DEAR BOB: As a renter, I have lived for two years in oneunit of a two-family house. On Nov. 1, 2006, we signed a new two-year lease.But on Nov. 7 the landlord called to tell us he will be selling the property.Does the new owner have to honor our lease? Or are we out of luck? We’ve gottenthe runaround from both the landlord and the Realtor selling the property. Theydon’t seem to be showing the property to many investors, but instead mainly tofamilies –Jessica J.
DEAR JESSICA: Presuming your two-year written lease has noescape clause for the landlord, the new buyer of your property must honor theterms of your lease.
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Just between us friends, your landlord must be very foolishto sign a new two-year lease shortly before he planned to sell the property.Few buyers will want to purchase that residence and have to wait two years tooccupy it after your lease expires.
You might want to study the lease to see what it says aboutthe landlord and/or listing agent showing the property to prospective buyers.If the lease doesn’t provide for showings, you don’t have to let prospectivebuyers inspect your unit.
If the lease provides for such showings, as most do, youmust be given “reasonable notice.” That is presumed to be at least 24hours’ advance notice. You might want to inform any prospective buyers that youhave a two-year lease and you have no plans to move. For more details, pleaseconsult a local real estate attorney.
POSSIBLE PITFALLS OF BUYING AT A PROPERTY AUCTION
DEAR BOB: If I purchase a house at a public auction, am Iliable for debts other than the mortgage on the property? If so, what is thebest way to be assured of knowing what they are prior to the auction? –John F.
DEAR JOHN: Be sure to read the terms of the auction beforebidding. Is it an auction for unpaid property taxes? Perhaps a mortgageforeclosure auction? Maybe a homeowner’s association assessment lien sale? Oran IRS income tax lien sale?
For example, if you buy at an auction for unpaid propertytaxes (not a tax certificate sale), all junior liens such as a mortgage,judgment lien against the former owner, and even homeowner association liens,are wiped out.
However, if you buy at an IRS income tax lien sale, you buy”subject to” all prior liens such as a mortgage and unpaid propertytaxes. Also, after an IRS tax sale, the taxpayer has a 120-day redemptionperiod to reclaim his property by paying you the amount of your successful highbid for the property.
Most auctioneers will disclose the prior liens of which theyare aware. To be certain, before the auction you can buy from most titleinsurance companies a “title guarantee report” (or similar name),which reports what encumbrances are recorded against the property title.
WHY PROSPECTIVE HEIR SHOULD NOT BE A PROPERTY CO-OWNER
DEAR BOB: You frequently mention the benefits of a revocableliving trust such as probate court avoidance and having the named successortrustee manage the property if the original trustor becomes incapacitated by astroke or Alzheimer’s. How does this work? Would it be wise for my mother toadd my name to her living trust (which contains only her home) as a co-trusteein case she becomes incapacitated so I can manage the trust? – Pat S.
DEAR PAT: If you are the beneficiary of the living trustafter your mother passes on, and if you are also named as the successortrustee, if she becomes incapacitated as determined by a physician, then youcan manage her living trust assets.
Adding your name to the property title and to the livingtrust as a co-trustee could be a major mistake because you then might notreceive the full stepped-up-basis-to-market-value inheritance benefit. Fordetails, please consult a local estate-planning attorney.
The new Robert Bruss special report, “How to BuyFixer-Upper Houses with Little or No Cash for Fun and Fortune,” is nowavailable for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or bycredit card at 1-800-736-1736 or instant Internet delivery at
(For more information on Bob Bruss publications, visit his
Real Estate Center).
Copyright 2006 Inman News