DEAR BOB: After a mortgage lender has given a loan payoff amount and cleared the title, is the lender allowed to come back months later and ask for more money, saying it made a mistake? –Pam N.

DEAR PAM: Presuming that happened to you, if the amount involved is large I would refuse to pay. The lender can beg you for the money. But the lender’s only legal recourse is to sue the borrower, claiming a mistake. That would be a very weak lawsuit.

Purchase Bob Bruss reports online.

I’ve had this happen to me over small amounts less than $1,000. I just ignored the lender’s requests. After one or two letters, which I ignored, the lender “went away.”

If your mortgage was marked “paid in full” and the lender recorded a mortgage satisfaction or a deed of reconveyance, the lender has no further security. Lenders should live with their payoff demands, which should be correct. For further details, please consult a local real estate attorney.


DEAR BOB: My son and I bought a condominium in May 2003, close to the university, so he can live there during the school year. He graduated in 2006. We hold title as joint tenants. I live in a different location. We plan to sell the condo, which has about $80,000 equity. Will we owe any capital gains tax? He is now a student in law school. –Celia B.

DEAR CELIA: Congratulations on making a smart investment with your son while he attended college. Because your son’s name was on the title, if he owned and occupied the condo as his principal residence at least 24 of the last 60 months before its sale, up to $250,000 of the capital gains profit will be tax-free, thanks to Internal Revenue Code 121.

The amount of equity is irrelevant. What counts is the net profit. That is the difference between the condo’s adjusted cost basis and the adjusted (net) sales price. If this sales profit is less than $250,000, no capital gains tax will be due. For full details, please consult your tax adviser.


DEAR BOB: My mother signed a deed conveying her home to my brothers and me for the sum of $10. Then we conveyed a life estate in the home to her for $1. She recently moved to an assisted-living residence and we sold the house. What is our cost basis? Is it the $10 we paid? Do we qualify for any capital gain tax exclusion? I called the IRS representative who said this is so complicated we should talk to a tax accountant. Is our cost basis the price my mother and father paid in 1953, plus any money they put into remodeling it? –Tom S.

DEAR TOM: Because you and your brothers received the property as a gift, as the donees your cost basis is the same as your donor mother’s basis. Presuming your father died before the gift, she received a partial “stepped-up basis” to market value on the date of his death (if the house is in a community property state, it was probably a 100 percent stepped-up basis to market value).

In other words, your basis is the same as her basis, including any capital improvements she added.

But your capital gain above her basis is fully taxable because you don’t qualify for the Internal Revenue Code 121 principal-residence-sale tax exemption up to $250,000, as you didn’t live in the house as your primary home at least 24 of the last 60 months before its sale. For full details, please consult your tax adviser.

The new Robert Bruss special report, “The 10 Key Questions Smart Home Buyers Ask to Avoid Getting Ripped Off,” 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 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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