“Home swapping” refers to a newer type of real estate and vacation-related practice that has grown in popularity over the years. In a home-swapping arrangement, one family switches homes with another for a short period of time, usually for a few weeks only. The idea is that each family lives in the other’s home for a vacation experience.
For example, a family in Washington, D.C. may swap homes with a family that lives in Honolulu, with the respective families using the properties and amenities as vacation homes. There is sometimes a fee involved, but it usually is done without monetary exchange. The practice has become more popular, especially when economic circumstances are less favorable. The Internet has also helped make communication easier.
Home swapping can also be a way to do a permanent swap. Sometimes home builders allow buyers to trade in their existing homes for a newly built one. Of course, such a trade would require plenty of paperwork and possibly the cooperation of a mortgage lender. A person would probably not want to do it without the involvement of a real estate lawyer.
Home swappers need to be vigilant about doing their due diligence. The parties need to understand the challenges and obtain the necessary advice. It can be done when both parties, for whatever reason, do not want to go the traditional route of selling their property, paying off any mortgage they may have, and then searching for a new home.
One issue in a permanent home swap may arise if either or both of the homeowners have mortgages. Sometimes, a mortgage can be assumed by a person who buys another person’s house. The mortgage lender allows the new owner to assume the responsibility of paying off the mortgage on the home.
The problem is that other mortgage lenders do not allow their mortgage loans to be assumed by a new buyer of the house. Rather they forbid it. In this case, if a buyer needs a mortgage loan to complete the purchase of the house, the transaction might become complicated. If the owner of the house has a mortgage, the owner does not receive the funds from the sale that they need to pay off their mortgage. It is possible that the buyer could use the proceeds of a mortgage loan to pay off the mortgage of the current owner.
But if the amount owed on the mortgage exceeds the amount that the buyer qualifies to borrow, this may not be an option.
So, a permanent swap just may not be an option in all situations. A person would have to study how it works and decide whether it is something that could work for them and their circumstances.
Is Home Swapping Legal?
The problem with home swapping is that it may be considered illegal, depending on the location in which it occurs. For example, the arrangement may be considered a “short-term” rental arrangement, which is illegal in many states. For example, in New York, a rental agreement for less than 30 days is illegal; thus, the parties may become subject to legal liability for home-swapping.
In addition, there are many concerns regarding the safety of such practices. Often, the parties may barely know each other, having only met and exchanged information over the Internet. The living arrangements likely are not covered by insurance for the reason that it might render one’s homeowner’s insurance null and void.
So if one of the owners becomes liable for personal injury or property damage, they may find that they do not have insurance to cover the loss. And then, one home-owner may experience theft of their personal property or other kinds of real estate fraud.
Lastly, some states are beginning to impose special taxes on property owners who engage in home swapping. The justification here is that home swapping is basically the same as operating a hotel illegally. Hotels and other commercial accommodations are taxed by state and local governments for their operations. So governments believe that home swapping should be taxed as well.
What Is “Couch-Surfing”?
Couch surfing is similar to home swapping, except that it usually involves a single person switching an apartment or condo with another single, rather than entire families switching homes.
Again, the same types of concerns apply to couch surfing. It can be illegal in some states and in some common ownership communities. Homeowner association covenants may forbid short-term rentals. This prohibition may apply to single-family residences and townhouses in the community as well as condos.
In some states, state laws prohibit short-term rentals. Or municipal or county regulations may forbid the practice. Other concerns would be liability and insurance issues, liability for theft, and the like.
The term “couch surfing” can also apply to a situation in which a person loses their housing and sleeps on the couch of a relative or friend in their home until they can find new housing. For example, a single person may lose their job and then lose their apartment because they cannot pay the rent. They might “couch surf” with a family member until they get back on their feet financially. There is usually nothing illegal about this unless the family member or friend’s rental agreement limits the number of occupants in the unit.
Generally, practices like home-swapping and couch-surfing in which two people switch condos or apartments should be avoided, especially if the parties do not know each other or are not close family relatives.
Alternatively, a person would want to carefully consider all of the potential issues involved, e.g., state law, homeowner association covenants, liability, and insurance, and make sure that switching is legal in their case. They would also want to make sure that any potential legal problems are addressed so their interests are protected.
For example, a person would want to contact their insurance company and ask them under what conditions their coverage could extend to a home-swapping situation. A person may need a new policy of some kind, or they may need to add a rider to their current policy. A person would want to confirm that swapping is legal in their state, county, municipality, or community.
If a person wants to swap apartments or other rental properties, they would be well advised to check their lease and check with their landlord and get the landlord’s permission. Otherwise, they might find themselves without housing when they get home from their vacation. This would most certainly ruin an otherwise enjoyable holiday.
It is important to keep in mind that most people who engage in leasing real property as a business do extensive checks on prospective tenants. They do this to protect their interests. They want a tenant who is going to pay rent reliably and take care of the property they inhabit.
A potential swapper may want to give serious thought to what kind of background check they should do on the person or people with whom they intend to swap. Simply relying on instinct or apparent good feelings is a way to set oneself up for problems.
Do I Need a Lawyer for Home Swapping or Couch Surfing Issues?
If you are thinking about home-swapping or swapping your condo or apartment, you want to consult a knowledgeable real estate lawyer before you do it. Serious problems can arise, and you do not want to find yourself with potentially complicated and expensive legal problems.
LegalMatch.com can connect you to a lawyer who can help you think through what kind of background check you want to do on the people with whom you are going to swap. Your lawyer can also advise you of other measures you want to take to avoid any kind of legal problems and protect your interests.
