What It Means to Be 'In Escrow'

DEAR ROBERT: Did you read the loan documents before signing? Apparently not. If they didn't state that the monthly PMI fee begins after 12 months, then you don't have to pay it, but it appears that the PMI explanation is in the paperwork someplace.

Yes, it appears that you were misled by the loan officer. You could have completely avoided PMI by obtaining an 80 percent first mortgage and a 20 percent home equity loan or second mortgage. Or the lender could have charged a slightly higher interest rate and paid the PMI premiums for you. But it appears that you have little recourse, especially since your mortgage was sold to another lender.

You could take that loan officer to small-claims court and sue him or her for the amount of your unexpected PMI premiums you will have to pay after one year. However, the judge will ask if you read the documents. When you say no, the case will probably be dismissed.

DEAR BOB: For several years, my wife and I have owned an 11.2-acre parcel of land in a high-priced residential area. But it is worthless because it has no road access. If we get an easement from a street to our land, it would become very valuable. But none of the neighbors will sell us an easement. What can we do? -- Stephen E.

DEAR STEPHEN: Most states have statutes or court decisions showing how to "unlock" parcels without road access by obtaining a driveway easement over an adjoining parcel. You will need to retain the best real estate title lawyer you can find. He or she will research the titles of the adjoining parcels.

If it can be proven that at some time in the past an owner of your landlocked parcel also owned an adjoining parcel, then you could be entitled to an "easement by necessity" over that parcel, even if the owner doesn't want to give you an easement. The theory behind easement by necessity is that the common owner forgot to provide road access to the landlocked parcel, so the court can now create such an easement.

DEAR BOB: You often answer questions about Internal Revenue Code 1031 tax-deferred exchanges of rental properties. Can vacant land that is not rented be exchanged tax-free? -- Claire B.

DEAR CLAIRE: Yes. IRC 1031 says any property held for investment or use in a trade or business can qualify for a tax-deferred exchange. If you bought the land as an investment, you can make a tax-deferred exchange for other "like kind" investment or business property of equal or greater cost and equity. But "like kind" does not mean "same kind." Thus you can trade your vacant land for other vacant land, apartments, offices, warehouses, shopping centers or just about any property except a personal residence.

DEAR BOB: What is the most cost-effective way for my parents to leave me their home? They want to add my name to the title, but I would like to avoid as much tax as possible. -- Jeannine T.

DEAR JEANNINE: If your parents die in 2007, federal estate taxes will not be an issue unless they each leave net estates of more than $2 million. Your goal should be to avoid probate costs and delays, as well as to receive a stepped-up basis to market value when you inherit the property.

One method is to add your name with all three of you holding title as joint tenants with right of survivorship. If your parents die first, you would be the sole surviving joint tenant. Joint tenancy does not require probate. The surviving joint tenant simply files a certified copy of the deceased joint tenant's death certificate and an affidavit of survivorship.

But there are joint-tenancy drawbacks, especially if one joint tenant becomes incapacitated and the property needs to be sold.