DEAR BOB: I made a purchase offer to buy a house listed for sale at $700,000. I offered $705,000, agreed to pay all closing costs, and to take care of all the deferred maintenance. The house has three heirs who are battling on the sale. I really wanted to purchase this house. The termite (pest control) inspection revealed $30,000 of needed repairs, but I didn’t ask the seller to pay this expense. Two of the heirs accepted my purchase offer. But the third heir held out and said, “I want more.” Sixteen days after making my purchase offer, the sellers counteroffered at $850,000. If the house had been listed for sale at that price, I wouldn’t have even looked at it because it is out of my price range. Can the sellers do this? I am insulted and don’t know if I should waste more time with this house? –Toby McP.
DEAR TOBY: A home seller who has signed a listing doesn’t have to sell the house at any price. However, because the house was listed for sale at $700,000 and you made a $705,000 purchase offer, the listing agent is entitled to a full sales commission even if no sale occurs. The reason is you made a full-price, all-cash, no-contingency purchase offer that met the listing terms.
Purchase Bob Bruss reports online.
The situation you describe shows the difficulty of dealing with greedy heirs. I suggest you walk away, but let the listing agent know of your continuing interest in buying at $705,000. If the house doesn’t sell in a month or two, you might get a phone call from the sellers agreeing to sell to you at that price.
TWO HOME SALES, BUT JUST ONE $250,000 TAX EXEMPTION
DEAR BOB: My in-laws owned a house from 1973 to 2007. It was their principal residence until 2004 when they bought and moved into another house where they now live. They recently sold the first house and they now want to sell their second house in 2007. Because they had established their principal residence in both houses for at least two consecutive years within a five-year timeframe, will they owe any profit tax under that $500,000 exemption rule on either house since the total sales prices for both houses is less than that amount? –Kevin F.
DEAR KEVIN: To qualify for the Internal Revenue Code 121 principal-residence-sale, capital-gains-tax exemption up to $250,000 (up to $500,000 if both spouses meet the occupancy test), the sellers must have owned and occupied their primary home at least 24 of the last 60 months before its sale.
As for the first house, if it was sold more than 36 months after your in-laws moved out, that sale is not eligible for the IRC 121 tax exemption. As for the second house, if they bought it in 2004 and have lived in it since then before selling in 2007, that sale appears to qualify for the IRC 121 tax break.
However, your in-laws cannot use this tax exemption on the sale of both houses. The reason is IRC 121 can be used only once every 24 months. They should consult their tax adviser for full details.
ADDING A CO-OWNER TO HOUSE TITLE RAISES ISSUES
DEAR BOB: My sister and I own a house together. We want to sell part of it to my fiancée so the three of us will have equal ownership. How should we go about this without having to refinance and encounter a higher mortgage interest rate? –Usanee S.
DEAR USANEE: You and your sister could sign a quitclaim deed, adding your fiancée as a one-third co-owner. There should be no need to refinance since the two original owners remain on the title and on the mortgage obligation.
Have you thought about how to hold title among the three co-owners?
One possibility is to own equal interests as joint tenants with right of survivorship. That means each owner’s will has no effect on the property when that person dies. After one joint tenant dies, then the surviving two joint tenants each become 50 percent owners. A major joint tenancy advantage is such transfers avoid probate.
Another possibility is to hold title as tenants in common where each co-owner’s one-third share would be subject to his or her will. Please consult a local real estate attorney for full details.
DID HOME SELLER HAVE A DUTY TO DISCLOSE A NOISY NUISANCE?
DEAR BOB: We recently bought an expensive weekend waterfront home. The next-door neighbor plays country music continuously. There are no noise ordinances in the county. Our requests to turn down the volume have been ineffective. He has now mounted expensive speakers on his pier. We cannot enjoy our property because being outdoors is intolerable. We learned this has gone on for many years and was a major reason our seller sold. Did she have a legal duty to disclose this nuisance to us before purchase? Is our only recourse a private nuisance lawsuit against the neighbor? –Beth P.
DEAR BETH: The seller had a legal duty to disclose to you the neighbor’s noise nuisance, which has a material effect on the enjoyment of your home. You might wish to sue the seller for either rescission of the sale or for monetary damages.
However, determining exact monetary damages could be extremely difficult. The leading court case on this issue is Shapiro v. Sutherland (1998) 60 Cal.App.4th 666 where the buyers won rescission due to the undisclosed noisy neighbors next door.
Should you prefer to keep the property, in addition to suing the seller for damages, you have an additional alternative to bring a lawsuit against the neighbor to abate the nuisance. If the loud music affects many neighbors, then it is a public nuisance which could be abated by a public official, such as the county or city attorney. For details, please consult a local real estate attorney.
NO EASY WAY TO GET RID OF A TIMESHARE
DEAR BOB: I recall that sometime in the past you mentioned how to get rid of a timeshare. What is the name of that booklet? –Miles M.
DEAR MILES: Because there are so many different forms of timeshare ownership and timeshares are so difficult to “get rid of,” I have not written on that topic. I am not aware of any comprehensive booklet about easily disposing of timeshares without any continuing liability.
HOW TO SELL WHEN A CO-OWNER DOESN’T WANT TO SELL
DEAR BOB: In 1991 our mother deeded a lakefront cabin to two siblings and me. Two of us want to sell the property, but the other co-owner refuses to sell. Can we force her to sell? Or can we sell our shares to someone else without her approval? She cannot afford to buy us out. –Bill M.
DEAR BILL: Presuming the three co-owners hold title as tenants in common, any of you co-owners can sell your share without permission from the other tenant-in-common co-owners. The same rule applies if title is held as joint tenants with right of survivorship, thus fully or partially breaking up the joint tenancy.
Another alternative is for one or two of the co-owners to bring a partition lawsuit to force the sale of the property. If the judge orders partition, the sales proceeds will then be divided among the co-owners according to their ownership shares. For details, please consult a local real estate attorney.
CAN UNHAPPY SELLER CANCEL A SIX-MONTH LISTING?
DEAR BOB: I signed a six-month listing contract with an agent who believes the best way to sell my home is to set an asking price far below market value. I believe the agent is not doing enough to advertise the house. Our personalities are clashing really badly. No purchase offer so far. Is there any way to get out of my six-month listing and list my home with a better agent? –Dorothy D.
DEAR DOROTHY: Why in the world would you sign a six-month listing if it didn’t have an unconditional cancellation clause after 90 days? You made a major mistake because a long listing encourages the agent to be lazy. No wonder he isn’t marketing your house aggressively, as he probably would have done with a shorter 90-day listing.
The only valid reason to cancel a listing is lack of “due diligence.” If the agent put your listing into the local MLS (multiple listing service), proving lack of due diligence could be very difficult. Instead, I suggest you contact the agent’s office manager to transfer your listing to a better agent within the same firm.
The new Robert Bruss special report, “Pros and Cons of Investing in Rental Houses and Condominiums,” is 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).