Q: I have been divorced since 2010, and my ex still has 2 properties owned jointly with me. Is it at all possible that I can force the sale of these properties. Kay.
A: Dear Kay. You have to first read the divorce settlement/separation agreement that you entered into with your then husband back in 2010. Does it contain any language that the houses will be sold after a certain period of time?
Are you paying anything toward the house – such as mortgage, taxes, insurance and upkeep? Are any of the two properties rented and if so, are you getting any rent money?
And the bottom line question: is there any equity in either or both of the houses, or are they “under water”?
Assuming that there is nothing in your separation agreement that does not allow you to take legal action, you have the right to file what is known as a “partition action” in a law court in the county where the houses are located. The law is very clear throughout the country that courts will not allow two or more people to continue to own property when one wants out.
Ultimately, a judge will force the sale, either with a real estate broker or a public sale actually held in the courthouse. Typically, the partition cases in which I have represented one owner involve a brother and sister. Mom died, and the sister wants to live in the house. The brother lives across the country and wants half of the sales proceeds.
But who are the winners? The lawyers who represent the parties, the speculator who often gets a below-market price and the trustee appointed by the court to oversee the sale.
Bottom line: you may want to have an attorney threaten your ex that you will sue if he doesn’t take action to get your name off of the title. But from my experience, the only way to accomplish this is either (1) a sale of the property or (2) your ex refinances in his own name. If he cannot qualify for a new loan (or loans in your case) then he should sell.
Q: My mother is 89 years old and in a nursing home almost 5 years. I am contributing to the cost of her care. I have 2 questions. One is how to transfer the title at her death. I have her old will done in the 1960’s naming me the heir. The second question is can the money which I have contributed over the years be deducted from the sale of her house? This is the only asset she has. Thank you for your help. Ruth.
A: Dear Ruth: To answer your first question: I assume that the house is in your mother’s name and not in some form of Trust. If my assumption is correct, then some form of Probate will be required. Different states have different probate requirements, and in any event, you will need an attorney to assist you – both with the Probate proceedings as well as to transfer the title to your name. Actually, while it will make you more comfortable if the house is in your name, in fact, you do not have to do that. Should you decide to sell, so long as you have (1) your mother’s death certificate, (2) proof that you complied with the Probate requirements in your state and (3) your mother’s Last Will and Testament, you should have no problem selling.
If your mother is still mentally competent, you might want to discuss with an estate attorney whether she should update her Will. Obviously, a lot has happened – and there have been many changes in the law – since the 1960’s.
Your second question: can you deduct the expenses you have made over the years from the sale price? Before anyone can answer this, you have to determine what the tax basis of the house is. Did your mother and father buy it many years ago for $100,000? What was the market value of the house when your father died, since your mother would have obtained what is known as a “stepped up” basis. In other words, if the property was valued at $200, 000 when dad died, your mother’s basis would be increased from $50,000 to $150,000. And if the house is worth $500,000 when Mom dies – and you inherit it – your tax basis will be $500,000. If you sell it for that price, you will have made no gain, and thus will have no tax to pay. Accordingly, it may not be necessary to claim any deductions for the expenses you incurred.
Q: I have an interesting problem. We signed a contract to buy a condominium. The sales price was $370,000. However, there was a typo. The sales price read “Three hundred seventy five thousand ($370,000) dollars. The contract was signed by everyone and we did not notice the error until our lender asked what the price was.
We thought it was the lower price and that’s what we offered. The seller, however, claims that she was selling at the higher price.
What should we do? Quinn.
A: Section 3.114 of the Uniform Commercial Code (UCC) – a set of rules for business transactions (and a law that has been enacted in every state except Louisiana), dictates how any confusion should be handled.
“If an instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers.”
I hope this answers your question. You may be stuck with the higher price. Talk with a local attorney who may be able to resolve this in your favor. For example, there may be a loophole in the contract that would allow you to walk away and get your deposit. That could be leverage against the seller to lower the price to what you originally intended.
Q: I saw your article on Tips of buying Condo with help from Parents and it was very helpful. I have additional questions.
I am trying to help my daughter buy a condominium unit in NYC, and we plan to pay $450-600K for the down payment, and she will pay us back in the next 15 years or until she exits the property. Do we need to generate an official contract or will just a regular contract with notary be good enough? Is there a minimum interest rate we need to charge or it can it be interest free? Kouwei.
A: Dear Kouwei: excellent questions. So that we are on the same page, when you say “down payment” I am assuming you mean “purchase price”. If you only meant “down payment”, then that means that the purchase price is much higher and there is a commercial lender that will make your daughter a loan. If that’s the case, then you have to make absolutely sure that your down payment is protected; if your daughter defaults on her loan, the bank will be in first place position, can foreclose and potentially you can lose your money.
So for this question, I am assuming that the purchase price is $500,000 and that you are lending her the entire amount.
For your protection, your daughter should sign at least two documents: (1) a promissory note – “I owe you mom $500,000, payable in monthly (or annual) installments at an interest rate of X percent. The entire loan will be due and payable on XXXX20__, (2) a deed of trust (some state call it a mortgage), and that document will be recorded among the land records in New York City.
Why for your protection? Should, for example, your daughter is sued by someone and there is a judgment against her, the judgment creditor could sell the condo to collect on the money judgment. If you have a recorded security instrument (deed of trust), you are in first place and will get your money first.
However, a deed of trust is beneficial for your daughter also. If she wants to (or needs to) deduct the mortgage interest on her annual tax returns, she must have entered into a deed of trust that is recorded.
You really don’t need any contract; the two documents referenced above will be sufficient.
As to interest rates, you have the right to lend her “interest free”; however, you will be hit with “phantom income” and you will have to declare interest on your tax returns. Look up “Applicable Federal Rates” on the Internet. The IRS publishes monthly what rates can be charged and will be imputed to lenders in the absence of a higher rate. That will also tell you what the minimum rate you can charge your daughter, should you wish to go that route.
Bottom line: it is difficult to maneuver through this process in general, and I suspect even harder in New York City. My strong advice: get a real estate attorney to guide you through the entire process.