QDEAR BOB: You write frequently about the benefits of holding real estate titles and other major assets in a living trust. About a year ago, I persuaded my mother, then 87, to put into a living trust the titles to her Florida vacation condo, her primary house, a timeshare, inherited land in Nebraska and a commercial building in New Jersey, as well as her stock brokerage account and her bank accounts. I was named the successor or alternate trustee. The living trust specified that upon her death, the assets were to be sold unless one of the three heirs (myself and two brothers) wanted to buy out the others to keep a specific asset. About three months after transferring the titles into her living trust, she suffered a severe stroke and was unable to effectively communicate. Thanks to the living trust, I was able to lease her empty New Jersey building while she was in a convalescent home, thus providing income for her care. She passed away in February. My brothers and I sold the assets with no problems. I just wanted you to know the living trust asset distribution went smoothly, with no probate court hassles in the four states where she owned property. -- Evelyn G.

ADEAR EVELYN: I am constantly amazed at real estate owners who hesitate to transfer their titles into their living trusts. Some of my fellow lawyers are to blame because they often discourage living trusts. Could they be hoping to eventually receive the probate fees?

Your situation shows how a successor or alternate living trust trustee can manage the assets after the original owner becomes incapacitated. Equally important, when the trustor dies, a living trust avoids probate proceedings.

That was especially important because your mother owned real estate in four states. Think of all the hassle and expenses she spared you and your brothers.

DEAR BOB: I have a friend who owns a rental. The tenants refuse to pay the $1,250 rent each month. But they pay partial rent payments of $350 to $475. What procedure should my friend use to collect the rent? -- Anne P.

DEAR ANNE: Your friend should consult a local real estate lawyer who specializes in evictions. It is usually a major mistake to accept partial rent payments, especially month after month.

The lawyer will review the situation with your friend. If the tenants can't or won't pay the full rent, the best solution is to evict as quickly as possible to avoid further rent losses.

Then your friend should rent to qualified tenants after checking their rental application references such as prior landlords, employment and credit report scores.

DEAR BOB: My husband thought you were crazy to frequently advise homeowners to have a home equity credit line for emergencies and opportunities. We live in Port Charlotte, Fla., in the area hit by Hurricane Charley. Although our house wasn't as badly damaged as some, it sustained roof and other damage, which we estimate will cost at least $35,000 to repair. But thanks to you, if the insurance doesn't pay for all the repairs, we feel secure knowing we have our $125,000 home equity credit line. Last year when we paid the $50 annual bank fee, my husband almost canceled, saying it was a waste of money. Now he is so glad I insisted on keeping that credit line. -- Alva B.

DEAR ALVA: I'm sorry to learn of the damage but am thankful your home can be repaired.

Situations such as yours show why every homeowner and condo owner should have either a home equity credit line or a senior citizen reverse-mortgage line of credit to use for an emergency or investment opportunity.

DEAR BOB: We have owned and lived in our home for more than 40 years. Our neighbor has lived in his house about 20 years. He just recently told us part of our front yard belongs to him. The original owner planted along a line we always thought was the boundary. No one ever complained before. We don't know what to do. -- Walt and Alyce J.

DEAR WALT AND ALYCE: What you want to do first is hire a professional surveyor to determine the exact boundaries of your lot.

If you learn the neighbor is correct, hire a local real estate lawyer to legally claim a prescriptive easement so you (and future owners of your property) can continue using that portion of his property.

The legal requirements for a prescriptive easement are open (obvious), notorious (not hidden), continuous and hostile (without permission) use of another's property for the statutory required number of years, which vary in each state. Payment of property taxes is not required.

The shortest time period is five years in California; the longest is 30 years in Texas. It appears you qualify for a prescriptive easement. If an agreement can't be reached with your neighbor, your real estate lawyer might recommend a quiet-title lawsuit to permanently get your prescriptive easement.

DEAR BOB: If an heir plans to stay in the house to be received from an elderly parent, wouldn't it be better for the parent to give the house as a gift before death? -- Bert S.

DEAR BERT: As I've often said, it is usually better to inherit real estate after the owner's death than to receive property as a gift before death. The primary reason is an heir receives a new stepped-up basis of market value on the date of the decedent's death.

If a gift deed is received while the owner is alive, the donee takes over the donor's adjusted cost basis, which is usually low.

For example, suppose your parent owns a house now worth $300,000 for which the parent paid $100,000. If your parent gives you a gift deed to that house, your adjusted cost basis is $100,000. When you eventually sell it, you will have a substantial capital gain.

However, if you inherit that house after your parent dies, your new stepped-up basis is the $300,000 market value, thus greatly reducing or eliminating your capital gain tax when you sell.

DEAR BOB: I am 24 and want to buy my first home soon. While researching, I came across foreclosure houses that have recorded notices of mortgage default. If I pay the entire mortgage loan balance, will the property become mine free and clear? What are the pros and cons of buying foreclosure properties? -- Thad D.

DEAR THAD: Congratulations on wanting to buy your first home at 24. I was a 27 when I bought my first home for a $5,000 down payment borrowed from my parents (which I repaid).

Buying homes that are in the foreclosure process usually isn't a good idea for beginners because of possible complications.

There are three foreclosure acquisition opportunities: (1) buy from the defaulting homeowner and cure the default to reinstate the mortgage; (2) purchase at the foreclosure auction for cash; or (3) if there were no auction bidders, buy after the sale from the foreclosing lender that took title to the home.

Foreclosure buyers purchase "subject to" senior liens, such as unpaid property taxes. If you buy direct from the defaulting borrower before the auction, you also must pay any junior liens, such as a second mortgage. The foreclosure cash sale wipes out junior liens, but not senior liens.

Buying from the foreclosing lender after the auction, if there were no foreclosure sale bidders, often results in easy financing. However, most lenders usually mark the price up to full market value.

DEAR BOB: I especially related to that recent item you had about the homeowners mortgage that was sold to another lender that then changed the due date. My son had a mortgage with the monthly payment due on the 15th of each month. I didn't believe it until he showed me the promissory note. I know the due date can't be changed by the lender, but there really are some mortgages with monthly payments due on odd days. -- Charlene H.

DEAR CHARLENE: Thank you for sharing your experience. Probably 98 percent of home loans are due on the first day of each month but are late if the payment is received by the lender after the 10th or 15th day of the month. Your son's mortgage note is a rare exception.

This situation shows the importance of reading the mortgage promissory note to determine the exact due date and the grace period, usually 10 or 15 days.

DEAR BOB: Do we have grounds for a possible lawsuit against an appraiser? Our property is a 1916 church building with living quarters that were attached in 1975. In May 2002 we decided to sell and had a market appraisal for $225,000. A real estate agent brought us a purchase offer at $239,500 and we accepted. But the buyer's bank hired an independent appraiser, who took nearly eight weeks and submitted an appraisal for only $182,000. The agent thought this was ridiculous. However, the damage was done. The sale fell through.

To finance our purchase of another residence, we refinanced the church property. Our lender's appraiser said it was worth $220,000. These two appraisals were only six months apart. Do we have cause for damages for the $182,000 appraisal? -- Don and Nancy T.

DEAR DON AND NANCY: No. The legal reason is you didn't hire or pay the appraiser. The buyer, or the buyer's mortgage lender, paid for the appraisal. The appraiser was not your employee and had no legal obligation to you as the property seller.

Frankly, I wouldn't be surprised if the buyer's lender instructed that appraiser to low-ball the value due to the unusual type of property.

When you decide to sell that property, perhaps your mortgage lender will let your buyer assume your mortgage so a new appraisal won't be required.

DEAR BOB: What can I do about a neighbor's noisy band? We live in a very quiet neighborhood. Soon after a nearby house was rented to tenants, we noticed loud drums and band practice for long periods of time. We've called the police several times with no results. I tried talking with the parent. The father was angry that I called the police about his son, 17, the drummer. He says the band will play any time it chooses.

I have now hired a lawyer to file a legal complaint to seek an injunction to stop this loud disturbance. Any suggestions? -- Jack C.

DEAR JACK: The situation you describe is a private nuisance that affects only you and perhaps a few other neighbors. Because the police refuse to act, your only legal recourse is a nuisance abatement lawsuit for an injunction to stop the loud noise.

If you can get some of your neighbors to join your lawsuit as plaintiffs, that will greatly strengthen your case because they can also appear as witnesses to testify. Also, you will need factual evidence, such as the decibel range of the loud band noise.

Because the neighbor refuses to cooperate, let's hope your lawsuit will provide the desired peace and quiet.

DEAR BOB: In about 1971, my partner and I bought a vacation cabin together. But then my partner moved to Alaska. In the last six years, he has visited the cabin once. I have been there one time in five years. We have turned off all the utilities and are paying the insurance and property taxes together. I contacted my partner about selling the cabin. He said my ex-husband and he agreed to sell only to each other for the amount of money put into the property. My ex-husband has died. There is nothing in writing to back this up. We bought the property for $10,000. It is worth about $130,000 today. The partner wants to leave the property to his new wife's family. But I want to sell it. Local real estate agents won't help me sell my half. What can I do? -- Charlene R.

DEAR CHARLENE: As a co-owner, you can bring a partition lawsuit to force the sale of the property with division of the sales proceeds between the two co-owners. You'll need a local real estate lawyer. But the result should be worth the expense.

DEAR BOB: I inherited 25 percent of a property, which I want to sell. Four of us siblings are listed on the deed. The others don't want to sell. How can I sell my share without causing trouble with my siblings? -- Mike K.

DEAR MIKE: There just isn't any market for one-fourth of a property. However, you might locate a bargain hunter speculator who would buy your one-fourth interest and then bring a partition lawsuit to force the sale of the property.

But with three co-owners opposing the sale, a judge might be very reluctant to order a partition-forced sale of that property.

DEAR BOB: How can I get my boyfriend's name added to my home mortgage? We have been together about 30 years. He is 67. I am 57. -- Gertrude C.

DEAR GERTRUDE: Frankly, I can't think of any valid reason why your boyfriend's name should be added to your mortgage obligation to your lender (unless you have some ulterior motive).

If your boyfriend wants to be able to claim income-tax deductions for mortgage interest and property tax payments he pays, it's easy for you to sign and record a quitclaim deed giving him a partial interest in your home. He doesn't need to be legally on the mortgage obligation to claim such deductions if he is on the title. For more details, consult a local real estate lawyer.

DEAR BOB: My father died last year. His affairs were quite a mess. He owned two small lots in Hawaii. He shares the title with an ex-wife whom he divorced in 1964. I have the divorce agreement, which clearly says he was awarded sole ownership of the two lots. The kicker is he never transferred title into his name. I have no idea where the ex-wife is, or if she is even still alive. I spoke with a Hawaii probate lawyer. She says I must clear up the title before the Hawaii court can probate the land to his heirs. How do I clear up this title mess? -- Steven R.

DEAR STEVEN: I am surprised the Hawaii probate lawyer didn't suggest a quiet-title lawsuit. That is a legal action against any claimants, such as the ex-wife, to clarify that your late father owned title to the two lots.

Process service is usually by publication of the lawsuit notice in a legal newspaper. Quiet-title actions are quite routine and simple unless there is opposition, which shouldn't occur in the situation you describe.

DEAR BOB: I am writing for my 80-year-old neighbor. She is mentally sharp and owns a lovely home, all paid for. But she says she is running out of money. When I suggested a reverse mortgage, she said her son is opposed. He says that when she dies, the reverse-mortgage lender then takes the whole house and nothing is left for him. Is this true?

-- Renay W.

DEAR RENAY: No. That son is either mistaken or greedy, maybe both. Your neighbor is a perfect reverse-mortgage candidate so she will have plenty of money to enjoy her remaining years without cash worries.

When a senior citizen obtains a reverse mortgage, the lender receives a first mortgage lien on the residence. As the years go on, the mortgage balance grows as the homeowner receives payments. No monthly payments to the lender are required.

At the time of the homeowner's death, or when she decides to move out of the home, the reverse mortgage matures. That means its balance must be paid in full.

But the reverse-mortgage lender doesn't take the house. Any remaining equity goes to either the homeowner or the homeowner's heirs.

To illustrate, suppose your neighbor's house is worth $400,000 and at the time she permanently moves out or dies, she has received $150,000 from her reverse-mortgage lender, including accrued interest.

Presume the son is the only heir. If he wants to keep the house he can refinance with a new $150,000 mortgage to pay off the reverse-mortgage balance. Or, if he wants to sell the house, he then pays off the $150,000 reverse mortgage from the sales proceeds and keeps the remaining $250,000 cash for the equity.

Readers with questions should write Robert J. Bruss at 251 Park Road, Burlingame, Calif. 94010, or contact him via his Web page, www.bobbruss.com.

{copy} 2004, Inman News Service