DEAR BOB: I recently bought my first home. It is on a busy street with a very small front yard and no street parking. Shortly after moving in, I received a notice that the city plans to widen the street and take four feet from the front of my property. This will necessitate taking down a big, old, beautiful tree and leave only a few feet from my house to the sidewalk. A neighbor said all the neighbors knew about the street widening, and the city claims to have notified all owners. What are my rights? The seller said nothing about this on the seller’s disclosure statement. If I would have known of the city’s plans, I wouldn’t have bought the house. What should I do? –Mary E.
DEAR MARY: If there was a real estate agent involved in the transaction, he or she claims to be a “professional” and should have notified you of the proposed street widening, which adversely affects the desirability and market value of your home.
Purchase Bob Bruss reports online.
Home sellers have been known to lie. That is apparently what happened in your situation. The city will probably offer you a small amount for taking the four feet of your property.
To be sure you aren’t cheated I suggest you hire a professional appraiser to evaluate your home’s market value both before and after the taking. You should also consult a local real estate attorney to discuss the possibility of rescinding the sale if that is what you would like to do.
ONE-SIDED VIEWPOINT OF INHERITING A HOUSE
DEAR BOB: Thirty years ago, when I was single, I bought my house. Six months later, I got married. But I have never added my wife’s name on the deed. My house is willed to my wife when I die. If I die first, the house will transfer to my widow through probate. I assume she will benefit from the stepped-up basis to market value if she were then to sell the house. Would setting up a revocable living trust be preferable and what would be the tax liability if I die first and my wife decides to sell the house? –Ron L.
DEAR RON: Your viewpoint seems rather one-sided. If your wife dies first, you won’t inherit the house since you already own it. Thus, you will retain its current, presumably very low adjusted cost basis. If you die in 2007 or 2008, all transfers to a surviving spouse are tax exempt and your entire estate is subject to the $2 million federal estate tax exemption.
But I suggest you consider adding your wife’s name to the title. Marital transfers between spouses are not taxable so that is not an issue. Then, if her name is on the title and if she dies first, you would benefit from the stepped-up basis rules to market value on the date of her death.
Whether or not you decide to add your wife to the title, setting up a revocable living trust would be highly advantageous because probate costs and delays will be avoided. If you die first, your wife still gets a stepped-up basis.
Another major living-trust advantage, if you become incapacitated perhaps due to a severe stroke or Alzheimer’s disease, is your successor trustee (presumably your wife or an adult child) can manage the property and, if necessary, even sell it. Details are in my new special report, “Pros and Cons of Living Trusts to Avoid Conservatorship, Probate Costs and Delays for Heirs,” 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.
CO-OWNER DOESN’T HAVE MUCH FORECLOSURE LEVERAGE
DEAR BOB: I own 60 percent of a home. But I do not occupy it and am not a co-signer on the mortgages. I acquired my 60 percent interest when the 40 percent co-owners were in default on their mortgages. Now they are in default again. They are trying to negotiate a forbearance with the lender. The mortgage lender says I have no say in the matter because I am not a co-signer on the mortgage. What should I do? –Michael B.
DEAR MICHAEL: If you are not a co-signer on the mortgage, the lender does not have to negotiate with you. Of course, if the lender forecloses, your 60 percent interest in the property will be wiped out.
If I were in your situation, I would consider offering to buy out the co-owners as cheaply as possible (perhaps for $5,000 or whatever it takes) for their quitclaim deed to the house so you can get rid of them and reinstate the mortgage to avoid foreclosure.
Or you can bring a partition lawsuit to force a sale of the house, but that is probably not a wise idea in the current buyer’s market in most cities.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
