Neighborhood brokers can help with selling house purchased 40 years ago
Q: We are planning to move this year. We bought our house 40 years ago. Things seemed much simpler then: We didn’t have a house to sell and you went to your bank for your mortgage. Now, things seem more complicated. We just don’t know what to do first.
Who do we see to get help going through this process? We would appreciate any help you can give to get us started on the right path. — R. and K.B.
A: Call in neighborhood brokers — at least three — and ask them to come over and give you advice. It won’t obligate you to do anything. You can look them over and choose the one who inspires the most confidence, an agent with whom you feel comfortable. Meanwhile, you’ll learn a lot just listening to what the others have to say. That’s a good way to get started.
Two years of living can convert rental back to residence
Q: I own a rental property that I am thinking about selling. Can you tell me the best method to pay the lowest capital gains tax? I seem to remember that I can change it back to my principal residence by living in it for 18 months. I’m not sure if that is still valid. — J.C.
A: To convert the rental to your principal residence and use the home sellers’ tax exclusion, you must live in the house for at least two years before selling (five years if you acquired it through a Section 1031 exchange).
You’d still owe recapture tax, though, on any depreciation you claimed or could have claimed, since the current home sellers’ law went into effect on May 7, 1997.
Buyer can try to back
out of sales agreement
Q: If a purchase and sales agreement has been signed and the buyer decides not to buy for financial/personal reasons (because the co-borrower does not like the property), can you back out and, if so, is there anything bad that can happen? — via e-mail
A: Yes, there is.
Consult a lawyer to see if there’s any legitimate way to cancel the contract. If not, your attorney can explain just what the something bad might be.
First-time buyer cannot
include note for automobile
Q: I am a first-time home buyer, and I have a new car note. Can I include the car note in the mortgage or any other debts I may have? — J.S.
A: A mortgage is a signed pledge that your real estate can be taken to pay off the loan if you fall behind. It doesn’t involve your other debts or assets.
Lenders won’t risk lending more than the real estate justifies. And anyhow, it doesn’t make sense to take on a 30-year debt for a car that would be in the junk heap long before you finished paying for it.
Rental property mortgage
foreclosed upon
Q: We, unfortunately, are having our rental property foreclosed on. What can the mortgage company do against us personally? Checking accounts, salaries, the home we live in? We had to make the choice of paying on the house we reside in and not the vacant rental. The rental house went up for auction yesterday. Would bankruptcy be an option to protect the house we live in, or would the house not come into play? — Warm regards, M.
A: Sorry not to have a warm answer.
If the foreclosure auction didn’t bring enough to cover the debt, the lender can seek a deficiency judgment that could be placed against your other property. Sometimes they do, sometimes they don’t.
Bankruptcy does not free you of a mortgage; it just postpones the possibility of foreclosure for some time.
Closing agent slipped up
when calculating taxes
Q: When I bought my house, I reimbursed the sellers for prepaid property taxes. But some months later, I received a bill for past-due taxes. The title company that handled the closing doesn’t offer any help after many phone calls. They say I must pay the taxes. Is there anything I can do? — via e-mail
A: My e-mail server had a blip, and your question went off into the ether, so I couldn’t answer it directly. Hope you’re reading this. Yes, it’s true, you should pay the taxes promptly, no matter what the problem.
If the amount involved isn’t enough to warrant a lawyer’s help, you could try small claims court on your own, suing the title company, which clearly slipped up. Or you might sue the sellers, who accepted credit for something they hadn’t paid.
You can also write to the president of the title company, explaining that you are filing a complaint with the state agency that supervises them. A reference librarian can help you locate both addresses. Other readers have told me they’ve had prompt action after doing just that.
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.