House Calls by Edith Lank

Dear Edith: Our son and his wife have never owned a home. If we give them an interest-free loan to buy a home and the house is put in their names, will they qualify as first-time home buyers? Also, what type of paperwork would we need to prove they owe us money on the home? — e-mail

Answer: If they buy the house as their main residence, it sounds as if they'd qualify for the $8,000 tax credit offered by the IRS. There are income limitations: The credit starts to phase out for a married couple with income of more than $150,000.

You'd want them to sign a mortgage document pledging the house as security for your loan. Get professional guidance on the whole process from a lawyer.

WHERE'S THE APPRAISAL

Dear Ms. Lank: On Monday we will be closing on a condo we have been renting. We are purchasing this unit in Florida for approximately one-third of the price that the owner paid for it. We would like to have a copy of the appraisal that was performed by the bank as part of the evaluation process, for documentation purposes in the event that we need to file a property tax appeal.

We are being told by the real estate agent that the bank does not disclose this information. Is this accurate and are we entitled to a copy? — H. F.

Answer: You are entitled to receive a copy of any appraisal you paid for, so submit a written request to that effect.

INCLUDING THE CAR

Ms. Lank: Is it wise to mention a paid-up automobile when listing assets? Would that mean that if we ran into trouble with our mortgage, they could take our car? — e-mail

Answer: Including the car when you list your assets for a mortgage lender won't pose any danger. You're not offering the car as security; you're just trying to convince the bank that you're a solid citizen and would be a good risk. When you sign the mortgage documents, you'll be pledging only the real estate as collateral for the loan.

FORECLOSURES ARE OCCUPIED

Dear Edith: I'm looking into buying a property for my growing family. I was told that the foreclosure homes are great buys. After researching and driving by the two properties I was interested in, I notice that both of the properties are still being occupied.

The two properties are scheduled for auction soon. Is it possible for owners/tenants to still live in houses that are foreclosed or in the process of being foreclosed? — B. F.

Answer: Yes, the unfortunate homeowners still own the property and they (or their tenants) have the right to occupy it. They don't have to let you in to inspect the interior either.

Buying foreclosures is a complicated business, and you should be working with a lawyer who can guide you through the process, which differs from one area to another. I wonder if you understand that the successful bidder at a foreclosure auction must come up with the purchase price in cash, either immediately or within a very short time (as I say, local practices differ). It's not the same buying on the open market, where you are allowed time to obtain mortgage financing.

There are other considerations, mostly legal, and again, I'd recommend working through a lawyer if you want to buy that way.

EXPANDING CAPE COD

Dear Edith: In this market, is it a good idea to add a bathroom and renovate two bedrooms upstairs on a Cape Cod-style street? — e-mail

Answer: That depends on price levels on your street, how the house presently compares with its neighbors, your financial situation and how long you intend to live there. You can get informed opinions for free by calling a few local real estate brokerages and asking for advice.

RISK OF LOSS

Ms. Lank: I'm reviewing a counteroffer on my house in which the buyer has added the following verbiage: Should damage occur to property between buyer walk-through and possession, damages will be repaired at seller's expense.

Is this normal? It seems like this could open me up to all sorts of liability and potential claims of damages. — e-mail

Answer: The buyers have a right to receive the property as it was when they viewed it and made their offer. It's not unusual to agree that risk of damage or loss before closing is borne by the seller, and sales contracts often contain a provision to that effect.

In many states, the law says that if all or part of the property is destroyed, the seller can cancel the contract and the buyers get their deposit back. If a buyer prefers to sue, a court may require the seller to go through with the sale and turn over any insurance proceeds to the buyer.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.

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