equity loan closing costs for a reverse mortgage are similar but still higher. The reverse mortgage is a non-recourse loan. The homeowners have no personal liability for repaying the loan. They are not required to make any repayments during the term of the loan. The full amount owed, including the amounts advanced and accrued interest is repaid from sales proceeds when the homestead property is sold by the borrower or by the borrower’s estate. When the reverse mortgage becomes due, the lender must look solely to recovery against the homestead property under its mortgage as its exclusive remedy. 

Under the Texas law the loan balance of a reverse mortgage cannot be called due and payable until the homeowner sells or transfers the homestead property, permanently abandons the property, or dies. The lender may call the loan due if it is discovered that the homeowner was fraudulent in obtaining the loan or has defaulted on contractual obligations to repair, maintain, pay taxes and insure the homestead. If the lender intends to foreclose for any reason a lender must provide written notice to the homeowner that a reason for foreclosure exists and give the homeowner an opportunity to cure that reason. If the ground for foreclosure is other than the sale of the property or the death of the homeowner the foreclosure may only be obtained by a court order under the applicable rules of civil procedure.

Sources: 
Alsup, J. Alton. Decemeber 2005. Texas’ New and Improved Reverse Mortgage. Texas Bar Journal. Vol.68, No.11. pp1076-77

The Landlord’s duty to repair

If you are currently renting a house or apartment that is in disrepair your landlord could possible violating Texas Law if they fail to remedy the situation. The law provides that a landlord must make a diligent effort to repair anything that materially affects the physical health or safety of an ordinary tenant. 

Examples of the health and safety problems include sewage backups, roaches, rats, no hot water, or lack of heat and air conditioning. These problems may be covered by city or state law. Problems such as broken dishwashers, walls that need painting or poorly managed lawns are not covered by state or city law. Your lease agreement may require that those problems be fixed as well. If there are any questions about how to classify the problem then you should contact your lawyer.

There are some exceptions to the duty to repair. It is not the responsibility of your landlord to repair a condition caused by the tenant or a tenant’s guest. In addition, it may be specifically indicated in your lease that the tenant is responsible for the repair of broken screens, windows and doors regardless of who broke them. Your landlord may also be exempt from the duty to repair if he has only one rental unit.

There are specific steps that the law requires you follow when requesting repairs. Your lawyer can help you follow these steps to obtain those necessary repairs. These steps are designed to notify your landlord of the problem and give your landlord sufficient time to fix it. If your landlord refuses to repair the problem and you have followed the steps required by the law than you may be entitled to terminate your lease, repair the problem yourself and deduct the cost from your rent or sue your landlord. Before you take any action consult an attorney to avoid negative action from your landlord. 

Sources: 
January 2002. A Landlord’s Duty to Repair. www.texasbar.com