Question: I signed a purchase agreement with an inspection clause. During the inspection, we found that the water meter ran when the water was shut off. The inspector suspected that a pipe outside the house leaks. After about ten days the inspection contingency was removed, the seller told me that the problem is that a toilet on the second floor leaks and that pipes inside the walls may leak too. I saw big water stains on the first floor ceiling although they are covered by new paint.
Can I get out of the contract? My reasoning is that the house has a dramatic fault that is hard to be fixed.
Answer: Drama doesn't count, but here's what does: First, why did you remove the inspection clause? Did it require that the sellers make any repairs? Did it allow you to terminate the agreement and get back your deposit?
Second, what did the seller disclosure statement say? Did it note the leaks?
Third, for whom did the broker work? Did you use a buyer broker?
Please take the purchase agreement to a real estate attorney in your community.
Question: I recently made a full price offer to purchase a home. The sellers already had two other offers but they simply changed a few dates then accepted my offer. My agent called me and told me the sellers had accepted my offer but I needed to initial the few minor changes and fax the contract back to her.
As soon as I received the seller's accepted offer I acknowledged the changes and faxed the contract back to my real estate agent. I felt the contract was now secure.
However, a short while later my agent called back and said the seller's agent told her the owners decided to accept a higher offer instead of mine. My agent said since the listing agent had already informed her that the sellers were going with another offer before my agent could get my changes faxed back to the listing agent there was nothing we could do but offer to pay more money too.
So, per my agent's advice I lined through my original price and increased my offer by $15,050 and faxed it to my agent. My agent called the seller's agent who was driving to the seller's house and told her I had increased my offer. Then my agent called me and said the listing agent told her the other party was now offering $16,000. (This was while she was driving in her car.)
At this point I began feeling very uncomfortable with the situation. It appeared that verbal offers were being made and the seller was agreeing to accept another offer before he physically received it.
It is my understanding that all contracts to purchase real estate must be in writing.
Can a seller back out of a purchase and sales contract for any reason?
Answer: There was no contract between you and the seller as I understand your letter.
When an offer is accepted subject to a "few changes" it is not accepted. Instead, a counter-offer is being made.
You sent back the fax accepting the counter-offer to your broker. However, that does not mean it must be accepted by the seller -- an offer can be withdrawn at any point before acceptance.
You heard of a counter-offer and responded. However, your response may well have been after the owners had accepted a written offer from another party.
In the future, meet at the listing broker's office to hash out an agreement and avoid time delays.
Question: You are my last resort. How do I find out who owns a rental property in Troy, MI?
Answer: Ask at the property records office. Or, online, search for the property records office on the nationwide list maintained by Research Ventures.
Question: My husband and I are going through a divorce, though he is still living in our house. We are planning to sell the house in the next year. My husband (soon to be ex) does very little around the house, maybe mows the lawn once or twice a month. There are lots of cosmetic repairs to be done and I am feeling right now that I will have to pay someone to do the repairs. I don't feel that monies made from the house sale should be divided equally between us since I will be the one paying for repairs and upgrades. What can I do to ensure that the majority of the money made from the sales goes to me?
Answer: When people get divorced there are often many things in dispute. You could bargain for a larger share of the money from the house. Better, you could make an agreement now with your husband that would be part of the divorce arrangement. Before doing anything, speak with an attorney for specifics.
Question: An HOA has a lien against a homeowner's property; he partially pays every two or four months. If he pays today, could we apply this to his delinquency of eight months ago and maintain that date towards the 12 month criterion for foreclosure or would today's date be established for count down?
Answer: You have to follow the HOA rules, whatever they are, and apply them equally to all homeowners. If there is an ambiguity then you might want to establish a policy.
There is a terrible dilemma here because a foreclosure is bad for everyone and yet if an HOA has huge amounts of unpaid fees because of a policy allowing delayed payments it may not be able to meet its obligations. In effect, you want to do the humane thing and yet "being nice" may rebound in a way that hurts everyone.
Three ideas: First, speak to the unit owner and see if something can be worked out that would be acceptable within the framework of current HOA rules. Second, ask if the unit owner is listing the property for sale. If so, the HOA would collect at closing and doing more may be moot. Third, see if the HOA attorney can find an acceptable solution short of foreclosure.
Question: Since the housing market in my community is not so good right now, my husband and I are considering selling our house on a land contract. If the land contract term is 5 years or more with a balloon payment after five years, can you still write off the capital gain? We bought the property 17 years ago for $195,000 and will be selling it for $309,900 way under the $500,000 allowed for a married couple.
Answer: A land contract is an installment sale, title does not actually pay to the buyer until some or all payments have been made. Thus in this situation the property may not be "sold" for five years -- if at all.
If the property is occupied by someone else for five years you will not be able to claim a residential capital gains write-off because you will not have occupied the property for a sufficient period.
"To exclude gain," explains the IRS, "a taxpayer must both own and use the home as a principal residence for two of the five years before the sale. The ownership and use periods need not be concurrent. The two years may consist of 24 full months or 730 days. Short absences, such as for a summer vacation, count as periods of use, but longer breaks, such as a one-year sabbatical, do not. The taxpayer also must not have excluded gain on another home sold during the two years before the current sale."
For specifics, see a tax professional.
If it was me, I would require the buyer to finance and settle on the property now or find another purchaser.
Question: I'm interested in a commercial property which is land-locked. I am told by the real estate company that the surrounding properties MUST give me a right away to get to this property. Is this true?
Answer: Which surrounding property owner must give you a right of way? One of them? All of them? Who gets to choose? One lane or two lanes? Paved or unpaved?
If I were considering this property I would view access as the seller's problem, something for him to resolve. He might negotiate an easement with a neighbor that passes with the property; sue, claiming he is entitled to a private "way of necessity" or sue to obtain a prescriptive easement. When he gets everything straight and in writing, then I might have more interest.
For specifics, get a buyer broker who handles commercial real estate or speak with a local real estate attorney.
Question: I have a son who is going to sell his home and wants to move to Texas. He is asking $470,000, he owes $270,000 -- which means he would have a profit $200,000 and plans on buying a home for around $150,000. Does he have to pay capital gains taxes on any of this money? His broker said he might has to have a 1031 exchange.
Answer: To generally determine the sale profit of a property take the sale price and subtract the acquisition cost, selling expenses and any capital improvements. What is owed is not part of the equation.
Then ask: Has the individual lived in the property for two of the past five years? If yes, then an individual may be able to obtain up to $250,000 ($500,000 if a married couple) without paying a capital gains tax, money which may be used for any purpose.
For details, see IRS Publication 523, Selling Your Home and speak with a tax professional.