Debts take joy out of real estate inheritance

DEAR BOB: Is it true when someone inherits real estate,which was the deceased’s primary residence, the mortgage will be wiped out atthe time of death and the property title passes free and clear of all liens? Iheard if the property was not the deceased’s principal residence, then the heirhas to pay the debts –Rick S.

DEAR RICK: Dream on, my friend! When you inherit realestate, you receive title “subject to” all existing recorded liensand encumbrances against the property.

Purchase Bob Bruss reports online.

That means if you inherit a house that has a first mortgage,a home equity loan, a mechanics’ lien and unpaid property taxes, you must payall those obligations according to their terms or lose the property byforeclosure or forfeiture.

Real estate inheritances can be wonderful if there is plentyof equity (the difference between the total amount owed and the fair marketvalue of the property). However, if there is little or no equity in theinherited property, you might want to decline that inheritance. For moredetails, please consult a local real estate attorney.

HOW TO HANDLE A NEIGHBORHOOD NUISANCE

DEAR BOB: We live in a historic area of eight rowhouseslocated next to each other. The rowhouse next door was purchased by a realestate agent who told the seller and the neighbors he planned to live in thehouse and rent the back unit (as the previous owner did). Instead, he did notmove in. He put seven college students in the house, letting the propertydeteriorate, allowing the gutters to fall off, and creating an eyesore. Herefuses to respond to our phone calls, nor will his real estate brokeragemanager reply. What can we do? –Barrett B.

DEAR BARRETT: The situation you describe is legally a”private nuisance” because it affects a small number of adjoiningproperty owners. If necessary, you and your neighbors can bring a legal actionto abate the private nuisance.

However, since you’ve tried being nice, it’s time to contactthe city “code enforcement officer” (or similar title) to learn ifany ordinances are being violated. Often, a city warning letter will accomplishamazing results. For more details, please consult a local real estate attorneybefore filing a lawsuit to abate that private nuisance.

DON’T BE A CHEAPSKATE TO GET RID OF MORTGAGE INSURANCE

DEAR BOB: I need to get an appraisal from a certifiedlicensed appraiser to prove my loan-to-value ratio is below 80 percent so myPMI (private mortgage insurance) monthly premium can be cancelled. I called mymortgage lender who is affiliated with an appraiser who charges $300. I phonedan appraiser in the yellow pages who wants $325. But I heard some real estateagents, who are also certified licensed appraisers, charge less since this is aone-bedroom condominium. I don’t feel I need to spend $300 to remove an expensemy lender has been taking from me for the last five years. I have never beenlate with payments. Is there a less expensive alternative? –John M.

DEAR JOHN: Don’t be a cheapskate. You didn’t say how muchyour monthly PMI premium costs, but let’s say it is $50. Presuming you have atleast 20 percent equity in your condo so you are eligible to cancel the PMI, ifyou pay $300 for a professional appraisal to prove to the lender you have atleast 20 percent equity, you will earn back that $300 from just six months ofPMI premium savings. That’s an easy “no brainer” expense.

The new Robert Bruss special report, “Probate PropertyProfit Secrets Revealed,” is now available for $5 from Robert Bruss, 251Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instantInternet delivery at www.BobBruss.com.Questions for this column are welcome at either address.

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

Copyright 2006 Inman News

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