It's All in the Clause

There is no valid excuse for not promptly telling you the buyer's good-faith earnest money deposit check bounced.

However, I would not bother suing the buyer's agent because proving your loss might be difficult and costly. I suggest you move on. However, your listing agent should have been monitoring the situation, so perhaps he or she should share the blame, too.

DEAR BOB: I am thinking of selling my home to one of those "we buy houses" companies. It claims to buy as-is. It asks the seller to inform it of any repairs needed, but it also says that if the seller does not inform it of any necessary repairs, the company presumes repairs are necessary anyway. This firm offered me a very low price. If I accept, it performs a "due diligence" inspection before the contract is final. Do the facts that the company assumes repairs are necessary and that it highly discount the sales price change the seller's legal liability for repairs? -- Mark P.

DEAR MARK: Most states now have laws and court decisions requiring home sellers to disclose known defects of the residence in writing. Making an as-is home sale is not a method to avoid liability for undisclosed defects of which you are aware.

If you sell to those professional buyers at a price heavily discounted from market value, you should insist on a written waiver in the sales contract that you have disclosed all known defects and that the buyer has investigated and will not hold you liable for any hidden defects that might become evident later. For details, consult a local real estate lawyer.

DEAR BOB: We recently purchased a beautiful waterfront home in Washington state. This will become our retirement home in three years. We are reluctant to rent it out and are leaning toward having a housesitter live in it until we move in. the person is highly recommended by our new neighbors. However, I read somewhere that if we allow an individual to house-sit, we are granting squatter's rights. Is that correct? The sitter would not pay rent but would pay the monthly expenses. -- Jeanine W.

DEAR JEANINE: Squatter's rights (legally called a tenancy at sufferance) refers to occupancy without the owner's permission. Obviously, your housesitter will occupy with your permission, so you need not worry about squatter's rights.

Be sure to consult your insurance agent in Washington to be certain you have adequate insurance for this unusual situation, including liability coverage in case the housesitter trips on a loose carpet, which could be considered negligence by you.

You need a written agreement with your housesitter so that you can remove him or her at your will. I suggest that you consult a real estate lawyer near the property.

DEAR BOB: We own a house that has been rented to tenants for many years. Now we want to use it as our primary residence and sell it after 24 months. What documents should I have to prove to the Internal Revenue Service this is indeed my primary residence so I can claim the $500,000 exemption of Internal Revenue Code 121? -- Deb S.

DEAR DEB: Just move in. Save your utility bills and other evidence of principal residence occupancy. Be sure to file your income tax returns from your new principal residence and change your car registration, driver's license, bank accounts, etc., to your new address.

You mentioned "we." If your spouse is not on the title, that's all right as long as he also meets the test of occupying the house for 24 of the past 60 months. However, if your co-occupant is not your spouse, he or she must be on the title to claim the $250,000 tax exemption. For more details, consult a tax adviser.