DEAR BOB: My daughter and another teacher co-own atownhouse. The other teacher is leaving to get married. My wife and I are goingto buy her out so our daughter can avoid selling and trying to purchase againin an expensive area. To remove the other teacher’s name from the deed andmortgage (preferably leaving only our daughter’s name or substituting our namesfor the departing teacher) do we need an attorney? Or can we sign something ina government office to get her name off the deed? –Dan W.
DEAR DAN: The departing co-owner’s name will always remainon the mortgage obligation until the loan is either paid off or refinanced. Ifyou contact the lender, the lender might demand a stiff assumption fee, or evendemand payment in full because of the title transfer. If I were in your shoes,I would not contact the lender.
Purchase Bob Bruss reports online.
To remove the departing co-owner’s name from the title, whenshe receives your payment for her equity share, she should sign a quitclaimdeed to you and your wife. I suggest you handle the transaction at a localtitle insurance or real estate attorney’s office because you should obtain anowner’s title insurance policy. The title insurer or attorney will then recordthe quitclaim deed.
The reason you need an owner’s title insurance policy forthe half interest you are acquiring is you don’t want to get stuck with thedeparting co-owner’s liens (if any), perhaps for unpaid income taxes orjudgments, etc., which might have attached to her half of the property. Anowner’s title policy is your best protection. For more details, please consulta local real estate attorney.
PROS AND CONS OF SELLING AN “AS IS” HOUSE
DEAR BOB: I have decided to sell my home so I can afford tomove to a very nice, nearby assisted-living residence. My two-bedroom home,built in 1938, has become a bit run-down. However, it is in a very goodneighborhood where most homes have been remodeled or completely rebuilt. Myreal estate agent suggests I spend about $50,000 to renovate the kitchen andbathrooms before listing my house on the market for sale. My son says I shouldjust have the house painted inside and outside. He and his pals have offered todo the painting in a weekend or two. I can afford the $50,000 renovation cost,but then I read your article about selling “as is” and wonder ifthat’s the way to go? –Anne C.
DEAR ANNE: Listen to your smart son. There is no sensespending $50,000 to renovate an older house just before sale. Your buyers willeither like your charming older house the way it is and be thankful for areasonable price in a desirable neighborhood, or they will want to remodel totheir taste after purchase.
Save your $50,000 and the inconvenience of renovation, whichmight not even return the $50,000 in the form of a higher sales price.
Let your son and his pals paint your house inside andoutside. Also, check the landscaping to be sure it is attractive. Perhaps plantsome spring flowers to make the front yard especially inviting.
When you sell your home “as is,” that means theseller must disclose all known defects (such as a leaking roof) but the sellerwon’t pay for any repairs. However, if an obvious defect can be repaired atminimal expense, such as a dripping faucet, get it fixed.
In addition to the real estate agent you already consulted,after the house is painted and ready to sell, I suggest you interview at leasttwo more agents.
The reason is you need to compare their evaluations, especiallytheir CMAs (comparative market analysis). These forms will show you recentsales prices of comparable nearby homes, asking prices of neighborhood homescurrently listed for sale (your competition), and even the asking prices ofrecently expired similar home listings. Then you can correctly set your askingprice.
HAPPY ENDING TO VETERAN’S RENTAL STORY
DEAR BOB: I read your recent item about the Iraq War veteranin a wheelchair who wanted to rent an apartment but it had four steps and heneeded an access ramp. You correctly informed the landlord he does not have topay for the ramp. But the Americans with Disabilities Act (ADA) requiresallowing the tenant to install the ramp at his expense. However, you and yourreaders might not be aware of the Home Improvement and Structural Alterations(HISA) program available to veterans through most Department of Veteran AffairsMedical Centers. Information is available in VHA Handbook 1173.14 and on theInternet at www.va.gov/vhapublications.If the veteran is eligible for VA Medical care, he should qualify for financialassistance with the ramp. –Ivan R.
DEAR IVAN: Thank you for your valuable information and tothe dozens of other readers who e-mailed and mailed suggestions. Fortunately,the landlord and the veteran’s mother reached an agreement.
The four steps have been removed, and there is now a rampwith a nice railing to the public sidewalk so the wheelchair veteran can takethe nearby bus to a local college.
But there’s more. I received a nice e-mail from a residentof the apartment building who reports one of the residents, an older woman, isteaching the “quite charming” veteran how to cook, and another”young female resident” takes him shopping on Saturdays in her sportutility vehicle. I’m just reporting the facts. Is this reality TV material?
CONFUSION ABOUT MEDIATION AND ARBITRATION
DEAR BOB: In a recent article, you said it is not wise tosign a binding arbitration clause in a real estate sales contract. But I amconfused how a person can agree in the contract to mediation of disputes, asyou suggest, but not agree to binding arbitration if a dispute later arises.What alternative do you suggest to expensive court action? –Richard F.
DEAR RICHARD: A buyer or seller cannot be required in a realestate contract to agree in advance to binding arbitration, giving up theirconstitutional right to a jury trial, right to appeal, and court rules ofevidence, without initialing or signing an arbitration clause in the salesagreement.
But many printed real estate sales contracts includemediation of disputes clauses, which do not require signing by the parties.However, mediation does not forfeit any legal rights, as does bindingarbitration. If a party does not want to mediate disputes, which might arise,he can just cross out the printed mediation contract clause.
As I have often said, agreeing in a real estate contract tomediate future disputes is a good idea. It often saves costs, compared to courtlitigation, and mediation usually succeeds or fails within a day or two.
However, I recommend realty buyers and sellers not forfeittheir legal rights by agreeing in advance to binding arbitration of futureconflicts that might arise. If a dispute later arises, such as a home buyerdiscovers a serious defect that the seller allegedly failed to disclose, afterthe buyer sues the seller and mediation doesn’t work, then the parties canagree to binding arbitration rather than a court trial.
DOES STEPPED-UP BASIS RULE APPLY TO LIVING TRUSTS?
DEAR BOB: You often emphasize the advantages for a coupleholding title to their home in a revocable living trust. I know when a coupleowns title to the home jointly, after a spouse dies, the survivor gets astepped-up basis to market value. Does the same rule apply when title is heldin a living trust? –Philip H.
DEAR PHILIP: Holding title to your real estate (and otherassets) in your revocable living trust has no effect on the tax aspects afteran owner dies. The same stepped-up basis rules apply to living trusts as toother title holding methods.
When a husband and wife hold title to the home and otherreal estate in their living trust, after a spouse dies and the living trustprovides the survivor receives the asset, in common-law states, the survivorthen receives a new stepped-up basis to market value for the inherited half ofthe property.
The survivor’s basis for the other half of the propertyremains as before (half of the purchase price plus half the cost of capitalimprovements added during ownership). The property’s market value when theliving trust was created is irrelevant.
However, in community property states, the surviving spousereceives a new stepped-up basis to market value on the entire property. I knowthat’s not fair, but I didn’t write the tax laws. For more details, pleaseconsult your tax adviser.
The new Robert Bruss special report, “How to Sell YourHouse or Condo for Top Dollar With or Without a Real Estate Agent,” 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