House Calls by Edith Lank

Dear Edith: We're first time homebuyers looking into buying a foreclosed house. We've been working with a Realtor who has been sending us listings, taking us on tours, etc. We've never talked about fees. Who pays him and when (especially if we do buy the bank-owned home)? — G.O.

Answer: Real estate brokers are traditionally paid at the closing, on the day you become the new owners. They're usually paid by the seller (yes, even if it's a bank). If you signed a written contract specifically hiring that agent, you may be obligated to pay a fee in certain specific situations. Otherwise, commissions need not be any concern of yours.

Problems With Closing

Dear Ms. Lank: I have a problem. I am in the middle of selling my home. Per the contract, we are to close in two weeks as the buyer requested. Just today, we were told that an extension to the closing date was needed. We were told the buyers were not yet cleared by the mortgage underwriters.

However, this buyer had been pre-approved and we received weekly updates from our agent that the process was on track. The problem is the extension would make us pay another month's mortgage payment. We cannot afford this because we have already rented an apartment. What are our options or can we require anything from the buyer? — J.L.

Answer: You can ask a lawyer to investigate whether you're being lied to. If not, I don't see what you can require from your buyers. If they don't have the mortgage money by the original closing date, what can they do?

I haven't seen the terms of your sales contract. It might say there can't be an extension unless you agree. Often, though, the closing date is just a target. If it comes and goes the contract is still in effect. At that point there is a legal procedure called making time of the essence, by which you can set a binding "show up or drop out" date, but that wouldn't solve your problem. Besides having legal expenses, you'd have to start all over.

Snags often do come up before closings. I'm afraid all I can offer you is sympathy. Hang in there.

Partner In Foreclosure

Ms. Lank: My friend bought a vacation home with a guy that owns other houses.

That guy is now allowing three of his houses to go into foreclosure. The home they own together is not included in the guy's foreclosures.

Question: How can this affect my friend? Is my friend's credit score (747) going to be affected? What protective measures should be taken by my friend? — K.

Answer: As long as bills on the vacation home are being paid on time, your friend's credit rating should not be affected. Other complications might arise, though, if judgments are placed against the co-owner's share.

Radon Remediation

Hello Edith: My daughter and her husband just got an offer on their home, contingent upon an inspection. The inspection revealed a level of 39 when radon was checked.

The prospective buyers backed out. My daughter and her husband are having radon mitigation performed on Tuesday. From your experience, how difficult will it be to sell their home with this history, despite the repair?

They had the house listed for six days and got full asking price. The home is quite lovely and the quick response is an indication of this. However, they are worried now. Can you ease their worry? They have already committed to buy another home. — S.K.

Answer: Radon is probably the easiest environmental problem to fix. In many states your kids wouldn't even be required to disclose that it had been done. Frankly, though, I'd consider the remediation a plus. If I were a seller I'd use it as a selling point.

Owning With Grandson

Dear Edith: Is it possible to have joint ownership on a house between myself and my minor grandson? He is 11. Would it be better to have him named in my will to inherit the house? Presently, the house is in my name only. — J.H.

Answer: It's possible to name a minor as co-owner of real estate. Doing so, though, would open you up to all sort of cumbersome legal complications, petitioning courts or accounting to them. Your ability to use a reverse mortgage (any kind of mortgage) or to sell would be problematical. If you ever did want to sell, your grandson would owe capital gains tax on some of the profit.

Then again, you can't be sure how an 11-year-old will turn out, which could lead to an entirely different set of problems.

Talk with a lawyer who specializes in estate planning for expert advice on better ways to achieve your goal.

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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