Dear George: "My broker notified me the day before the sale of my home was scheduled to close, that the buyer loan was denied. She was apparently depending upon the sale of her home to buy mine. The buyer of my home deposited $1,000 earnest money. When I asked my agent about the earnest money, she told me the buyer, who is also a broker, did not deposit any earnest money. The contract states that she did. What are my options at this point? Is the earnest money mine or not?" -- Please Help

Dear Please Help In this situation you relied on the representations of your broker. As a result, you could not accept other -- and perhaps better -- purchase offers and when the transaction failed you could not collect the deposit money which was supposed to protect you.

Please contact your state real estate commission to consider a complaint against both the buyer and your broker -- the commission may have a "guarantee fund" under which you could be compensated. Also, speak with an attorney regarding your rights and remedies in this matter.

See if your local Realtor association has an ombudsman program. The Ombudsman will listen to your side. Then the Ombudsman will contact the broker member with whom you are having the problem to listen to his or her side. The purpose is not to settle the dispute, but to make sure that you, as the consumer, are fully aware of all the options available to you. It also assures that the broker Member understands that you, as a consumer, know all the options available to you. I'm told this program has met with great success.

Dear George: "I bought a townhouse in Maryland at the end of October. I like my home. However, it makes me sick when I breathe the odors coming from the carpet. The previous owners had two dogs. When I did my walk-through there was no evidence of the odor. I suspect there had been a liberal application of carpet deodorant. I've had two professional cleanings. Both firms tell me that the urine is in the padding as well as the carpet. New padding with a cheap carpet would cost $4,000. The owners said they had no problems with pet odors. Do I have any recourse about this smelly problem?" -- Help!

Dear Help! What does the seller disclosure form say? Did you have a professional home inspection? Did you buy the property in "as is" condition?

It is very difficult to obtain compensation once a property has closed, however in the right circumstances it can be done. Obtain three detailed quotes from reputable firms. Keep in mind, that replacement of the padding (or just the "involved" sections of padding) and carpet may not be enough. If the padding is in contact with a concrete subsurface, you may also need to seal the concrete.

Ask the sellers to compensate you for some or all of the damage. If they do not, speak with an attorney.

Dear George: "I purchased my house two years ago. I am thinking now about refinancing. I wish to take advantage of the extremely low rates. Furthermore, I plan to do some home improvements in about one to two years for which I will need to secure financing. Does it make more sense to wait on refinancing until I do the home improvement financing?" -- Wondering.

Dear Wondering: The interest rate on refinancing your home appears to be about 2-3/8 percent lower than your existing loan. You will likely incur some closing costs, but refinancing makes sense if you are planning to remain in the home for a number of years, whether you remodel or not. Do it now.

As to loan options, if you plan to improve in two years and you borrow the money now you will pay interest on funds you will not immediately use and may be tempted to spend elsewhere. Perhaps refinance and also obtain a line-of-credit home equity loan that can be used as needed.

As to a "home improvement loan," be very careful. Compare costs and terms with a home equity loan from a lender -- not a contractor. Hire a state certified appraiser to provide an "as improved" value estimate before hiring any work done.

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George Stephens welcomes your questions by e-mail. Because of the volume of mail received, questions cannot be answered individually. Mr. Stephens is not a lawyer and this column does not contain legal advice. If you wish to obtain legal advice, please consult with an attorney or legal clinic.

Published: December 28, 2001

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