DEAR BOB: My mother died in 1988, and dad passed away in 2006. The house was, and still is, in my late mother’s name alone. All dad did after mom’s passing was continue to pay the property taxes on the house. A couple of other children belong to dad from a prior marriage. What needs to be legally done to clear the title to the house? –Mr. A.M.
DEAR MR. A.M.: What a mess! If your mother’s estate was never probated or distributed to her heirs, her will needs to be probated in the local probate court where she was a resident at the time of her death. That proceeding will determine if your late father received title to the house, or if her will left it to somebody else.
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If mom didn’t leave a written will distributing her assets, then her estate will pass according to the state law of intestate succession where she was a resident.
Presuming your late father received the house from your late mother, then another probate needs to be opened to distribute his assets according to his will or by the state law of intestate succession. For details, please consult a probate attorney in the county where your mom was a resident.
HOW SELLING PROPERTY “SUBJECT TO” THE MORTGAGE WORKS
DEAR BOB: I own a piece of commercial property, which has a small mortgage. Can I sell this property without the buyer coming up with a big down payment to pay off the existing mortgage? –Jerre V.
DEAR JERRE: Yes. You can sell any property “subject to” its existing mortgage. Of course, the buyer must make the monthly payments or lose the property by foreclosure.
But the lender might enforce the due-on-sale clause, if there is one. However, only very dumb lenders enforce due-on-sale clauses if the monthly payments are made on time. If that should happen, your buyer can refinance the mortgage with another lender to pay off the existing mortgage.
You should be aware that because the mortgage was acquired in your name, you will remain liable on its obligation. If your buyer fails to keep up the monthly payments, that will reflect adversely on your credit report, but not on the buyer’s credit report.
HOW TO RETURN PEACE AND TRANQUILITY TO THE NEIGHBORHOOD
DEAR BOB: My neighbors have anywhere from seven to 13 cars parked in front of their house. They run a gardening business with day laborers, a daycare business, and a rooming house from the home. The neighborhood has single-family houses of four to six bedrooms in the $750,000-value range. The constant traffic and noise, as well as strangers on our block, drives us crazy. Can anything be done to return peace and tranquility to the neighborhood? –Edwin T.
DEAR EDWIN: Presumably you already had a polite conversation with the neighbor but it didn’t produce satisfactory results. Next, I suggest you contact the city code enforcement officer to have the situation investigated to determine what zoning and other laws are being violated.
If that doesn’t produce satisfactory results, then you and your neighbors should consider bringing a lawsuit against the neighbor to abate this private nuisance that is disturbing the neighborhood.
NO EASY WAY TO AVOID TAX ON SALE OF A TWO-UNIT PROPERTY
DEAR BOB: My wife and I own a property that contains two rental houses on one lot. To sell the property and avoid capital gains tax, can we occupy one of the houses and still rent out the other one? Or must we occupy and/or not rent both for two years? –Jon H.
DEAR JON: You and your wife could occupy one of the rental units as your principal residence at least 24 of the last 60 months before selling the property. Then you will avoid capital gains tax apportioned to that unit, up to $500,000 for a married couple filing a joint tax return. If you were single, Internal Revenue Code 121 provides a principal-residence-sale tax exemption up to $250,000.
However, your capital gains tax apportioned to the other rental house will remain taxable. Keeping the other unit vacant won’t reduce your capital gains tax on its sale. For more details, please consult your tax adviser.
ALWAYS GET OWNER’S TITLE INSURANCE WHEN BUYING OUT CO-OWNER
DEAR BOB: I will soon be buying out my investor co-owner in an apartment building for about $260,000. We are not relatives. We obtained title insurance when we bought the property about six years ago. Do I need title insurance again? –Herb W.
DEAR HERB: Yes. Always get an owner’s title insurance policy when acquiring any property or, especially, when buying out a co-owner. That’s the only way you can be certain you are obtaining marketable title.
Although remote, there is a possibility your co-owner has unpaid judgment liens, income tax liens, child support liens, or other liens which may have attached to the property. Go back to the title company which originally insured your title and ask if they have a discounted or “bring down” rate for your situation.
SHOULD HOME SELLER REFUND DEPOSIT IF BUYER DIDN’T TRY HARD TO GET A MORTGAGE?
DEAR BOB: The buyer of our home made a quick Internet mortgage application and was declined. I offered to carry back the mortgage for the buyer on exactly the terms stated in the sales contract financing contingency clause. But the buyer refuses and wants to cancel the sale. Am I obligated to refund the buyer’s good faith deposit? –Mary Ann P.
DEAR MARY ANN: The buyer is obligated to use good faith to remove the contingency clauses in the purchase contract. Applying with just one mortgage lender is clearly insufficient and does not show good faith.
Your offer to carry back the mortgage for the buyer shows financing is available.
However, if the buyer wants to get out of the sale, you might not want to do business with that person. Buyers like that are disgusting.
If I were in your situation, I would have my attorney write a letter to the buyer giving him the opportunity to clear his breach of contract by either accepting your finance offer or obtaining a mortgage elsewhere.
If he refuses to complete the purchase as agreed in the sales contract, I would keep his deposit (presuming it is several thousand dollars). Let him sue you for it if he thinks the judge might rule in his favor. The buyer will look silly suing for a deposit refund when the buyer is in breach of the contract. For details, please consult a local real estate attorney.
ARE NO-PET CONDOMINIUM RULES ENFORCEABLE?
DEAR BOB: I enjoy your educational and entertaining articles. Last weekend I was looking at condominiums for possible purchase. Several of the sales agents informed me when the condo complex has no-pet rules. Are such rules legal? It seems to me a condo owner should be allowed to keep an indoor cat if it doesn’t go outdoors and never bothers anyone –Victoria G.
DEAR VICTORIA: Many upscale condominium complex CC&Rs (covenants, conditions, and restrictions) prohibit pets. Such restrictions have repeatedly been upheld by the courts so don’t even think about having a pet in a no-pet complex. But perhaps you might get away with having a goldfish.
U.S. MORTGAGE LENDERS WON’T LOAN IN FOREIGN COUNTRIES
DEAR BOB: My wife is from Trinidad and Tobago, West Indies. We intend to buy a home in Tobago. I am hoping we can get a mortgage in the United States. Is that possible for foreign real estate? –Mark L.
DEAR MARK: Sorry, you cannot get a home mortgage in the United States for use in a foreign country. Perhaps your banker can refer you to an affiliate or correspondent bank in Tobago for assistance with financing there.
NO WAY TO BE CERTAIN HOUSE IS LEFT TO SPOUSE IN A WILL
DEAR BOB: My husband and I have been married 27 years. He is rather “old school” and set in his ways. When we purchased our house about six months after getting married, he insisted title be taken in his name alone. I went along with that. We have had a good marriage, raising three wonderful sons, but my husband’s health is declining. I am concerned what will happen if he dies first. He refuses to show me his will. When I bring up the subject of what happens to the house when he dies, he says, “Don’t worry. It will go to you.” How can I be sure I am named in his will to receive the house? –Ida C.
DEAR IDA: There is no way to be certain you are named in your husband’s will to receive the house. He might leave you, for example, only a life estate with the remainder to go to the three sons after you die.
Of course, because of the long period of your marriage, under the laws of most states you have probably established marital rights in the house. Other than that, you can’t be 100 percent certain of receiving title to the house when your husband passes on.
The new Robert Bruss special report, “When It’s Smart to Prepay or Refinance Your Mortgage,” 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.
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