Editor’s note: Robert Bruss passed away on Sept. 26, 2007. Inman News is republishing his work, which still holds value in today’s market, in an ongoing "Best of Bob Bruss" series.
DEAR BOB: We bought a two-family duplex in November 1998. Now we would like to have my sister take over the balance on the existing mortgage. It is about $97,000. How do we do this? We don’t know where to start. –Carmen S.
DEAR CARMEN: If I understand you correctly, you are giving the duplex to your sister if she will take over the mortgage payments. It is called a "subject to" transfer. Just sign and record a notarized quitclaim deed to her.
Purchase Bob Bruss reports online.
After it is recorded, the property is hers and you are no longer on the title. For her protection, your sister should buy an owner’s title insurance policy from a local title insurer. Then she can be certain she received marketable title with no unexpected liens, easements or other surprises recorded against the title.
If you want your sister to formally assume the mortgage obligation, presuming she has good credit and good income, tell the mortgage lender she wants to assume the mortgage. The lender will charge an assumption fee, typically $500 to as high as 1 percent of the mortgage balance.
However, the lender probably will not release you from continued liability on that mortgage, just in case your sister defaults. For this reason, there is really no advantage for your sister to assume that mortgage.
CHECK OUT HOME BUILDER BEFORE BUYING
DEAR BOB: My husband and I, longtime homeowners with significant equity in our home, are considering buying a new house in a new subdivision. In the course of my research, I noticed one of the subdivision’s builders does not belong to the state’s builder association, nor does he have a Web site. But the subdivision appears to be continuing to make sales. Is this as big a red flag as I think? –Patricia J.
DEAR PATRICIA: Let’s put it this way. It is not a plus factor if that builder doesn’t belong to the local home builder’s association. Many builders, especially small ones, don’t have Web sites so that really isn’t important.
However, it is very important to check on that builder’s license status to see if he has an active license and if he has had any complaints filed with the state regulators.
Visit some of his previous subdivisions built within the last few years to see how they turned out. Knock on a few doors to ask the homeowners about the construction quality and if they have any unresolved complaints with their builder.
In the current buyer’s market, if that builder goes bankrupt and you are one of the few buyers in his new subdivision, it could be many years before the vacant lots are filled in with new homes. You can’t be too careful when buying in a new subdivision, especially in the present market situation.
HOW MANY CHANCES DOES FORECLOSED HOMEOWNER HAVE TO REDEEM?
DEAR BOB: How many chances does a homeowner have to reclaim his house after losing it at a foreclosure sale? Suppose I buy a foreclosed house from a bank. Does the original owner have a chance to make things right with the lender and get his house back even though the bank sold the house to someone else? If a buyer intends to make a foreclosed house his principal residence, should he or she have an attorney, or can the sale be handled between the bank and the real estate agent? –Tom B.
DEAR TOM: If a mortgage is foreclosed, state law in most states provides a redemption period after the court judicial sale. During this time, which varies between a few weeks and even up to 12 months in one state, the defaulting borrower can redeem his or her property by paying the high bidder at the foreclosure sale the amount of that bid.
However, most defaulting borrowers are broke and they do not redeem their properties. They have only one chance to redeem until the redemption period after the foreclosure sale expires.
When a deed of trust is foreclosed, and the property is sold at a nonjudicial sale, there usually is no redemption period after the trustee’s sale.
If you are buying a foreclosed property from the foreclosing bank, your best protection of receiving marketable title is to insist on obtaining an owner’s title insurance policy at the time of purchase. Unless there are title or legal complications, except where required by state law, most buyers of foreclosed property do not need an attorney if they obtain an owner’s title insurance policy.
(For more information on Bob Bruss publications, visit the
Real Estate Center).
