DEAR BOB: My mom’s part-time home health aide, who earns $9 per hour, has shared her real estate problem with me because she is a single mother who wants to go back to school to become a registered nurse to earn a better income. If she can sell her townhouse or refinance it, she can use the money to go to nursing school full-time and have enough money from the equity to pay living expenses with her son. About seven years ago, she and her live-in boyfriend bought a townhouse together. Both names are on the deed and the mortgage. He moved out about six years ago and told her she can keep the house. They have some type of graduating mortgage payment, which recently increased $100 per month. She has never heard from her co-owner after trying to contact him through relatives. What does she need to do to get his name off the title and the mortgage? – Fran A.
DEAR FRAN: Congratulations to your friend who wants to improve her life and that of her son. She should hire an experienced local real estate attorney in the county where the property is located to determine her best course of action.
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The attorney may recommend bringing a quiet-title lawsuit to remove the missing co-owner’s name from the townhouse title.
Because the whereabouts of that person is unknown, the local court will probably approve “service by publication.” That means a legal notice is printed in the local newspaper informing the missing owner he is being sued and he must appear in court or his legal rights could be determined without his presence.
A common problem, however, is the judge might not be willing to completely terminate the missing co-owner’s rights in the property after just a short absence, such as one year.
If that happens, the court could order the townhouse sold (called a partition action) with half of the sale proceeds held in trust for the missing co-owner. That’s why your friend should consult an experienced local real estate attorney to evaluate her situation.
P.S. You might want to help your friend find a scholarship at a nearby nursing school. With the current high demand for nurses, there are many financial aid opportunities, such as those offered by local hospitals in return for a promise to work there after graduation.
CAN HOME BUILDER REQUIRE BUYER USE A SPECIFIC LENDER?
DEAR BOB: While searching for a house to buy, we found a desirable new community that requires we use the builder’s mortgage lender for financing. But their rates seem high. Is this practice legal or can we use another lender? – Lester G.
DEAR LESTER: Don’t be intimidated by the home builder who will receive an extra profit if you use his mortgage company. In most states, a builder cannot require the buyer to use a builder-related lender or closing settlement firm.
However, don’t be too hasty to reject the builder’s mortgage finance terms. Shop around among other lenders, such as your bank and credit union, to be sure of their exact mortgage details. Then compare those terms with what the builder’s finance department offers. Maybe there are some advantages to using the builder’s lender.
CONTINUOUS RESIDENCY NOT REQUIRED FOR $500,000 HOME SALE TAX EXEMPTION
DEAR BOB: We bought our home in 2001, lived in it for seven months, and then received a job transfer to Europe. The house was rented to tenants until we returned in 2003. We have lived in our home since then. It is amazing how much our home has appreciated in market value. My wife’s employer has now offered her another job transfer that is too good to turn down. But the employer has no home sale program. Can we qualify for that $500,000 exemption although we didn’t live in our home for 24 continuous months? – Craig S.
DEAR CRAIG: Yes. Internal Revenue Code 121 offers a principal residence sale tax exemption up to $250,000 (up to $500,000 for a qualified married couple filing jointly). To qualify you and your spouse must have occupied your residence a total of at least 24 months during the 60 months before its sale. However, the occupancy need not be continuous. For details, please consult your tax adviser.
The new Robert Bruss special report, “How to Earn Up to $250,000 (or more) Tax-Free Profits Every 24 Months Buying and Selling Houses,” 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 PDF delivery at www.bobbruss.com. Questions for this column are welcome at either address.
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