By having a professional home inspection before listing the home for sale, your mother can either have the home defects repaired or she can simply disclose them to prospective buyers so they are fully aware before making a purchase offer.
DEAR BOB: About four months ago we bought our first home. It was built about 1930, and the neighborhood is charming and has good schools. However, we have a big problem with our home warranty company. Our home seller paid for a one-year home warranty policy, which we understand cost about $450. Within a week or two, the furnace gave off a bad odor. We phoned the warranty company, which sent a repairman the next day. He said the furnace was in bad condition and gave us a written warning not to operate it. Because the weather was cold, we had to act quickly. We expected the warranty company to either fix the furnace or install a new one. The warranty company denied liability since the furnace was a "pre-existing condition." Because we were desperate for heat, we bought a new furnace, which cost us almost $5,000 installed. The warranty company refuses to pay anything. Do we have any recourse? -- Vince R.
DEAR VINCE: You should sue that home warranty company. Depending on the local small-claims court jurisdiction, you can either sue there or in the local court of general jurisdiction for reimbursement.
Home warranty companies are notorious for denying policy coverage by stating a claim was an excluded pre-existing condition, especially for large claims like yours. These warranty companies are the pros, and homeowners such as you are the amateurs. They know that so they often deny legitimate claims like yours, realizing most homeowners just go away and never sue them.
You should report this matter to your state insurance regulator. Unfortunately, home warranty companies are loosely regulated in most states, so they continue to get away with denying policy coverage based on a bogus reason.
DEAR BOB: Thanks for your recent article about when home fixtures are included in a home sale. My fixture issue involves the recent sale of my house. Two years before the sale, I remodeled the kitchen and installed a Sub-Zero refrigerator, which had a front panel that matched the new cabinets. Nothing was said in the sales contract about the kitchen appliances, so I unplugged the refrigerator and had it moved to my new condo. It was not built in and the movers easily pulled it out. However, the buyers were upset. They thought the refrigerator was included in the sale because the front panels matched the cabinets. We're talking about a refrigerator worth about $4,000. My buyers want me to either return the refrigerator or buy them a new one, or they will take me to court. What should I do? -- Irene W.
DEAR IRENE: Your situation is known in fixture law as a gray area. Neither you nor the buyers are 100 percent correct. If the buyers wanted the refrigerator included in the sales price, they should have specified it in their purchase contract.
As you probably know, a fixture is former personal property that, by means of permanent attachment to the structure, has become part of the real property. Examples include light fixtures, built-in appliances such as dishwashers and ovens, and permanently attached stereo speakers.
Although the front panels on your upscale Sub-Zero refrigerator matched the cabinets, that doesn't make it an installed fixture that transfers ownership with the house. However, if it was built in to the house, as many upscale refrigerators are, then the buyers have a strong argument that the refrigerator was a permanently attached fixture that is included as a fixture with the house.
DEAR BOB: If there are three joint tenants with right of survivorship, after one joint tenant dies do the other two owners remain as joint tenants with right of survivorship? Or does the ownership revert to tenants-in-common? I asked title insurance company officers, and a lawyer with the state association of real estate agent, but no one knows for sure. What happens? -- Robert H.
DEAR ROBERT: When one joint tenant with right of survivorship dies, the surviving joint tenants receive the deceased joint tenant's share. In your situation, the three joint tenants each owned an undivided one-third interest in the property. After one joint tenant died, the two surviving joint tenants each own a one-half interest as joint tenants with right of survivorship. The ownership does not become a tenancy-in-common after one joint tenant dies.
However, in most states, the surviving joint tenants must record with the local recorder of deeds a certified copy of the deceased's death certificate and an affidavit of survivorship. Consult another lawyer for more details.
DEAR BOB: My domestic partner and I own our home. During a recent mortgage refinance investigation, it was discovered a lien was placed on our home by an auto finance company. Is it legal to place a lien on the property without notification? Can I file a lawsuit to have the finance company present a bill of sale to the vehicle? -- Gilberto A.
DEAR GILBERTO: As a general rule, a creditor cannot record a lien against a real estate title unless that creditor has obtained a court judgment against the debtor and property owner.
Even if an invalid lien is recorded against a property title, the title insurer will always be cautious before issuing a title insurance policy.
Anyone can sue anyone. However, there are serious penalties for bringing groundless lawsuits. There are also slander-of-title penalties for recording invalid liens.
Before you sue the auto refinance company to clear the title, make a phone call to find out what's going on. Be polite because resolving the issue on a friendly basis is usually far better and cheaper than a lawsuit. Consult a lawyer for more details.
DEAR BOB: I recently sold my home to buyers who made it known that they needed 100 percent mortgage financing. We agreed to pay $13,000 in closing costs to help the buyers. The lender gave them a "good-faith estimate" that showed this amount would pay their closing costs. On the day of closing, the loan officer told the buyers they owed $4,000 more than expected to buy the house. He was clear the lender had just raised the fees to make more profit. The buyers didn't have the $4,000. Everyone felt helpless. The listing agent ended up cutting his fee to allow the sale to close. This seems dishonest. What is the possible recourse against the mortgage lender? -- Matt C.
DEAR MATT: Welcome to the world of home mortgage lending, where bait-and-switch tactics are much alive, as you and your buyers discovered. Most mortgage lenders are honest, but some are not. The bad guys know when they have a vulnerable situation, especially when the home buyer has no cash available.
That mortgage lender knew he could squeeze $4,000 out of somebody, perhaps the listing agent who would lose far more than $4,000 in sales commission if the sale fell apart. Since the extra $4,000 didn't come out of your pocket, you have no legal recourse against that lender. Neither does the buyer. The real estate agent who volunteered to pay the $4,000 to save the home sale probably also has no legal remedy. That dishonest lender should be reported to the regulating state or federal agency, but don't expect any action.
DEAR BOB: Is a lease option, which you often recommend, the same as a land-purchase contract? -- Loretta K.
DEAR LORETTA: A land-purchase contract is not the same as a lease option. With a land-purchase contract, also known as a contract for deed, contract of sale or installment land sale contract, the property seller retains title, the buyer pays the seller each month, and the buyer can obtain title after making all or the agreed number of payments to the seller.
But a lease option gives the property buyer a choice to buy or not buy the property by exercising the option to purchase before it expires. Consult a lawyer for more details .
DEAR BOB: My late husband and I held title to our home in our living trust. I recently had a new living trust prepared. The lawyer who originally prepared our living trust died, so he is not available, but I did not receive a new deed to the home. Other than hiring an expensive lawyer, is there some way to straighten out the title? -- Marcia M.
DEAR MARCIA: Under the terms of the original living trust, if you were named as the successor trustee, then you can transfer the title into your name or the name of your new living trust.
Just because you had a new living trust prepared doesn't mean that living trust holds title to your home and you are its trustee. You must act to straighten out the home's title to be certain it is held in your new living trust and you are its trustee. DEAR BOB: We live about half of the year in our Florida house and the remainder of the year in our other home up north. This past winter, when we returned to our Florida home, we were shocked to discover our neighbor had built an ugly concrete block fence between our properties. At first glance, it looked to me as if he tried to grab at least five feet of our lot. Although I didn't say anything to him, I hired a professional surveyor to determine where the lot line is located. It turned out the neighbor took almost seven feet along our lot line. In other words, the concrete block fence is seven feet on my side of the boundary. When I confronted him with a copy of my survey, he challenged it as probably inaccurate. What recourse do I have? -- Ryan R.
DEAR RYAN: A lawyer can review the facts and advise your best course of legal action.
From your description, it appears the neighbor built the new concrete block fence on your property. That means the fence belongs to you and you can remove it.
In addition, you might be entitled to damages, such as the cost of demolishing that fence, removing the debris and restoring your property to the pre-fence condition.
DEAR BOB: My parents own a summer and winter home. They recently went to their long-time family lawyer to discuss their wills and how to avoid probate costs and delays. I had suggested a living trust to them, as you often recommend. Instead, their lawyer updated their wills and had them sign quitclaim deeds to their properties. He said after they die, he will have these deeds recorded to transfer title without probate. Is this legal? -- Durk R.
DEAR DURK: As a lawyer, I am not comfortable with such post-mortem deeds for many reasons. The general rule is a deed can effectively convey title only while the grantor is alive. But some lawyers recommend post-mortem deeds as an alternative to probate. As long as nobody objects, such deeds are probably effective.
DEAR BOB: I own a condominium where the annual membership meeting is held each February. The condo is in Michigan, but perhaps 50 percent of our condo owners spend the winters in Arizona, Florida or Texas. The result is few members are in town to attend the annual meeting where important matters are often decided. Although there are always plenty of proxy votes, I feel it is dishonest to have the annual meeting when few condo owners are present. What can we do? -- Nathan R.
DEAR NATHAN: Your condo homeowner association conditions, covenants and restrictions, or the by-laws, specify when the annual meeting of the association shall be held. To change the meeting date will require a vote of the members. There will probably be legal fees to have the change prepared. This can be a big hassle, which might be expensive, especially if the majority of condo owners are satisfied or just doesn't care. Unless there is a pressing reason to change the annual meeting date, I suggest forgetting the issue.
DEAR BOB: My mother died about two years ago, and her will left everything to my sister and me equally. Because I was living with my mom when she died of cancer, my sister has allowed me to live in the house since then, if I pay the property taxes and insurance. There is no mortgage. The house is worth around $400,000. Now my sister thinks we should sell the house, but I don't want to sell, as I am satisfied with the status quo. Can my sister force me to sell? -- Naomi N.
DEAR NAOMI: As a co-owner, your sister can bring a partition lawsuit to force the sale of the house. In most partition lawsuits, the judge orders the property sold with the sales proceeds divided among the titleholders.
It is extremely difficult to defend a partition lawsuit unless there are extraordinary circumstances. To save litigation costs, you and your sister could enter into an agreement to sell the property and divide the net proceeds, thus saving legal fees.
DEAR BOB: My wife died last year. Under the terms of her will, I inherited all her assets, including the house. I just presumed as the sole heir I would receive a new "stepped-up basis" to market value, as you often discuss. However, when I recently consulted my tax adviser about selling the house, she said that because title to the house was held in my name alone, I didn't receive any stepped-up basis and am stuck with our low $47,000 purchase price many years ago. Is this true? -- Marv W.
DEAR MARV: From your description, your tax adviser appears to be correct. If the title to the home was held in your name alone, when your wife died last year, you didn't inherit anything so you didn't receive a new partial or full stepped-up basis to market value.
DEAR BOB: Because of a semi-permanent overseas job transfer and big promotion, we decided to sell our apartment building here in the United States at a substantial profit. Our plan was to buy a similar rental building near London. But our tax adviser said we can't make a tax-deferred exchange of a U.S. rental property for a foreign rental property. If Uncle Sam taxes our overseas earnings, why can't we make such a tax-deferred exchange? -- Richard R.
DEAR RICHARD: Although I am told it is possible to make an Internal Revenue Code 1031 tax-deferred exchange of a foreign rental or business property for another qualifying foreign property, under current tax law it is not possible to make an IRC 1031 tax-deferred exchange of a U.S. rental property for a qualifying foreign rental property, or vice versa. Your tax adviser appears to be correct. |
