Big drawbacks of buying home on leased land

DEAR BOB: We are considering buying a retirement home in avery nice new golf course development near where we frequently vacation.However, we learned the houses are on 99-year land leases. Although we don’tplan to be around when the lease expires, won’t that hurt the value of thehomes as they become older? Are there any advantages or disadvantages? –ConnieS.

DEAR CONNIE: That 99-year land lease is a great deal for thedeveloper, but not so good for the home buyers. The reason is at the end of the99 years, title to the houses reverts to the landowner.

Purchase Bob Bruss reports online.

As you can see, the market value of the houses will declineas the 99th year approaches.

However, if the 99-year land leases contain an option forthe individual homeowners to buy the land beneath their houses, that makes themmuch more attractive for several reasons.

The major reason is your land-lease payments then become taxdeductible, just like interest. But another reason is most people want to ownthe land under their home. Please consult a local real estate attorney toreview the documents before getting involved.

UNLESS LAND TITLE IS IN A LIVING TRUST, PROBATE IS USUALLYREQUIRED

DEAR BOB: Four of us own a valuable piece of land that wewant to sell in the next year or so. The problem is one owner is very ill andwill probably die in the next few months. Is there any way to avoid having hershare tied up in probate court so title can be transferred to her heir quicklyafter her death? A problem, however, is she has Alzheimer’s and doesn’tunderstand what’s going on –Lucie R.

DEAR LUCIE: Presuming you hold title as tenants in common,not as joint tenants with right of survivorship, her share will pass in probatecourt according to the terms of her will.

Or, if she holds her share in her living trust, then probatecourt action is not required after her death and her successor trustee caneasily transfer her share of the land to whoever is named in the living trust.

Unfortunately, because of the Alzheimer’s disease, it’s toolate to create a living trust for her now to avoid probate. For more details,please consult a local probate attorney.

MUST LANDLORD REFUND SECURITY DEPOSIT BEFORE MOVE-OUT?

DEAR BOB: Is there a law requiring a landlord to refund thetenant’s security deposit after a number of years of occupancy? I have neverheard of such a law, have you? –Gus G.

DEAR GUS: No. But landlord-tenant law is controlled by statelaw. Although I try to keep up on new real estate laws, I have not heard of anystate which requires landlords to refund tenant security deposits before thetenant moves out. If any reader knows of such a state law, they will surely letme know and I will pass on the information.

The new Robert Bruss special report, “Pros and Cons ofToday’s Five Best Real Estate Profit Opportunities,” is now available for$5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this columnare welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2006 Inman News

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