Posts

What you don’t know about homeowners insurance can hurt you.

If you are like me you pay your insurance and forget about it. This article is about how to avoid that sinking feeling when your insurance agent says your loss is not covered under JohnMenszer-1090932your homeowners policy. What you may not realize is that insurance companies exclude, or partially exclude, entire classes of losses. These fall into two main categories : correlated risk and moral hazard.

What insurance companies are afraid of paying for is really big catastrophes. If my house burns down that is catastrophic for me, but it is unlikely to affect the whole city. Since it hard to actuarially adjust the premiums for really big losses that happen infrequently, the companies tend to exclude them.

War is one example. Hurricanes are another. My homeowners policy states that flood damage is an exclusion “regardless of how caused” and goes on to state that flood includes “but is not limited to storm surge, waves, tidal water, overflow of a body of water, whether driven by wind or not.” Whew! If you want protection from flood loss get a flood insurance policy which is a government program.

Another factor to consider is that most policies in costal areas of the country now include enhanced deductibles for “Named Storm Damage” (Hats off to the storm-naming National Weather Service). Unlike a standard deductible which is a fixed dollar amount, the hurricane deductible is based on a percentage of the total insured dwelling value

So far we have been discussing correlated risk – multiple losses that can happen together. Another type of loss that insurance companies try to steer away from is moral hazard. Moral hazard is when the insured’s behavior changes in such ways as to raise the costs for the insurer.

But you might say, “all insurance affects behavior.” That is almost the point of insurance. If my camera is insured, you bet I’ll be more likely to take it on a canoe trip over the rapids. What the companies are concerned about are the hidden moral hazards, where having the insurance will be encouraging indifference. “Yes,” the company says we insure against loss, “but we don’t want to be ridiculous about it.”

Infestations of vermin are not covered. You really should wash the dishes in the sink and keep your house tidy. Mold is not covered. Fix that roof leak. If a bowling ball falls off your shelf and breaks your TV, shame on you.

To learn more about these questions check this National Public Radio Planet Money report.

 

What You Should Know About Code Enforcement.

Code Enforcement is serious business in New Orleans. An Administrative Judgment can cause you to have:
Your property seized and sold at public auction. JohnMenszer-0296
Daily fines of hundreds of dollars per day.
A lien filed against your property.
The fine and penalties added to your tax bill.

In New Orleans, the Municipal Code was amended as of April 10, 2014, making occupied and vacant property subject to the “Minimum Property Maintenance Code”. See this link to the Municode website, specifically Sections 6 and 26:
https://library.municode.com/index.aspx?clientId=10040

It is a violation of the Code to have:
Weeds in excess of 18 inches.
Substantially peeling, flaking or chipped exterior paint.
A gutter that discharges water onto a neighbor’s property.
A window that doesn’t operate or has a substantially cracked glass.
A screen with holes or breaks.
Peeling, chipped or flaking interior paint.
An inoperative or unlicensed motor vehicle.
A hot tub or pool without a 6 foot high fence with self-latching gate.

The Code Enforcement process can be initiated by an inspector or by a neighbor’s call to 311. At the hearing, the owner can present evidence and photographs to show work in progress. The Code Enforcement Bureau has discretion to continue the hearing, if substantial progress is shown, or render a Judgment. If found in violation the Bureau will issue a Notice of Judgment and levy a fine which is subject to stiff penalties beginning in 30 days if the fine is not paid. After 30 days the Judgment is recorded in the Land Records Division of the Clerk of Court (formally Notarial Archives and the Mortgage Office.) The Bureau has discretion whether to have the Sheriff of Orleans seize and sell the property at public auction.

The Owner is best served by bringing the property into full compliance. The administrative process allows appeals of a Judgment to Civil District Court, but only a suspensive appeal, which requires the posting of a bond, will protect the property from seizure and sale. Paying the fine (and penalty) will terminate the current case, but the property is subject to being re-cited for violations. Repeat offenders may have increased penalties.

As I said before, “Code Enforcement is serious business in New Orleans.”

High Tech Zoning Tool You Should Know About

 

 

Screen Shot 2014-03-12 at 9.59.09 AM

The City of New Orleans website has a cool new mapping tool that allows you to zoom in on any lot in Orleans Parish and obtain up to date zoning information.

You can:

• View the city in satellite imagery or as street map.

• Search by street address or drag and click on a location.

• Create custom layers that show lot, square, zoning and future land use.

For each lot it will tell you the zoning designation, description and when the map was last updated. Click on each item for more detailed information and a link to the zoning ordinance itself. Check your neighbors. Check yourself. Check the commercial development on the corner.

The Comprehensive Zoning Ordinance is the “blue print” to new developments in New Orleans real estate. Last updated in the 1970’s a new ordinance is in the process of being adopted. It will afford predictability and uniformity to what has been an ad hoc process of appeals for each non-conforming use and waiver. The goal has been to balance comprehensiveness and simplicity, so that the average citizen can understand it. High tech mapping tools have allowed the City to analyze neighborhood patterns of use as never before which should lead to fairer and more just decisions.

You will find a link to the Planning and Zoning Lookup Tool on the City’s website at:

www.nola.gov/city-planning/planning-and-zoning-lookup-tool/

 

 

 

Tax Sales – How do they work?

JohnMenszer-1060877In New Orleans Tax Sales are conducted by online auctions. The price is set at the amount of taxes owed, plus costs. The bidder who offers the least percentage of ownership wins. The city issues the winning bidder a tax sale certificate who becomes the tax sale purchaser and holds a tax sale title.

Tip: Never bid less than 100% ownership, just to get the property. I know you want the winning bid. However, if you decide to quiet the title later, owning less than 100% can be a nightmare. It won’t be worth it. Don’t do it.

Keep in mind that what you bid is just your initial investment. You will have to pay subsequent years property taxes to maintain your interest in the property. And you may have additional costs to keep the grass cut and avoid environmental liens.

The owners have up to three years from the day the tax sale is filed in the public records to redeem the property. In order to redeem the owners must pay tax sale purchaser the amount of taxes paid, plus a 5% penalty and 1% interest per month (12% per year).

After the redemption period is over (if the owners have not redeemed) the tax sale purchaser becomes the owner and can file suit to quiet the title. The goal of a suit to quiet title is to have the courts recognize the rights of the tax sale purchaser.