Home improvement loans are monetary loans that allow a homeowner to engage in improvements, renovations, and repairs of their properties. These are different from mortgage loans in that the loan amounts are used for improvement of the property, especially for labor and materials, rather than the ownership aspects of the home. Home improvement loans are generally issued by lending institutions like banks, or the same companies that issue mortgage loans.
Home improvement loans can help a person to increase the value of their home. They often allow the homeowner to ensure that their property is safe and in good condition. Such loans often allow the owner to sell the property at profit in the long run.
On the other hand, home improvement loans are often associated with various legal issues and disputes. These include:
- Zoning and land usage
- Disputes over qualifications
- Disputes over repayment/defaults on the loan
- Loan fraud
For instance, a common issue is where a person uses a home improvement loan to build another story or higher structure on their property. If this new structure obscures a neighbor’s view or access to sunlight, it may be considered a zoning or land usage issue. These may require further legal filings to fully resolve the dispute.
Generally speaking, loan fraud occurs when either party uses false information or misrepresentation in order to gain a profit on a loan arrangement. In a home improvement loan situation, fraud can occur on either side. In fact, it is quite common for home improvement loans, since these tend to be smaller loans that are subject to less regulation. In a home improvement loan fraud scheme, the following factors may be at issue:
- Misrepresentation regarding the loan amounts
- False signatures and false contact information
- Using fake credit information to obtain a loan
Home improvement loan fraud can sometimes involve the cooperation of both parties. For instance, the lender may knowingly qualify a person for such a loan, even though they don’t meet the eligibility requirements. This is illegal and can lead to legal consequences for both parties.
Home improvement loans can sometimes be complex, even though they usually involve lower amounts than a mortgage loan. There may often be issues regarding the usage of the loan amounts, or with the loan contract terms. You may need to hire a real estate lawyer if you need help negotiating or reviewing a home improvement loan agreement. Also, if you need to file a legal claim, your attorney can provide you with representation during the legal proceedings.