Q: I read your column and you seem to be really great at helping people with their issues, so I am taking a long shot and asking for your advice as well.
A little over 2 years ago, my grandmother passed away. The executor of the Will, and estate was my aunt. The beneficiaries were my father, and my uncle. I have single handedly pushed the whole case through probate, in order to keep the house from being sold. My father still lives in it, but wasn’t able to pay the bills/mortgage, etc. I had my attorney file a quit claim deed, so the house title was transferred from my uncle, and father, to myself and my husband. This is where things get tricky.
The taxes, and mortgage have not been paid since my grandmother passed, and I am not sure how much my husband and I are responsible for being the new owners of the home. The mortgage company has given us the runaround when we offer to pay what is owed, but saying they need an executor (even though that was my aunt, but she has since relinquished her rights as such). Then we asked if we could modify the loan into our names, but they won’t let us do that, because we live out of state (my husband is in the Army). Then they deliberately lied to us, stating we did not have to make any payment until the house has a sell date. When we mentioned this to our bank, they informed us that is a total lie. They also lied about the amount that is owed; some company employees told us there was about $6,000 owed on the home, and others told us that there is $14k owed.
Sorry for rambling; I suppose my question is: what rights do we have versus this company? Are we responsible for late fees that my deceased grandmother accrued? How can we settle this case without paying thousands more than necessary? Brandi.
A: Dear Brandi. You will not like my response, but when you and your husband obtained title, you assumed the obligations of your grandmother, who owned the house before she died. Your attorney should have told you this when he/she arranged for title to be transferred to your name. Accordingly, there is no question in my mind but that you owe the interest and the late fees on the mortgage that has not been paid for a couple of years.
Of course, the real question is “how much” do you owe? Your lender should provide you with a ledger sheet, showing all payments, all late fees, etc. You should immediately demand obtaining this document.
Regardless of whether the lender provides you with that ledger – which from my experience is often hard to understand, here’s a suggestion. You should send a letter to the Comptroller of the Currency. This is a federal agency that regulates banks. Go to your favorite search engine and type “Office of the Comptroller of the Currency” and their website will appear. It provides information as to how and where to send complaints. Once that agency receives a consumer complaint, it is forwarded to the appropriate bank, and the lender is required to promptly respond.
Finally, I think it would be a good idea for you and your husband to retain a different attorney, who should be able to guide you through your problems.
A READER’S RESPONSE:
Read your response to using a housing inspector on a new home. I have never done that, but I’ve sold two homes that went through inspections from licensed inspectors. In my opinion they are mostly a waste of time and cost homeowners needless expense. When they do find something it is usually so minor as to not be worth the cost of the inspection; e.g some minor paint flaking on a window trim arch that even I could see, or ashes in my wood burning fire place during the heating season when you use a wood fire place, or a minor leak in the corner of a rain gutter.
As a result I had to spend hundreds of dollars bringing in contractors to make these minor repairs, which most homeowners do themselves as part of their normal seasonal maintenance. I even had an inspector imply I had mold on a piece of roof decking which was only a dirt stain from when the house was originally built. If he had checked it closely instead of taking a picture from 30’ away he would have known what it was. But since he raised it I had to pay someone to come in and say it was exactly that - a dirt stain.
Home inspection is a racket, and inspectors just find non essential things to justify their expense in my view. Too many of them don’t know what they are doing anyway-certified or not. Art.
Art: Thank you for your comments. I appreciate that some inspectors think that in order to justify their fee, they have to find something – no matter how small. But overall, in my opinion, a home inspector serves two functions.
First, to inspect the house. If all that is found are minor things, so be it. However, I have had clients where the inspector found major problems – such as lack of proper beams to hold up the ceiling of a basement.
But the second function is equally important. If after the buyer takes title and starts raising all sorts of issues, the seller can say “you had an inspector; if there are problems, sue the inspector.”
I have represented a number of sellers who were confronted with numerous house problems after settlement, and I have always gone back to the buyer (or the buyer’s lawyer) stating “ your client had a home inspection, so if there are problems, look to that inspector and not to the seller.”
So, I am a strong advocate of including a contingency for a satisfactory home inspection in all real estate sales contracts. It’s a two-edged sword and impacts both buyers and sellers.
Q: I am buying a new condominium from a developer. My lender asked if the developer’s loan allowed for partial releases. What does this mean? Nicholas.
A: Nicholas. The developer got a construction loan to build the condominium complex. The loan was secured by a deed of trust (the mortgage document) that was applicable to the entire building – including all newly constructed units.
Now, the developer wants to sell off unit by unit. But the existing mortgage has to be released. Clearly, the developer will not have sufficient funds – just from the sale of one unit – to pay off the entire balance. Accordingly, when the developer first obtained its mortgage, the lender should have agreed to provide “partial releases” as units were sold. The lender would get all or a major portion of the sales proceeds from your purchase. As units were sold, the lender would continue to get partial payments until eventually, that loan will be paid in full.
Typically, developers make their profit when the last few units are sold; the money from the first few sales goes to reduce the developer’s mortgage.
Q: What is a private letter ruling? Periodically, you have referenced that in your columns? Sandy.
A: Sandy. According to the Internal Revenue Service (IRS), “a private letter ruling, or PLR, is a written statement issued to a taxpayer that interprets and applies tax laws to the taxpayer’s represented set of facts. A PLR is issued in response to a written request submitted by a taxpayer. A PLR may not be relied on as precedent by other taxpayers or by IRS personnel.”
Let’s say you are planning a unique venture, and are not sure about the tax consequences. You can write the IRS a letter, spelling out the facts, and asking for an opinion on any tax implications. If the matter is one that the IRS will accept, the service will respond. However, depending on the complexity of the issue, it could take months to get a formal response. Often, you will be communicating with an IRS person who has been assigned to your request.
But, it is not cheap. According to the most recent publication, as of February 1 of this year, the cost will depend on your income. If your income is less than $250,000, you will have to pay – up front – $2,200. The cost increases to $6,500 for incomes between $250,000 and $1 million. And if you are a millionaire, you will have to pay $28,300.00.
For more information, obtain from the IRS Revenue Procedure 2015. And do not even attempt to get your own private ruling; you will need professional guidance and assistance.