DEAR BOB: My husband and I have a home mortgage with ournames on it, but the house title is in my husband’s name. We have no wills.What would I have to go through if he passed away? –Lana J.
DEAR LANA: Please consult a local attorney specializing inwills and living trusts. Without written wills, you are at the mercy of thelocal probate court.
Purchase Bob Bruss reports online.
If either of you dies tomorrow, because you have no livingtrust or written wills, the deceased’s estate must be distributed by thedreaded local probate court to transfer title.
The state law of intestate succession then determines whowill receive the deceased’s assets. Especially in second marriages, the titlemight not go where you desire.
To avoid probate court costs and delays, I suggest you andyour husband consider placing the title to your home into a revocable livingtrust. Then, when one of you dies, the successor trustee (presumably thesurviving spouse) can transfer title to the living-trust assets without probateproceedings, as specified in the living trust.
Another major living-trust advantage occurs if one of youbecomes incapacitated, perhaps due to Alzheimer’s disease or a severe stroke.Then the successor trustee can manage the living-trust assets, even sellingthem if necessary. More details are in my special report, “24 KeyQuestions Answered: Living Trust Secrets Reveal How to Avoid Probate Costs andDelays,” available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA94010 or by credit card at 1-800-736-1736 or instant Internet delivery at
NO NEED TO HIRE AN APPRAISER WHEN SELLING YOUR HOME
DEAR BOB: I am thinking about selling my home for sale byowner (FSBO) Based on previous low appraisals for refinancing, I am concernedabout my home appraising low although it is in excellent condition and in agreat location. I am considering hiring a real estate attorney or realty agentto help “manipulate” an appraiser to get the best appraisal and tohelp fill out the sales contract and required disclosures when a sale is made.Does the home buyer or seller pay for the appraisal? –Robert F.
DEAR ROBERT: There is no need for a home seller to hire aprofessional appraiser unless there are unusual circumstances. After a saleoccurs, the home buyer’s mortgage lender hires the professional appraiser whosefee is often paid by the buyer.
Before deciding to risk selling your home alone without aprofessional real estate agent, please interview at least three successfulrealty agents who sell homes in your vicinity. Even if you are thinking aboutselling FSBO, they won’t mind. The reason is they know most FSBOs list theirhomes for sale with a professional agent within 30 to 60 days.
Each agent you interview should provide you with a writtencomparative market analysis (CMA). To help determine your asking price, a CMAis far better than a professional appraisal. This is because successful realtyagents know current up-to-date market values of homes like yours. Butappraisers work from closed home sales information, which might not beup-to-date.
MUST HOME SELLER PAY CORRECTED MORTGAGE PAYOFF?
DEAR BOB: When we recently paid off our home mortgage, thelender supplied the wrong payoff amount to the title company. The unpaid amountwas added to my credit report as unpaid after the closing. Am I obligated topay the additional amount? –Sheila D.
DEAR SHEILA: Yes. If your mortgage lender made a mistake asto the exact payoff amount demand, you are responsible for paying the amountowed to the lender.
However, before you pay the disputed amount, I suggest you(1) demand a written explanation from the lender for the payoff amountdifference, and (2) get a written statement signed by a responsible officerwith the lender that when you pay the disputed amount, the lender will removeany negative comments from your three credit reports.
SALE OF ADJOINING LOT QUALIFIES FOR HOME SALE TAX BREAK
DEAR BOB: Several months ago, my wife and I sold a vacantlot adjoining our residence at a substantial profit. In April, we sold ourresidence at a large profit. A friend told us we can claim that $500,000 homesale tax exemption for both our home sale profit and the profit on the vacantlot sale. Is this true? –Chuck D.
DEAR CHUCK: Yes. Internal Revenue Code 121 provides for aprincipal residence sale tax exemption up to $250,000 (up to $500,000 for amarried couple filing a joint tax return in the year of sale). To qualify, youmust have owned and occupied your principal residence at least 24 of the 60months before its sale.
In addition, Internal Revenue Code Regulation 1.121-1(b)(3)says this exemption also applies to the sale of adjacent vacant land owned andused as part of your principal residence. The adjoining vacant land must besold within 24 months before or after the sale of your principal residence. Forfull details, please consult your tax adviser.
CAN HOME SELLER REQUIRE ARBITRATION OF SALES DISPUTES?
DEAR BOB: I made a purchase offer to buy a home. The sellersaccepted on the condition that I agree to binding arbitration of any disputethat might arise after the sale closes. I seem to remember that you warnedagainst binding arbitration. Can the seller force me to agree to arbitration?–Maria G.
DEAR MARIA: A home seller can require any sales contractprovision the seller desires. If the seller insists on binding arbitration ofany dispute that arises later, if you don’t agree to such a clause, the sellerdoesn’t have to accept your purchase offer.
However, the seller might not understand all thedisadvantages of agreeing to binding arbitration at the time of signing a homesales contract. Perhaps the seller is not aware that agreeing to bindingarbitration means both parties forfeit their legal rights to a jury trial,court rules of evidence, and the right to appeal an arbitrator’s decision.
My best advice is home buyers and sellers should not give upthese important rights at the time of signing a home sales contract. If adispute later arises, perhaps due to the seller’s failure to disclose asignificant home defect, at that time the parties can agree to bindingarbitration rather than a court trial.
HOW TO HANDLE AN INNOCENT PROPERTY MISREPRESENTATION
DEAR BOB: About five months ago, I sold what I thought was alegal two-family duplex building. However, my buyer’s attorney recentlyinformed me that the property is only zoned as a one-family residence. Thestructure was built in the 1920s. I owned it for 14 years with no zoningproblems. However, when the buyer went to apply for a city building permit toremodel one of the units, he was told this is only a one-family residence. Thezoning is clearly single-family, but I thought since the building wasconstructed over 70 years ago, it was “grandfathered” as a zoningexception. There are several other two-family structures in the vicinity. Whatshould I do? –Margaret H.
DEAR MARGARET: The situation you describe is known as aninnocent or unintentional misrepresentation. If the property is worthsignificantly less than the two-family duplex the buyer thought he purchased,his legal remedy is to rescind the sale and get his money back from you.
You should consult a local real estate attorney to discussyour alternatives. It might be possible to get the property”grandfathered” as a legal two-unit building variance. That’s what Idid years ago to “legalize” a three-unit building I owned in an areazoned for a maximum of two units per lot. Also, I had to get another variancebecause my property didn’t have adequate parking.
NO TAX DEDUCTION IF YOUR NAME IS NOT ON THE TITLE
DEAR BOB: Last year I started helping my mother pay theproperty taxes and mortgage payments on her house after my father died in July.This amount I paid totals about $14,000. But when I recently had my incometaxes prepared, the tax preparer said I couldn’t deduct this amount. Please saythis isn’t true. –Nancy Y.
DEAR NANCY: Unfortunately, your tax preparer is correct. Thereason is because you have no legal obligation to make those payments if yourname is not on the property title.
However, your problem can be easily corrected. Your mothercan add you to her title as a co-owner. Then you will become obligated to makethose payments and you can deduct the mortgage interest and property taxes youpay.
The new Robert Bruss special report, “How to Obtain theBest Appraisal of Your House or Condo,” is now available for $5 fromRobert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 or instant Internet delivery at
(For more information on Bob Bruss publications, visit his
Real Estate Center).
Copyright 2006 Inman News