Lake Tahoe Home: Things to know when buying property at Tahoe
December marks what we hope will be the beginning of big snow, happy skiers and the second selling season for real estate in the Lake Tahoe region.
Winter is a great time to buy in the Truckee/Tahoe area. Whether you are looking to purchase a new primary residence or just a vacation home, there are a number of legal issues that you will want to consider.
1. TRPA/Building Restrictions
The Tahoe Basin is under the jurisdiction of a bi-state federal agency known as the Tahoe Regional Planning Agency (TRPA). TRPA’s mission is, primarily, to preserve the environmental health and sustainability of the Lake Tahoe region.
TRPA has the authority to establish and enforce land use planning, building and development restrictions. The TRPA code may limit a homeowner’s ability to build, remodel, landscape and otherwise improve their property.
If you are purchasing within the jurisdiction of TRPA, it is important that you understand what you can and cannot do with your property with regard to improvements and the timelines for permitting and/or building within the Tahoe Basin.
Certain activities like grading and digging are generally prohibited October 15 through April 30. If your property is within a scenic corridor or within a sensitive zone (like a stream zone), you may be subject to additional TRPA oversight.
TRPA does not make redevelopment, remodeling or improvement impossible, but it is important that you be aware that TRPA restrictions may impact your intended use of your new property. There is a great deal of information available on the TRPA website: http://www.trpa.org.
2. Homeowners’ Associations
If you are looking at purchasing a condominium or townhome that is within a homeowners’ association, you should carefully review any applicable Covenants, Conditions and Restrictions (CCRs).
The CCRs will dictate any use restrictions on your property. For many second-home buyers in Tahoe, rental restrictions are very important.
Some associations may limit the length of rentals or prohibit them entirely. If you are intending to rent out your new house as a vacation rental or on a longer-term basis, you should carefully review the CCRs for provisions relating to rentals.
It is also important that you understand if you will be required to pay monthly assessments, whether there are any planned or pending special assessments and the general financial health of the association, which should be evident in the operating and reserve budgets and financial reports.
3. Title Report/Title Insurance
An often-overlooked document in the mountain of paperwork that you wade through when purchasing a home is the preliminary title report issued by the title company in preparation for the issuance of title insurance at the close of escrow.
The title report provides a list of recorded documents that will be excluded from title insurance coverage. It is very important to review this list of exceptions and exclusions.
Often you will see easements affecting the property or any recorded use restrictions (like CCRs), and sometimes you may see issues relating to TRPA building covenants or restrictions.
The title insurance policy that you obtain will not insure against loss resulting from a claim that is related to a title condition that was listed on the exceptions list.
More importantly, certain title conditions can impact your intended use of the property (for example, if there is a public easement for beach access that goes right by your new master bedroom window … you may want to know about that).
It may be possible to remove some title exceptions and/or to insure around others. You may want to seek legal counsel to understand the impact and possible removal of certain types of exceptions.
Your Realtor should be able to guide you on when it is advisable to seek legal counsel to assist with title issues.
4. California Versus Nevada?
While the Tahoe Basin is one big beautiful region, there is one major tax difference that should be pointed out in case you are not already aware: The State of California has individual and corporate state income tax, while the State of Nevada does not.
When buying a second home that is intended for your personal vacation use, this may not be an important issue. However, if you are intending your new Tahoe home to be your new primary residence, it is worthy of consideration.
Additionally, if you intend to rent out your property, thereby generating income, the rental income is likely to be subject to income tax — not such a big deal if you are already a California state taxpayer, but if you are a Nevada resident, you may be subjecting yourself to California income tax on that rental income.
It’s all food for thought, and depending on circumstances, a reason to get in touch with your tax professional for guidance.
5. Real Estate Agents
As with any community, the Truckee/Tahoe area has many excellent Realtors … and a few that may not be quite so excellent. Choose an agent/broker by asking questions of both the Realtor and people who you may know in the community.
Realtors who live and work full time in the community, and have for some time, are going to understand the many unique aspects of home-ownership in Tahoe, such as why you want to think twice about a long, steep north-facing driveway or when you should investigate your grand remodel plans with TRPA.
Many of the communities around the lake and in the Truckee area have a local Board of Realtors. They can often be found online and may be a useful place to do a little research.
The Truckee/Tahoe Area is an amazing region rich with unparalleled beauty, outdoor adventure and close knit communities.
If Incline Law Group, LLP, can ever be of service to you in the purchase of your Tahoe home, or with other legal needs, please feel free to contact us. Until then, we will see you on the trails and the ski runs.
Cassell von Baeyer is an attorney/partner with Incline Law Group LLP in Incline Village. Visit inclinelawgroup.com to learn more.