Home Seller Beware of Buyer?

Q: DEAR BOB: I have had much work done to my home without permits. When I sell the house, is this a case of "buyer beware," or could there be a problem with the building inspectors if the buyer raises an issue? My house has more square footage than shown on the official county records. Would I be taking a risk if I mention my home's square footage? -- Steve M.

A: DEAR STEVE: When you decide to sell your home, you will regret not following the rules. You ask if this is a case of "buyer beware," but the rule has become "home seller beware of the buyer."

To protect yourself from after-sale lawsuits, you must disclose all known defects with the house, including the lack of building permits. A buyer of your house should demand a large discount for the risk he or she is taking.

If the buyer decides to make improvements requiring a building permit, the building inspector could insist that the illegal improvements be "legalized." The building inspector might demand to inspect the wiring and plumbing.

Because your house now has more square footage than shown on the official tax-assessment records, you might be assessed for back taxes. When the buyer's mortgage appraiser evaluates your home and checks the official records, the appraiser will deduct market value for the illegal space you added.

DEAR BOB: In 1980, my father set up the title to his condominium with his wife as joint tenants with right of survivorship and a life use, with the remainder to me. In 1981, he and his wife divorced, but the divorce lawyer failed to remove her life use from the condo title. My father died in 1986, and I have been living in the condo and paying all the taxes and maintenance since. How do I get my stepmother's name off the title? -- Robert P.

DEAR ROBERT: The easiest solution is to offer your stepmother money for her quitclaim deed to you. Be sure that it is properly prepared by a real estate lawyer so that it clearly gives up all her rights to the condominium.

The issue of a "life use" should have been resolved at the time of the divorce. Depending on state law where the condo is, you might be able to claim title to the condo by adverse possession if you have occupied it without your stepmother's permission. Adverse possession is a stretch, however, and I would use that legal argument only as a last effort.

If your stepmother refuses to cooperate, your best alternative is to bring a quiet title lawsuit against her in the county where the condo is, asking the court to determine her rights after the divorce, if any.

DEAR BOB: Several years ago, I refinanced my home through a mortgage broker recommended by a friend. He repeatedly assured me that there would be no prepayment penalty. When I sold my home in March 2007, I was charged a $20,000 prepayment penalty. I contacted the mortgage broker, who said that it was an error and that there was to be no prepayment penalty. When I signed the loan papers, I failed to notice the penalty, as I was in a hurry to get to a meeting. Do I have any recourse? -- Lyn T.

DEAR LYN: No. You have only yourself to blame. You should not have signed the loan papers in haste. Oral promises mean nothing in real estate. In the future, read before you sign.

DEAR BOB: Three of us own a house. Two want to sell, but one co-owner doesn't. The one who opposes a sale can't afford to buy out the other two, and he refuses to sign a listing to sell. Is there any way we can get this house sold even though the third co-owner says he won't sign any sales papers? -- Richard D.