DEAR BENNY: We recently purchased a new home, only to find out that two weeks later the builder had offered substantially more of a discount to other buyers for the same model we had purchased. This has continued to date, but we were told there were no more discounts, all the while the builder was offering discounts above and beyond what we received. Is there any recourse I can pursue in this matter as I am left with hardly any equity in a manner of less than two weeks after I closed? –Raj

DEAR BENNY: We recently purchased a new home, only to find out that two weeks later the builder had offered substantially more of a discount to other buyers for the same model we had purchased. This has continued to date, but we were told there were no more discounts, all the while the builder was offering discounts above and beyond what we received. Is there any recourse I can pursue in this matter as I am left with hardly any equity in a manner of less than two weeks after I closed? –Raj

DEAR RAJ: Unfortunately, this has become a common problem in recent months. Developers are anxious to sell their inventory and thus will offer money discounts (or other gratuities) in order to make the sale.

The case law throughout the country will not help you. Courts take the position that what happens after you buy is your concern and not the seller’s. The court usually asks: "Would you be complaining if the house appreciated rapidly? Would you be willing to give your seller some of this gain?"

So in your case, you probably have no rights. For readers who are considering buying a new house (or condominium) in the near future, here’s a suggestion: Include a provision in your contract that if the seller provides any more discounts to other buyers within the next six months, the seller will give you that same benefit.

Sellers may not want to go along with this, but it’s worth trying.

DEAR BENNY: I am a 31-year veteran in the title insurance industry. Title officers, myself included, believe that adding the words "with right of survivorship" following "as joint tenants" is redundant. I have asked a number of attorneys about this, but they usually reply with something like "isn’t that standard language?" What are your thoughts? –Mark

DEAR MARK: I haven’t researched the law in all 50 states, but I do understand that in some states, in order to have the surviving joint tenant own the property, you actually have to add the words "with right of survivorship." To be on the safe side, however, I would always add that language after a deed that is conveyed to "joint tenants."

DEAR BENNY: We bought a condominium when our son went to college six years ago. Our intention was for him to live there while he was in school and then to have an investment property when he was finished. Since he was young when we bought it, we didn’t put the property in his name. He has been living there and caring for the property, including finding tenants to live with him, over the past six years. Now that he is a graduate student and is almost done with school, we would like to give him the property. What is the best way to add his name to the title so he can do what he wishes with it when he graduates? –Greg

DEAR GREG: Because you advised me that you are not in a community property state, I will respond. Readers in community property states should consult their own attorneys and tax advisors.

Let’s say that you and your wife bought the property for $50,000, and now it is worth $350,000. The basis for tax purposes for you and your wife is $25,000 each. Under the tax law, if you both give the property to your son, his basis will be yours — namely $50,000. You and your wife have the right to give him $24,000 each year ($12,000 per giftor) but anything above this has tax consequences.

You should consider having your son buy the property from you. You can lend him the moneys that he would need for a down payment, and if you have no mortgage on the property (or a small mortgage that you can pay off), you should consider taking back financing — in other words, lend him all of the moneys needed to purchase the property.

The transaction between you and your son should be arm’s length, and I recommend that you retain a local attorney to represent you and your wife. However, while the purchase price should be realistic, you can lower the price by at least 10-15 percent below market. You do not have to pay a commission to a real estate agent, and you can do a quick sale, especially if you are taking back the financing.

DEAR BENNY: We signed a contract to buy a house. The settlement date was moved back twice by the sellers and then they wanted to rent back from us. We could not extend the date any further due to restrictions on our mortgage loan: we wanted to lock in a good interest rate and avoid paying a further penalty. We signed two addendums: one to change the closing date to the latest date possible, and one for the rent-back addendum. Our agent called today and said the sellers are no longer willing to sell the house. We are stunned and do not know how to proceed. We are out a lot of fees — to the mortgage company, the settlement company and the home inspection — plus taking time off from work to make the inspection and a lot of heartache over this. We did all we could do to work with them and they are backing out with no concern for what that means to us. That’s all they said, and that they have a lawyer. I’m not sure why they would say that to us (through our Realtor). Our agent said this has never happened to him before. He has not given us any advice on what to do next. Please, can you give me some help here? –Genny

DEAR GENNY: There are many reasons why a seller decides not to go forward with the deal. They may feel that they did not get enough money for their house. They may not be able to find another house quickly. Or they may just be difficult people.

Regardless, you must immediately get your own attorney and consider filing a lawsuit for specific performance. This means that you are ready, willing and able to go to settlement (closing — called "escrow" in many western states) and are asking the judge to force the sellers to convey the property to you. If applicable in your state, your lawyer should immediately file what is known as a "lis pendens," and record it among the land records in the jurisdiction where the property is located. This is Latin for "lawsuit pending." By recording this, it puts the world on notice that you are challenging the seller, and thus makes it very difficult — if not impossible — for the seller to sell the house to anyone else.

But once you file the lawsuit and the lis pendens, you (or your attorney) should try to talk to the sellers, and see if an acceptable compromise can be reached. Perhaps they will allow the property to be sold to you, on the condition that they can stay in the property for a reasonable period of time.

Hopefully, faced with a lawsuit, your sellers may be more realistic.

DEAR BENNY: My mom has owned her home for 30 years and it has gone up in value. My grandma passed away about a year ago and my mom moved into her home. My brother is living in my mom’s home. My mom would like to sell the home to my brother, but he currently does not have the credit to be able to get a loan for the home because of a bankruptcy four years ago.

One idea I had was to do a land contract so that he could make payments on the home until his credit was good enough to get a regular loan. My question is: In land contracts, does the taxable event occur at the time the land contract is signed or at the end of the contract when actual title is transferred? Because she will likely officially sell the home after two years of residing in it, she would like to avoid paying capital gains tax on the equity gained from the sale. Would a land contract work? –Amanda

DEAR AMANDA: Any tax-related questions must be answered by your own tax advisors, as each case has different facts. I can provide only general advice.

A land sales contract — also known as an "installment sales contract" — is an arrangement where the seller prepares a deed to the property, and the deed is held in escrow (usually by the seller’s attorney) until such time as the buyer can come up with all of the sales proceeds. In some states, the contract must be recorded among the local land records.

The tax law is very clear that the sale for tax purposes takes place when the deed is put in escrow. Thus I would take the position that your mother would be able to take advantage of the up-to-$250,000 exclusion of gain.

One note of caution: If there is a mortgage on the property, a land sales contract will trigger the "due on sale" clause. However, because this would be a transaction between mother and son, the lender cannot call the loan due. On the other hand, if the transaction were with a stranger, the lender would have the right to accelerate the loan.

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com.

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