By Jim Wherry, Legal Assistance Office, Fort WainwrightJune 29, 2010
FORT WAINWRIGHT, Alaska - Home Ownership. When purchasing a home, ask lots of questions! Prospective homebuyers should ask for and review copies of a seller's utility bills before signing a written offer. This may come as a shock, but not every home can receive satellite TV or cable, so if this is an important item, ask.
An individual who purchases a home will take a home as a tenant in severalty. Married couples normally own joint real estate as tenants by the entirety. This means each one owns 100% of the real estate. When one passes away, the other automatically owns the entire home, free and clear of their spouse's estate. There is no joint tenancy in Alaska. All other persons who purchase real estate, together, own the property as tenants in common. When a tenant in common passes away, that person's property passes to his or her beneficiaries who may or may not be the other owner of the property.
House Taxes: Alaska is a privacy state. Unlike the Lower 48, you are not obligated to tell the city or the borough, how much you paid for your home. The government will use other available information to determine the value, if you decide not to provide the requested information. Once you close on your new home, you will receive a polite card, asking how much you paid for your home, so they will have an accurate assessment of your home for tax purposes. You do not legally have to reply to this request. Tax valuations are available online, and you definitely want to respond, if you believe the valuation is too high!
You will also receive a form from the taxing authority, once a year, asking if you actually live in the house. You definitely should sign and return this form. If you live in the house, the assessed value of your home is automatically reduced by $20,000 for tax purposes.
Home Insurance: Lenders will require hazard insurance on your home, which is part of the homeowner's policy you will need to have in place prior to closing. Your home purchase will not close without homeowners insurance. If you get an Alaska Housing Finance Corporation loan, your homeowners insurance and property taxes will be part of your payment.
Every home is in a flood zone, but some homes are in a "100-year" flood zone, or higher. This means that it is only likely for that home to flood in 100 years. If a home is in a flood plain, lenders may require flood insurance. We learned from Hurricane Katrina that most flood insurance will not cover flood damage directly caused by rain. Damage from sewer backups or sump pump failures are also not covered by flood insurance.
Alaska experiences as many as 7,000 earthquakes, each year. In 1904 and 1947, Fairbanks, Alaska experienced major earthquakes registering more than 7.2 on the Richter scale. Earthquake insurance does add an extra expense to home ownership. Some people a have it, while others hope to rely on government programs to rebuild in the event of a disaster. Know how much the deductible is: it can be quite high.
A word to the wise: Buyer beware. The military's current personnel basing plan projects fewer PCS moves for Soldiers during their careers, but military members can still expect to move around. Military home owners may only live in their homes for one to two tours before moving.
In the mid-70s and early 80's, Alaska faced a tight housing market, just as it does, today. The construction of the Trans-Alaska Pipeline brought 1,000s of people from all over the United State in hopes of obtaining good paying jobs. The jobs were nine weeks on and two weeks off, 80 hour weeks and lots of money to be made.
Those families wanted to buy homes, which brought up the builders. There was a major construction boom and the state prospered. In the mid-80s the pipeline had been completed and workers were laid off. Unfortunately, the price of oil bottomed out in the late '80's, and more than 15% of the population left the state, many because there were no more construction jobs. Foreclosures skyrocketed and home prices plummeted. Alaska became a buyer's market. Housing markets can and do turn downwards.
Home ownership comes with costs that renters never see. Property taxes, maintenance, unexpected repairs, rising home heating costs and natural disasters all happen. Things will break, need repaired, need replaced...plan on it! On the plus side, your home is yours. A fixed mortgage rate will lock your house payment in and shield you from soaring rental expenses. Ownership allows you to fix up your house, your way.