DEAR BOB: I live with my “significant other” in his house. That is not the issue. We recently bought a second home together. He has three daughters. I have one son. How will this second home be divided between the survivor and the children when one of us dies? – Susan D.
DEAR SUSAN: If you and your significant other hold title as joint tenants with right of survivorship, the surviving joint tenant owns the entire property after one joint tenant dies. In other words, the winner (survivor) takes all. The will of the deceased joint tenant has no effect on joint tenancy property.
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When the surviving joint tenant dies, his or her 100 percent title then passes according to the terms of the survivor’s will or living trust.
However, if you and your co-owner hold title as tenants in common, when one of you dies, the deceased’s half passes according to the terms of his or her will. Please consult a local real estate attorney to discuss your title situation to learn if changes should be made to comply with your wishes after one of you dies.
CAN REVERSE MORTGAGE LENDER REQUIRE $10,000 OF REPAIRS?
DEAR BOB: After having read your excellent articles on reverse mortgages for seniors, I feel my brothers-in-law can benefit from one. They own their home but have limited income for costs of living. They recently applied for a FHA reverse mortgage and qualified for a $50,000 reverse mortgage. But the FHA appraiser requires about $10,000 of repairs before the transaction can be approved. The loan originator recommended a local contractor. Is this standard procedure? – Clifton D.
DEAR CLIFTON: Many older homes are in poor condition. If you were a mortgage lender, would you make a loan secured by a “bad house?” Of course not.
FHA appraisers are obligated to note the need for obvious repairs that affect a home’s market value.
If your brothers-in-law feel the appraiser was unreasonable, I suggest they contact other local reverse mortgage originators, especially those representing Fannie Mae and Financial Freedom Plan.
The best place to find reliable local reverse mortgage originators is at www.reversemortgage.org. 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.
HEALTH EXCEPTION FOR $250,000 HOME-SALE PROFIT EXEMPTION
DEAR BOB: I am selling my condo, which I bought in November 2002. But I could not move in until repairs were made, taking two months. My reason for sale is health reasons. Although I owned my condo for two years, I lack several months of occupancy time to qualify for that $250,000 home sale tax exemption you often discuss. I am 73. Will I still owe tax on my sale profit? – Joe C.
DEAR JOE: If you have not owned and occupied your principal residence at least two of the five years before its sale, you are not yet eligible for the full Internal Revenue Code 121 home sale tax exemption up to $250,000 (up to $500,000 for a married couple filing jointly).
Your age is irrelevant. But because your home sale is due to health reasons, you qualify for the partial exemption contained in IRC 121.
Although you are two months short of the 24-month occupancy requirement, that means you are eligible for 22/24 or 92 percent of the $250,000 or $500,000 exemption. For more details, please consult your tax adviser.
ANOTHER MORTGAGE JUNK FEE QUESTON
DEAR BOB: I know you have tackled this topic before, and I try to save all your articles, but I can’t find the ones where you explain mortgage junk fees. Please tell me one more time which fees I have to pay? – Borne B.
DEAR BORNE: A mortgage junk or garbage fee is a charge which was not disclosed on your lender’s “good faith estimate” which goes to the mortgage lender or mortgage broker without any specific service received in return.
In other words, a mortgage junk fee is 100 percent pure lender profit.
Examples include loan processing fee, documentation fee, warehousing fee, loan review fee, administration fee, and (when lenders run out of names) miscellaneous fee.
Legitimate mortgage fees are charges paid to third parties for specific services, such as an appraisal fee, credit report fee, attorney or escrow fee, title insurance fee, and recording fee.
Most mortgage lenders charge a one or two point loan fee (each point equals one percent of the amount borrowed). This loan fee should be enough for the lender’s costs and profits so there will be no need for the lender to add additional junk or garbage fees, often at the last minute.
IS NEIGHBOR LIABLE FOR DISEASED BOUNDARY TREE?
DEAR BOB: You haven’t had a tree question for quite a while. My neighbor’s tree is on the boundary line. It has dropped some big branches on my house during the last storms. It is badly damaged and has some rotten spots. The house is rented. I sent the owner a registered letter telling her about the tree with pictures. Is she now liable for damages if the tree falls on my house? – Ken B.
DEAR KEN: If the tree is on the boundary line, you own half of that nasty tree.
The general rule is you can trim it back to the property line. But a “rule of reasonableness” applies. Don’t trim the tree so severely that it dies or falls on the neighbor’s house.
Since you own half of that boundary tree, it is in your best interests to reach an agreement with the neighbor owner as to the best course of action. If that tree falls on your house, or severely damages it, because the tree is on the boundary the neighbor probably would have no liability to you. For more details, please consult a local real estate attorney.
MULTIPLE LISTING SERVICE AVAILABLE FOR DO-IT-YOURSELF SELLERS
DEAR BOB: I enjoyed your recent comments about do-it-yourself home sellers who want to save the sales commission. You said a major disadvantage of not listing with a professional agent is lack of access to the local MLS (multiple listing service). At least in my area, there are several MLS members who will submit fizzbo listings (for sale by owners) at fees of $400 or so. This overcomes a major hurdle of “for sale by owner” sellers – Kathryn R.
DEAR KATHRYN: Most communities have several MLS members who, for a fee of a few hundred dollars, will submit “for sale by owner” listing to the local MLS. For an additional charge, they will post those listings on www.realtor.com.
But posting a home for sale on the local MLS and at Realtor.com is usually not enough marketing effort to sell most homes. Professional real estate agents use additional marketing methods to get buyers to make purchase offers.
The MLS is the most powerful marketing method professional agents have, but a listing in the local MLS alone usually is not enough to get a home sold for top dollar.
VERBAL LISTING IS NO LISTING
DEAR BOB: I told a local real estate broker I was thinking about selling my home. I named the price I wanted to get. Several days later, she brought a buyer to look at my house. Within a few hours, that buyer made a full price all cash offer to buy my home. I quickly realized I didn’t ask for enough. The broker was very upset that I didn’t accept her buyer’s offer. Now she threatens to sue me for her commission. Should I hire a lawyer? – Jon B.
DEAR JON: Not yet. The Statute of Frauds requires real estate listings and virtually every other real estate contract to be in writing to be legally enforceable in court.
Your verbal listing is no listing.
The fact you told the realty agent you were thinking about selling your home and the price you wanted was not a formal listing because it was not in writing. Although you let that agent show your home to a prospective buyer, no listing was thereby created because a listing must be in writing to be enforceable. For more details, please consult a local real estate attorney.
The new Robert Bruss special report, “Robert’s Realty Rules: How to Avoid the 10 Worst Home Seller Mistakes,” 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).
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