DEAR BOB: My mother died in 1988, and dad passed away in 2006.The house was, and still is, in my late mother’s name alone. All dad did aftermom’s passing was continue to pay the property taxes on the house. A couple ofother children belong to dad from a prior marriage. What needs to be legallydone to clear the title to the house? –Mr. A.M.
DEAR MR. A.M.: What a mess! If your mother’s estate wasnever probated or distributed to her heirs, her will needs to be probated inthe local probate court where she was a resident at the time of her death. Thatproceeding will determine if your late father received title to the house, orif her will left it to somebody else.
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If mom didn’t leave a written will distributing her assets,then her estate will pass according to the state law of intestate successionwhere she was a resident.
Presuming your late father received the house from your latemother, then another probate needs to be opened to distribute his assetsaccording to his will or by the state law of intestate succession. For details,please consult a probate attorney in the county where your mom was a resident.
HOW SELLING PROPERTY “SUBJECT TO” THE MORTGAGEWORKS
DEAR BOB: I own a piece of commercial property, which has asmall mortgage. Can I sell this property without the buyer coming up with a bigdown payment to pay off the existing mortgage? –Jerre V.
DEAR JERRE: Yes. You can sell any property “subjectto” its existing mortgage. Of course, the buyer must make the monthlypayments or lose the property by foreclosure.
But the lender might enforce the due-on-sale clause, ifthere is one. However, only very dumb lenders enforce due-on-sale clauses ifthe monthly payments are made on time. If that should happen, your buyer canrefinance the mortgage with another lender to pay off the existing mortgage.
You should be aware that because the mortgage was acquiredin your name, you will remain liable on its obligation. If your buyer fails tokeep up the monthly payments, that will reflect adversely on your creditreport, but not on the buyer’s credit report.
HOW TO RETURN PEACE AND TRANQUILITY TO THE NEIGHBORHOOD
DEAR BOB: My neighbors have anywhere from seven to 13 carsparked in front of their house. They run a gardening business with daylaborers, a daycare business, and a rooming house from the home. Theneighborhood has single-family houses of four to six bedrooms in the$750,000-value range. The constant traffic and noise, as well as strangers onour block, drives us crazy. Can anything be done to return peace andtranquility to the neighborhood? –Edwin T.
DEAR EDWIN: Presumably you already had a polite conversationwith the neighbor but it didn’t produce satisfactory results. Next, I suggestyou contact the city code enforcement officer to have the situationinvestigated to determine what zoning and other laws are being violated.
If that doesn’t produce satisfactory results, then you andyour neighbors should consider bringing a lawsuit against the neighbor to abatethis private nuisance that is disturbing the neighborhood.
NO EASY WAY TO AVOID TAX ON SALE OF A TWO-UNIT PROPERTY
DEAR BOB: My wife and I own a property that contains tworental houses on one lot. To sell the property and avoid capital gains tax, canwe occupy one of the houses and still rent out the other one? Or must we occupyand/or not rent both for two years? –Jon H.
DEAR JON: You and your wife could occupy one of the rentalunits as your principal residence at least 24 of the last 60 months beforeselling the property. Then you will avoid capital gains tax apportioned to thatunit, up to $500,000 for a married couple filing a joint tax return. If youwere single, Internal Revenue Code 121 provides a principal-residence-sale taxexemption up to $250,000.
However, your capital gains tax apportioned to the otherrental house will remain taxable. Keeping the other unit vacant won’t reduceyour capital gains tax on its sale. For more details, please consult your taxadviser.
ALWAYS GET OWNER’S TITLE INSURANCE WHEN BUYING OUT CO-OWNER
DEAR BOB: I will soon be buying out my investor co-owner inan apartment building for about $260,000. We are not relatives. We obtainedtitle insurance when we bought the property about six years ago. Do I needtitle insurance again? –Herb W.
DEAR HERB: Yes. Always get an owner’s title insurance policywhen acquiring any property or, especially, when buying out a co-owner. That’sthe only way you can be certain you are obtaining marketable title.
Although remote, there is a possibility your co-owner hasunpaid judgment liens, income tax liens, child support liens, or other lienswhich may have attached to the property. Go back to the title company whichoriginally insured your title and ask if they have a discounted or “bringdown” rate for your situation.
SHOULD HOME SELLER REFUND DEPOSIT IF BUYER DIDN’T TRY HARDTO GET A MORTGAGE?
DEAR BOB: The buyer of our home made a quick Internetmortgage application and was declined. I offered to carry back the mortgage forthe buyer on exactly the terms stated in the sales contract financingcontingency clause. But the buyer refuses and wants to cancel the sale. Am Iobligated to refund the buyer’s good faith deposit? –Mary Ann P.
DEAR MARY ANN: The buyer is obligated to use good faith toremove the contingency clauses in the purchase contract. Applying with just onemortgage lender is clearly insufficient and does not show good faith.
Your offer to carry back the mortgage for the buyer showsfinancing is available.
However, if the buyer wants to get out of the sale, youmight not want to do business with that person. Buyers like that aredisgusting.
If I were in your situation, I would have my attorney writea letter to the buyer giving him the opportunity to clear his breach ofcontract by either accepting your finance offer or obtaining a mortgageelsewhere.
If he refuses to complete the purchase as agreed in thesales contract, I would keep his deposit (presuming it is several thousanddollars). Let him sue you for it if he thinks the judge might rule in hisfavor. The buyer will look silly suing for a deposit refund when the buyer is inbreach of the contract. For details, please consult a local real estateattorney.
ARE NO-PET CONDOMINIUM RULES ENFORCEABLE?
DEAR BOB: I enjoy your educational and entertainingarticles. Last weekend I was looking at condominiums for possible purchase. Severalof the sales agents informed me when the condo complex has no-pet rules. Aresuch rules legal? It seems to me a condo owner should be allowed to keep anindoor cat if it doesn’t go outdoors and never bothers anyone –Victoria G.
DEAR VICTORIA: Many upscale condominium complex CC&Rs(covenants, conditions, and restrictions) prohibit pets. Such restrictions haverepeatedly been upheld by the courts so don’t even think about having a pet ina no-pet complex. But perhaps you might get away with having a goldfish.
U.S. MORTGAGE LENDERS WON’T LOAN IN FOREIGN COUNTRIES
DEAR BOB: My wife is from Trinidad and Tobago, West Indies.We intend to buy a home in Tobago. I am hoping we can get a mortgage in theUnited States. Is that possible for foreign real estate? –Mark L.
DEAR MARK: Sorry, you cannot get a home mortgage in theUnited States for use in a foreign country. Perhaps your banker can refer youto an affiliate or correspondent bank in Tobago for assistance with financingthere.
NO WAY TO BE CERTAIN HOUSE IS LEFT TO SPOUSE IN A WILL
DEAR BOB: My husband and I have been married 27 years. He israther “old school” and set in his ways. When we purchased our houseabout six months after getting married, he insisted title be taken in his namealone. I went along with that. We have had a good marriage, raising threewonderful sons, but my husband’s health is declining. I am concerned what willhappen if he dies first. He refuses to show me his will. When I bring up thesubject of what happens to the house when he dies, he says, “Don’t worry.It will go to you.” How can I be sure I am named in his will to receivethe house? –Ida C.
DEAR IDA: There is no way to be certain you are named inyour husband’s will to receive the house. He might leave you, for example, onlya life estate with the remainder to go to the three sons after you die.
Of course, because of the long period of your marriage,under the laws of most states you have probably established marital rights inthe house. Other than that, you can’t be 100 percent certain of receiving titleto the house when your husband passes on.
The new Robert Bruss special report, “When It’s Smartto Prepay or Refinance Your Mortgage,” is now available for $5 from RobertBruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736or instant Internet 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