Paying Cash for a Home Carries Risks

When the mortgage is paid off, either the estate executor or the heirs will execute a Satisfaction of Mortgage or a Deed of Reconveyance to clear the loan obligation from the title. In other words, the death of the mortgage carryback seller-lender is not a big problem for the home buyer who obtained the seller financing benefits.

DEAR BOB: I have owned my condominium since March 31, 2005. 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.

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 homeownership. 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.

DEAR BOB: Can we fire our real estate agent? We (and four others) are in the process of selling our property to a commercial buyer. Our agent never shows up for meetings and is so out of the loop. He calls us to see what is going on with the sale. We don't think he deserves the 6 percent sales commission because his involvement ceased after finding the buyer. We want to fire him or, at the very least, cut his commission. Can we do that? -- Harrison Y.