Discovery of halfway house upsets homebuyer

Q: Before we purchased an expensive home, we asked the owner about the neighbors and were told specifically about several of them. What we didn't learn until we moved in is that a home next door is a halfway house. Should this have been disclosed? And if so, do we have any recourse for the fact that it wasn't?

A: By law, the seller must disclose any known "material facts" about your home, explains Federal Way attorney Christopher Benson, the owner of Great American Escrow.

What's a material fact? "Among other things, a material fact means information that substantially adversely affects the value of the property," Benson says, adding that the Legislature has set parameters on what can be considered to adversely affect value.

That's basically those items on the Form 17 disclosure document you got — stuff such as the condition of the home's roof, its heating, plumbing, drainage systems, etc. But once you step off your property, it's a different story.

"The legislature has gone so far as to say that the fact or suspicion that any neighboring property is — or was — the site of a violent crime, illegal drug activity, gang-related activity, political or religious activity or other activity not adversely affecting the physical condition of your property is not a material fact."

So you're out of luck unless that halfway house has adversely affected the physical condition of your property.

Is this fair? Benson argues yes. "Think about it. If to sell your house you had to know everybody's business all around you, it would be pretty tough."

That said, he cautions that sellers and their real-estate agents cannot lie when asked a direct question. Direct in this case would be: "Is there a halfway house nearby?"

"I don't think a general question like, 'Is there anything we should know about the neighbors?' is good enough," Benson says.

Q: I'm in the process of refinancing my mortgage. After I paid an upfront appraisal fee to get my loan from one lender, I found a better deal from another lender. I pulled out before the setup and notification of actual appraisal activity. However the first lender will not refund my $400 appraisal fee. Do I have any recourse?

A: To really nail down an answer, it's crucial to know who has jurisdiction over your lender, says Mark Thomson, spokesman for the state's Department of Financial Institutions.

Depending on the type of lender or mortgage broker, it could be the state or the federal government. If your lender is subject to Washington's Mortgage Broker Practices Act, then whether the appraiser actually charged your lender or broker an appraisal fee (to be passed on to you) is a key component.

If there was no charge, then you're due a refund, Thomson says. If there was a charge and an appraisal was ordered but canceled, expect to pay a cancellation fee.

If the appraisal was actually done, then "the lender or broker must give a copy to the borrower within five days of a written request and also transmit the original to another lender also within that same five days.

Often there will be a retype fee (to change the lender names on the document)." Thomson says this "can be fairly expensive, but still cheaper than getting a whole new appraisal."

If you think you're due a refund, contact the Department of Financial Institutions at 800-372-8303. If it doesn't have jurisdiction over your lender, it can refer you to the appropriate agency.

Q: In late October I discovered a roof leak in my townhouse. That's a big problem because it's for sale. I'm working with our homeowners' association to get the leak fixed, but it's slow going and the damage is getting worse. Can I just get the leak repaired myself and get reimbursed by the association?

A: A condo roof is common property maintained by the homeowners' association. The answer to your dilemma may be in your association's governing documents: its covenants, conditions and restrictions, or CC&Rs.

"There should be something in the CC&Rs that addresses emergency repairs and also how a repair proposal is processed," notes Bellevue attorney Stephen Durkee of Durkee & Hennessey.

Typically these rules will also stipulate whether you can make a repair yourself and withhold that amount from your next dues payment.

If you have not done so already, Durkee says, you should put your problem in writing to the association. Tell them of the leak, including the date it started, and state you want it fixed ASAP.

"Tell them they've had more than enough time, and if they don't repair it promptly and you have to incur the cost of repair while they dither, you may look to them for reimbursement."

Home Forum answers readers' real estate questions. Send questions to Home Forum, Seattle Times, P.O. Box 1845, Seattle, WA 98111, or call 206-464-8510 to leave your question on a recorded line. The e-mail address is erhodes@seattletimes.com. Sorry, no personal replies. More columns at www.seattletimes.com/columnists.