Buying or selling a home can be highly stressful; individuals who are moving and active-duty service members can make moving feel downright impossible. Military moves occur when a service member receives a Permanent Change of Station (PCS) order requiring them to relocate to a new stationed location.
Key Considerations When Selling
While many service members are pros at doing a PCS, a military move involves unique considerations that a traditional move does not. Suppose you are taking a listing with a servicemember who is PCSing; you should first identify the exact date the servicemember will relocate and if they are staying stateside or moving abroad. Next, if married, are both spouses moving simultaneously, or is one spouse moving ahead of the other? The answers to these questions can help dictate the preparation that is needed.
For example, using a Power of Attorney can be helpful if one of the parties stays until closing. It is important to understand that the service member still needs to be contacted prior to closing to confirm that power of attorney remains valid, has not been revoked, and is in full force and effect. You might also consider having your service member seller pre-sign their settlement documents. Having the service member pre-sign provides them with the flexibility they often need and ensures that the documents are executed in time for settlement. If the service member has to PCS without enough time to pre-sign and does not have anyone local who can sign on their behalf, we can work with an attorney in our affiliated law firm to be appointed and sign on the service member’s behalf. If the service member has already departed, communicate their location to the title company so all parties have ample time to get the documents executed, notarized, and returned in time for settlement. Another typical mistake military sellers encounter in Maryland is not filing for an exemption from Withholding Tax at least 21 days before closing. Because many service members declare their residency in states with more advantageous income tax rules, despite living in Maryland for years, they are not considered residents of the State of Maryland. In this case, the service member should apply for an exemption similar to any other out-of-state seller to determine their tax liability prior to closing.
Key Consideration When Buying
The potential pitfalls of purchasing a home as part of a PCS are equally as important as understanding the many challenges of military sellers. Similar to selling, using a Power of Attorney is frequently the best option compared to a remote closing, which is often not permitted by the service member’s chosen lender. Unlike selling, identifying the need early for the POA and beginning the process is critical. If the buyer is using a loan, the lender often requires that it approve the overall use, form, and substance of the POA well before closing.
There are other logistical considerations for a military buyer as well. For example, wiring the cash to close (ahead of the closing) can present unexpected challenges. Military homebuyers often bank with institutions with military roots (i.e., USAA, Navy Federal) who may not be the most expeditious regarding getting a wire to the recipient. VA loans, often utilized by military homebuyers, impose stringent guidelines with which you should be familiar. Specifically, a military buyer cannot be charged any real estate commission or fees (admin or otherwise). Service members are still eligible to receive their first-time homebuyer credit in Maryland and the Homestead Tax Credit. However, they must provide a Statement of Service to the State Department of Assessments and Taxation to establish valid proof of living in the property despite not changing their driver’s license.
While this list is certainly not exhaustive, it provides a taste of the unique challenges working with a military buyer/seller can present. Please contact us to see if you are missing anything in your transaction and if we can assist your military buyers or sellers.