Q: I’m an official resident of Florida now. My neighbor is also a widow and her attorney recently set her up with something called a “Lady Bird deed” to ease the transfer of her house upon her death. I’ve asked other friends at my senior center about this, and no one else I know has one of these. Can you please explain its use/validity? I don’t want to spend money going to an attorney unless it is a good thing to do. — J.
A: My dear, you might as well ask me if taking your neighbor’s medications is a good thing to do. As always, what’s appropriate for one person could be disastrous for another.
There’s no evidence that President Lyndon Johnson ever used a Lady Bird in his estate planning, but the name is certainly intriguing. It’s a type of deed that passes property on your death to a specific person, regardless of your will and outside probate. The Lady Bird, which is available in only a few states (yes, Florida is one), has some additional provisions appropriate for a person who contemplates qualifying for Medicaid coverage in the future.
There’s no room here to go into detail about uses, drawbacks and possible complications. If you are interested, you’ll have to discuss your specific situation with a Florida lawyer who specializes in elder law.
dumping dad’s House will take work
Q: My father rolled some of his debt into his mortgage a few years ago and currently owes just under what the house may be worth. It is an older home and has not been updated. His pension and Social Security cover his payments. However, he has been diagnosed with Alzheimer’s. When the time comes to put him in an assisted-living facility or nursing home, my sister believes that we can turn the house over to the mortgage company to free him from those payments. Is this true? Is it a good idea? — W.V.
A: I’ve never heard of a mortgage company that will agree to take property and cancel the mortgage. Sorry about that.
Call some local brokers and ask whether the house is likely to sell for enough to cover the mortgage sometime in the next few years. You should be able to get opinions as a free service with no obligation. Most brokers welcome the opportunity to view a house and make friends.
Land Contract allows renters to buy
Q: We have a property listed with a real estate agent. There are people interested now, but it seems they can’t get full mortgage price. If we decide to sell on land contract will the listing agent still be given a commission? And how do we legally handle the land contract? Do we need to go through a lawyer? — P. A., via askedith.com
A: For those unfamiliar with a land contract (sometimes called “contract for deed”): The buyers move in as tenants, with a written contract allowing them to buy at a certain price in the future. Meanwhile, they usually pay an additional amount above their monthly rent, to be held in trust by the seller and used eventually toward the purchase price. Every contract is different, reflecting the needs of the parties. The agreement may be that they will receive title — ownership — when they’ve paid the full purchase price, or perhaps when they’ve paid enough to qualify for a regular mortgage loan on the remainder.
I don’t know your situation or why you’re considering a land contract, but I am absolutely certain that each party should have an attorney who specializes in real estate.
You need a contract that states the eventual purchase price (which might, for instance, change with inflation). Where will those be held in trust? Will that sum be returned if the buyers drop out in the future? Who will pay property taxes — and what happens if they’re not paid? Would the buyers have the right to sell their contract, allowing a different buyer to take over where they left off? Would you have the right to approve or disapprove the next buyer?
You need to know a lot about your buyers’ finances, why they can’t qualify for a mortgage now, how dependable is their income, do they have a record of paying their bills on time? The buyers, meanwhile, would want to know whether the property might have a mortgage or other liens against it now and that you wouldn’t borrow against it in the future.
For the seller, a land contract may provide tenants who treat the property as their own and take good care of it. For the buyer, it can result in home ownership that isn’t available any other way. But lots can go wrong, and both parties need professional guidance.
About That Corner Lot
Q: It seems from the media that we’re in a seller’s market, but I don’t see it. My house — good condition, nice front and back landscaping — is in a quiet neighborhood at a corner, a fine location. My Realtor says the corner is a negative, which is hard for me to believe. That was one of the reasons we bought the house 12 years ago. What do you think about the corner? Is it a positive or negative feature? — R, via askedith.com
A: One common impression is that a corner house involves more grass to cut with less privacy to show for it. In the past, there have been times when more sidewalk meant higher property taxes, never mind more snow to shovel, but not every buyer will have these prejudices — you didn’t.
If your house has been on the market for some time then the market has voted that, for whatever reason, it isn’t worth what you’re asking. If it hasn’t been listed yet, and you have the luxury of time to experiment, you’re free to test the market by asking whatever price you wish.
Edith Lank will respond personally to any question sent to www.askedith.com, or mail to 240 Hemingway Drive, Rochester NY 14620.