DEAR BOB: In 1971 I purchased my home. At that time, I had the property surveyed and then paid a reputable fence company to install a fence on the property line. Recently, the children of my deceased neighbor inherited the house next door and had the property surveyed. They informed me their survey reveals my fence is 1 inch on their property. They wish to remove my fence because they claim the fence belongs to them. Can they remove the fence that I paid for? Can I claim adverse possession of my neighbor’s property where my fence is located? – Carl L.
DEAR CARL: Wow! It’s hard to believe there are nasty people out there like your new neighbors. Fortunately, you have a legal remedy. But it might cost you a few dollars for legal fees.
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If your survey was insured in your owner’s title insurance policy you received when you bought your property in 1971, then your title insurer insured its accuracy. Be sure to notify your title insurer of this possible claim.
Even if “your fence” is 1 inch on the neighbor’s side of the correct boundary, you can claim a prescriptive easement for that tiny space. But it might require court action to perfect your prescriptive easement to prove “open, notorious, hostile and continuous occupancy” without the owner’s permission.
The reason you need to hire a local real estate attorney immediately is to obtain an injunction to prevent the new neighbors from tearing down your fence, which they think is their fence.
But before you hire an attorney, try talking with the new owners. Maybe a modest payment, such as $500 or $1,000, will resolve the problem. If you pay them, be sure they sign a written, recordable agreement allowing the alleged encroachment to continue. That’s what I did with my neighbor about 10 years ago.
REVERSE MORTGAGES ARE NOT FREE
DEAR BOB: I recently read your article about the 70-year old widow with a $33,000 existing mortgage who wants to get a reverse mortgage. You suggested she get a home equity loan or a reverse mortgage to pay off that small loan. Well, I wish her luck. Three times I tried to get a reverse mortgage and the lenders wanted $4,000 to $8,000 for a reverse mortgage to pay off my $30,000 mortgage. I hear FHA and Fannie Mae won’t allow this – Carl K.
DEAR CARL: Reverse mortgages are not free. Up-front fees should generally be about 2 percent of your total reverse mortgage maximum amount, plus a few extra costs.
To illustrate, based on your age and your home’s market value, let’s say a reverse mortgage company approves a $200,000 maximum with 2 percent up-front fees. That means you would pay $4,000 in loan origination fees to get rid of your $30,000 mortgage and its payments. In addition, you would have $170,000 available for your choice of lifetime monthly payments, a credit line (except in Texas), or any combination. That’s a very good deal for you.
DON’T DEED HOUSE TO ADULT CHILDREN WITHOUT GOOD REASON
DEAR BOB: I would like to hear your feelings about parents deeding their house to the adult children but retaining lifetime use – Phyllis H.
DEAR PHYLLIS: Why would you want to do that? Unless you have a very good reason for doing so, there is no advantage to your children until you die because you have a retained life estate. Unfortunately for you, they will be praying you die as soon as possible.
But there is a major disadvantage to them because their cost basis for the gift is the same as your probably very low adjusted cost basis. Please consult your tax adviser before you make such a major mistake.
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