Homebuying Basics: Refinancing Your Mortgage

DEAR DOUGLAS: Your ex-roommate, not the landlord, owes you the security deposit amount you originally paid when you signed the lease. Because he remains in the rental property, he is using your 50 percent share of the security deposit, plus his 50 percent. If he refuses to pay you the 50 percent to which you are entitled, take him to the local small-claims court to get a judgment for the security deposit he owes you.

DEAR BOB: Why did you recently say homeowners need insurance in case a tree falls on a neighbor's property? This happened to us and our insurer said we had no liability. The neighbor's insurance policy will have to pay for our tree's damage to their fence. -- Harold W.

DEAR HAROLD: You always need homeowners insurance. In addition to providing hazard insurance, a homeowners insurance policy includes negligence liability coverage. Liability for your tree that fell on the neighbor's property depends on the cause. If it was a windstorm, then you have no liability to your neighbor because you were not negligent.

However, if the tree was diseased or was leaning toward the neighbor's house when it fell and damaged the neighbor's property, you would be liable for negligence, and your homeowners insurer would pay for the damage. Ask your insurance agent for details.

DEAR BOB: How can a second residence qualify for the $250,000 single or $500,000 married capital-gains tax exemption, or the tax-deferred exchange benefit?

-- Patty C.

DEAR PATTY: To qualify for the Internal Revenue Code 121 principal residence sale tax exemption up to $250,000 (up to $500,000 for a married couple filing a joint tax return), you must own and occupy the home as your primary residence at least 24 of the last 60 months before its sale. To qualify for the Internal Revenue Code 1031 tax-deferred exchange benefits, the property must be a rental and must be traded for another "like kind" rental property of equal or greater cost and equity. Consult a tax adviser for details.

DEAR BOB: If I already have a revocable living trust, do I also need a will? -- Joe S.

DEAR JOE: Yes. You need a will because you probably have some assets that are not included in your revocable living trust, which includes your major assets such as your house, bank account, stocks and bonds. Your automobile, furniture and other personal assets probably are not held in your living trust. When you die, your will can specify whom you want to inherit real and personal assets not included in your living trust. For details, consult the lawyer who created your living trust.

DEAR BOB: I own a house where my elderly mother holds a life estate. She lives alone in the house and may someday opt for a smaller apartment. If this happens, and she refuses to release her life estate, do I have any legal recourse?

-- Patrick L.

DEAR PATRICK: Legally, you are what is called a remainderman, subject to your mother's life estate.

You should get a copy of the document that created her life estate. If it was well written, it should say that when your mother dies or moves out for longer than six months, her life estate terminates. If the life-estate document was poorly written, it is open-ended and gives your mother a life estate without stating what happens if she moves out for longer than six months.

Should that happen, you would probably have to bring a quiet title lawsuit to terminate her life estate. For more details, consult a local real estate lawyer.

DEAR BOB: Is there any way to leave my house to my three sons after my death other than through my will? I don't think I have enough assets to merit a living trust.

-- Aida S.

DEAR AIDA: If title to your house passes under the terms of your will and your will has to be probated in court, the legal fees, other costs and delays could be substantial. However, if you hold title to your house and other major assets in your living trust, probate costs and delays are avoided.

Unless you die and leave a net estate of more than $2 million in 2006 or 2007, there won't be any federal estate tax due. Depending on your state of residence, there probably will be little or no state inheritance tax because you are leaving your assets to your sons.

DEAR BOB: A large old tree in my neighbor's back yard is leaning toward my house. It shows signs of significant rot and cracking at the base of the trunk. If it falls toward my house, it would easily cause significant damage and pose a major hazard. Besides asking my neighbors to cut down the tree, do I have any recourse? -- Scott O.

DEAR SCOTT: You should consult your homeowners insurance agent, who can write a letter to the neighbor outlining the negligence if the tree is not removed or trimmed to reduce the hazard of its falling onto your house.

I recently had a similar situation at my home. I contacted our local code enforcement officer who notified my out-of-town neighbors about their two tall trees that were leaning toward my house. The absentee neighbors were nice and had their two trees removed within a few weeks.

Presuming you have already tried being nice to the neighbor without results, maybe it's time to become more aggressive. After you contact your insurance agent and the local code enforcement officer, you could sue the neighbor in a private nuisance abatement lawsuit. If the judge agrees the tree is a hazard, he could issue a court order to force the neighbor to abate the nuisance and remove the dangerous tree.

Readers with questions should write Robert J. Bruss at 251 Park Rd., Burlingame, Calif. 94010, or contact him via his Web page,http://www.bobbruss.com.

© 2006, Inman News Service