Financial Crimes Enforcement Targets Shell Companies Purchasing Luxury Properties

Geographic Targeting Orders expanded to include Honolulu, Hawaii 

OnlineEd Blog

(August 23, 2017)

canstockphoto5735968- luxury building(WASHINGTON, Aug. 22, 2017/FinCEN) The Financial Crimes Enforcement Network (FinCEN) today announced the issuance of revised Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to identify the natural persons behind shell companies used to pay for high-end residential real estate in seven metropolitan areas.  Following the recent enactment of the Countering America’s Adversaries through Sanctions Act, FinCEN is revising the GTOs to capture a broader range of transactions and include transactions involving wire transfers.  FinCEN also expanded the GTOs to include transactions conducted in the City and County of Honolulu, Hawaii.

In addition, FinCEN today published an Advisory to provide financial institutions and the real estate industry with information on the money laundering risks associated with real estate transactions, including those involving luxury property purchased through shell companies, particularly when conducted without traditional financing.  Such transactions are vulnerable to abuse by criminals seeking to launder illegal proceeds and mask their identities.  The Advisory provides information on how to detect and report these transactions to FinCEN.

“Through this advisory and other outreach to the private sector, FinCEN, industry, and law enforcement will be better positioned to protect the real estate markets from serving as a vehicle to launder illicit proceeds,” said FinCEN Acting Director Jamal El-Hindi.  “FinCEN also thanks Congress for its modification of the Geographic Targeting Order authority, the first use of which will enable FinCEN to collect further information to combat the potential misuse of shell companies to purchase luxury real estate.”

In January 2016, FinCEN issued GTOs to require U.S. title insurance companies to report beneficial ownership information on legal entities, including shell companies, used to purchase certain luxury residential real estate in Manhattan and Miami—specifically, luxury residential property purchased by a shell company without a bank loan and made at least in part using a cashier’s check or similar instrument.  In July 2016 and February 2017, FinCEN reissued the original GTOs and extended coverage to all boroughs of New York City, two additional counties in the Miami metropolitan area, five counties in California (including Los Angeles, San Francisco, and San Diego), and the Texas county that includes San Antonio.

Within this narrow scope of real estate transactions covered by the GTOs, FinCEN data indicate that about 30 percent of reported transactions involve a beneficial owner or purchaser representative that was also the subject of a previous suspicious activity report.  This corroborates FinCEN’s concerns about this small segment of the market in which shell companies are used to buy luxury real estate in “all-cash” transactions.  In addition, feedback from law enforcement indicates that the reporting has advanced criminal investigations.  The expanded GTOs will further help law enforcement and inform FinCEN’s future efforts to assess and combat the money laundering risks associated with luxury residential real estate purchases.

FinCEN appreciates the continued assistance and cooperation of the title insurance companies and the American Land Title Association in protecting the real estate markets from abuse by illicit actors.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Homeless Population Increases as Rents Rise

Portland and Seattle have declared states of emergency in response to the number of people experiencing homelessness

By Jeff Sorg, OnlineEd Blog

canstockphoto8313695evicted(PORTLAND, Aug. 3, 2017/Zillow®/) Rising rents urban areas are creating crisis levels of homelessness that will continue or accelerate as rents rise, Zillow® research has found. The connection between homelessness and increasing rents is especially strong in places that are already facing rapidly growing homeless populations: New York, Los Angeles, Washington, D.C. and Seattle.

A five percent increase in New York rents over the next year would force almost 3,000 more people into homelessness, according to a new analysis from Zillow. In Los Angeles, the homeless population would grow by roughly 2,000, and Seattle would see its homeless population increase by nearly 260.

Relying solely on the number of homeless people counted during a one-night survey is an imperfect method. Previous research has found that as few as 59 percent of unsheltered homeless people are included in a given count.

Rents are at record highs across the country, and income growth did not keep pace as rents grew, making paying the rent increasingly unaffordable. Seattle and Portland, Ore. have declared states of emergency in response to the number of people experiencing homelessness. The median rent payment in Los Angeles requires 49 percent of the typical household income, leaving little opportunity to save in case of an unexpected medical bill, or loss of a job – events which could push a family into homelessness.

“We’ve seen so much pressure in rental housing markets that it’s created a rental affordability crisis that has spilled over into a homelessness crisis at lower income levels,” said Zillow Senior Economist Dr. Skylar Olsen. “Often, the rental demand in these markets isn’t being met with a sufficient supply. There are several cities grappling with this problem, but there is no one-size-fits-all solution for everyone. This report puts a number on the link between rising rents and homelessness, highlighting the very real human impact that rent increases are having across the country.”

 

[Source: Zillow press release]

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Environmental Series: Molds and Fungi in the Home

Molds and Fungi are simple organisms medically known to cause a host of health symptoms

By Jeff Sorg, OnlineEd Blog

(July 21, 2017)

canstockphoto8624069mold(PORTLAND-OR) – Fungi are medically known to cause allergies, hypersensitivity pneumonitis (HP), humidifier fever, infections, mushroom poisoning, mycotoxicoses, and mucous membrane irritation. Some of the Penicillium, Aspergillus, Stachybotrys, Paecilomyces, and Fusarium can be hazardous to health under ideal conditions.

Molds and Fungi are simple organisms, and microfungi are only visible through a microscope. Plaster and wood-rotting fungi are known as macrofungi because they produce sporing bodies that are visible to the naked eye. Molds and mildews are names given to thousands of species of Filamentous Fungi. Most molds and fungi do not cause health problems and are found on plants, foods, dry leaves, and other organic materials. In fact, molds and fungi perform a valuable function as they assist in breaking down dead material.

Mold spores are very tiny and lightweight, which allows them to travel freely through the air. Other types of mold colonize as a network of filaments by attaching themselves to host material. For molds to grow, they need a food source and moisture. Hydrophilic types of fungi need conditions close to saturation, or at least very damp conditions. The Xerophilic types of fungi grow in drier conditions, with only minimal moisture. Molds that have food and moisture will grow in an indoor environment – even in an arid climate. Evidence of mold growths can often be seen in the form of discoloration ranging from white to orange and from green to brown to black growing on various materials found inside and outside the house.

Adverse health effects from fungi usually depend on the dose and duration of exposure to the mold source. The methods of exposure are inhalation, exposure to skin, and ingestion. The groups of people at higher risk are elderly individuals, pregnant women, children, and those with compromised immune or respiratory systems. Health problems generally may be grouped as follows:

  • Infections
  • Respiratory problems
  • Nasal passage problems
  • Eye problems
  • Central nervous system problems
  • Fever
  • Possible death if exposure results from extremely toxic varieties

Remediation should be implemented when a structure has a mold or mildew problem. The following are regarded as the necessary steps in any remediation or cleanup process:

  • Identify and correct the moisture source. No permanent solution to the identified mold problem can be realized unless the source of the moisture fueling the mold growth is identified and corrected.
  • Hard materials that are not absorbent, such as glass, plastic or metal, must be properly disinfected. Disposal of these is not necessary.
  • Carpets, rugs, furniture, and other items with absorbent material must be removed and discarded if not thoroughly dried within 24 hours of water contamination. This type of material, even if disinfected, will usually continue to harbor unsafe mold after decontamination attempts. Therefore, it is best to remove and discard all porous material.
  • All stained ceiling tiles, carpets, or wallboard should be removed and properly discarded.
  • If a structure was flooded, the sheetrock should be removed to at least 12 inches above the high water mark. After sheetrock removal, the wall interior should be inspected for signs of mold.

The following cleanup steps should be followed in a mold remediation situation:

  • Identify whether contaminated material can be saved or should be removed and discarded.
  • If the material can be saved, before disinfecting the contaminated area or materials, clean the materials and surfaces to remove as much of the mold as possible.
  • After the contaminated area has been cleaned, the nonporous surfaces must be disinfected.

The removal of contaminated material should be regarded as a hazardous process, and contaminated materials should be disposed of properly.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Oregon Real Estate Agents Who Flip Houses May Need a Contractor License

Sometimes an Oregon real estate licensee will be operating as a contractor and not even know it!

By Jeff Sorg, OnlineEd Blog

(July 21, 2017)

canstockphoto7462396suit with hard hat(PORTLAND-OR) Sometimes an Oregon real estate licensee will be operating as a contractor and not even know it! ORS 701 defines a contractor as

” . . . a person who, for compensation or with the intent to sell, arranges or undertakes or offers to undertake or submits a bid to construct, alter, repair, add to, subtract from, improve, inspect, move, wreck or demolish, for another, any building, highway, road, railroad, excavation or other structure, project, development or improvement attached to real estate or to do any part thereof.”

Under this statutory definition, the Oregon Construction Contractors Board (CCB) will use the following three-question test to determine if one is acting as a contractor, thereby requiring a contractor’s license.

  • Is the work being done construction related?It does not matter if the work being done is new home construction, remodeling, upgrades, or repairs. It also does not matter whether the licensee is doing the work or if it is being done by others who are licensed or unlicensed.
  • Is the real estate licensee offering the property for sale?  If the licensee buys the house for a rental or primary residence, then the licensee would not have to be licensed as a general contractor to hire contractors.  If the licensee buys the house with intent to resell, then the licensee might need a contractor license.
  • Is the real estate licensee the direct beneficiary of the sale?If the licensee is the direct beneficiary of the sale – in other words, the party who will receive the proceeds from the sale – then a contractor’s license would be required. If the real estate licensee is acting as an agent for the seller by arranging for the work to be done, the licensee would not have to be licensed as a general contractor because the licensee is not a direct beneficiary of the sale.

If the real estate licensee answers yes to all three of the above questions, then the licensee probably would be violating the contractor license law if operating without a contractor’s license.

There are two exemptions under ORS 701.010 that would exempt a licensee from having to register as an Oregon contractor:

  1. If the licensee owns the property and occupies the property, the licensee is not a contractor if the licensee has contractor work performed on the property.
  2. If the licensee owns the property and rents the property, the licensee is not a contractor if the licensee has contractor work performed on the property.

What these rules mean for Oregon real estate licensees:

  • If a real estate licensee buys and moves into an existing house, then fixes it up and sells it, the licensee fits the exemption and a contractor’s license is not necessary.
  • If a real estate licensee buys a property, fixes it up, rents the house, and then sells it, the licensee fits the exemption, and a contractor’s license is not required.
  • If a real estate licensee builds a new house, lives in it, and then sells it, the licensee fits the exemption, and a contractor’s license is not necessary.
  • If the real estate licensee builds a new house, lives in it, and then sells it, and does this on a regular basis, the licensee will not fit the exemption, and the licensee will be deemed a contractor who must have a contractor’s license. This law states that a person is operating as a contractor if the person sells two or more new homes within a three-years. Therefore, a licensee can build one new house and live in it for three years and not be required to have a contractor’s license. But, if that person arranges for or does construction work on two or more newly built properties for compensation and with the intent to sell them within a 36 month period, a contractor’s license is required.

Note: Licensing rules are fluid. Please be sure to check with the CCB to find out if you are exempt from CCB licensing.

ORS 701.010 outlines those who are exempt from construction contractor licensing by includes the following definition:

“An owner who contracts for one or more licensed contractors to perform work wholly or partially within the same calendar year on not more than three existing residential structures of the owner.”

However, this exemption does not apply to “an owner contracting for work that requires a building permit unless the work that requires a permit is performed by or under the direction of a general contractor.” The above exemption means that an owner may contract with one or more licensed contractors to perform work within the same calendar year on not more than three residential properties of an owner.

For the exemption from contractor licensure to apply, the type of work the contractors can perform are those things that do not require a permit. Examples include painting, installing carpet, repairing a roof, or installing new cabinets. If any work requires a permit, then the owner cannot use the licensure exemption and must hire a general contractor.

Getting a contractor license is pretty easy and includes completing the OnlineEd 16-hour Oregon CCB approved contractor pre-license course and passing the CCB’s open-book licensing exam.  Learn more about the OnlineEd $68 Contractor Pre-License Course.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Environmental Series: Volatile Organic Compounds in the Home

Exposure to these compounds can have acute health effects on humans and their pets.

By Jeff Sorg, OnlineEd Blog

(July 20, 2017)

canstockphoto3219894toxic(PORTLAND, OR) Volatile organic compounds (VOCs) are emitted as gases from certain types of solids or liquids. A typical indoor environment may contain as many as 100 different compounds causing concentrations up to ten times higher indoors than outdoors.

Pesticides, cleaning agents, cosmetics, dry-cleaned clothing and fabrics, paints, varnishes, and waxes all contain organic solvents. All of these can release organic compounds while they are being used. Some can even release compounds while stored.

A common characteristic of all VOCs is that they will release gases into the atmosphere. These volatile compounds can be emitted as a gas for short or extended periods.

Exposure to VOCs can have acute or chronic health effects on humans and pets. Since the existing knowledge base of the toxicological effects of VOCs and their mixtures is incomplete, exposure to them should be minimized.

Two of the more common VOCs found in or about residential structures are formaldehyde and pesticides. As an example, let’s take a look at formaldehyde-containing building materials:

  • Glues and adhesives
  • Urea-formaldehyde foam insulation (UFFI)
  • Pressed wood products (e.g., plywood, particleboard, paneling, and wood finishes)
  • Carpet
  • Laminated flooring materials
  • Cabinet fiberboards
  • Drapery materials
  • Used as a preservative in some paints and coating products

If the formaldehyde measurement levels are too high, further exposure to formaldehyde may be decreased by the following measures:

  • Use of exterior-grade pressed wood products. These products are lower emitting because they contain phenol resins and not urea resins.
  • Finding and removing the source is the most effective remedy, but is often unacceptable due to cost factors.
  • Avoid using building materials, furnishings, or other products that emit formaldehyde.
  • Increase ventilation after bringing new sources of formaldehyde into the home.
  • Use air conditioning and dehumidifiers to maintain moderate temperature and reduce humidity levels. The rate at which formaldehyde is released is accelerated by heat and may depend on the humidity levels present in the structure. Formaldehyde tends to double its level of off-gassing for every 10-degree Fahrenheit increase in temperature.
  • Use alternative products such as lumber, metal, or solid wood furniture and cabinets.
  • Avoid the use of foamed-in-place insulation materials containing formaldehyde.
  • Enclose unfinished pressed wood surfaces of furniture, cabinets, and shelving with laminate, a water-based sealant, polyurethane varnish, oil-based alkyd resin paint, or thick vinyl film.
  • If purchasing a mobile home, insist that outdoor air is capable of being circulated into the home. Mobile home sellers are required under HUD standards to give prospective buyers a ventilation improvement information sheet before a sales agreement is reached.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Home Buying a Strong Boost to Overall Economy

In their first year of ownership, new home buyers spend about $10,601 

By Jeff Sorg, OnlineEd Blog

(July 14, 2017)

canstockphoto282379female moneyA new consumer spending analysis from the National Association of Home Builders (NAHB) highlights another reason why home building helps drive a healthy economy: In their first year of ownership, new home buyers spend about $10,601 on appliances, furnishings, and home improvement projects – 2.6 times as much as other home owners in a typical year.

NAHB economists studied the U.S. Bureau of Labor Statistics Consumer Expenditure Survey to help quantify the wave of activity – and cash – spent to install new refrigerators, buy couches and make other improvements as new owners personalize their homes.

“While construction jobs are the most obvious impact of new homes on the economy, it’s important to realize that it doesn’t stop there,” said NAHB Chairman Granger MacDonald, a home builder and developer in Kerrville, Texas.

“It’s the architects, the heating technicians, the lumber suppliers. And it’s the mom-and-pop owners at the local furniture or appliance store who are helping these buyers make their house a home,” he said.

During the first two years after closing on the house, a typical buyer of a newly built single-family home tends to spend on average $4,500 more than a similar non-moving home owner.

A previous NAHB study based on 2004-2007 data collected during the housing boom showed somewhat higher spending by home owners overall.  But the tendency of buyers to outspend non-moving owners on appliances, furnishings, and home improvements was similar.

In the aggregate, most of the demand for appliances, furnishings and remodeling projects in a given year is generated by non-moving home owners, because they outnumber home buyers by such a wide margin.

But new owners’ impact is noticeable – and vital, MacDonald said. “The health of housing – and new home buying – is key to the overall state of our economy.”

See the study at http://www.nahb.org/spendingpatterns.

[Source: National Association of Home Builders]

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Environmental Series: Underground Storage Tanks for Heating Oil

An Underground Oil Tank Could be an Economic Liability for the Property Owner at the Time it is Discovered

By Jeff Sorg, OnlineEd Blog

(July 13, 2017)

canstockphoto17488720inground oil tank

There are many problems associated with underground storage tanks (USTs) for heating fuel. In the past, heating oil tanks (HOTs) were installed underground, outside and above ground or above ground in basements.

As the popularity of oil as a heating fuel decreased, so did the use of HOTs. Today, homebuilders usually don’t install oil-burning furnaces as a heat source, opting instead for natural gas or electricity to heat their homes.

In the past, unused HOTs were abandoned when a new heat source using a different fuel was installed into the home. Most of the above ground HOTs were removed and scrapped, but the majority of underground storage tanks were left in the ground to rot. Many of these abandoned USTs also contained unused heating oil.

When a UST decays, any oil left inside will leak out and contaminate the surrounding soil, surface water, and where the water table is high, the groundwater.

Underground storage tank problems become evident when a homeowner becomes aware of some heating related problem such as inconsistent or no furnace ignition that can be caused by water entering the tank and mixing with the oil. Another example of an adverse tank condition would be having to fill the tank up with fuel more often. Both of these examples mean that if water is entering the tank, then oil is likely being released from the tank.

Here are some easy things to do to investigate the possibility of a UST:

  • Look for an oil tank fill cap.
  • Look for a vent pipe.
  • Look for oil lines or signs of oil lines.
  • Contact the gas or electric company to get the start date of service for the house. If the date coincides with the date of construction, there might not be a home heating oil tank on the premises. If the date of service does not coincide with the date of construction, further research may be necessary.
  • Contact the local fire department.
  • Contact a professional locator company. A locator company will use various techniques to determine if a large metal object is present in the ground, such as the use of a metal detector.

If it is determined a tank is in use or has been abandoned, soil testing should be the next step in the investigation process. The results of the soil test will determine if an existing tank should be decommissioned and whether ground contamination cleanup will be necessary. If decommissioning is required, it will be accomplished by one of the following methods:

  • Decommission by Removal – This option requires a complete pumping out of any remaining fuel in the tank. After this step is completed, the tank may be dug up and removed. It must be disposed of in an approved disposal site. The hole will then be backfilled to grade with sand or gravel. The native soil will be placed on top of the backfill material until the hole is filled to grade. The vent pipe is removed.
  • Decommission the tank in place with Sand or P-gravel (DIP) – Tanks located under concrete, asphalt, or more than 24 inches of soil may make this method impractical. This option requires the complete pumping out of any remaining fuel in the tank. The ground is removed to the top of the tank and the top cut off. The inside of the tank is then cleaned and visually inspected for leakage. If there is no leakage, the tank will be filled with sand or p-gravel, the top then replaced, and the hole backfilled to grade. The vent pipe and fill pipe will be removed, and a certificate of decommissioning will be mailed to the owner. If there are visible signs of leakage, the homeowner will be notified.
  • Decommission in place with slurry (SLURRY) – This option requires the complete pumping out of any remaining fuel. Since an inspection of the tank is impossible with this method, soil samples should be taken to determine if there has been leakage. If there has been leakage, the remediation process should be implemented. If the tank has not leaked, then after it is empty of oil, a slurry mixture is pumped into the tank. Slurry is a sandy, ashy type of concrete. Once the tank is filled with slurry, the fill cap and vent pipe are removed.

A UST could prove to be an economic liability for the owner of the property at the time it is discovered.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Environmental Series: Lead-Based Paint Hazards Disclosure Rules

Sellers and Lessors must disclose known information about lead-based paint

By Jeff Sorg, OnlineEd Blog

(July 6, 2017)

canstockphoto384422paintcanIn 1994, the United States Environmental Protection Agency (EPA) and HUD drafted federal regulations on the disclosure of lead-based paint hazards in residential properties built before 1978 to comply with the Residential Lead-based Paint Hazard Act of 1992. The rules were implemented in 1996 in cooperation with the National Association of REALTORS®. These rules requre sellers and lessors, or their real estate agents to:

  • distribute a federal lead hazard pamphlet,
  • disclose any information known by the seller/lessor or the agent concerning lead paint and/or lead hazards in the house, and
  • provide a 10-day or mutually agreeable period for a lead paint assessment or inspection before a purchaser/lessee becomes obligated to purchase.

The seller must retain the signed documentation demonstrating that the buyer/tenant received the required disclosure information for three years from the date of sale/lease. The REA requires these records to be retained by a principal broker/property manager for six years from the date of the sale.

You can view a sample of a lead-based paint disclosure here:

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Redfin Study: Middle-Class African-Americans and Hispanics Priced Out of Hot West Coast Markets

Fewer than five percent of homes for sale in Portland, Los Angeles, and Denver were affordable on median African-American and Hispanic incomes in 2016

By Jeff Sorg, OnlineEd Blog

(June 30, 2017)

canstockphoto1334948soldsignIn 2016, just 18 percent of homes for sale in the 30 largest U.S. metros were affordable for middle-class Hispanic families and 14 percent were affordable for African-American families, according to a new study by Redfin (www.redfin.com). Both rates were down 11 percentage points from 2012. This is compared to 30 percent affordable for those earning the median income for white households, down 12 percentage points since 2012.

Housing affordability declined over the same four-year period for the middle class as a whole, as home prices increased by 26 percent and household incomes edged up by less than 2 percent nationally. In 2012, 44 percent of homes for sale were affordable on a middle-class income; that share fell to 32 percent in 2016.

The study also found that in 2016, middle-class African-American and Hispanic families were virtually priced out of homeownership in Denver, Los Angeles, Portland, San Francisco, San Diego and Phoenix. In each of those metros, fewer than 5 percent of homes on the market were affordable on the median household incomes for African Americans and Latinos.

Still, Denver was home to the smallest racial gap in housing affordability in 2016. Less than 2 percent of homes for sale there were affordable to families earning the median income for African-American and Hispanic households, compared to just 8.3 percent for families earning the median income for white households. The racial affordability gap was largest in Minneapolis, where the typical white family could afford 66 percent of the homes for sale, compared to 5.2 percent and 24.8 percent for families earning the median income for African-American and Hispanic households.

Among the 30 largest metros, Las Vegas had the largest declines in affordability for families making the median African American (-26.5 points) or Hispanic (-24.6 points) household incomes from 2012 to 2016.

Also during this period, metros known for their relative affordability, like Atlanta, Tampa and Kansas City, saw double-digit declines in the share of listings that were affordable on African American and Hispanic median incomes.

St. Louis was the only metro that saw increases in affordability for both Hispanic (+5.4 points) and African-American families (+4.3 points). Interestingly, St. Louis was also the only metro where overall middle-class affordability, including for median-income white households, did not change significantly over this time period.

“American cities are at risk of losing both the economic and racial diversity that has been their hallmark,” said Redfin chief economist Nela Richardson. “Middle-class homebuyers are being priced out of America’s largest cities at an alarming rate, as the home affordability gap gets wider. Given the significantly lower rates of homeownership among African-American and Hispanic families, the reduction in affordable listings has even more dire consequences for income inequality when broken out by race.”

[Source: Redfin news release]

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Environmental Series: Oregon Drug Houses

Methamphetamine drug manufacturing houses do exist in Oregon and require special attention

By Jeff Sorg, OnlineEd Blog

(June 27, 2017)

canstockphoto3507277drughouseThe process required to manufacture meth is easy, with the raw materials necessary for its production readily available to the public. Recipes and information for the manufacture of the drug are found on the Internet. By investing just a few hundred dollars in equipment and chemicals, a home manufacturer can produce a finished product worth thousands of dollars.

Ingredients to make meth can be purchased in any drug, grocery, or hardware store. Some of the more commonly used ingredients are over the counter cold and asthma medications containing ephedrine or pseudoephedrine; red phosphorous; hydrochloric acid; drain cleaner; battery acid from lithium type batteries; lye; acetone; lighter fluid; lantern fuel; and antifreeze.

If meth has been manufactured on a property, there may be serious health issues resulting from entering and occupying the property. Each pound of produced meth leaves behind five or six pounds of toxic waste. Meth cooks pour leftover chemicals and byproduct sludge down drains and nearby plumbing, storm drains, or directly into the ground. Chlorinated solvents and other toxic byproducts used to make meth pose long-term hazards because they can persist in the soil and groundwater for years. Clean up costs are high because solvent-laced soil usually must be incinerated.

Meth houses are enveloped in an unpleasant, chemical-like ammonia smell, similar to cat urine or fingernail polish. In addition to the smell, there are other signs that a house is used as a meth lab. Another sign would be chemical drums or other containers about the property that store solvents, drain cleaner or antifreeze.

Most people entering a property that was used as a meth lab will experience immediate eye and throat irritation, and lightheadedness or a headache. Acute short-term exposure to high concentrations of some of the chemicals used in meth production, similar to what law enforcement officers often face, can cause severe health problems including lung damage and burns to different parts of the body.

Oregon has a comprehensive program to identify and deal with contaminated drug properties. Oregon’s law for contaminated drug houses is outlined in ORS 453.855 through 453.912. The law does not allow a contaminated property to be occupied and provides procedures for proper cleanup and certification of fitness after a cleanup has occurred. The main provisions of the law are:

  • Identification of a property as not fit for use – The Director of Human Services, the State Fire Marshal, or any law enforcement agency may make the not-fit-for-use determination. Once determined, the property may not be entered, occupied, or used for any purpose. This means that the owner may not enter the property for cleaning, remodeling, or demolition except under a Department of Human Services approved work plan.To be considered suitable for use, the property must be successfully certified as decontaminated. In some cases, the structure on the property may have to be demolished, and any ground contamination will have to be cleaned up before being certified. Once determined to be a contaminated property, the property is listed as a contaminated property with the Department of Consumer and Business Services.
  • Restriction on transfer of a contaminated property – ORS 453.867 prohibits the transfer, sale, use, or renting of any property that is determined to be an illegal drug manufacturing site. All contracts to transfer, sell, use, or rent a contaminated property are voidable between the parties at the request of the purchaser, transferee, user, or renter. Under ORS 453.870, contaminated property may be transferred or sold only if full written disclosure is made to the prospective purchaser of the contamination status. After the transfer, the property remains a contaminated property and may not be entered, used, or occupied.
  • Property decontamination – The owner of a property determined to be not fit for use may have the property certified as fit for use. To be classified as a property fit for use, the owner must engage the services of a contractor licensed by the Department of Human Services (DHS) to decontaminate the property. The decontamination work must be executed by a written work plan submitted to DHS for approval.If the work plan is approved and the decontamination work is completed according to the plan, DHS will certify the property as having been decontaminated. Once the DHS has certified the property as decontaminated, the property owner shall notify the Department of Consumer and Business Services and request that the property is removed from the department’s list of contaminated properties. Once the property has been taken off the contamination list, the property may be transferred, sold, used, or rented without restriction.

    The safest way to clean up a former meth lab is to hire an environmental company trained in hazardous substance removal and cleanup. If the owner of the property desires to do the cleanup, extreme caution should be exercised because the contaminants give off fumes, can penetrate the skin, and can result in severe health problems. The following are steps that would be taken by an environmental hazard cleanup company:

    • Air out the property – The first step is usually a short-term airing-out of the property to clear out as many of the contaminants in the air as possible. This process should last several days before actual site cleaning.
    • Heating structure and reintroducing ventilation – After the initial airing-out, the windows and doors should be closed, and the temperature inside the structure should be raised to approximately 90 degrees and left alone for a few days. This will promote some of the chemicals to volatilize (to dissolve into the air).After the heating process is complete, the structure is ready for cleaning. During the cleaning process, proper ventilation should again be introduced. After the cleaning process the property should be aired out for three to five days to allow for any remaining volatilization of chemicals. Exhaust fans should be used to assist in this process.
    • Contamination removal and disposal – The meth manufacturing process produces vapors that are absorbed into material within the structure. Spilled chemicals, supplies, and equipment can further contaminate non-lab items such as carpeting, wall material, counters, cabinets, etc. Items that are visibly contaminated should be removed and disposed of in a landfill. Absorbent materials such as carpeting, drapes, clothing, and like material should also be removed from the property and disposed of in a landfill.
    • Surfaces – Walls, counters, floors, ceilings, and similar surfaces are porous and can absorb contaminants from the meth manufacturing process. The closer to the actual location of the manufacturing, the more likely these materials will have absorbed the contaminants. If these surfaces have visible staining or contamination, these should be removed and disposed of in an approved landfill. In many cases, this may entail removal and replacement of wallboard and similar surfaces. In some cases, intensive cleaning followed by the application of a physical barrier, such as paint sealant or epoxy, may be an adequate solution.
    • Ventilation system – Fumes from the meth manufacturing process will enter the structure’s ventilation systems. These systems must be thoroughly cleaned. This cleaning would necessarily include the vents, ductwork, filters, walls, and ceilings near ventilation ducts.
    • Plumbing – Most meth cooks will dump their manufacturing byproducts down sinks, drains, and toilets. These contaminated waste products can collect in drains, traps, and septic tanks and give off harmful fumes. Drain traps and adjacent plumbing pipes may have to be removed and cleaned. In some cases, replacement may be necessary. The septic tank may have to be pumped and treated as a hazardous waste site.
    • Repainting – It is advisable to repaint the entire interior of the structure. This will assist in putting a barrier between any residual contamination and interior of the structure. Paint-coating materials specifically designed to seal in contaminants, such as products containing a shellac base, should be considered.
    • Testing – Both before and after cleanup, the environmental cleanup company will test for contamination. Before cleanup, the test will identify areas where cleanup or removal of materials will be necessary. After the cleanup process has been completed, the test will verify that the structure is again suitable for occupancy.

The outlined cleanup process usually takes six to eight weeks with a cost ranging from $5,000 to $25,000. Insurance coverage for drug house contamination might be possible but is reported to be available in only 25% of existing policies.

An Oregon property owner, under Oregon’s seller’s property disclosure statement law, is to disclose if the house being sold was ever used for manufacturing methamphetamine or any other illegal drug.

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Categories: Real Estate