DEAR BOB: My husband and I have a home mortgage with our names on it, but the house title is in my husband’s name. We have no wills. What would I have to go through if he passed away? –Lana J.
DEAR LANA: Please consult a local attorney specializing in wills and living trusts. Without written wills, you are at the mercy of the local probate court.
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If either of you dies tomorrow, because you have no living trust or written wills, the deceased’s estate must be distributed by the dreaded local probate court to transfer title.
The state law of intestate succession then determines who will receive the deceased’s assets. Especially in second marriages, the title might not go where you desire.
To avoid probate court costs and delays, I suggest you and your husband consider placing the title to your home into a revocable living trust. Then, when one of you dies, the successor trustee (presumably the surviving spouse) can transfer title to the living-trust assets without probate proceedings, as specified in the living trust.
Another major living-trust advantage occurs if one of you becomes incapacitated, perhaps due to Alzheimer’s disease or a severe stroke. Then the successor trustee can manage the living-trust assets, even selling them if necessary. More details are in my special report, “24 Key Questions Answered: Living Trust Secrets Reveal How to Avoid Probate Costs and Delays,” available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.
NO NEED TO HIRE AN APPRAISER WHEN SELLING YOUR HOME
DEAR BOB: I am thinking about selling my home for sale by owner (FSBO) Based on previous low appraisals for refinancing, I am concerned about my home appraising low although it is in excellent condition and in a great location. I am considering hiring a real estate attorney or realty agent to help “manipulate” an appraiser to get the best appraisal and to help fill out the sales contract and required disclosures when a sale is made. Does the home buyer or seller pay for the appraisal? –Robert F.
DEAR ROBERT: There is no need for a home seller to hire a professional appraiser unless there are unusual circumstances. After a sale occurs, the home buyer’s mortgage lender hires the professional appraiser whose fee is often paid by the buyer.
Before deciding to risk selling your home alone without a professional real estate agent, please interview at least three successful realty agents who sell homes in your vicinity. Even if you are thinking about selling FSBO, they won’t mind. The reason is they know most FSBOs list their homes for sale with a professional agent within 30 to 60 days.
Each agent you interview should provide you with a written comparative market analysis (CMA). To help determine your asking price, a CMA is far better than a professional appraisal. This is because successful realty agents know current up-to-date market values of homes like yours. But appraisers work from closed home sales information, which might not be up-to-date.
MUST HOME SELLER PAY CORRECTED MORTGAGE PAYOFF?
DEAR BOB: When we recently paid off our home mortgage, the lender supplied the wrong payoff amount to the title company. The unpaid amount was added to my credit report as unpaid after the closing. Am I obligated to pay the additional amount? –Sheila D.
DEAR SHEILA: Yes. If your mortgage lender made a mistake as to the exact payoff amount demand, you are responsible for paying the amount owed to the lender.
However, before you pay the disputed amount, I suggest you (1) demand a written explanation from the lender for the payoff amount difference, and (2) get a written statement signed by a responsible officer with the lender that when you pay the disputed amount, the lender will remove any negative comments from your three credit reports.
SALE OF ADJOINING LOT QUALIFIES FOR HOME SALE TAX BREAK
DEAR BOB: Several months ago, my wife and I sold a vacant lot adjoining our residence at a substantial profit. In April, we sold our residence at a large profit. A friend told us we can claim that $500,000 home sale tax exemption for both our home sale profit and the profit on the vacant lot sale. Is this true? –Chuck D.
DEAR CHUCK: Yes. Internal Revenue Code 121 provides for a principal residence sale tax exemption up to $250,000 (up to $500,000 for a married couple filing a joint tax return in the year of sale). To qualify, you must have owned and occupied your principal residence at least 24 of the 60 months before its sale.
In addition, Internal Revenue Code Regulation 1.121-1(b)(3) says this exemption also applies to the sale of adjacent vacant land owned and used as part of your principal residence. The adjoining vacant land must be sold within 24 months before or after the sale of your principal residence. For full details, please consult your tax adviser.
CAN HOME SELLER REQUIRE ARBITRATION OF SALES DISPUTES?
DEAR BOB: I made a purchase offer to buy a home. The sellers accepted on the condition that I agree to binding arbitration of any dispute that might arise after the sale closes. I seem to remember that you warned against binding arbitration. Can the seller force me to agree to arbitration? –Maria G.
DEAR MARIA: A home seller can require any sales contract provision the seller desires. If the seller insists on binding arbitration of any dispute that arises later, if you don’t agree to such a clause, the seller doesn’t have to accept your purchase offer.
However, the seller might not understand all the disadvantages of agreeing to binding arbitration at the time of signing a home sales contract. Perhaps the seller is not aware that agreeing to binding arbitration means both parties forfeit their legal rights to a jury trial, court rules of evidence, and the right to appeal an arbitrator’s decision.
My best advice is home buyers and sellers should not give up these important rights at the time of signing a home sales contract. If a dispute later arises, perhaps due to the seller’s failure to disclose a significant home defect, at that time the parties can agree to binding arbitration rather than a court trial.
HOW TO HANDLE AN INNOCENT PROPERTY MISREPRESENTATION
DEAR BOB: About five months ago, I sold what I thought was a legal two-family duplex building. However, my buyer’s attorney recently informed me that the property is only zoned as a one-family residence. The structure was built in the 1920s. I owned it for 14 years with no zoning problems. However, when the buyer went to apply for a city building permit to remodel one of the units, he was told this is only a one-family residence. The zoning is clearly single-family, but I thought since the building was constructed over 70 years ago, it was “grandfathered” as a zoning exception. There are several other two-family structures in the vicinity. What should I do? –Margaret H.
DEAR MARGARET: The situation you describe is known as an innocent or unintentional misrepresentation. If the property is worth significantly less than the two-family duplex the buyer thought he purchased, his legal remedy is to rescind the sale and get his money back from you.
You should consult a local real estate attorney to discuss your alternatives. It might be possible to get the property “grandfathered” as a legal two-unit building variance. That’s what I did years ago to “legalize” a three-unit building I owned in an area zoned for a maximum of two units per lot. Also, I had to get another variance because my property didn’t have adequate parking.
NO TAX DEDUCTION IF YOUR NAME IS NOT ON THE TITLE
DEAR BOB: Last year I started helping my mother pay the property taxes and mortgage payments on her house after my father died in July. This amount I paid totals about $14,000. But when I recently had my income taxes prepared, the tax preparer said I couldn’t deduct this amount. Please say this isn’t true. –Nancy Y.
DEAR NANCY: Unfortunately, your tax preparer is correct. The reason is because you have no legal obligation to make those payments if your name is not on the property title.
However, your problem can be easily corrected. Your mother can add you to her title as a co-owner. Then you will become obligated to make those payments and you can deduct the mortgage interest and property taxes you pay.
The new Robert Bruss special report, “How to Obtain the Best Appraisal of Your House or Condo,” 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 delivery at www.BobBruss.com. Questions for this column are welcome at either address.
(For more information on Bob Bruss publications, visit his
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