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• Residency. You need to be a Michigan resident, meaning that Michigan is your permanent home - the place you intend to return to whenever you go away.  A temporary absence, such as going to Florida for the winter, won't destroy your status as a Michigan resident.  You may be asked to show documents verifying your claim that a specific home is your principal residence.  Examples include a driver's license, voter registration card, checks listing the property address, income tax records, and charge account statements.
• Multiple Residences. If you own two homes in Michigan, only one of them can be your principal residence.
• Claiming the Exemption. You claim the exemption by signing a Homeowner's Principal Exemption Affidavit, and filing it with the local tax assessor.  When you buy a home, the closing officer or your real estate agent may help you with the filing.  The tax assessor needs to receive the Affidavit by May 1 if you are to benefit from the exemption for the current calendar year.  (But if the seller already had the exemption in place, the taxes for the current year will be based on the home's exempt status.  This is helpful if you close on your purchase after May 1.)
• Re-filing. Once the Affidavit is filed with the assessor, there's no need to file another one in later years.  You'll get the benefit of the exemption as long as you continue to own and occupy the home as your principal residence.

The attorneys at the Ann Arbor firm of Hamilton, Judge, Schroer & Steingold can advise you on how the principal residence exemption applies to your specific situation.

• Contractor's Inspection. An experienced contractor can spot problems - or potential problems - with the home's electrical, plumbing, heating and air-conditioning systems.  The inspector can also check out the condition of the roof, basement, and other structural elements.  If you're not satisfied with the condition of the house, the seller may agree to reduce the sales price or correct the problems before closing.  If that doesn't work, you're free to cancel the deal.
• Radon Inspection. Radon is an invisible, odorless and tasteless gas that can cause health problems - especially if the level exceeds 4.0 picocuries per liter.  The contractor who inspects the home can use a simple test kit to determine the radon level.  If the level is too high, there are ways to remediate the problem.  You and the seller can work which of you will pay for the remediation.
• Lead-Based Inspection. Lead-based paint may be present in older homes.  This can be a problem if you have young children.  You can have the home checked for lead-based paint, and then determine the cost of correcting the problem.  If the seller is unwilling the bear the cost, the contingency clause in the sales contract will let you void the contract.
• Pest Inspection. A qualified pest inspector can check for the presence of wood-destroying insect or damage caused by them.
• Well and Septic Inspection. If the home isn't served by municipal water and sanitary sewer services, you want to make sure the water is safe to drink and the septic system is in good shape.  Health regulations in Washtenaw County require a homeowner to have a certified inspector examine the well and septic system before selling the home.  Your home purchase should be contingent on your satisfaction with the inspection report.  You can also have an inspection made by an expert selected by you.

The attorneys at the Ann Arbor firm of Hamilton, Judge, Schroer & Steingold can help you include appropriate contingency language in the sales contract, and advise you on issues related to inspections.

When you sell your home, you'd hate to have the buyer later claim that you misled him or her about the home's condition. The fact that the buyer had the home inspected by a professional contractor may not fully protect you from legal claims.  Making clear disclosures will help you reduce the risk of liability to the buyer.

• Sales Contract. You'll probably see a clause in the sales contract in which you represent that all equipment and improvements in the home are in working condition, except for the items that you specify.  Be sure to insert any items that are not in working condition.
• Seller's Disclosure Statement. A Michigan statute mandates the use of this form.  In the form, you'll disclose what you know about problems with or defects in your home.  The form covers not only appliances and systems in your home, but deals with such issues as leaky roofs and basements.  If something changes after the buyer receives your disclosure statement, you should inform the buyer in writing.
• Lead-Based Paint Disclosure. Federal law mandates the use of this form.  You'll disclose what you know about the presence of lead-based paint in the home, and give the buyer any records you have on the subject.  You'll also need to permit the buyer - or his or her expert - to inspect the home for lead-based paint.
• Your General Duty. Besides being diligent in completing the above forms, you have a general duty to be honest with the buyer about the condition of the home.  For example, if the buyer expresses concern about the condition of the home's foundation, reveal all that you know - preferably in writing.

The attorneys at the Ann Arbor firm of Hamilton, Judge, Schroer & Steingold can explain your disclosure obligations in greater detail, and can help you with all other legal aspects of selling your home.

Suppose you and your spouse are getting divorced and you’re working on a property settlement. What can you do if the mortgage balance on your home exceeds the home’s value?  Consider these two scenarios.

• Scenario #1: You want to stay in the home.  Your spouse will prefer that you refinance the mortgage so that you alone are indebted to the lender.  To accomplish this, it may be necessary to use some marital assets – in addition to the new loan proceeds – to pay off the existing mortgage.  But what if refinancing isn’t feasible?  Your spouse may agree to let you keep the house if you promise in writing to protect him or her from any personal liability for the mortgage balance.  If so, your spouse will want to make sure that you have sufficient resources to make good on that promise.  Another possible solution is shelter support. Here, your spouse continues to make the mortgage payments or contribute to them.
• Scenario #2: Neither of you want to or can assume the mortgage liability alone.  In that case, there are several possibilities – some with colorful names.

Roosting.  You both agree to remain in the home and share expenses until the house can be sold for what’s owed on it.

     Short Sale.  You and your spouse sell the house for less than the mortgage balance, and the lender agrees to accept the sales proceeds and cancel the rest of the mortgage debt.

     Squatting.  One or both or you remain in the house, making no mortgage payments.  You wait out the foreclosure period which may last a year or more.  The downside: the mortgage company may try to collect from you if the house sells for less than the mortgage balance.

     Jingle Mail.  Both of you move out and surrender the house to the mortgage company.  (“Jingle Mail” suggests the sound of keys being sent in.)  Caution: Unless the bank agrees to cancel the mortgage debt, you can still be personally liable.

     Deed in Lieu of Foreclosure.  Both of you deed the house to the mortgage company which agrees to accept it in place of a foreclosure sale – and agrees as well to forgive your personally liability.

     Bankruptcy.  This gets rid of any personal liability for the mortgage balance.  You might look into completing a joint bankruptcy before your divorce is final.

 The attorneys at the Ann Arbor firm of Hamilton, Judge, Schroer & Steingold can help you explore these options and apply them to your own, unique situation.