DEAR BOB: I recently bought a house, which was built in 2001. It was a quick decision, which I now realize was a bad mistake. At the time, it looked like the house didn’t have any problems. But now we realize the whole house needs painting. We also discovered the roof leaks. The two times I came back before the closing, the seller was never available to disclose any problems. What recourse do we have against the seller and/or the realty agent? – Cynthia O.

DEAR CYNTHIA: Just because a house is fairly new doesn’t mean it is in good condition. Your realty agent should have recommended you include in your purchase offer a contingency clause for a satisfactory professional home inspection before purchase.

Purchase Bob Bruss reports online.

Most realty agents now highly recommend such professional inspections to prevent after-purchase lawsuits. Or, perhaps the realty agent knew about the home’s problems and didn’t want to recommend a professional inspection, which might kill the sale.

Never rely on a home seller to tell you if the home has serious defects. After the sale closes and the seller has your money, you have zero leverage over the seller. But before the closing, you had 100 percent leverage. Apparently, you had never heard of the importance of professional inspections.

At this point, all you can do is contact the realty agent and seller to discuss their paying for the repairs if you can prove they knew about the hidden defects. If you don’t get a satisfactory response, your next step is to consult a local real estate attorney about a lawsuit for breach of contract, fraud and misrepresentation damages.


DEAR BOB: I have about 13 years remaining on my 15-year, 5.75 percent interest rate, $180,000 mortgage. I also have an $80,000 home equity credit line, which adjusts with the prime rate, currently 0.25 percent below prime at 5.99 percent interest.

With the prime rate rising over the past years and showing no signs of slowing down, when should I convert my line of credit to a fixed-rate mortgage? – Dave A.

DEAR DAVE: Today is an excellent time to make that consolidation of your existing first mortgage and the second mortgage home equity line of credit.

That’s what I did recently. I lowered my first mortgage interest rate and “stabilized” the interest rate on my home equity credit line.

With no current sign of the prime rate dropping, and with fixed-rate home loans hovering around 6 percent interest, this is a good time to consolidate your two loans.


DEAR BOB: I recently sold my home after owning it for 41 years. I went into active duty with the military in 1990 and did not return to my home since then. My adult children lived in the home, but did not rent it. I was discharged from the military in 2001. Will I have to pay capital gains taxes on my home sale? Please reference the tax code for my situation – Thelma R.

DEAR THELMA: The special section of Internal Revenue Code 121(d)(9) applies to “members of uniformed services and foreign service” who sell their homes. This is known as the Military Family Tax Relief Act of 2003.

In general, it extends the required principal residence occupancy period, to qualify for the $250,000 home sale tax exemption, up to 10 years while on active duty (rather than five years for civilians).

It is retroactive for principal residence sales made by individuals on active duty who sold their homes after May 6, 1997. Please consult your personal tax adviser because this provision is quite complicated.

The new Robert Bruss special report, “24 Key Questions Answered: Living Trust Secrets Reveal How to Avoid Probate Costs and Delays,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet PDF delivery at Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center


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