Question: We signed a purchase agreement to buy a home several weeks ago. We had a loan approval, builders inspection, appraisal scheduled, everything going right and then the seller wanted out of contract. We said no. The owner has offered to pay all of our costs but we still want this property. We lived up to our agreement and just love this house. If we took the owner to court for "specific performance" would we win?

Answer: Predicting court outcomes is like predicting next week's horse races, there are no sure things.

When there's a dispute in real estate where one party is judged to be in the wrong the usual resolution is a monetary award -- cash. "Specific performance" -- forcing one party to go through with the contract -- is not practical in some cases, say requiring a suddenly-bankrupt buyer to purchase a property.

1. It could take several years to resolve the matter in court.
2. There is no certainty as to who will win.
3. The property essentially can't be sold while the parties battle in court because the title is clouded.
4. You may have legal expenses which cannot be recovered.

The real question here is how much time and effort you want to further invest in this property. The owners might be more motivated to sell if you seek substantially more than your costs. Discuss your options with an attorney in the state where the property is located.

Question: I recently spoke with a lending institution which suggested an interest-only loan that would give me low monthly costs. With the first 10 or so years going mostly to interest in a 30-year fixed mortgage, why not get an interest-only loan? The adjustable rate starts at 4.1% and I can prepay. Is this a good loan for me?

Answer: You will lower your monthly cash cost with an interest-only loan. For instance, if you borrow $200,000 over 30 years at 6.25 percent the monthly cost for principal and interest would be $1,231. An interest-only version would have a monthly cost of $1,042 -- a cash savings of almost $200 a month.

That said, since the debt will not decline over time, the interest cost will remain unchanged during the life of the loan. Without a principal reduction each month, there is no equity build-up from debt reduction. In a worst-case situation, with a property value decline you could find yourself owing more than the property is worth.

With an interest-only loan you are trading lower monthly costs for ongoing debt. This might be a good strategy for an investment property, but for a residential purchase I prefer an amortizing loan. Why? Because owners can sell, keep or refinance a property more readily if there is little or no debt.

Question: Four months ago we saw a house we liked and said we were interested, but didn't make a firm offer at that time. The owner now wants to take the home off the market. Is there any way we can make an offer on the house?

Answer: An owner is not obligated to eternally offer a home for sale. You could have made a written offer when the owner was actively marketing the property.

You can still make an offer -- I have had people approach me to buy property which was not for sale. But an owner has no obligation to review an offer or accept it.

Question: We are refinancing our home. It has been discovered that the lien papers were never released when we purchased our home new. The builder has been paid, however, somehow there was a breakdown in the filing of these papers. We now cannot refinance because of this and will probably lose our lock-in rate. How can we get the house refinanced?

Answer: There may be a simple paperwork error here. Or, perhaps sub-contractors were not paid.

Contact the title insurance company used at closing. They will review the closing papers to see if the liens were supposed to be removed. The title insurance company will help in this matter -- without further cost to you.

Question: We purchased a home that has a 2-year FHA/VA Roof Certification. However, a heating-and-air conditioning contractor has told me that the roof had 4 and 5 layers of comp shingles and was not safe or to code. I went to the City and pulled the permits, and found none for roofing, and the permitted number of layers was three. What next?

Answer: Roofing material is heavy and extra layers beyond code mean additional weight on a home that could pose a danger.

What is the remaining life estimated on the certificate?

Contact the original roof inspector, explain the matter and ask them to re-check the roof at their cost.

You might also want to contact another roof inspector for an independent evaluation.

It could be that the roof is fine -- and the heating contractor made a mistake. But if it is confirmed that there are four or five layers of roofing, then review your sale agreement, seller disclosure statement and roof inspection certificate to see who told you what -- and ask an attorney what recourse may be available.

Have a real estate question? Send your inquiry to . Because of the volume of mail received, Mr. Miller cannot respond to questions individually or privately. Published letters may be edited for space and style. For comments regarding other Realty Times articles, please contact individual authors by pressing here.

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Published: September 12, 2003

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