ARTICLES & NEWS

HOME CONSTRUCTION ARTICLES

Baby room

Son Entitled to Appreciation in Home’s New Value

By Christopher Combs | May 3, 2020

Question: My son and his girlfriend bought a home in North Phoenix three years ago as tenants in common. They each contributed $15,000 for the down payment, and my understanding is that they have been splitting the monthly mortgage payments and other home expenses. Last year they had a baby, and they needed another bedroom. We loaned our son $20,000 to add on a bedroom. Although my son and his girlfriend are happy now, what happens if they break up and have to sell the home? Will my son get back from the proceeds the $20,000 cost of the bedroom…

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handshake deal

Documentation Necessary if Building Home with Next-Door Neighbor

By Christopher Combs | March 29, 2020

Question: My next-door neighbor has a construction background. I can get construction financing. We want to buy an old home in downtown Glendale, and do a “scrape and build,” i.e., tear the old home down and build a new home. My next-door neighbor is fine with a “handshake” deal. In other words, everything would be in my name to get the construction financing and we would split the profits after we sell the new home. What are your thoughts? Answer: Not good thoughts! In every business relationship, and especially in a business relationship with a neighbor or a family member,…

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Community Center

Developer Has Sold the Community Center

By Christopher Combs | March 22, 2020

Question: We purchased our new home in a Chandler subdivision six years ago. At the time of our purchase we received a brochure from the homebuilder stating that one of the benefits of our purchase was the community center which could be used for recreational and social activities. After all of the homes in the subdivision were sold by the developer, the developer deeded the community center to the owner of an adjoining golf course for a golf maintenance building. I always thought that, if the homebuilder’s brochure stated that a certain item such as a brand name microwave would…

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1031 exchange

Restrictions Apply on Tax-Free Deferred Exchange of Homes

By Christopher Combs | March 8, 2020

Question: Ten years ago after the “crash” we bought a rental home in North Phoenix. This rental home has appreciated in value by $200,000 in the last ten years. We now want to sell this North Phoenix home, and to use the $200,000 sale proceeds to build a home in Chandler as our personal residence. We do not want to pay any tax on the $200,000 capital gain on the sale of the North Phoenix home. Can we use a section 1031 tax-free deferred exchange to sell the North Phoenix home and use these $200,000 sale proceeds to build our…

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Construction loan

“Walking Away” From Construction Disaster

By Christopher Combs | February 23, 2020

Question: In 2016 we bought a lot for $40,000 in Camp Verde to build a summer home. Last summer we got a construction loan for $280,000. This $280,000 construction loan was secured by the lot and by the home to be constructed on the lot. During construction of the home, however, heavy rains caused the foundation to sink and the partially built home to collapse. Almost all of the $280,000 loan had been used for the construction of the home. Our contractor has no insurance and our insurance company has denied coverage because we didn’t go to Camp Verde to…

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Tenancy in Common

Sale of Tenancy in Common Home

By Christopher Combs | December 1, 2019

Question: My next-door neighbor and I wanted to build a “spec” home in Peoria. My next-door neighbor then bought the lot for $100,000, and we took title to the lot as tenants in common. My next-door neighbor did not have good credit, so I took out the construction loan of $300,000 to build the home. The home has been completed with an appraised value of $600,000. If the home sells for $600,000, how will these $600,000 sales proceeds be divided between me and my next-door neighbor? Answer: In order to calculate the division of the $600,000 sales proceeds, you should…

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Damaged stucco

Remedies Against Homebuilder for Defective Stucco

By Christopher Combs | September 1, 2019

Question: Last year we purchased a new home in north Scottsdale. Every time that we get any measurable rain, parts of the stucco on our home loosen and fall. The homebuilder’s contractor has tried unsuccessfully several times to correct the stucco problem. Do we have any rights against the homebuilder? Is there a time period? Answer: First, you can file a complaint with the Registrar of Contractors (“ROC”). You have two years from the completion of the home to file this complaint which costs you nothing. After you file the complaint, the ROC will send an inspector to inspect your…

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Can the Home Builder Keep my Earnest Money?

By Christopher Combs | June 10, 2019

Question: We entered into a contract to purchase a new home in a subdivision in the San Tan area for $300,000. We deposited $30,000 earnest money in escrow. After 45 days while the home was still in the framing stage, my wife decided that she wanted to quit her job and return to school. With only one income we will not be able to afford this new home now, and we want the return of our $30,000 earnest money. Due to strong demand in our subdivision, the homebuilder has just raised the base price for our model home, and the…

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