DEAR BOB: About five years ago, I stupidly added my adult daughter to the title of my home as a joint tenant with right of survivorship. At the time, I was in poor health and she was taking care of me. Well, I recovered and am now in excellent health for age 68. But my daughter and I have had a “falling out.” She won’t speak to me. When I recently contacted her to sign a quit claim deed so I can sell my home to use the money to go into a life care home, she refused to sign. She claims she is entitled to 50 percent of my home’s sales proceeds. Then she said she could even force the sale of my home. Is this true? – Jennifer H.
DEAR JENNIFER: In most states, the answer is yes. A joint tenant, or a tenant in common, can usually bring a successful partition lawsuit to force the sale of a property. Of course, it is up to the judge to decide. But in most situations, the court will order a partition sale of the property with the sales proceeds divided between the co-owners.
Purchase Bob Bruss reports online.
Your situation shows why co-owners are usually better off holding title in a living trust, partnership, REIT, or other ownership form where a partition action is not available. For full details, please consult a local real estate attorney.
DON’T EXPECT COUNTY (OR CITY) ASSESSOR OR TAX COLLECTOR TO CLEAR YOUR TITLE
DEAR BOB: In 2001 I paid off a Small Business Administration loan secured by my home. Since then, I have been trying to get the county assessor and the tax collector to clear my title of this lien. But no written confirmation of my request to release this lien has ever been sent to me although I have written several times. What should I do? – Lucille D.
DEAR LUCILLE: No wonder you haven’t received a reply. You’re asking the wrong person.
Only your mortgage lender can clear your title of that SBA mortgage lien. The county (or city) recorder of deeds just records documents presented for recording. The tax assessor and tax collector have nothing to do with clearing your title when you pay off a secured mortgage.
You should be contacting the lender of the SBA mortgage you paid off in 2001. It is the lender’s responsibility to record, or at least deliver to you for recording, a deed of reconveyance or a satisfaction of mortgage.
Have you checked the title to your property? Perhaps the lender properly recorded the document to clear the SBA lien from your property.
SHOULD PARENTS LISTEN TO GREEDY DAUGHTERS?
DEAR BOB: I am a 67 healthy retiree. But my wife and I are “financially challenged” and need extra income to supplement our social security and other income. Our two daughters, for sentimental reasons, do not want us to sell our home or get a reverse mortgage. After my wife and I pass on, one of them will buy out the other and live in the house with her family. In return, they will jointly pay half of our current mortgage payment ($1,200 per month), which may make us survive financially. By accepting their financial help, they want to be sure after I am gone, my wife (their mother) won’t sell the house. I told them, if we accept their offer, I would add their names to the deed as joint tenants with right of survivorship. Will I be doing the right thing? – Perry P.
DEAR PERRY: I’m sure you and your wife love your daughters and they love you. But they are primarily looking out for themselves, not for you and your wife.
The situation you describe can be potentially very dangerous. Why let your daughters control your life by putting their names on the title to your home?
If you and your wife have a substantial equity in your home, why give up all the benefits of a reverse mortgage for a mere $600 per month from your daughters?
A reverse mortgage, depending on the market value of your home and the ages of you and your wife, can provide all the cash flexibility you need. You can choose among any combination of a lump sum (perhaps to pay for a new car, a new roof, or a vacation cruise), lifetime monthly income, and/or a credit line.
If you and your wife are struggling to pay that $1,200 mortgage payment, I suspect you have other financial needs. A senior citizens reverse mortgage can solve your financial problems. More details are in my special report, “Secrets of Tax-Free Reverse Mortgage Income for Senior Citizen Homeowners,” 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.
WHY ARE SALES COMMISSIONS BASED ON HOME SALES PRICE?
DEAR BOB: Why are real estate sales commissions based on the sales price of the home? Why does the seller of a $500,000 home have to pay a higher sales commission to a full-service real estate broker than the seller of a $100,000 home? Sheldon V.
DEAR SHELDON: The answer is real estate brokers charge percentage sales commissions based on the sales price of the home because that’s the way it has always been done. As home sales prices have risen in recent years, the dollar amounts earned by the sales agents have kept pace.
Although the customary real estate sales commission has been 6 or 7 percent of the home sales price, as home prices rose, the negotiated commission rate has dropped to an average of 5.1 percent (according to a 2003 report of the National Association of Realtors).
You will find so-called discount real estate brokers who charge less, either a flat fee or a lower percent to sell your home. But these agents often also cut their services, such as not advertising your home, making the seller hold the weekend open houses, and even failure to include listings in the very important MLS (multiple listing service) which is the most powerful sales tool listing agents have.
CLOSING COSTS THAT ARE NOT TAX DEDUCTIBLE
DEAR BOB: Can home purchase closing costs for appraisal, title search, notary and attorney, loan processing, and other charges which are not tax deductible be added to the purchase price cost basis of the home? Will doing so save tax dollars when the home is eventually sold? – Andrew M.
DEAR ANDREW: Yes. Home buyers should add their home purchase costs that are not tax deductible in the year of purchase to their home’s acquisition price.
The major principle-residence, tax-deductible expense in the year of purchase is the mortgage loan fee. Also, there might be pro-rated property taxes. Other than those expenses, most of your home purchase costs are not deductible.
But other expenses, such as those you listed, should be added to your purchase price. The result is called “adjusted cost basis.” The higher your adjusted cost basis, the lower your capital gain at the time of home resale. For more details, please consult your tax adviser.
WHO OWNS FENCE ON WRONG SIDE OF PROPERTY LINE?
DEAR BOB: The house in back of mine was recently sold. The new neighbor recently contacted me to inform me that “my fence” is about two feet on his side of the true boundary and he wants me to pay to have it moved. That fence has been there as long as I owned my home. He claims his survey shows my fence is on his property. Do I have to pay to move it? – Matt M.
DEAR MATT: No. Whether you or a previous owner of your home built the fence on the neighbor’s lot (presuming the survey is accurate), you have no legal obligation to pay for its removal.
There is a very logical reason. Because the fence is on the neighbor’s lot, that fence belongs to the neighbor. If he wants to tear it down, because it is his fence he can do so at his expense. For full details, please contact a local real estate attorney.
AVOID PREPAYMENT PENALTY WHEN REFINANCING
DEAR BOB: I was recently offered a mortgage refinance at a bargain interest rate. The loan officer locked in my interest rate. But the problem is the mortgage contains a stiff prepayment penalty for the first three years. Do you think this is a big risk for me? – Russ R.
DEAR RUSS: Although I don’t like mortgage prepayment penalties, unless you think you will be refinancing again within the next three years, I wouldn’t reject a bargain interest rate just because the new loan has a prepayment penalty.
Lenders have learned to insist on prepayment penalties because some home loan borrowers will refinance again if interest rates drop as little as one-half percent. However, be sure the prepayment penalty does not apply if you sell the home. That is very important.
The new Robert Bruss special report, “How to Become a Successful Real Estate Negotiator,” 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.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
What’s your opinion? Send your Letter to the Editor to firstname.lastname@example.org.