DEAR BOB: When my father died about four years ago, his will specified his surviving wife (my stepmother) would receive a life estate in his luxury house. She now “rattles around” this 20-room house, which she is barely able to financially maintain. The property taxes are constantly in default, unless my lawyer pressures her to pay. When she passes on, or decides to vacate the house, I am the legal remainderman (although I am a woman) who will then receive clear title to this valuable house. As I am on semi-cordial terms with my stepmother, I have offered her several financial incentives to give up her life estate in this lavish house. My concern is it will deteriorate and lose market value. It is a prime property that could command a substantial sales price, which I have agreed in writing to split with my stepmother 50-50 if she will move out now. But she refuses to move out or agree to any settlement although she is obviously letting the house run down. What can I do if she doesn’t maintain the house? – Evelyn H.
DEAR EVELYN: As the remainderperson (to be politically correct), you can bring a legal action against your stepmother for “waste” if you can prove she is letting the property seriously deteriorate. But waste can be very difficult to prove in court so, before you sue for waste, be 100 percent certain you can prove the life tenant is committing waste.
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However, if she fails to pay the property taxes, thus risking loss of the property by a tax sale for unpaid property taxes, that is very strong evidence of waste.
I suggest you consult a local real estate attorney to discuss your legal alternatives. Waiting too long to take action could prove costly if the house loses substantial market value due to deterioration.
REALTOR AGREES OPEN HOUSES DON’T SELL HOUSES.
DEAR BOB: Some time ago, I enjoyed the controversy in your articles about whether weekend open houses sell homes listed for sale. As a Realtor for the last 16 years, my experience has been many home sellers demand I hold open houses for their listed homes. But I can’t recall one sale that resulted. However, as a top-selling agent with my brokerage, I met dozens, perhaps hundreds, of buyers and sellers at my open houses who produced extremely profitable listings and sales for me. You are correct that weekend open houses rarely produce direct sales of the house being shown. But open houses are one of the most effective marketing techniques for listing agents to meet new clients – Alan S.
DEAR ALAN: Thank you for sharing your sales experiences. I rest my case.
REVERSE MORTGAGE NOT AVAILABLE FOR NON-OWNER-OCCUPIED HOUSE
DEAR BOB: My elderly aunt, age 87, is in a convalescent residence where she is receiving superb care from the devoted staff. However, her funds are rapidly running out. She owns her vacant house, worth about $400,000, free and clear. Her desire is to return to live in it. But I don’t think that is realistic. Although she is not living in her house, is there any way she can obtain a reverse mortgage to provide the monthly income she needs to continue her convalescent home care? – Ned W.
DEAR NED: No. Reverse mortgages require the house or condo be owner-occupied. My best suggestion is to talk with your aunt about selling her house so she can use the sales proceeds to continue receiving the excellent care in the convalescent residence where she is now living.
NO NEED TO PROVE COST BASIS FOR INHERITED PROPERTY
DEAR BOB: Several years ago, I inherited a house from my mother. I have rented it to tenants since then. Now I want to sell. How can I prove her cost basis for this house to calculate my capital gain? – Helen J.
DEAR HELEN: There is no need for you to prove your mother’s probably very low cost basis for the house you inherited from her.
Your cost basis is the stepped-up market value of the house on the date of her death (or alternative date used by her estate).
You can hire an experienced professional appraiser to determine the fair market value of the house as of that date. That is the easiest and least expensive method to prove your stepped-up cost basis for the inherited house.
The new Robert Bruss special report, “Pros and Cons of Flipping Houses and Investment Properties for Fast Cash Flow Profits,” is now available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet download at www.bobbruss.com. Questions for this column are welcome at either address.
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