Avoiding Refinancing Fees

Maybe he won't sell your house at a given open house, but if he doesn't hold open houses, he surely won't sell your listing or any other houses as a result of meeting prospective buyers. If that agent thinks he can sell your house by merely putting your listing into the local multiple listing service and on a few Web sites, he is downright lazy and isn't working in your best interest.

DEAR BOB: I own a tenant-occupied rental house that I am considering selling to my tenants on a lease option or a lease-purchase agreement. What is the difference? -- Gene G.

DEAR GENE: A lease option gives the tenant the option to buy the property at the agreed price and terms. The term of a lease option is customarily one or two years. But a lease-purchase agreement obligates the tenant to buy at the agreed price and terms, within the specified time limit.

Either way, insist on substantial, nonrefundable upfront option money. Be sure the lease option or lease-purchase contract clearly states that the option money, typically 1 to 3 percent of the option price, is not refundable. For details, consult a real estate lawyer.

DEAR BOB: I own a rental house. My neighbor's pecan tree litters my driveway and roof with leaves, pecans and sap. The tree roots have cracked the fence and raised part of my concrete driveway. What recourse do I have? Can I cut the roots and limbs? What if the tree dies? -- Etta J.

DEAR ETTA: The laws of most states allow you to trim the neighbor's encroaching tree roots and limbs back to the property line, at your expense. However, if you kill the tree, you could be liable to the neighbor for the lost value of the tree, possibly several thousand dollars.

DEAR BOB: To avoid probate costs and delays when I die, I created a revocable living trust and deeded my condo title to it. I am 62 and plan to get a reverse mortgage in about eight years, when my interest-only mortgage converts to an amortized mortgage. Does having the condo title in my living trust prevent me from getting a reverse mortgage? -- Alan W.

DEAR ALAN: No. As long as you have sufficient equity in your principal residence, holding title to it in your revocable living trust won't prevent you from obtaining a reverse mortgage. However, the reverse-mortgage lender will ask you to take the title to your home out of your living trust momentarily so the reverse mortgage can be recorded against the title. After that is done, you can then have the attorney or title company re-deed the title back into your living trust. It's a bit confusing, but it is done every day.

DEAR BOB: I own a rental property and will have its mortgage paid off in 12 months. I am considering an Internal Revenue Code 1031 tax-deferred exchange for a rental property closer to my home. Must all the cash realized from the sale of the current property be used as a down payment on the property to be acquired, which will be of higher value, or can I take some cash out and just carry a larger mortgage? -- Claudia M.

DEAR CLAUDIA: The general rule of IRC 1031 is that you must trade equal or up in both price and equity. That means if you take out any cash, called "boot," it will be taxable to you. However, if you want to take out cash, you can refinance either property before or after the trade, just not as part of the trade transaction. Please consult a tax adviser for details.

DEAR BOB: I am paying half of my son's mortgage payments, but my name is not on the mortgage papers. However, I am on the title. Can I deduct half of the mortgage interest and property taxes on my 2007 income tax returns? -- Rhoda J.

DEAR RHODA: Yes. It is irrelevant that your name is not on the mortgage obligation. What matters is that your name is on the title to the residence, making you legally obligated to be sure the mortgage and property taxes are paid.