Children From Previous Marriage Could Lose in Joint-Tenancy Title
QUESTION: My husband and I own our home and two rental properties in joint tenancy with right of survivorship. We have been married almost eight years. It is my second marriage and his first.
Recently we were at a cocktail party where we met a real estate lawyer. She said there ought to be a law against joint tenancy because it often disinherits people. She said if I die before my husband, my children from my first marriage (who live with their father) will not receive any interest in the house. If this is true, what do you recommend we do?
ANSWER: The real estate lawyer is correct. If you should die before your husband, your joint tenancy property will go to him as surviving joint tenant. Your will has no effect on joint tenancy property.
In other words, your children from your first marriage will not receive any interest in the joint-tenancy property. However, if your husband dies first, then you wind up owning the properties alone as surviving joint tenant.
If you are not happy with this situation, you and your husband can change the ownership. Perhaps you would like to own the properties as tenants in common.
Then each tenant in common can pass his or her share of the properties at their death by will. However, if your husband dies first and he doesn’t leave his half to you by will, you could wind up owning the property with someone you don’t like.
If you die first and will your share to your children, your husband would own the property with them. Before you make this change, please consult a real estate attorney to discuss the pros and cons of joint tenancy and tenancy in common or other ownership form.
Patience Pays Off in Buying or Selling
Q: We have been negotiating for over a month with an out-of-town seller of a home my husband and I badly want to buy. The home is everything we want. But the seller is being totally unreasonable. We have made her three different offers, which the realty agent thought would meet her requirements.
However, she keeps saying she wants to think it over. Yet, the house is vacant and we know she is making monthly mortgage payments of almost $1,500. What can we do to get this house?
A: Be patient. That advice recently paid off for me in buying a fix-up house from “difficult sellers.” Finally, the realty agent’s patience paid off and they agreed to accept an offer just slightly higher than my original offer.
But you may have made a mistake by making three different offers if the seller did not make counteroffers to your offers. I would be very careful about making any new offers, unless you receive a counteroffer from the seller. It looks like the seller knows how to take advantage of you without making any concessions. Patience should pay off if you wait for the realty agent to extract a counteroffer from the seller.
Why Don’t All Buyers Get Home Inspection?
Q: I am puzzled as to why home buyers have so many problems with sellers who don’t tell buyers about defects with the houses. It seems to me the solution is for home buyers to have the homes professionally inspected. Why doesn’t every home buyer get a professional inspection before purchase?
A: I don’t know. Many real estate agents encourage their buyers to get professional inspections to protect both the buyer and the realty agent. But I suspect many home buyers don’t want to spend the money on a professional inspection.
Realty Investments Can Give Lifetime Income
Q: I own several rental properties in addition to my residence. It occurred to me that I could sell my rental properties and carry back mortgages to provide my wife and me with higher retirement income than we can earn if we took the cash and put it in savings and sell for higher prices than I might get if I insist on cash sales. Do you see any problems with this idea?
A: No. Your plan makes sense. Many people acquire investment real estate while they are young and then sell it when they are older, so they can enjoy the retirement income.
New Property Owner Must Honor Leases
Q: I think I made a bad mistake. Recently I bought a six-unit apartment building at what I considered a bargain price. But I neglected to double-check the rental agreements with the tenants. I knew the rents were low. But it turns out three of the tenants have leases with four years remaining. The seller never told me about the leases. However, I must admit I never asked. Is there any way I can get out of these leases, since keeping the rents low for the next four years will cost me a fortune?
A: A new property owner must honor the leases signed by the previous owner. If the law were otherwise, it would be easy for a property owner to get out of unfavorable leases by selling the property.
But you may have a cause of action against the seller for not telling you about the unfavorable leases. Those leases were material facts that should have been disclosed to you before purchase. Please consult your attorney for details.
Must Condo Seller Disclose Assessment?
Q: Recently I bought a one-bedroom condo. About a week after I moved in, the seller mailed me a bill from the condo owner’s association for a $2,500 special assessment for a new roof. If I had known about this I would have reduced my purchase offer by $2,500. The seller claims he just received the bill and didn’t know anything about it. I realize I have to pay it, but don’t you think the seller should reimburse me?
A: Yes. The seller and the realty agent should have disclosed the forthcoming special assessment to you before purchase. Most condo associations spend considerable time debating special assessments, so the seller either must have known or should have known about the assessment. I realize the $2,500 amount is not a huge amount, but if the seller won’t voluntarily reimburse you, it might be worthwhile to take him to court. Consult your attorney for further details.
Mortgage Broker Tries to Do Her Best
Q: Several times recently you have said to be careful of mortgage brokers. I am a mortgage broker who tries to do her best for my borrowers. However, you won’t believe how dishonest the lenders are with us. They want to get loan applications in the door as badly as we do.
Lenders will quote us loan terms and then unexpectedly change them. Meanwhile, we have quoted loan terms to borrowers and their real estate agents. I’m sure there are some mortgage brokers who use the bait-and-switch tactics you have written about, but why can’t you be kinder to the rest of us who try to do our best?
A: Thank you for explaining “the rest of the story.” Mortgage brokers have a very difficult job as middlemen between mortgage lenders and borrowers. If you find a mortgage lender will not stick with quoted loan terms, I suggest you quit doing business with that lender. There are hundreds of lenders, so you don’t have to do business with those who are unreliable.
Co-Owner Can Force Sale of Property
Q: About five years ago, a friend and I bought some land together as tenants in common. We planned to hold it about five years. Since we purchased it, the property has gone up almost $100,000 in market value. I want to sell, but my partner refuses. She says we can earn more by holding for a few more years. But our loan comes due in about six months and I want to sell now. What can I do to force my partner to honor our agreement?
A: Please consult a real estate attorney. A partition lawsuit is appropriate to either force the sale of the property or have the court order a physical division of the property.
Mortgage Interest Not as High as It Seems
Q: My husband and I want to buy a home, but we are holding off purchasing until interest rates come down. Do you think mortgage rates will drop within a few months?
A: I don’t know. If you find someone who knows for sure what will be happening to mortgage interest rates, please let me know. The so-called expert economists have been forecasting lower interest rates for months, but it hasn’t happened yet.
However, interest rates are not as high as they seem. For example, an 11% fixed-interest rate really only costs about 9% after considering the tax savings for the interest deduction on your income tax returns.
I wouldn’t wait to buy a home. If interest rates do fall, more home buyers will be able to buy homes and this will increase competition for homes, thus firming up prices. In most cities, the home sale market is a “buyer’s market” now. That means there are more homes for sale than there are qualified buyers. The result is that buyers can negotiate hard for the best possible price and terms.
Title Insurance Doesn’t Guarantee Boundaries
Q: Two years ago we bought our home. We thought the property boundary was where the fences are located. But about six months ago the neighbor, who recently bought his home, showed us his survey, which showed the boundary is about 5 feet inside our fences.
We showed the survey to the title insurance company, but they say we are not covered since our policy does not insure the property boundaries. Is this true?
A: Yes. An owner’s title insurance policy does not insure the property boundaries unless this coverage is specifically included. Please consult your attorney for further details.
