Dear George: "I contracted to buy a new home from a builder. I hired a licensed inspector to inspect the framing. His report identified a number of deficiencies. A registered architect also listed several building code violations. I informed the builder. I specifically referenced the building code applicable to 1 and 2 family dwellings. The builder refuses to delay construction to correct the deficiencies. I have prepaid for upgrades so I'd like to know what my options are. What recourse do I have?" - Disgusted

Dear Disgusted: You mentioned an inspector and an architect. Did you ever consult an attorney before signing your contract? I'm constantly amazed at the number of readers who enter into real estate transactions without representation. A real estate licensee can advise you regarding real estate matters. An attorney can advise regarding legal matters. Neither can advise you if you don't hire them.

Your state does not require builders to be licensed. Therefore, builders are for the most part unregulated. Municipalities, as well as some counties, in your state adopt building codes. To that extent builders must comply with the applicable building code, if any, or get "red-tagged" (shut down). However, some builders purposely select areas just outside areas encompassed by any building codes. The "justification" typically has something to do with the land is less expensive. However, an unethical builder can also cut corners. Your best recourse is to hire an experienced attorney to sort matters out.

Dear George: "We were thrilled when our agent informed us that we had a deal on the sale of our home. We were not thrilled when several days later she informed us that the buyer's earnest money check bounced twice. Does this mean our contract is no longer valid or enforceable?" - Uncertain

Dear Uncertain: A trusted attorney friend tells me that your contract is still enforceable. However, the buyer has defaulted. The paragraph dealing with default sets forth your options. Since your question deals with your legal rights under the contract, however, you should hire your own attorney to provide legal advice.

Dear George: "In December 2001 I sold a condominium. I received the condo as a gift from my mother in 1995. For income tax purposes I need to find out what the fair market value of the condo was in 1995. I have no idea about how to find that information. I did find out what the appraised value was from Appraisal District. Isn't appraised value different from fair market value? If it is, can you suggest how I might find the Fair Market Value?" - Seller

Dear Seller: The appraisal districts in your state have been required to assess real property at its "Market Value" since 1983 (and perhaps as early as 1979). The definition of "Market Value" in your state's Property Tax Code is very similar to the definition of "Fair Market Value" found in the Uniform Standards of Professional Appraisal Practice. However, if you believe that the valuation is under-stated for your purposes, hire a state certified Independent Fee Appraiser. The appraisal districts use "mass appraisal" models. Fee appraisers tend to be more accurate as to the Fair Market Value of an individual property.

Dear George: "Please explain what MIP insurance is. I noticed this item was included in the fees I was charged at the closing when I refinanced my home." - Refinanced

Dear Refinanced: "MIP" (Mortgage Insurance Premium") is the FHA equivalent of "PMI" (Private Mortgage Insurance). That is, MIP is to FHA government insured loans as PMI is to conventional or non-government loans. Both types of insurance policies protect lenders from losses in the event of a borrower's default. Lenders are required to place mortgage insurance on most residential loans that have a Loan-To-Value ("LTV") of 80% or higher. However, it is the borrower who pays the cost of MIP or PMI. See http://www.hsh.com/pamphlets/mgicmi101.html for more information. For more detailed information, check out http://www.pueblo.gsa.gov/cic_text/housing/home-insure/mortgage.htm or contact your lender.

Published: April 26, 2002

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George C. Stephens, CRB is the Broker of deRaat Stephens, Inc. dba ERA Stephens Properties and the Director of Compliance for eRealty, Inc. Stephens served as 1998 Chairman of the 13,000+ member Houston Association of REALTORS® and is the Vice Chairman of HAR’s wholly owned subsidiary, e-Har, Inc. He is the 2001 Secretary/Treasurer of the 50,000+ member Texas Association of REALTORS® and TAR’s 2002 Chairman-Elect. Stephens holds a Texas Real Estate Broker license as well as a Texas Mortgage Broker License.