Question: I'm interested in investing in Austin real estate. However, I live in another state and do not have time to take care of rent. Are there any agencies that can take care of finding tenants?

Answer: You want to find a Texas real estate brokerage that offers management services in Austin. You also want to carefully evaluate local real estate options to determine which property or properties would work best given your finances and personal preferences.

Question: I closed on the purchase of a house and a few days later we had to vacate the house because the bathroom toilets, shower and tub were overfilling with water. The only dry rooms left in the house were the kitchen and utility room.

It was discovered by a plumber that the main sewage line had collapsed and was filled with roots. The damage to the sewage line is approximately 25 feet from the house foundation.

Are there any measures that I can take with the real estate agent and seller with whom I bought the house from? The house was not bought "as is."

Answer: There are some things which are the responsibility of the seller -- and some which are not.

The question which you need to ask is whether or not the seller knew about the condition of the pipe at the time the property was made available for sale. If yes, then the seller would have an obligation to disclose the problem.

However, how likely is it that a homeowner would know about problems with a buried sewer pipe outside the home? Were there leaks? Depressions in the ground? Back-ups?

Speak with the neighbors and ask if they remember any plumbers at the property recently.

As well, is this even a homeowner repair? Given the distance to the house, by any chance is this pipe the responsibility of the water company?

Question: We're selling our home ourselves (by owner). What will we be responsible for at closing? Our home is going to sell for $500,000+.

Answer: Your obligations at closing are determined by the commitments you made in the sale agreement. For instance, did you agree to pay all of the transfer taxes, half, none or make some other arrangement? Did you agree to pay some portion of all closing costs, say the first $10,000? Did you agree to make a "seller contribution" equal to 3 percent of the sale price? Or more?

You now have a live contract. You must honor all obligations. Please have an attorney or legal clinic review the document to determine your promises -- and costs.

However, a legal review at this time will merely tell you the terms of your agreement. What you really needed, and did not have, was advice before you placed the property on the market. In other words, the time to review the agreement was before the property was offered for sale so that you could negotiate individual items.

While self-selling may have made sense years ago when real estate transactions were far-less complex, that's not generally the case today. You should have help from a broker or at attorney. If your buyer had such assistance, whether known to you or not, you may well have committed yourself to huge and unnecessary financial obligations.

Question: We signed a 'side agreement' as sellers to give the buyers cash at closing for repairs to the property we sold. The repairs were to be done after the closing. We have not paid the funds. We do not have the money.

What should we do?

Answer: By "side agreement" do you mean a part of the sale arrangement which was not disclosed to the lender?

When you enter into a real estate agreement which requires financing by a third-party lender, the lender must be given the entire sale agreement. If the idea of the "side agreement" was to hide information from the lender, then the lender has the right to decline the loan. The lender might also see the loan application as fraudulent, something no borrower should want.

In the same way that lenders should not abuse borrowers, it's equally fair that borrowers should not abuse lenders. Lenders have a right to all details regarding a transaction, otherwise they're likely to make erroneous lending decisions.

Full disclosure is necessary because the lenders make loans based on the appraised value of the property or the sale value, whichever is less. If lenders do not know all the details of sale agreements then they can make loans which are too large -- thus increasing their risk. A "side agreement" can be seen as a discount on the sale price, meaning that lenders should be making smaller loans -- or maybe no loans.

If the agreement was plainly disclosed to the lender within the loan application then you have an obligation to come up with the money because the arrangement is simply a contract contingency. If the agreement was hidden from the lender then there may be a question as to whether such an arrangement is enforceable. Your job is to contact a local real estate attorney. Immediately.

Question: Me and my wife are interested in purchasing a quarter interest in a vacation home with three of our close friends (couples). We will be paying an equal amount of cash each so there will be no mortgage

Considering the fact that several joint issues need to be addressed, such as expenses, utilities, taxes, etc., what type of agreement would you recommend?

We would also need to address the issue of potentially buying each other out or perhaps reselling the property at some point in time.

Answer You get big points for realizing that you need a written agreement up front because today's "close friends" can quickly evolve into tomorrow's combatants. There are fairly-standard joint ownership agreements which can be perfected by a local real estate attorney.

Question: Our landlord raised our rate significantly, so we gave 30 days notice. During that 30 days we did some chatting and he lowered the renewal offer. Yet with 10 days left in the month he became impossible to get a hold of. I tried e-mail, phone and three stops in the office. As a result we had no choice but to pack up and leave. Because he was completely unresponsive and made no effort to communicate with us, we had to leave the keys and the gate opener on the kitchen counter. I sent e-mails (which has been a form of communication in the past) and a certified letter notifying them that we vacated the unit. Is there anything else I could have done?

Answer: With a good lease form there should be a section for "notices," the way to officially communicate. A certified letter certainly shows that you communicated with the broker, a certified letter with a return receipt required would give you evidence showing when your letter was actually received and that it was received.

If you are at the end of the lease, or if you have a "hold-over" tenancy on a month-to-month basis, then a landlord is not required to give more than 30 days notice for a lease termination, rent increase, etc. Alternatively, you also must give at least 30 days notice to vacate without penalty.

I'm not sure what a "significantly" increased rental rate is, but you might want to see if any rent control requirements exist in your community. Such rules are thankfully rare these days, but if the property is under rent control then you should see if the landlord followed all rules regarding the size of the increase, notice and related issues.

Question: My husband is a real estate appraiser and consultant. He owns his own business. We also own a rental property which is a condo, he serves on the board of directors that makes decisions regarding improvements, staff and condo fees. This year they decided to repave one of the roads, increase the condo fee and hired a staff member who assists with rentals. Aren't such decisions things for a real estate professional to decide?

Answer: A condo board is made up of people who have one singular qualification: They own at least one of the units at the property. The test is ownership, not one's profession, training or experience.

If the condo rules allow the board to make decisions regarding improvements, staff and rentals then they have the right to make such decisions -- and unit owners must either abide by the decisions which have been made or elect alternative board members who can change the rules.

For it's part, the board would be wise to get bids for large or specialized work and advice from professionals as required. If the property is sufficiently large, the board might also want to hire a professional manager or management firm.

Question: If I spend more than 750 hours per year looking for rental real estate to purchase and I spend more than 50 percent of my working time doing this, would this qualify me as a real estate professional who is not subject to income rules regarding depreciation write-offs?

Answer: If you spend your time just looking do you have any losses to write off? Or, do you have a hobby?

The rules related to passive write offs are fairly complex. The IRS in part says the following:

"Generally, rental activities are passive activities even if you materially participated in them. However, if you qualified as a real estate professional, rental real estate activities in which you materially participated are not passive activities. For this purpose, each interest you have in a rental real estate activity is a separate activity, unless you choose to treat all interests in rental real estate activities as one activity. See the instructions for Schedule E (Form 1040) for information about making this choice."

Also, the IRS says that you can qualify "as a real estate professional for the year if you met both of the following requirements.

"*More than half of the personal services you performed in all trades or businesses during the tax year were performed in real property trades or businesses in which you materially participated.

"*You performed more than 750 hours of services during the tax year in real property trades or businesses in which you materially participated.

"Do not count personal services you performed as an employee in real property trades or businesses unless you were a 5% owner of your employer. You were a 5% owner if you owned (or are considered to have owned) more than 5% of your employer's outstanding stock, outstanding voting stock, or capital or profits interest."

There's more, but the bottom line is this: Take a look at Schedule E, get a copy of IRS Publication 925, Passive Activity and At-Risk Rules and speak with a tax professional.

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Published: May 16, 2008

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Have a real estate question for Realty Times? Wondering about buying, selling, financing, refinancing or renting? Here's where you can send your question to Peter G. Miller, OurBroker®, a nationally-known columnist, author and reporter. Peter G. Miller has written six books -- including The Common-Sense Mortgage -- a guide with hundreds of thousands of copies in print. Miller was the original creator and host of America Online's Real Estate Center and joined Realty Times in 1998. Send your questions to . Because of the volume of mail received, individual questions cannot be answered privately and not all questions can be used. Published letters may be edited for space and style and all letters become the property of Realty Times upon receipt.