QDEAR BOB: I live with my significant other in his house. We recently bought a second home together. He has three daughters and I have one son. How will this second home be divided between the survivor and the children when one of us dies? -- Susan D.

ADEAR SUSAN: If you and your significant other hold title as joint tenants with right of survivorship, the surviving joint tenant owns the entire property after one joint tenant dies. In other words, the survivor takes all. The will of the deceased joint tenant has no effect on joint tenancy property.

When the surviving joint tenant dies, his or her 100 percent title then passes according to the terms of the survivor's will or living trust.

However, if you and your co-owner hold title as tenants in common, when one of you dies, the deceased's half passes according to the terms of his or her will.

Consult a local real estate lawyer to discuss your title situation to learn if changes should be made to comply with your wishes after one of you dies.

DEAR BOB: After having read your articles on reverse mortgages for seniors, I think my brothers-in-law could benefit from one because they own their home but have limited income. They recently applied for an FHA reverse mortgage and qualified for a $50,000 reverse mortgage, but the FHA appraiser requires about $10,000 of repairs before the transaction can be approved. The loan originator recommended a local contractor. Is this standard procedure? -- Clifton D.

DEAR CLIFTON: Many older homes are in poor condition. If you were a mortgage lender, would you make a loan secured by a bad house? Of course not. FHA appraisers are obligated to note the need for obvious repairs that affect a home's market value.

If your brothers-in-law think the appraiser was unreasonable, I suggest they contact other local reverse-mortgage originators, especially those representing Fannie Mae and Financial Freedom Senior Funding Corp. The best place to find reliable local reverse-mortgage originators is on the Internet at www.reversemortgage.org.

DEAR BOB: I am selling my condominium. I bought it in November 2002, but I could not move in until repairs were made, which took two months. I am 73 and I am selling it for health reasons. Although I owned my condo for two years, I lack several months of occupancy time to qualify for that $250,000 home sale tax exemption you often discuss. Will I still owe tax on my sale profit? -- Joe C.

DEAR JOE: If you have not owned and occupied your principal residence at least two of the five years before its sale, you are not yet eligible for the full Internal Revenue Code 121 home-sale tax exemption up to $250,000 (up to $500,000 for a married couple filing jointly).

Your age is irrelevant, but because your home sale is due to health reasons, you should qualify for the partial exemption contained in IRC 121.

Although you are two months short of the 24-month occupancy requirement, that means you are eligible for 22/24, or 92 percent, of the $250,000 exemption. Consult a tax adviser for details.

DEAR BOB: I can't find your articles where you explain mortgage junk fees. Tell me again which fees I have to pay. -- Borne B.

DEAR BORNE: A mortgage junk, or garbage fee, is a charge that was not disclosed on your lender's "good-faith estimate" and that goes to the mortgage lender or mortgage broker without any specific service received in return. In other words, a mortgage junk fee is 100 percent lender profit.

Examples include loan processing fee, documentation fee, warehousing fee, loan review fee, administration fee and miscellaneous fee.

Legitimate mortgage fees are charges paid to third parties for specific services, such as an appraisal fee, credit report fee, attorney or escrow fee, title insurance fee and recording fee.

Most mortgage lenders charge a one- or two-point loan fee (each point equals1one percent of the amount borrowed). This loan fee should be enough for the lender's costs and profits so there will be no need for the lender to add additional junk fees at the last minute.

DEAR BOB: My neighbor's tree is on the boundary line. It has dropped some big branches on my house during recent storms. It is badly damaged and has some rotten spots. The house is rented. I sent the owner a registered letter telling her about the tree. I also sent pictures. Is she now liable for damages if the tree falls on my house? -- Ken B.

DEAR KEN: If the tree is right on the boundary line, you own half of it. The general rule is you can trim it back to the property line, but a "rule of reasonableness" applies. Don't trim the tree so severely that it dies or falls on the neighbor's house.

Because you own half of that boundary tree, it is in your best interests to reach an agreement with the neighbor owner as to the best course of action. If that tree falls on your house, or severely damages it, the neighbor probably would have no liability to you because the tree is on the boundary.

DEAR BOB: In your recent comments about do-it-yourself home sellers who want to save the sales commission, you said a major disadvantage of not listing with a professional agent is lack of access to the local multiple-listing service. At least in my area, there are several MLS members who will submit for-sale-by-owner listings for fees of $400 or so. This overcomes a major hurdle for such sellers. -- Kathryn R.

DEAR KATHRYN: Most communities have several MLS members who, for a fee, will submit such listings to the local MLS. For an additional charge, they will post those listings on www.realtor.com.

But posting a home for sale on the local MLS and at Realtor.com is usually not enough marketing effort. Professional real estate agents use additional marketing methods to get buyers to make purchase offers.

The MLS is the most powerful marketing method professional agents have, but a listing in the local MLS alone usually is not enough to get a home sold for top dollar.

DEAR BOB: I told a local real estate broker I was thinking about selling my home. I named the price I wanted to get. Several days later, she brought a buyer to look at my house. Within a few hours, that buyer made a full-price, all-cash offer to buy my home. I quickly realized I didn't ask for enough. The broker was upset that I didn't accept her buyer's offer. Now she threatens to sue me for her commission. Should I hire a lawyer? -- Jon B.

DEAR JON: Not yet. The Statute of Frauds requires real estate listings and almost every other real estate contract to be in writing in order to be legally enforceable in court.

Just because you told the realty agent you were thinking about selling your home and how much you wanted does not mean there was a formal listing because it was not in writing. Although you let that agent show your home to a prospective buyer, no listing was thereby created.

Consult a lawyer for details.

DEAR BOB: We just moved into our home, which was built in 1999. It had one previous owner. It is on a corner lot. I am trying to determine where the property lines are located. When we obtained our mortgage, the bank said that because we made a $120,000 down payment, we could save some money by not having our lot surveyed. I would like to know where my boundaries are so I can put up a fence. Any suggestions for a free or cheap way to get me this info? -- Tess L.

DEAR TESS: Your first stop should be the local county or city recorder's office. There is probably a subdivision map recorded. If you obtained an owner's title insurance policy, most title insurers include a small map showing your lot and its dimensions.

But without a survey, the title insurer doesn't insure the boundary locations as part of the title policy.

To have the lot line "staked" by a professional surveyor, I suggest you spend a few hundred dollars to obtain an exact survey of your lot. Then you can build your fence on your side of the boundary without fear, presuming there are no city or homeowner association fence restrictions.

DEAR BOB: Last year my grandmother gave me a quitclaim deed to a rental house she owned in a town about 25 miles away. She said it was too much trouble to manage the tenants, who have never paid the rent on time. My grandmother recently died. Her will said that rental house was to go to another relative. Can he take this property away from me? -- Ron R.

DEAR RON: Presuming grandmother's quitclaim deed was properly notarized and you recorded it, you should have no problem. However, as I constantly advise, you should have bought an owner's title insurance policy to be certain there were no title problems. When a decedent mentions an asset in her will that she has previously sold or given away, the heir to that property receives nothing. Consult a lawyer for details.

DEAR BOB: Our 31-year old-son, who has health problems that prevent him from employment, has become interested in real estate. He reads your articles and almost every real estate book you review. But he has made some bad financial decisions, such as buying a car and not making the payments. As a result, his credit is bad. He found a foreclosure house that a bank is selling at a bargain price. From his trust fund, he has enough money for the down payment. He asked us to apply for the mortgage and buy the house in our names because we have great credit. However, we think this should be his investment. Should we add his name to the title?

-- Harold W.

DEAR HAROLD: Not yet. Congratulations to your son for finding a real estate investment opportunity despite his health problems. He is fortunate to have understanding parents who can help him buy his first investment property.

My suggestion is to buy the investment property in your names, but let your son manage the property. Presuming he does well, later you can add his name to the title by a quitclaim deed. As long as the mortgage payments are paid on time, the lender won't care.

DEAR BOB: In 1994, my wife inherited a house from a living trust and we have lived in it since. When we took possession, the house was worth $350,000. Today, it is worth about $1 million. If we sell it, will we be free from capital gains tax because the property came out of a trust? Or would the first $350,000 be tax-free and we can add our $500,000 to that? -- Michael F.

DEAR MICHAEL: The adjusted cost basis for the home is its market value on the date of the decedent's death, presumably $350,000. If the net sales price is $1 million, the capital gain is the $650,000 difference between the $350,000 stepped-up basis and the net sales price. Even if the home's title is in your wife's name alone, because you have both lived in your principal residence at least two of the five years before its sale, you qualify for the $500,000 married couple exemption of Internal Revenue Code 121.

That is presuming you file a joint income tax return in the year of home sale. The remaining $150,000 long-term capital gain will be taxed at the new 15 percent maximum federal tax rate.

DEAR BOB: Do you have any suggestions what we can do about a group of neighborhood teenagers? When I talk with them individually, they are well-behaved, but when they get together with their cars and motorcycles, they are like Hell's Angels. We and our neighbors are unsure what to do. When the teens have a party or create a loud disturbance, we call the police. They are ineffective, though; they just drive past and ask the kids to quiet down. As soon as the police leave, the loud music and noise start up again. The parents are usually gone, so there is no supervision. Any ideas? -- Carlos R.

DEAR CARLOS: The situation you describe is legally called a private nuisance because it affects only a small number of neighbors. If it affects a large number of residents, it is a public nuisance, which the city or county attorney can have abated.

I suggest you and your neighbors arrange a friendly meeting with the police chief to explain the problem. He can usually apply pressure on the parents, rather than you having to resort to legal action.

DEAR BOB: I am looking for investment property that I can afford to buy. About all I can afford is a mobile home in a nice park, which is for sale at $55,000. The elderly seller just wants to get out to move in with her daughter. I have the funds. But what do you think of mobile homes as real estate investments? -- Terry G.

DEAR TERRY: Mobile homes are places to live, not real estate investments. Most mobile homes depreciate in market value, just as your car loses value day by day.

If you have $55,000 cash for a down payment, you can surely buy a modest rental house to get started on your investment career. I recommend fixer-upper houses, which have profit potential.

DEAR BOB: About three months ago, my wife and I bought our first home. The seller provided a termite inspection report showing all clear, but we didn't hire our own inspector. About a month ago, we started remodeling. The contractor discovered serious termite infestation in some of the beams under the house. When we contacted the termite inspection company, it denied liability on the basis that its inspection was for the seller, not us. The repair cost is estimated at about $5,000. Does the seller's termite inspector have any liability even though the termite damage was easily accessible? -- Byron B.

DEAR BYRON: The termite inspection company is probably hiding behind the legal principle of "lack of privity of contract." That means the termite inspector contracted with the seller, not you, so the inspector has no legal liability to you.

However, in most states, termite inspectors are licensed by a state agency. If you file a complaint with that state agency about the inspector who provided a faulty inspection to the seller, you might get results.

Your situation reminds me of a similar circumstance I encountered several years ago. When I resold the house about a year after purchase, the buyer's termite inspector discovered serious damage, which he said was obviously more than a year old.

I contacted my big termite inspection company, which quickly admitted a faulty inspection and paid for the necessary repairs. After that experience, I always hired big, well-known termite inspection companies rather than smaller firms that might not stand behind their inspections.

DEAR BOB: My two sisters and I inherited a house that we hold title to as tenants in common. One of my sisters caused a car accident she caused and has inadequate insurance. The victim has serious injuries. If the case goes to trial, a judgment against our sister is likely. Can the judgment holder force the sale of our rental house?

-- Mike R.

DEAR MIKE: The answer depends on state law where the rental house is located. As a general rule, a judgment creditor can attach the interest of a co-owner but cannot force the sale of the co-owned property. Needless to say, the situation won't be pleasant.

However, if your sister deeds her presumably one-third interest in the house to the judgment credit to settle the lawsuit, that co-owner could then force a sale of the property in a partition lawsuit. Consult a lawyer to best protect your interests.

DEAR BOB: My husband and I got divorced five years. I got the house, which has greatly appreciated in market value since then. When I received my ex-husband's quitclaim deed, did I get a new stepped-up basis to market value as you often discuss when a property is inherited? -- Sharon V.

DEAR SHARON: Stepped-up basis applies only to inherited property received from a decedent.

Because you received title from your living husband, you took over his adjusted cost basis and did not receive a new stepped-up basis to market value as you would have if he had died. Consult a tax adviser for details.

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