DEAR BOB: I inherited a house and a two-family duplex from my uncle who died in 2004. The properties are located out of state. I have been in contact with the estate attorney who, I think, is “milking” this simple probate to get as much in fees as he can. It has now been more than two years since my uncle died. He left some stocks and bonds, plus a few bank accounts, and the two properties. But that’s about it. The stocks and bonds, as well as the bank accounts, went to other heirs. There are no complications as far as I know. Do probates usually take two years? –Mavis R.

DEAR MAVIS: If your late uncle left a written will, unless there are contested debts to be paid or other complications, a two-year probate is far too long to distribute the assets to the heirs. Because you live out of state, the probate attorney probably figures you are in no hurry so there is no urgency to close the probate proceeding.

Purchase Bob Bruss reports online.

I suggest you write a polite letter to the probate attorney asking when you will receive title to the two properties (I presume somebody is managing them so they don’t deteriorate and the rent is being collected). If you aren’t satisfied with the reply, a few phone calls might be necessary.

This unnecessary probate delay could have been avoided if your late uncle held title to his real estate and other major assets such as those bank accounts and the stocks and bonds in a revocable living trust. Then, after his demise, the assets could have been distributed promptly according to the terms of his living trust without probate costs and delays, usually in less than six months.

MORTGAGE DEFAULT WILL RUIN YOUR CREDIT

DEAR BOB: In 2004 my mother bought a condo as her first home. In early 2005 she listed it for sale at $350,000 and received a $360,000 purchase offer. But the bank appraisal came in at only $325,000. Rather than give it away, she decided to rent the condo and take out a home equity line of credit (HELOC). A year later, the tenant moved out and now we have a hard time finding and keeping tenants. If we can’t sell the condo or find a new tenant, foreclosure will likely occur. There is roughly about $40,000 left on the HELOC. If she gives up the condo with a deed in lieu of foreclosure to the lender, is she required to pay off the HELOC? –Jill U.

DEAR JILL: Defaulting on either the condo mortgage and/or the HELOC will ruin your mother’s credit. Don’t even think of that.

Because there is a HELOC on the condo (which is really a second mortgage), I doubt the first mortgage lender will accept a deed in lieu of foreclosure. If your mother stops paying on the condo’s first mortgage and the condo is foreclosed, that will wipe out the HELOC. However, the HELOC lender will probably sue your mother for its loss.

Your mother should do everything possible to either rent the condo or sell it for at least enough to pay off its first mortgage plus the HELOC.

NO MINIMUM HOLDING TIME FOR PROPERTY ACQUIRED IN A TRADE

DEAR BOB: What is the minimum holding time for a rental property acquired in an Internal Revenue Code 1031 tax-deferred trade? In July of 2006 I acquired a six-unit rental property in such an exchange. Now I have an opportunity to trade it for a commercial property that would be less management intense. But my tax adviser says I must hold title to my rental property at least 12 months before trading again. I can’t find this anyplace in the tax code that says that. What is the minimum holding time? –Julia L.

DEAR JULIA: There is no minimum holding time for a property acquired in an IRC 1031 tax-deferred exchange. I suggest you consult another tax adviser for a second opinion.

The new Robert Bruss special report, “The 10 Key Questions Smart Home Buyers Ask to Avoid Getting Ripped Off,” 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
Real Estate Center
).

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