'Heating' Things Up

Q: DEAR BOB: After buying a townhouse condominium, my husband and I soon learned that the heat didn't work. Several experts have confirmed the problem, and local contractors tell me they are aware of heating problems throughout the complex. The seller's real estate agent lived in the complex until recently. Fixing this won't be cheap -- it could cost about $30,000. The seller refuses to respond to our letters, and the listing agent refuses to enter into arbitration. Is it worthwhile to recover our costs with a lawsuit against the seller and the agent? If we can prove fraud, can we seek punitive damages? -- Karen S.

A: DEAR KAREN: Your first step should be to consult a real estate lawyer. The seller and the listing agent obviously knew about the defect. Normally, the buyer's biggest obstacle is proving that the seller or agent knew about the undisclosed defect before the sale closed. That should be no problem here because local heating contractors can be called to testify about the widespread heating problem in the complex.

As for recovering punitive damages for fraud, that is usually difficult.

DEAR BOB: My sister died and left her house to her daughter, but the daughter doesn't want the house. A quitclaim deed has been suggested. What exactly is it, and how might it benefit my niece as an alternative to letting the mortgage company foreclose? -- Joyce H.

DEAR JOYCE: If she wishes, she can renounce her inheritance. A quitclaim deed would be applicable if the daughter has already received title to the house, either from the probate court or a source such as the living-trust trustee. The daughter should consult a lawyer so the property won't be lost by foreclosure for nonpayment. After she renounces her inheritance of the house, the estate executor or administrator will distribute it to the next heir named in the deceased's will or living trust. If your sister died without a will or living trust, then the probate court will distribute the house to the next-closest heir.

DEAR BOB: What is the normal earnest money deposit that should be offered by a buyer for a $350,000 condominium? Is it a percentage of the sales price, or is it based on something else? -- Ottilia C.

DEAR OTTILIA: There is no "normal" earnest money or good-faith deposit for the purchase of a residence. At a minimum, however, it should be 1 percent of the sales price to show serious intent. That would be $3,500 in your situation.

If you are making an offer substantially below the seller's asking price, a larger deposit can impress the seller. However, your deposit should not be more than 5 percent of the purchase price. Always make your check payable to the firm you want to handle the closing of the sale, such as a title-escrow company or perhaps a real estate lawyer -- not the seller.

DEAR BOB: My mortgage company sent me a letter saying I can request to have my private mortgage insurance canceled if I meet the conditions it listed. It asks that I send a $150 check for a formal written evaluation of the property to determine that my house has not declined below its original value. Can I shop around to find someone else to do this evaluation, perhaps at a lower price? Or would it be wise to go ahead and send the mortgage company $150? -- Elizabeth H.

DEAR ELIZABETH: The bank offered you a bargain-priced appraisal. Grab it. Spending $150 to get rid of your PMI premium sounds like a great investment. That's presuming, of course, that your home has not declined in market value.

DEAR BOB: I received an offer from an independent mortgage lender stating that I can refinance my mortgage of $215,000 at 5.5 percent fixed interest to a monthly payment of $67 for 10 years. How is that possible? What is the catch, and is it necessarily bad, especially considering that we could use the financial break over the next few years? -- Bill P.

DEAR BILL: Read the fine print in the lender's offer. If the lender wants you to pay any upfront loan fee, other than perhaps for an appraisal costing about $300, be cautious. You already have an excellent mortgage.