Real Estate Mailbag
'Funding' a Living Trust
Bruss is away. These questions are from previous columns.
Q: DEAR BOB: About two years ago, I set up a revocable living trust and included my checking, savings and stock brokerage accounts. I recently realized that the title to my condominium is not in my living trust. What must I do to place my condo into my living trust to avoid probate after I die? -- Larry T.
A: DEAR LARRY: You are not alone. Millions of homeowners create revocable living trusts to avoid probate costs and delays for their heirs but forget to "fund" them with title to their homes. This is especially important if you own real estate in more than one state; otherwise, probate will be required in each state.
The easiest way to transfer title to your condo into your living trust is to sign a notarized quitclaim deed in recordable form from yourself to yourself as trustee of your living trust. Then record it with the local recorder of deeds.
To be recordable, the quitclaim deed usually must include the legal description of your property, the local parcel number and your notarized signature. The easiest place to find your condo's legal description and parcel number is on your owner's title insurance policy.
DEAR BOB: We plan to sell our home, which has worn and stained carpet. Professional cleaning won't remove the stains. A friend suggested that we just clean the carpet as best we can and offer a credit to the buyers so they can select their own carpet color. I worry that this is not putting the best face on our house and that the carpet might turn off potential buyers. What do you suggest? -- Penny S.
DEAR PENNY: Discounts don't work. Spending a few hundred dollars or even a few thousand dollars on new carpet will pay off. Most home buyers would not be able to imagine how your home would look with new carpet.
You don't have to buy top-of-the-line new carpet, but don't install the cheapest carpet, either. Avoid what I call "cheap-spec-house dark brown" or any other color except light beige. Most important, install a good-quality pad, which makes the new carpet comfortable to walk on, to put your prospective buyers in a good mood.
DEAR BOB: I own a condominium unit that suffered water damage about six months ago from the upstairs condo after a pipe in the wall leaked. The homeowners association paid for extensive repairs to my bathroom. Do I have to disclose this to my buyer? -- Derek S.
DEAR DEREK: Unless the damage was not fully repaired or there is evidence of the need for additional repairs, you don't have to disclose what happened. If homeowners were required to disclose all past repairs, the list for most homes would be a mile long. All you must disclose are current defects and problems that have a material effect on the market value or desirability of your home.
DEAR BOB: I am in the process of buying a house. The seller accepted my purchase offer, but the sale won't close for 60 days because the seller needs extra time to move. However, that's good for me because it means I can shop for the best mortgage. The first lender, the bank I have done business with for at least 10 years, was arrogant. It insisted on a $250 appraisal fee, which I paid. The appraisal came in at the sales price. When I questioned the loan officer, he said appraisers are instructed never to estimate a market value higher than the sales price, though I know I got a bargain price below market value. Because I have plenty of time, I continued mortgage shopping and found a better deal with another lender, but the second lender refused to accept my copy of the first appraisal and insisted that I pay $300 for a second appraisal from a different appraiser. Is this legal? -- Beth W.
DEAR BETH: As you have discovered, mortgage lenders and not borrowers hire the appraisers. A second mortgage lender will rarely accept an appraisal ordered by the first mortgage lender because of nonsense professional appraisal rules. So you, the borrower, get stuck paying a second appraisal fee. However, if you found a much better mortgage, paying a $300 second appraisal fee is worthwhile.