Renter’s insurance advised for scatterbrained cooks

DEAR BOB: I rent an apartment in a large complex. About sixmonths ago, I accidentally let my dinner cooking on the stove get overheated.It caused a fire that resulted in about $15,000 damage to my apartment.Fortunately, nobody was injured. The landlord’s insurance company paid to havemy apartment restored. Now the insurer is suing me for the $15,000. I don’thave renter’s insurance. Do I have to pay? –Sarah T.

DEAR SARAH: It sounds like you were negligent in allowingyour cooking to overheat, causing a fire, which resulted in the $15,000 damage.

Purchase Bob Bruss reports online.

The landlord could have sued you for negligence damages.Instead, the insurer paid the $15,000 repair costs. By doing so, the insurerbecame subrogated to the landlord’s right to sue you for damages due to yournegligence.

Your situation is a classic example why apartment tenantsalways need a renter’s insurance policy. If you had such insurance, yourinsurer would have paid this claim. Renter’s insurance pays for loss due tofire, theft and other accidental losses.


DEAR BOB: As the manager of a large real estate brokerageoffice, I usually agree with you. But I must take issue with your recentadvice. While it may not be legally required for a home seller to disclose pasthome repairs, at our firm we take the position that our sellers can never”over disclose,” and we probe for disclosure information. Any and allinspection reports, which have been done on a property and are in the seller’spossession, are presented to buyers in our disclosure packages. Great care istaken so a buyer can be fully informed before making a purchase offer on ourlistings –Rick LeD.

DEAR RICK: Although your policy is commendable, please bevery careful you don’t harm your home sellers. Home sales disclosure lawsrequire sellers to reveal current defects and problems, which have a materialeffect on the market value or desirability of a residence.

If a past problem with a house has been repaired, and thereis no need for additional repairs, why bring it up and possibly kill a sale?

For example, shortly after I bought my current home my newneighbor came over to get acquainted. As we were chatting, he said, “Isuppose the seller told you about when the hill in back of your house slid afew years ago and there was about 3 feet of mud against the house.” When Isaid I was not aware of that problem, he quickly pointed out the drains, whichthe seller installed to prevent future problems.

That was 28 years ago. The hill has been stable ever since.If I had known about that event, I might not have bought my home. Would I haveto disclose that neighbor’s comment about a past problem if I sold my housetoday? I think not.


DEAR BOB: Can I make a Starker tax-deferred exchange of myrental property and reinvest in a REIT (real estate investment trust) insteadof another rental property? –Thomas C.

DEAR THOMAS: No. The reason is you would be selling realproperty held for investment or use in a trade or business and acquiring REITstock, which is personal property. That is clearly not an Internal Revenue Code1031 tax-deferred “like kind” exchange. For details, please consultyour tax adviser.


DEAR BOB: We are selling our house, which has been vacantsince we moved out about two months ago. The buyers are obtaining a VeteransAffairs (VA) mortgage. But it will take another 30 days until the closing.Meanwhile, they are living in a motel nearby. They offered to pay us rent ifthey can move into the house now. Our listing agent says “no.” Whatdo you advise? –Loren H.

DEAR LOREN: Listen to your smart real estate agent. Neverlet a home buyer move into the property before the sale closes, the titletransfer is recorded, and you have your money.

The reason is if you let the buyer move in now and pay yourent, that buyer will surely discover real or imagined defects and refuse toclose the sale until you repair the problems discovered. Although I know youwant that rent income, it’s not worth the risk of letting your buyer move inearly. Don’t do it.


DEAR BOB: I have been living with my boyfriend about threeyears in his house. He has been very kind to me and I deeply love him. However,he is 78 and I am 54. He says that when he dies, his house will become mine.But he refuses to let me see his will, and his two children would be sure tocontest his will if he leaves the house to me. What can I do to protect my bestinterests? –Nadine R.

DEAR NADINE: Oral promises mean nothing in real estate. Evenif your boyfriend leaves the house to you in his will, and shows you that willtoday, he can revoke that will tomorrow.

One possibility is to get him to add your name to the housetitle as a joint tenant with right of survivorship. If you outlive him, thenyou would own the house by survivorship without probate. His will would have noeffect on joint tenancy property.

However, a joint tenancy can be easily dissolved if heshould later decide to convey his joint-tenancy interest to himself as a tenantin common. Then his half of the house becomes subject to his will. But youwould still own half of the house as a tenant in common. For details, pleaseconsult a local real estate attorney.


DEAR BOB: For many years I have owned a small professionaloffice building where I have my office. There are six tenants. We are allfriends and get along very well. The “new kid” tenant has been hereonly six years. The other tenants have been here much longer, about 15 yearsaverage. As I plan to retire in 2007, I will then sell my office building tohelp fund my retirement. A few of the tenants have leases extending as long asfour years at quite low rents. Would a new owner be able to raise the rents?–Ted N.

DEAR TED: No. The new owner must honor the terms of theexisting leases. The rents can be raised only when those leases expire.


DEAR BOB: I am the “remainderman” title holder ona house, subject to a life estate for my mother to occupy the house during herlifetime. She pays all the expenses, including the property taxes andhomeowner’s insurance.

But I am concerned if there should be an accident on theproperty, such as someone tripping on the steps. Could I be held liable sincemy name is on the title? –Virginia G.

DEAR VIRGINIA: Yes. If someone is injured on the property,you can be sure you would be named as a defendant because your name is on thetitle. For your protection, you should ask your mother’s insurance agent to addyour name as an “additional insured” on your mother’s homeowner’sinsurance policy.


DEAR BOB: I own a lovely lakeside vacation home, which Irarely use. But I don’t want to sell it because it keeps going up in marketvalue. Also, I might want to winterize it and retire there someday. However,the property taxes and upkeep are quite expensive. Several of my neighbors haveownership share arrangements. Would this be a good alternative to sell off halfof the property? –Corbin Y.

DEAR CORBIN: There aren’t many prospective buyers for halfof a vacation home. If you have a trusted friend or relative with whom you getalong, that could work out. If you do sell a half interest, however, then youprobably couldn’t later make it a full-time retirement home.

A major problem with co-ownership is one co-owner mightforce a partition sale of the property. If you do find a compatible co-owner,be sure an attorney prepares a partnership agreement, which prohibits apartition sale.

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 delivery at 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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