Backing out of home sale can create legal problems

Q: What if I want to back out of selling my home? Can the buyers of my home sue me? — R.

A: First of all, anyone can sue anyone any time. That’s not the question.

Could you end up in legal trouble if you broke your contract of sale? Yes, you could. The buyers might claim money damages. They could even go for a special type of lawsuit, for “specific performance,” asking the court to order you to sell.

There’s no telling what your particular buyers would do, of course. Take the whole matter to your own lawyer promptly for advice and information.

Primary borrower responsible

when secondary defaults

Q: I am the primary borrower on a house loan in which my business partner is listed as secondary. He has defaulted on his half of the payments the last two months due to personal issues with me. What are my rights as a primary signer on the loan? — L. L. S.

A: At this point, it’s not your rights that matter so much as your responsibilities. Anyone who signs the mortgage documents is personally liable for the whole debt. I would guess that you are, and that you may have to make up the missing payments to avoid foreclosure and a trashed credit record.

Fast-home-buying companies must purchase at wholesale

Q: Are the “fast home buyers” companies reputable? How do they work? I am in divorce proceedings, and we will be selling our property, and a fast sell will be needed. — F.

A: Many are reputable — just read every word before you sign anything. Scam companies may get you to sign over the house but leave you responsible for the mortgage. You’d want to make sure your loan was paid off before you signed over the property.

But there’s still a catch. “Fast home buyers” must buy at wholesale. They hope to resell your place at market value, and meanwhile they have expenses for property taxes, insurance, utilities, maintenance, commissions or salaries. Add in lost income on the money they pay you, an allowance for unexpected problems, and something for profit — else why do it in the first place? You can see why they’ll offer you a steep discount from true market value.

Such a sale can be useful to someone who does have to sell immediately, but if you can wait just a few months, you will do much better on the open market.

For a fast sale: Give your house a doll-up, put it in the hands of an experienced broker, and list it for less than the agent’s suggested price.

Many factors determine

payment of capital gain

Q: If I sell commercial property and have a capital gain, how soon after the sale do I have to pay the tax? — via e-mail

A: You might need to make a withholding payment at the next quarter-year: the 15th of January, April, June or September. If you didn’t, you could be hit with interest charges and perhaps a penalty.

Then again, you might not have to do that at all. It depends on the size of your gain and how much difference it will make in that year’s tax bill. It also matters whether you are already doing your own quarterly withholding and, if so, what you based this year’s estimate on.

As you can see, all this will go better if you take the figures to a tax professional. As a real estate investor, you should have your own CPA on tap anyhow.

Taking on mortgage

does not give ownership

Q: My dad lives in Pennsylvania along with his companion of 20 years. She is in a nursing home now. His name is not on the deed, but it is on the mortgage. What does this mean if she passes away, and is he able to sell the house? Her daughter is now power of attorney for her. I tried to research this but found it very confusing. — V. S.

A: Taking responsibility for the mortgage loan did not give your father any ownership or control.

Offering closing costs

can make sale more likely

Q: What, if any, are the pros and cons for sellers and buyers if the buyers make a full-price offer but ask for a certain amount of closing-cost assistance from the sellers? — F. S.

A: For the sellers, the benefit is that they get the deal made and the property sold. The downside is that they end up with less money. For the buyers, the pro is that they can handle closing costs they might not otherwise be able to afford. The only drawback might be that a particular mortgage plan may have limits on the amount of “seller concessions” it will allow the borrower to receive.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.

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