Editor’s note: Robert Bruss is temporarily away. The following column from Bruss’ “Best of” collection first appeared Sunday, March 19, 2006.
DEAR BOB: My fiance and I are splitting after a 10-year relationship. During this time, we bought two single-family houses and one duplex. When we started acquiring these properties, my credit was poor due to a bankruptcy, so all the property is in her name. I am worried that nothing is in my name. What should I do to protect myself and my interest in these properties, which have greatly appreciated in market value? –Dan C.
DEAR DAN: Please consult the best real estate attorney in town. Unless you have some type of written agreement, you might find it very difficult to prove an oral agreement to co-own the properties and split the profits upon sale. Now is the time to determine your exact legal rights in the properties, if any.
Purchase Bob Bruss reports online.
It might be necessary to bring a legal action for a “declaratory judgment” asking the court to determine your legal rights. Your real estate attorney will probably recommend recording a “lis pendens” against the property titles to prevent their sale or refinance pending the outcome of the lawsuit.
Hopefully, you will be able to work out a fair settlement so legal action does not become necessary. Your situation is a classic example why it is so important to put everything in writing, especially because the Statute of Frauds requires written agreements for real estate contracts.
DETERMINING BASIS IN PROPERTY GIFT FROM DEAD DONOR ISN’T EASY
DEAR BOB: About 15 years ago, my dad deeded a vacant lot to me. He then built a modest house on that lot and I have rented it to my aunt ever since. My dad died about five years and my aunt died recently so I have decided to sell the property. How do I determine my basis and my capital gains? –Amy P.
DEAR AMY: It may be possible to determine from public records your late father’s purchase price for the lot. However, the amount spent to build the house on the lot will be more difficult, unless there was a construction loan or mortgage used to pay the cost. Fortunately, the Internal Revenue Service allows owners in situations like yours to make reasonable cost estimates.
From the adjusted-cost basis, I presume you deducted depreciation during the years you rented the house to your aunt. When you sell the house, this depreciation deduction will be taxed at the special 25 percent federal “recapture” tax rate. For full details, please consult your tax adviser.
IS A BROKER “TRANSACTION FEE” LEGAL?
DEAR BOB: As a home seller who paid my listing broker a 5 percent sales commission (split equally with the buyer’s broker who obtained the buyer), I was very upset when, at the closing, my broker demanded I pay a $395 “administration fee.” She said this is “standard” now. Because I wanted to get the sale closed, I stupidly agreed to pay. However, when I re-read my listing contract, I didn’t see anything about a $395 administration fee. I later talked with several other realty agents I know and they said they don’t charge such fees on top of a sales commission. Is this junk fee legal? –Brian K.
DEAR BRIAN: Real estate brokerage owners are well compensated from sales commissions. If you did not agree to pay the $395 administration junk fee, on top of your sales commission, as part of the listing contract, you should not have to pay.
I suggest you send a written demand letter to the broker insisting the $395 be refunded within 10 business days. If you fail to receive the $395, I would take the broker to local small claims court for breach of contract and fraud because you were not obligated to pay.
The new Robert Bruss special report, “How to Sell Your House or Condo for Top Dollar With or Without a Real Estate Agent,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 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).