DEAR BOB: I am the seller of an income-property duplex that was supposed to close on Friday. My instruction to the closing officer was to wire transfer the sale proceeds directly to my bond fund. But I was phoned about 2 p.m. that day to inform me she had not yet received the loan proceeds and it would be too late to wire transfer so it would have to wait until Monday. As a result of the closing delay, I lost three days of interest, which was about $400. The pro-rated rent received for those three days went to my buyer. Is this a common occurrence? Do I have a justified cause of action against the party that failed to transfer the funds on time? What would you advise? – Jacob B.
DEAR JACOB: Wow! That must have been quite a sum of money you received to lose $400 interest for just three days. But please don’t have a heart attack just because your sale didn’t close on schedule.
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Frankly, it is a waste of your valuable time to argue about this modest amount. If the buyer’s lender promised to deliver the mortgage funds on Friday, apparently that was done (although it was received too late to wire the money into your bond fund).
Generally, loan funds must be received from the lender the day before the property title transfer is recorded (usually early in the morning).
You presumably got the money wired into your bond fund on the following Monday. If I were in your situation, I would forget the issue. Next time, try to close your realty sale early in the week so, at worse, there is only a one or two day delay.
MUST HOUSE ACQUIRED IN AN EXCHANGE BE RENTED FOR SIX YEARS?
DEAR BOB: In regard to an Internal Revenue Code 1031 tax-deferred exchange, how long must the acquired property be rented to a tenant before I can move in and convert it to my personal residence? I get different answers, ranging from one year to six years – Florence H.
DEAR FLORENCE: Internal Revenue Code 1031 does not specify any exact minimum rental time for the acquired property in a tax-deferred exchange.
Most tax advisers suggest at least 6 to 12 rental months to show rental intent at the time of the exchange. But waiting six years is totally unnecessary. For more details, please consult your tax adviser.
HOW DOES A QUIT CLAIM DEED AFFECT JOINT TENANCY?
DEAR BOB: Five years ago, two of my daughters and I bought a house as “joint tenants with right of survivorship.” Two years ago, one of my daughters moved out. She stopped paying her share of expenses. In October 2003, she signed a quit claim deed, resigning her interest in the house to us. When I die, will the house go to my other daughter who lives with me in the house? Could we sell the house now without the other daughter’s approval? – Ruth J.
DEAR RUTH: When a joint tenant signs a quit claim deed, that means she gives up her interest in the property to the remaining joint tenants. The result is you and your other daughter now own the house as joint tenants with right of survivorship.
If you die first, your surviving daughter who now owns the house with you in joint tenacy will own the entire house as a surviving joint tenant. No probate proceedings will be required.
However, if you and your daughter want to sell the house, you can do so without the approval of the daughter who signed (and presumably recorded) the quit claim deed. For full details, please consult a local real estate attorney.
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.
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