Question: I'm planning to take out $60,000 as either a home equity loan or home equity lone of credit (HELOC). Assuming I use the entire amount of the credit line, which is preferable right now? Is there any way to tell if this will change in the future?

Answer: One way or another everything will change in the future, trust me.

Your question requires additional information: For instance, are the interest rates, indexes and margins the same for both products? Which has higher closing costs? (Home equity lines of credit are often available with very few closing costs, but with a prepayment penalty if paid off in two or three years.)

I would choose the HELOC. Here's why: As I pay back the loan I would again have access to equity, but this time without mortgage applications or another round of closing costs.

Question: Can a person sell property to another person without asking the person that they did the wrap with? For example: My husband and I did a wrap around contract with our cousin and our cousin sold the property. Can he do that, and what do we get from the sale?

Answer: If I understand your question correctly, you sold your property to your cousin. The transaction was financed with a wrap-around mortgage; that is, the existing loan was left in place and additional financing from you was added to the property.

Then, apparently, your cousin re-sold the property. When the property was re-sold one would hope that all existing liens were paid off, including the wrap-around note -- unless your loan was assumed by the replacement buyer.

Please consult with a real estate attorney immediately. Bring all loan agreements and related paperwork for your visit.

Question: I'm the owner of a townhouse in a complex of 95 units with a pool and no other amenities. The complex is managed by a local property management firm. The dues are $95 per month (excluding water and sewer) which I think is pretty reasonable. The property manager publishes a monthly newsletter from the board meeting that shows we have $123,000 layered in CD's at a local bank and $21,000 for operating funds. I feel like I belong to an investment club and not an HOA. I understand the need for reserves, but when is enough, enough?

Answer: In total it sounds like the HOA has a lot of cash on hand and thus might be able to reduce monthly fees, however seen another way the HOA's reserves are equal to $1,295 per unit. That's not a lot if a bunch of roofs need to be repaired.

Also, the annual fee collections amount to $108,300 (95 units x $95 x 12), so the HOA has about a year of funding in reserve.

How does the HOA spend the money it takes in each month? What are you getting for more than $100,000 a year? Speak with your HOA treasurer for details.

Question: Does anyone on your staff have enough knowledge and historical perspective to provide me with any advice on the New York City area market, and whether it will be affected by the slowing housing market?

I keep hearing that nationally, prices still may have a way to go (downward), but I have heard that this will never affect New York City, because especially with the current higher value for European currencies, the market is being bought up (and prices pushed upwards) by wealthy Europeans.

However, I have also read (and remember from hearing about it) that the value of NYC apartments dropped nominally 40 percent and for inflation, 60 percent, from 1989 to 1995, so I am not sure what to believe.

If you can perhaps give some advice on whether such a drop will not happen again for some reason (perhaps due to the European buying trend)?

Answer: Nope, no special historical perspective here.

You note the argument by some that prices in New York can "never" fall and then offer two recent examples which show that values in the Big Apple can and do change, both up and down. The "never" argument is plainly untrue.

As to the impact of European buyers, why look only there? Investors from all over the world own property in New York.

I suspect that values in Manhattan at this time are most-plainly impacted by home-grown salaries and bonuses from Wall Street, billions of dollars paid to a relatively small population of workers. If Wall Street slows I would expect less upward pressure on New York real estate prices, especially in Manhattan, but this is just a guess.

Question: We have an IRS agent who is the vice president of our HOA board. He has informed the president that by virtue of his employment he cannot ever be President of the Board due to IRS regulations which prohibit him from making financial decisions, signing checks or being involved in accounting decisions. Our by-laws require the vice president to assume responsibilities in the event the president is unable to perform. This represents a problem because the president must sign checks with the treasurer and the management company. Should he even be on the board?

Answer: If the HOA president ever becomes incapacitated the IRS agent can simply step-aside so that the individual who is third in the line of succession can take the place of departed HOA president.

Perhaps at the next HOA meeting the matter of succession should be clarified. As to the IRS agent, he is doing everyone a favor by participating as an HOA officer and should be welcomed.

Question: If I want to get my earnest money deposit back from a seller with whom I did not close on property, do I need to go though mediation or arbitration if we agreed to that? Since we did not close, I'm thinking I can go through small claims and not arbitration or mediation. I want to pursue my earnest money deposit -- because the seller refused to give certain closing credits which were required in writing.

The escrow company allowed the seller to do so despite my objection, as the seller owns the escrow company I was required to use.

Answer: Most probably you were not required to use a given escrow company. Instead, it's likely that you agreed to use an escrow company in exchange for certain benefits.

As to mediation and arbitration, such options typically exist if problems cannot otherwise be worked out. If you simply get back your deposit no other action is required.

Did you have any outside assistance for your purchase, a buyer broker or an attorney? If not, how could you compete as an equal with someone who owns an escrow company? Is the arbitration or mediation clause balanced with no special requirements of either party?

Please see a local real estate attorney for specific advice. Among other questions, ask if your deposit money is being held in an escrow (trust) account.

Question: I'm a condo seller in Los Angeles. The property was built in 2004, and at one of our first homeowner meetings -- because two people had mentioned that they were allergic to cats -- we voted in favor of imposing a rule that no future homeowner can ever have a cat.

Now I'm selling my place, I finally accepted an offer, but the buyer just informed us that they have two cats. I've read about a companion-pet law from 2001, but I'm not sure if that applies here. My contention is that these are two indoor cats, they would never roam the halls and most likely people in the building would never ever see the animals.

I have submitted a request to the Board of Directors that we as a building come together to write some sort of agreement that the new buyer must agree to in order to live in the building, establishing clear guidelines that would restrict her cats to only ever be inside the unit and never in any common area.

I'm hoping you can maybe shed some insight for me on this matter.

Answer: Are the cats important to the buyers? Is this an issue for them? Do you have a written disclosure which they have signed regarding the cat rule?

What you propose makes a lot of sense. A review of the issue is not unreasonable, and it may be that some accommodation can be made -- especially since there will come a time when other owners will want to sell.

However, if the cat ban cannot be resolved then what happens to your buyers? Can they be compelled to purchase? Did you give them adequate notice? Please have a local real estate attorney review your sale agreement.

Question: I'm a tax professional who has a first year real estate agent as a client. We have requested an extension for her on her taxes and I have advised her that as a self-employed professional she should make estimated payments quarterly.

Is there a listing of deductions that a real estate agent can take?

Answer: The IRS has a list of real estate-related publications, but nothing which seems to relate directly to your question. I suspect the reason is that a self-employed real estate agents is simply, well, someone who is self-employed.

Does your client have a list of her business-related expenses and supporting documentation? Most likely all are deductible on Schedule C. It is probably useful to see the general material offered by the IRS regarding self-employed taxpayers.

Question: I have a contract to sell my mobile home. If the buyer backs out what can I do? They put down $100 for earnest money. Who gets that money?

Answer: Real estate agreements do not always result in a transaction. Sometimes the reason is that the agreement is conditional -- that is, it depends on an inspection satisfactory to the buyer, the ability to get financing at no more than a certain rate or clear title, etc. In such instances the deposit is returned to the buyer without penalty.

At other times, however, a sale agreement fails because a buyer or seller did not live up to their obligations. In that case a buyer can lose their deposit while both a buyer and a seller can potentially be sued.

For specifics, you need to see what your agreement says.

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Published: July 13, 2007

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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.