How moving to nursing home affects reverse mortgage

DEAR BOB: My 90-year-old mother-in-law has recently movedpermanently into a nursing home. She has a new reverse mortgage on herfree-and-clear home to pay her living costs. My husband will inherit her housewhen she passes on. At that time, we plan to demolish it and build new. Whatare the financial ramifications of renting the house to tenants until shepasses away? He is reluctant, whereas I hate to see a nice house sitting therevacant that can bring in $2,000 monthly rent. –Elaine H.

DEAR ELAINE: Bad news! Because your mother-in-lawpermanently moved out of her principal residence, her reverse mortgage willbecome due and fully payable in full after 12 months of her non-occupancy ofthe house.

Purchase Bob Bruss reports online.

Reverse mortgage lenders periodically check up on theirborrowers to see if they (a) are still alive and (b) are occupying theirprimary residence (except for absences less than 12 months).

If the house is rented to a tenant, when the reversemortgage lender discovers the owner no longer lives there, the lender canrequire the loan balance be paid in full or it will be put into foreclosure.For more details, read the reverse mortgage documents and consult a local realestate attorney.

JUDGE CAN’T FORCE YOU TO BUY OUT A CO-OWNER

DEAR BOB: My sister and I inherited two parcels of land. Shewants me to buy her out. But I can’t afford to do so. I live on one of theparcels as my residence. She says she can go to court to get a judge to forceme to buy her out. Is this true? –Josh S.

DEAR JOSH: No. I am not aware of any state with a statuteallowing a judge to force one property co-owner to buy out another co-owner.

However, your sister might be thinking of a partitionlawsuit. Virtually all states have partition statutes where one co-owner canbring a lawsuit to force the sale of jointly owned property. But if you want tokeep the property after a judge orders a partition sale, then you would have tofigure out a way to buy out your sister’s half. For details, please consult alocal real estate attorney.

WHAT TO EXPECT WHEN YOU PAY OFF THE MORTGAGE IN FULL

DEAR BOB: I recently paid off my land. The sellers sent methe original promissory note marked “paid in full” and signed by thesellers along with the original deed of trust and request for fullreconveyance, signed and dated by the sellers. What do I do now? Or do I have todo anything? –Kim B.

DEAR KIM: You must act to clear the recorded deed of trustsecurity instrument from your title. This is done by taking the request forfull reconveyance form to the trustee named on that document, paying the fees,and making sure it gets recorded to clear that deed of trust from your title.

If your lender had recorded a mortgage, the document to berecorded is called a satisfaction of mortgage.

Don’t let this slip by. It is extremely important to takecare of this now to clear your title. If you fail to act now, when you want tosell that land you could have a nightmare on your hands if the trustee and/oryour sellers can’t be found.

That happened to me when I bought my house. Fortunately, mysellers were able to locate their private party lender who failed to clear thetitle when the sellers paid off a second mortgage.

IF EX-TENANT CAN’T BE FOUND, GO AFTER CO-SIGNER FOR DAMAGES

DEAR BOB: My son and I own two rental houses in a collegetown. A property management firm handles them for us. We had “the tenantsfrom hell” who were finally evicted after several months of no rentpayment and some extensive damage. The property manager finally got around tofiling a lawsuit. But the court date has been postponed because they couldn’tlocate the ex-tenants to serve them. Couldn’t they have served the co-signerparents of one of the tenants? –Ken C.

DEAR KEN: If your tenants from hell were college students,they probably have zero assets. But the parents likely have assets and willprobably pay up to avoid hurting their credit ratings.

Can you say “bad management company?” It soundslike that’s what you’ve got. The management company should have served theco-signer parents. Forget about trying to find those ex-tenants who areprobably judgment proof.

Now you know why I recommend managing your own properties,which should be no more than an hour’s drive from your home. For more details,please consult a local real estate attorney where the properties are located.

WHAT IS BEST WAY TO PASS HOUSE TITLE TO HEIR?

DEAR BOB: What is the best way for my grandfather to passthe title to his house to me? –Chris T.

DEAR CHRIS: To avoid probate, your grandfather should have arevocable living trust, and then transfer title to his house and other major assetsinto his living trust. Then he maintains control of his assets during hislifetime.

After he dies, presuming he hasn’t sold the house, thesuccessor trustee (probably you) can transfer the title without probate towhomever was designated in the living trust to receive the house. More detailsare in my special report, “24 Key Questions Answered: Living Trust SecretsReveal How to Avoid Probate Costs and Delays,” available for $5 fromRobert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 or instant Internet delivery at www.BobBruss.com.

DON’T ACCEPT QUITCLAIM DEED WITHOUT OWNER’S TITLE INSURANCE

DEAR BOB: Eleven years ago, my boyfriend at the time boughta condo for my children and me to live in. The purchase was in his name becausemy credit was poor at the time. He bought it with the intent that someday whenmy credit got better I would get my own mortgage and put the condo in my name.I have paid the mortgage for the 11 years. The only thing he did was pay the$5,000 down payment and use his credit to buy the condo. We broke up in 2000.He says our agreement is still the same. I still live in the condo, making themortgage payments. My credit is now excellent. How can I get the title into myname? I think he is expecting to make money on this. But I don’t think it isfair for him to profit since all he did was pay $5,000 and let me use his goodcredit. Can he give me a quitclaim deed to transfer title? –Sandra F.

DEAR SANDRA: Yes, he can sign a quitclaim deed to you.However, be sure to have this handled by a title insurance company or titleattorney.

The reason is you need to buy an owner’s title insurancepolicy to be certain you obtain marketable title. You don’t want to get stuckwith any of his judgments, liens or other obligations that might have attachedto the condo. For full details, please consult a local real estate attorney.

CAN INHERITED PROPERTY BE SOLD OFF PARCEL BY PARCEL?

DEAR BOB: Several years ago, I inherited a house located on1.25 acres of land. An appraisal was made to establish the new basis stepped upto market value at that time. The land is divided among three separate deeds.Would it be possible to sell the three pieces of land separately? How would oneestablish the stepped-up basis for each parcel when the appraisal was based onthe totality of the property and the house? –Ed A.

DEAR ED: Yes, you can sell each of the separate parcelsindividually. I recommend obtaining a new professional appraisal to allocatethe stepped-up basis to each of the separate parcels.

HOW TO DEED HOME TITLE BACK INTO YOUR LIVING TRUST

DEAR BOB: When we refinanced our house recently, themortgage lender insisted on taking the title out of our living trust. How do weget the title back into our living trust to avoid probate? –Ann J.

DEAR ANN: The title attorney or title company who handledthe refinance should have asked if you wanted the title transferred back intoyour living trust. It is usually a simple matter to execute and record aquitclaim deed from yourselves back into your living trust. A local real estateattorney can provide full details.

The new Robert Bruss special report, “Five Easy Ways toBuy Your Home and Investment Property for Nothing Down,” is now availablefor $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit cardat 1-800-736-1736 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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