Two subjects nobody enjoys thinking about are death and taxes. Because April 15 just passed, we don’t have to talk about income taxes until next year. But death is a topic that is difficult to avoid, especially as the huge “baby boomer” generation approaches its golden years.

Shockingly, less than 20 percent of the U.S. population has a written will designating who shall inherit their assets after death. If a person dies without a will, he or she is said to die “intestate.” The state law of the residence then determines who automatically receives the assets, usually a surviving spouse, children, or other close relatives.

However, especially in second marriages, intestate succession often results in unintended consequences. Also, except for very small estates, probate court proceedings are usually required when a person dies without a will, thus delaying distribution six to 18 months, and often longer.

Another reason to avoid probate court proceedings is state law determines the attorney and administrator fees, ranging from 6 to 22 percent of estate assets. However, these fees are negotiable so don’t hesitate to negotiate if you are an estate heir.

But a far better, faster, and less expensive approach is to have a revocable living trust to hold title to your major assets such as your home, real estate investments, bank accounts, brokerage account, and mutual funds.

However, life insurance policies, tax-deferred annuities, IRA and 401k should remain outside your living trust because they pass automatically to the designated beneficiary.

THE FIRST MAJOR REVOCABLE LIVING TRUST ADVANTAGE

Most real estate owners are not aware of the two key living-trust benefits. The most important advantage is to avoid probate costs and delays after the trustor or principal dies.

Until then, the trustor is the controlling beneficiary and trustee of his or her living trust. Assets can be bought, sold, and managed as desired. Tax benefits are not affected because a living trust is merely a method of holding title.

To illustrate, instead of holding title to your home as “John and Mary Smith,” title can be held in your living trust as “John and Mary Smith, trustees.” For those who want privacy, some living-trust attorneys advise holding living trust in a creative name such as “1234 Easy Street Trust.”

When a living-trust creator dies, the successor trustee takes over management of the living-trust assets. Often this is a surviving spouse, or it could be a trusted adult child, relative, or friend named in the living trust.

The successor trustee can distribute trust assets according to the living-trust terms immediately, but it is usually wise to wait 30 to 60 days so debts of the deceased can be paid.

When a principal or trustor dies owning major assets such as real estate in more than one state, holding title to those assets in the living trust avoids probate costs and delays in each state.

For example, a few years ago an elderly friend died, owning real estate in Florida, Minnesota and North Dakota. She did not have a living trust. Her son later told me costly probate court proceedings had to be held in all three states, thus delaying asset distribution.

THE SECOND, BUT LITTLE KNOWN, REVOCABLE LIVING TRUST ADVANTAGE

Most people are not aware there is also a second major revocable living trust advantage. It is management of living-trust assets if the trustor or principal becomes incapacitated, such as with Alzheimer’s disease or is in a coma.

Without a living trust, it will be necessary to have a court-appointed conservator or guardian manage your assets if you are unable to do so. However, if you have your assets in your living trust, your successor trustee can then manage your assets without expensive court interference.

For this continued management reason, holding title to your home, real estate, bank accounts and other major assets in your living trust is usually far better than joint tenancy with right of survivorship, tenancy by the entireties (where allowed), or community property. The successor trustee can take over after a physician determines the principal or trustor has become incapacitated.

For example, suppose husband and wife own their home in joint tenancy with right of survivorship. If one spouse acquires Alzheimer’s disease and is no longer able to comprehend, the other joint tenant would not be able to sell their home without court approval of a conservator or guardian. However, if title to the home is held in a living trust, then the successor trustee spouse can easily sell the house without court intervention.

ADDITIONAL LIVING-TRUST BENEFITS

Privacy is a major living-trust benefit, as compared to a will, which becomes public knowledge after a decedent dies.

To illustrate, although Bing Crosby died in 1978, most of his assets were held in his living trusts, which never became public knowledge to this day. A few states allow living-trust registration, but there is no penalty for failure to do so.

Or perhaps you recall the nasty will contest after well-known CBS television personality Charles Kuralt died a few years ago. His written will left all his assets to his widow, but his Montana mistress claimed his Montana property was given to her in Kuralt’s holographic will. In a very expensive will contest lawsuit, the court ruled the Montana property became the mistress’. This public will contest could have been avoided if Kuralt held title to the property in a living trust instead.

Just like a will, a revocable living trust can be changed or even revoked at any time. Another benefit is a living trust has no effect on the trustor’s or the heir’s tax benefits, such as the $250,000 and $500,000 principal residence sale tax break, homestead rights, tax-deferred real estate sales benefits, and even stepped-up cost basis for heirs.

LIVING-TRUST DISADVANTAGES

Although there are some excellent do-it-yourself living-trust books available, most people prefer to consult an attorney who specializes in living trusts.

Costs vary widely, depending on the complexity and the extent of asset transfers into the living trust. Some attorneys charge as little as $500, but most living-trust attorney fees are in the $1,000 to $2,500 range. This is far less expensive than costs for probating a will.

A perceived disadvantage can occur if you want to refinance your home. Most mortgage lenders require taking the title out of the living trust momentarily so the lender’s mortgage or deed of trust can be signed and recorded by the borrower rather than the trustee. But then the title can be transferred back into the living trust one moment later.

Although many states allow “payable-upon-death” checking and savings accounts, and a few even permit payable-upon-death deeds, that doesn’t solve the potential problems of incapacity of the owner, or complications if the recipient predeceases the principal. Power of attorney and durable power of attorney forms can work well, but they don’t allow the attorney-in-fact to distribute assets after death.

Private property rights activists were horrified nearly a year ago when the U.S. Supreme Court ruled that federal law doesn’t prohibit local governments’ use of their eminent domain power to seize individual homes and businesses for commercial redevelopment projects. The high court’s decision in Kelo v. City of New London ignited a firestorm of debate and protest, but many homeowners, including those in two of the nation’s most populous states, still don’t have adequate protection from government takings of their homes for private commercial purposes.

In California, a Democrat-backed proposal is pending in the legislature while a Republican-supported initiative that would amend the state constitution appears to be headed toward a popular vote on the November ballot. This unfortunate cross-purposes situation isn’t surprising in a state that’s known for its bizarre politics and where the ballot initiative was invented nearly a century ago. Yet all the same, it’s unfortunate that no concrete action has been taken by the legislature to counter Kelo and protect the state’s homeowners.

In New York, the state bar association has called for a commission to study proposed changes to the state’s eminent domain laws. The primary beneficiaries of a study would appear to be the attorneys themselves, who should be familiar enough with the state’s laws to explain what would be needed to protect homeowners from Kelo-like situations without the distraction of a government-funded study. Indeed, the state bar already has convened its own task force on the subject of eminent domain. What’s needed is not another study, but action.

Granted, California and New York are the most populous states in the country and they contain some of the nation’s most densely packed urban areas, characteristics that make property rights and appropriate redevelopment particularly complex.

There is a risk that new laws could make eminent domain cases even more complicated and onerous for homeowners, who rarely have the financial resources and access to the legal system that’s necessary to challenge such government powers.

There is also a risk that responses to Kelo could err in the opposite direction and make it impossible for government authorities to condemn property that would meet almost anyone’s definition of blight and that was needed for redevelopment projects that clearly would serve the public interest, regardless of whether private companies also might be involved. Yet the risk of excessive constraints against government takings seems small compared with the harm homeowners could suffer in states where the wild permissiveness of Kelo hasn’t been curtailed.

Elsewhere, progress has been made. Hundreds of legislative proposals to counter Kelo have been introduced in more than 40 states, and some dozen states have enacted new limitations on government powers, according to a recent newspaper report. That outcome is exactly what the Supreme Court decision in Kelo envisioned. Most of these new state laws prohibit the use of eminent domain powers to further economic development or increase the tax base while others prohibit condemnation of property that isn’t deemed to be “blighted.”

Legislation that’s pending in Illinois and has the support of the state Realtors association attempts to strike a balance. Municipalities would be forced to prove an area was blighted before they could compel owners to sell their property for private development projects. Government seizures of property for private development would require a written agreement with a developer or an established plan to eliminate blight and a written agreement or deed restriction that would ensure the property was used for the stated purpose. Government entities would be required to pay relocation costs for displaced residents consistent with federal law in all eminent domain actions. And attorney’s fees would be awarded on the basis of the net benefit gained by property owners who made a good faith settlement offer and successfully challenged the government’s last and best offer for their property.

The bottom line is that state laws need to balance communities’ needs for development and homeowners’ property rights in ways that don’t result in greater confusion and endless legal wrangling between the two sides. On the margin, laws should err in favor of private homeowners, not commercial development or the interests of eminent domain attorneys.

While California debates and New York studies, local developers and their government cronies surely have their eyes on both campaign coffers and private residences that occupy prime real estate. Homeowners deserve better protection from the type of indefensible government takeover that Kelo seemingly condoned.

About 26 states had an increase in sales activity in first-quarter 2006 compared to first-quarter 2005, the National Association of Realtors trade group reported today, while the national rate of sales dropped 2.1 percent.

The seasonally adjusted annual rate of sales was 6.8 million units in the first quarter, the association reported. This rate is a projection of a quarterly sales total over a full year, adjusted for seasonal fluctuations in sales activity. Sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns, the group reported.

The biggest increase was in New Mexico, where existing-home sales rose 26.2 percent from the first quarter of 2005. Louisiana’s first-quarter resale pace rose 22.9 percent from a year earlier, while Montana experienced the third-strongest gain, up 17.5 percent. Six other states recorded double-digit sales increases from a year ago. Twenty-one states and the District of Columbia experienced declines. Complete data for three states was not available, the association reported.

Regionally, the strongest performance was in the South, which reported an increase of 2.3 percent to an existing-home sales pace of 2.71 million units in the first quarter in comparison with a year ago. After Louisiana, the strongest increase in the South was in Mississippi, up 17.3 percent from the first quarter of 2005; resales in North Carolina rose 17 percent; Arkansas and Tennessee also posted double-digit sales increases.

In the Midwest, existing-home sales rose 1.1 percent to a 1.56 million-unit annual sales level from the first quarter of 2005. Indiana led the region, up 10.4 percent from a year earlier, followed by Iowa, up 9 percent, and Ohio, with an increase of 6.2 percent.

The Northeast recorded an existing-home sales pace of 1.12 million units in the first quarter, down 2.9 percent from a year earlier. Sales activity in Maine rose 4.6 percent from the first quarter of 2005, Rhode Island increased 2 percent and New York sales declined 2.2 percent, the association reported.

In the West, the existing-home sales level of 1.41 million units was 12.4 percent below the first quarter of 2005. After New Mexico and Montana, the best performance for the region was in Utah where existing-home sales rose 12.7 percent from a year earlier; Hawaii sales increased 6.3 percent while Alaska rose 5.9 percent.

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was 6.24 percent in the first quarter, up from 6.22 percent in the fourth quarter; it was 5.76 percent in the first quarter of 2005.

David Lereah, NAR’s chief economist, said in a statement that rising interest rates have dampened sales. “A steady rise in mortgage interest rates has slowed home sales in higher cost areas, yet job growth in some moderately priced markets is boosting sales in other areas. The net effect is a modest decline in home sales for the nation as a whole, but sales remain historically strong and are providing a solid underlying base for the overall economy.”

NAR President Thomas M. Stevens, who is senior vice president of NRT Inc., said in a statement, “We project home sales may soften a little further before picking up in the fourth quarter, but we’re not looking for any significant changes in the market moving forward. This should provide stability in the market so that buyers and sellers will be on a fairly level playing field in most of the country.”

Total home sales include single-family, townhomes, condominiums and co-operative housing. NAR began tracking state sales statistics in 1981.

The association reported that minor revisions have been made to quarterly seasonally adjusted annual sales rates for 1999 through 2005. Each May, NAR Research incorporates a review of seasonal activity factors and adjusts historic data based on its most recent findings. Normally revisions are for the past three years, but these revisions include some adjustments back to the benchmark year of 1999, the trade group reported.

The U.S. House of Representatives is considering legislation that would change the federal reverse mortgage program, including a plan that would allow older homeowners to access greater amounts of equity from their homes, a reverse mortgage lenders’ group said Friday.

The Expanding American Homeownership Act of 2006 (H.R. 5121) would create a single national loan limit for Federal Housing Authority Home Equity Conversion Mortgages (HECM); implement a HECM for home purchase option; and remove the cap on the number of HECM loans FHA can insure, according to the National Reverse Mortgage Lenders Association.

“Taken together, these proposed changes would greatly benefit homeowners who are considering a reverse mortgage as part of their retirement planning,” said Peter Bell, president of NRMLA, in a statement. “A single national loan limit would be especially helpful. It would benefit homeowners living in high-valued homes in counties where the FHA lending limit is much lower, which limits the amount of proceeds available from a reverse mortgage.”

The proposed act would:

* Create a single national loan limit for FHA Home Equity Conversion Mortgages (HECM). The HECM program accounts for 90 percent of all reverse mortgages made in the U.S. Currently, lending limits vary by county and range from $200,160 to $362,790, the group said.

If the legislation passes, there would be one single limit equal to the conforming mortgage limit set by Freddie Mac, which is currently $417,000. Thus, seniors could convert greater amounts of equity from their homes into retirement income, the organization said.

* Implement a HECM for Home Purchase option that would allow seniors to purchase newer housing that better suits their needs, the organization said.

* Remove the existing cap on the number of HECM loans that FHA can insure. The last provision is also contained in H.R. 2892 and S. 1710, the Reverse Mortgage to Help America’s Seniors Act, which is still pending approval in the Senate after having passed the House of Representatives in December, according to the group.

A reverse mortgage is a loan that enables homeowners 62 or older to borrow against the equity in their homes, without having to sell the home, give up title, or take on new monthly mortgage payments. Loan proceeds can be used for any purpose, and taken out as a lump sum, fixed monthly payments, line of credit, or a combination.

The loan amount depends on the borrower’s age, current interest rates, and the value and location of the home. A reverse mortgage does not have to be repaid until the borrower moves out of the home permanently, and the repayment amount cannot exceed the value of the home.

After the loan is repaid, any remaining equity is distributed to the borrower or the borrower’s estate. A senior’s home does not have to be owned free and clear to qualify for a reverse mortgage. Reverse mortgages are often used to retire existing debt on a home.

Whether you are a first-time home buyer, or a retiree planning to “down-size” your residence, condominiums are “hot” during the 2006 peak home-buying season. In most communities, condos are still affordable for home buyers.

Condominiums are no longer the “ugly ducklings” of real estate. Now they appreciate in market value almost as fast as single-family houses.

As a longtime condo owner, I’ve witnessed their ups and downs in both popularity and desirability. Most condo owners are very satisfied. However, some condo complexes are poorly managed. Others have high monthly fees with sub-standard maintenance quality.

Worst of all, some condo complexes have become occupied mostly by renters, rather than owner-occupants, where there is little pride of ownership.

Buying a condo is not as simple as buying a house. However, if you know the right questions to ask, buying a condominium can be a profitable experience.

WHY BUY A CONDO INSTEAD OF A HOUSE?

In addition to the affordability of condos, the primary reason many condo buyers purchase is lack of maintenance concern. Condo owners don’t worry about repairs outside their condo units because that is the responsibility of the condo homeowner’s association.

Legally, a condo purchase involves very expensive air. Known as a “vertical subdivision,” each condo owner purchases the airspace to the inner walls, ceiling, and floor surfaces of a specific residence unit.

The building structure such as the walls, foundation, elevators, parking area, and roof, including outdoor grounds areas, is known as a “common area,” which is owned by, and the maintenance responsibility of, the homeowner’s association, which is owned by all the members.

In addition to affordability issues, the majority of condo buyers purchase for lifestyle reasons, such as recreational facilities, freedom from exterior maintenance, ability to lock the door and be away for extended periods, and enjoyment of luxury facilities at modest cost.

NEW OR RESALE CONDO — WHICH IS BEST?

Being the current owner of a second-home condominium, and having owned several previous condos, I am quite familiar with the many pros and cons of new and resale condominiums.

Owners of older resale condos usually have greater predictability of maintenance expenses and monthly fees because the construction defects of new units have been repaired.

However, older condo associations often have gradually increasing maintenance costs as the property ages. But a well-managed condo association will budget for such expenses and set aside adequate reserves so special assessments won’t be necessary.

Buyers of brand-new condominiums usually enjoy the latest up-to-date facilities and amenities. However, construction defects are a frequent problem unless the builder takes care of them without trying to dodge legal liability. For example, reportedly over 80 percent of California condo homeowner associations have sued their builder for construction defects.

Lawsuits by a condo association against its builder, or involving any other defendant, can greatly hurt the resale of condos in that complex. Mortgage lenders often refuse to make loans to buyers where there is any litigation involving the condo association.

Another unexpected problem with brand-new condos is the developer often sets the monthly maintenance fees too low to adequately fund reserves for repairs. After all the units are sold, the unpleasant result is the homeowner’s association has to raise monthly fee assessments to provide sufficient funds for expenses and replacement reserves.

THE FIVE KEY QUESTIONS CONDO BUYERS SHOULD ASK

To avoid buying a “bad condo,” whether it is brand-new or a resale unit, smart condo buyers ask at least these five key questions:

1.) HOW DO THE MONTHLY CONDO FEES COMPARE WITH COMPETITIVE NEARBY CONDO COMPLEXES?

Smart prospective condo buyers first ask, “What is included in the monthly assessment fee?” and then compare it with the fees charged at nearby competitive condo complexes.

However, be sure to compare apples with apples. To illustrate, the condo that I own includes winter heat in the monthly fee, but not summer air conditioning. Similar nearby condos include these major expenses, but some include neither because their condo units have individual heat and cooling units.

Closely related is the issue of adequate replacement reserves. Wise condo buyers carefully review the latest financial reports of the condo homeowner’s association. If it is an older complex, the reserves should be relatively high per unit to provide for unexpected repairs. However, newer complexes usually don’t need high maintenance reserves.

2.) WHAT IS THE FINANCIAL CONDITION OF THE HOMEOWNER’S ASSOCIATION? ARE THERE ANY EXPECTED SPECIAL ASSESSMENTS?

Before purchase, condo buyers must be given a copy of the CC&Rs (conditions, covenants, and restrictions), by-laws, rules, and latest financial reports of the homeowner’s association. In addition, smart buyers ask for and read the board of director’s minutes for the last six meetings.

A key question prospective buyers should ask is, “Are any special assessments under discussion or planned?”

For example, I recently had lunch with a very successful real estate broker who told me about a condo he recently sold for an elderly seller. He explained that only after the sale was almost ready to close, it was discovered the condo owner’s association planned to levy a $20,000 special assessment on each owner to pay for deferred maintenance.

There is no specific maintenance reserve guideline. But two general rules are a) $2,000 to $3,000 per unit, and b) 25 percent of the annual gross income of the association should be in the reserve account.

3.) IS THE CONDO ASSOCIATION PROFESSIONALLY MANAGED?

Except for very small condo associations up to six units, every condo association needs a professional property manager. Prospective buyers should be wary of buying a condo in a complex that is self-managed, often by the owners or directors living in the property.

A related question is, “How long has the complex been managed by the same company?” The longer the better. The condo association where I own my condo has had the same professional management firm for 30 years. The property manager assigned to our property has managed our property over 20 years. Needless to say, we are very satisfied.

Professional managers usually “earn” their fees from expense savings. For example, our insurance policy recently came up for renewal. The professional manager shopped among many insurers. Since he also manages other condo complexes, he controls lots of potential business for insurers. Not only did he negotiate a big reduction in our premiums with the same coverage, but he also got the insurer to lock-in the same rate for up to three years, and we are free to shop among other insurers at each annual renewal.

4.) WHAT IS THE PERCENTAGE OF RENTERS IN THE CONDO COMPLEX?

If the answer is more than 10 percent, buyers should be cautious. If there are more than 20 to 30 percent renters, that’s a very bad sign because mortgage lenders will either refuse to make loans in that complex or they will charge higher interest rates. Too many renters can hurt future condo sales.

A key reason to avoid condo complexes with more than a few renters is absentee owners often don’t care about maintenance of the property. The result can be declining quality of maintenance. Complexes with anti-renter rules are considered very desirable and often bring premium resale prices.

5.) ASK SEVERAL CURRENT RESIDENTS, “WHAT DO YOU LIKE BEST AND LEAST ABOUT LIVING HERE?”

A closely related question to ask is, “Would you buy a condo here again?”

Most condo owner-occupants are very friendly and willing to share their good and bad experiences. While you are asking questions, don’t hesitate to inquire, “How is the soundproofing here?” Poor soundproofing between condo units, upstairs and downstairs, as well as adjacent, is the number one complaint of condo owners.

Lastly, when making a condo purchase offer, be certain it contains a contingency clause for a professional property inspection. After the condo seller accepts your offer, be sure to accompany your professional inspector to determine if there are any undisclosed defects in the unit or the complex that might cause you to reject the inspection report.

What is the difference between a condominium, cooperative apartment, tenancy in common (TIC), and a planned-unit development (PUD)?

As we will see, there are major differences between these types of “common interest developments.” Please be sure you fully understand the distinctions because your legal rights will vary depending on what type of unit you decide to buy.

Condominiums are just airspace within the unit surfaces. When you buy a condominium, all you are really buying is very expensive airspace! Condo owners own only the inner surfaces of their walls, ceilings and floors. The building structure is part of the “common area” owned by the homeowner association, or HOA, of which all the condo owners in the complex are automatically members.

That means the HOA owns the walls, foundation, roof, plumbing, wiring, the land (although a few condo buildings are constructed on leased land – usually a very bad situation because when the land lease expires, the condos then belong to the landowner), parking areas, hallways, elevators, and other areas shared with other condo owners. Individual condo owners often have an exclusive right to occupy part of the common area, such as a patio or balcony, and an assigned parking space or two.

In some condo complexes, the recreation area is owned by the developer who signed a “sweetheart lease” with the HOA. Due to abuses by some developers, these sweetheart leases are now either forbidden or greatly restricted by law in several states. Prospective buyers should inquire if any part of the condo complex is leased and not owned by the HOA, such as the recreation center or parking area.

A Planned Unit Development is a condominium variation. PUDs are usually townhouse developments where each townhouse owner owns their structure and the land beneath it. But the HOA owns the common areas and is responsible for exterior maintenance, such as mowing the lawns and repairing the roof. If you are considering buying in a PUD, be sure to understand what is your maintenance responsibility and what the HOA maintains.

Cooperative apartments are rare, except in New York, Florida, Georgia, California, Illinois and Washington, D.C. A co-op building is owned by a non-profit corporation where each co-op stockholder owns a proprietary lease for their apartment unit. Although co-ops involve the sale of a personal property stock certificate rather than real estate, Congress has made co-op ownership virtually the same as condominiums for tax deductions and the 24 out of the last 60 month principal residence $250,000 exemption resale tax benefits of Internal Revenue Code 121. Up to $500,000 tax-free resale profits are available for a qualified married couple filing a joint income tax return.

Co-ops are often created because they are usually exempt from condominium ordinances. To illustrate, suppose you own a luxury apartment building that you want to convert to condominiums so you can earn huge profits. But you discover the city condominium ordinance requires two parking spaces for each condo unit and your building doesn’t have that much parking. Unless you can get a parking ordinance variance from the city, your best viable alternative is probably a co-op.

Because there is usually a master mortgage on the co-op structure, when a co-op project is new it is relatively easy for the first buyers to purchase with an affordable cash down payment, such as 10 percent to 20 percent. However, as time goes on and the master mortgage balance is gradually paid down, each co-op owner’s equity slowly rises. Except in New York and a few other areas, it is often very difficult for a co-op buyer to obtain resale financing because the lender’s only security is the personal property stock certificate.

For this major reason, many co-ops have converted to condominiums, which can be financed almost as easily as single-family houses. As a result, when a co-op converts to a condominium, the market value often rises 25 percent to 50 percent or more because of the easier marketability.

Another major drawback of co-ops is the dreaded interview of prospective buyers by the co-op board of directors. This interview is easy and painless at some co-ops. But other co-op directors demand detailed financial statements from buyer applicants. There are many co-op interview horror stories, including radio personality Rush Limbaugh, ex-President Nixon, and many others who were rejected by New York City co-op boards of directors.

No reason for the co-op rejection need be given, thus sometimes leading to subtle racial discrimination. The alleged reason for the interviews is to determine if the co-op buyer applicant can afford the monthly payments, plus any special assessments, because the remaining co-op shareholders must make up any missing payments or risk default on the master mortgage.

By comparison, most condominium associations do not have the right to approve or disapprove prospective buyers. However, some condo HOAs have a “right of first refusal” to match any purchase offer received from a condo buyer – but this right is rarely used.

Tenancy in common is jointly shared co-ownership. Residential TICs are a variation of both condominium and cooperative ownership. TICs usually involve a small group of owners buying a building together, such as a four-unit apartment building, as tenants in common with rights of each co-owner to occupy a specific apartment exclusively. There is one mortgage on the entire TIC property and all tenants in common are legally responsible for the mortgage payments. TIC owner-occupants receive tax benefits similar to other principal residence owners.

TICs have primarily arisen in jurisdictions where condominiums, cooperatives and/or PUDs are difficult or very expensive to create. Examples include San Francisco, Berkeley and Santa Monica, Calif., where rent control makes apartment conversions to condominiums very difficult.

Although most TICs work out quite well, some have fallen on “hard times” where the owners disagree, or one or more tenants in common can’t or won’t pay their share of the mortgage payments and operating expenses. If one co-owner doesn’t pay his/her share, the other co-owners must either make up the deficit or watch the mortgage go into foreclosure. Removing a non-paying tenant in common can be very difficult since it is not as easy as foreclosing on a regular mortgage borrower.

Because of the many potential problems with TICs, they are not recommended unless there is no other joint ownership alternative available. Of course, TICs require a carefully drawn agreement among the joint tenant co-owners. Consideration should also be given to resales and whether a prospective purchaser must be approved by the other TIC co-owners. Due to TIC difficulties, many real estate agents refuse to handle TIC resales, thus limiting the number of prospective buyers and the potential for market-value appreciation.

However, residential TICs should not be confused with commercial TICs, which have become very popular with real estate investors making tax-deferred Internal Revenue Code 1031 exchanges. To illustrate, an investor can make a tax-deferred exchange from an investment or business property, such as an apartment building, into a management-free TIC share, such as an office building or shopping center, which is managed by the TIC development company. Although the long-term viability of commercial TICs has yet to be proven, many commercial TIC investors are very pleased.

Your home is your castle, and the last thing you need is for your son’s stereo or your daughter’s phone to sound like an army of knights crashing through on their way to battle. Noise comes from sound waves, which are vibrations in the air that are generated by any physical action. If you can break, interrupt, alter or otherwise change the flow of those waves, you can change the amount of transmitted noise.

WALL CONSTRUCTION A MAJOR KEY TO QUIET

If you are building or remodeling, you have a lot of opportunities to impact noise transmission that are not available to you after the house is complete. Perhaps the most important consideration is the interior walls. The typical wall is simply a sandwich of drywall sheets over wood studs. Since drywall is a solid, relatively thin material, it does little to break the sound waves, and the air that is trapped in the wall cavities between the sheets does nothing to stop sound transmission.

One obvious solution is to install insulation in the walls between rooms, which will absorb some of those sound waves and greatly deaden the noise transmission. While any insulation is better then none, your best bet is to specify sound-deadening insulation instead of the more common thermal insulation, typically found in attics and exterior walls. Heavier and denser, this type of insulation is specifically designed for this application.

You can make a big impact with how the drywall is installed as well. The majority of drywall is installed by attaching it directly to the studs on each side of the wall, so the sound waves from one room will resonate directly through the drywall-stud-drywall composite right into the adjacent room. Installing double layers of drywall with staggered seams on each side of the wall will help to some degree, providing additional thickness and therefore additional mass to help deaden sound waves. Special sound-deadening sheets can be used as the first layer, directly under the outer drywall layer, or you can use one or two layers of 5/8-inch drywall instead of the standard 1/2-inch.

To better stop this transmission of sound, you need to break up as much of the direct connection between the drywall and the stud as possible. Perhaps the most effective way of accomplishing this is to install resilient channels, also commonly called “hat channels,” prior to installing the drywall. The U-shaped metal channels are attached horizontally across the faces of the studs, and then the drywall is attached to the metal channels instead of the studs. The staggering of the connection points and the sound-absorbing properties of the channel’s design makes a tremendous difference in how much sound transmission occurs between the walls.

Sound deadening insulation is a little more expensive then thermal insulation, but is not a major expense in the overall construction of home and will pay big dividends in peace and quiet without affecting the overall size of the wall. Double drywall layers and resilient channels are also relatively inexpensive in the overall scheme of the things, but remember that they create thicker walls, which will necessitate larger door jambs and other adjustments.

WATCH THOSE WINDOWS AND DOORS

Create an opening in a wall, and you create a pathway for more noise. For that reason, when you’re thinking about how to quiet things down, you want to pay particular attention to your windows and doors. Wood and vinyl frame windows have more sound deadening properties then metal frames, which are more prone to vibration and sound transmission. Also, the thicker the air space between the panes of glass and the better the insulation around operable windows, the better the window will perform from an acoustical as well as a thermal standpoint.

Solid-core doors are also considerably better at blocking noise then hollow-core doors, so you might want to consider upgrading to solid-core interior doors for any room where sound is an issue. Even with solid-core doors, sound can make its way around the door as well. Therefore, keep the door as closely fit to the floor as possible, use resilient materials to seal between the door frame and the wall studs prior to installing the door casing, and consider some type of weatherstripping between the door and the door stops, even on interior doors.

QUIET DOWN THE PIPES

If you have a two-story home, specify cast-iron waste lines for all upper-floor plumbing. This dense, slightly rough material is much better at deadening the sound of rushing water than the more common ABS plastic waste lines, which are smooth inside.