Wednesday, September 13, 2006
By Robert J. Bruss
Inman News
DEAR BOB: I have owned my condominium since March 31, 2005. But I
am interested in relocating in the next few months for career purposes. Someone
told me I might be exempt from capital gains tax on the sale of my condo --
although I have not lived in it for 24 months -- if I sell for career or
educational purposes. Is this true? --Annmarie S.
DEAR ANNMARIE: If you sell your principal residence due to a job
location change that qualifies for the moving-expense tax deduction, you may be
eligible for a partial Internal Revenue Code 121 $250,000 exemption based on
the number of months of primary-residence ownership and occupancy.
However, moving for "educational purposes" clearly does
not qualify unless you obtain a new job where you attend school. For full
details, please consult your tax adviser.
WHAT TO EXPECT WHEN MAKING FINAL MORTGAGE PAYMENT
DEAR BOB: We bought our home 18 years ago with the seller carrying
back the mortgage. We faithfully made on-time payments every month. This December
we will make our final mortgage payment. What do we need from the owner for
final title clearance to the property? --Susan H.
DEAR SUSAN: Congratulations on making your final payment after 18
years of home ownership. Not many mortgages last that long because they usually
get refinanced or the home is sold.
If a mortgage was recorded against your title, when you make the
final payment your seller-lender should provide you with a Satisfaction of
Mortgage in recordable form so you can clear your title of the mortgage
security.
If the security instrument was a recorded deed of trust, the
lender should instruct the trustee to provide a Deed of Reconveyance
in recordable form, which you can record to clear the deed of trust from your
title.
The seller-lender should also return your promissory note marked
"paid in full."
Because most individual lenders don't know what to do when the
final payment is made, you may have to "guide" your seller-lender to
take care of the details properly. For more details, please consult a local
real estate attorney.
BUYER'S HOMEOWNER INSURANCE DOESN'T PROTECT SELLERS
DEAR BOB: I just sold my house and purchased the most expensive
homeowner's insurance policy for the buyer. My house is almost 6,000 square
feet, with many amenities. If anything goes wrong, such as appliances, roof,
sinks or showers, can the new owner sue me? My sister and brother-in-law sold
their home "as is" and the buyer had a leak in the garage roof six
months later during a heavy rain. They took my sister and brother-in-law to
Small Claims Court and won. We know there are no leaks in our house. What can
we do to avoid liability to our buyers? --Joey L.
DEAR JOEY: I am very puzzled why you would pay for your buyer's
homeowner insurance policy. That expense should be paid by the buyer. That
policy won't protect you after the home sale if you failed to disclose in
writing to the buyers all known defects in the residence.
Your legal obligation at the time of the sale is to provide a
written disclosure of all known home defects. If a defect later materializes,
such as a roof leak, it is then up to the buyer to prove you knew of the
undisclosed defect but failed to reveal it. For more details, please consult a
local real estate attorney.
