QDEAR BOB: I married my husband in 2000. He created a living trust in 1998 for his house where we lived, and he told me and many of his friends that the house goes to me when he dies. I did not ask about the details. He died in March. My stepsons were around the house and my husband's living trust cannot be found. They want me to move out of the house. He left more than $1 million to his three children. I am in terrible shock. Can this living trust be probated? -- Lata R.

ADEAR LATA: Hire the best lawyer in your area who specializes in trust law. If title to the house was held in your late husband's living trust, the terms of that revocable living trust determine who receives the house.

Oral realty statements mean nothing. If title to the house was never deeded into his living trust, as often occurs, or if he didn't amend his living trust after marrying you, then you might not be entitled to the house.

Assets held in a living trust normally do not go through probate court. That is a major living-trust advantage to save probate costs and delays. The trustee has authority to distribute living-trust assets according to the terms without probate. As a potential living-trust beneficiary, you have a legal right to see that living-trust document.

If the living trust cannot be found, then title to the house will probably pass according to your late husband's will. However, you may have marital rights to the house.

Should your stepsons order you to move out of the house, your lawyer will probably advise you not to move unless they have solid proof you did not acquire any interest in the house. To evict you, they must prove their legal rights.

DEAR BOB: We are concerned about buying a house, which is titled in the husband's name. He says the house has always been his, even after 15 years of marriage. The seller is now getting a divorce. The price is fair and this is a big opportunity for us. The house needs work; it hasn't been touched in 20 years. All inspections will be completed before purchase. Can the husband convey title without his wife's signature? -- Mitchell W.

DEAR MITCHELL: If title to the house is in the husband's name alone, presumably acquired as his separate property before marriage, every title insurance company I've encountered will insist on having the wife's signature either on the deed or on a quit-claim deed.

If the wife refuses to sign anything and you acquire title by a deed from the husband alone, since only his name is on the title, the title insurance company will almost certainly issue a title policy with a major exception for any marital rights claim by the ex-wife.

Without the wife's signature, your acquisition could be risky. Discus the matter with the title insurance company and a lawyer.

DEAR BOB: I am a single person living in a high-cost area earning a modest income. I have been working with a buyer's agent to find a condo I can afford. But my options are limited. A financial planner recently urged me to hold out until the real estate bubble bursts. She said it is not smart to buy when there is great demand and real estate prices are high. But I am afraid the real estate bubble is never going to burst and if I wait I will reduce my chances of ever owning my home in this high-cost area. Do you think the bubble will burst or the market will cool off? -- Cynthia N.

DEAR CYNTHIA: Ever since I bought my first home for $27,000, and my real estate friends thought I lost my mind by overpaying, I've been waiting for the "real estate bubble" to burst.

The long-term trend for house and condo prices has always been up. But there are price peaks, valleys and plateaus along the way.

If you want to buy your home for long-term occupancy (at least five years), I suggest you get busy and buy before prices go higher. Even if home prices level off, or perhaps drop a bit, you will be enjoying ownership of your personal residence rather than paying rent to a landlord and buying his property for him with no personal benefits to you.

DEAR BOB: During the past five years, I bought a condo, lived in it for two years and then kept it as a rental while I bought a house as my principal residence. Now, I am selling both the house and condo. Will I avoid paying capital gains tax on both properties, which I owned and lived in for two years each within the last five years?

-- Deesh B.

DEAR DEESH: No. Internal Revenue Code 121 allows you to use the principal residence sale $250,000 tax exemption only once every 24 months.

If both your condo and house qualify, because you owned and occupied each for 24 of the 60 months before their sale, you can only use one $250,000 tax exemption (up to $500,000 for a qualified married couple filing jointly) for one of those home sales. Consult a tax adviser for details.

DEAR BOB: My sister paid a $500 deposit when her contract to buy a home was written up by a real estate agent. The seller accepted. Then she had a problem obtaining a mortgage. The deal fell through. Her real estate agent forwarded a request to release the $500, but the sellers refused to refund her $500. The title company refuses to refund the $500 and says the money will go to the state. Is there any way she can get her $500 refunded? -- Maria Z.

DEAR MARIA: Because of the small amount involved, it is not worthwhile to hire a lawyer. Your sister might wish to jointly sue the seller and the title company that is holding her $500 good-faith earnest money deposit. However, if the sales contract did not contain a clause making the purchase offer contingent on her obtaining a mortgage, she might be wasting her time.

In most states, if a home buyer's good-faith earnest money deposit is not disbursed, the holder of that deposit either must "interplead" it into court (ask the court what to do with the deposit) or transfer it by escheat to the state treasurer.

DEAR BOB: On late-night and weekend TV I often see infomercials about investing in real estate tax liens, but the prices seem high. Are there any books you recommend on this topic? -- David L.

DEAR DAVID: The best recent book on this topic, "Profit by Investing in Real Estate Tax Liens" by lawyer Larry B. Loftis, is well written and documented, with lots of personal examples.

DEAR BOB: Two years ago, I bought a home with my girlfriend, with title in my name only. Now we are married and want to know if we will be eligible for a $500,000 tax exemption if we sell. -- Steven P.

DEAR STEVEN: Internal Revenue Code 121 is generous. Married couples can claim the tax exemption up to $500,000, even if the title is held by only one spouse, if both spouses occupy their principal residence at least 24 of the 60 months before its sale and they file a joint income tax return in the year of the sale. Consult a tax adviser for details.

DEAR BOB: About seven years ago, I inherited a house from my late uncle. I had no idea he willed his free-and-clear house to me until his lawyer called me. As I was getting a divorce at the time, I was happy to move into the house where I have lived since. My employer, the U.S. government, has offered me a wonderful job promotion if I will agree to move to Honolulu. It's a tough decision, but I have accepted. My question involves my profit on the sale of my inherited house. From reading your articles for many years, I know about the $250,000 principal residence sale exemption. But what is the cost basis for my inherited house? -- Annie R.

DEAR ANNIE: When you inherited your house seven years ago, you received it with a new "stepped-up basis" of market value on the day your late uncle died. At the moment, I'm sure that new adjusted cost basis was the least of your concerns.

Fortunately, it is possible to determine the past market value of a property as of a specific date. Your best resource is a local professional appraiser who specializes in determining past values. However, finding these specialists is often difficult.

In most jurisdictions, it doesn't make sense to check the local property tax assessor's records. The reason is those records are often several years out of date. Sometimes they are accurate, but more often they are below actual market value (occasionally they are too high, but that's another issue).

I suggest you ask local title insurance officers, real estate agents, realty lawyers and real estate agents for names of local appraisers who specialize in determining past market values. The appraisal won't be cheap, but it will be profitable to establish your stepped-up basis as of the date of your inheritance.

DEAR BOB: We own a rental house next door to our principal residence. The couple who rented it for the past three years now want to buy it. They are perfect neighbors, and we are anxious to sell it to them. However, we have owned this rental house about 14 years, acquiring it when its owner died so we could control who lives next door to us. The house has greatly appreciated in market value. A friend told me there is a special tax exemption law when a homeowner sells an adjacent lot. Neither I nor our tax adviser can find this law. Do you know about it? -- Byron R.

DEAR BYRON: Your friend is referring to Internal Revenue Code 121. It has a special provision when a principal residence owner sells his/her adjoining lot. The sale can qualify for the IRC 121 tax exemption up to $250,000 (up to $500,000 for a qualified married couple filing a joint tax return).

However, it applies only to adjoining vacant land if you sell your principal residence within 24 months, not to the sale of an adjoining rental house, as in your situation.

The only way to avoid tax on the sale of your rental house would be to make a tax-deferred exchange for another qualifying rental property under Internal Revenue Code 1031.

DEAR BOB: When we moved out of our apartment, the building manager inspected our apartment and said it appeared to be clean. We had the carpets professionally cleaned, the windows washed, and even paid $150 to a cleaning service. However, when we received the accounting for our $1,000 security deposit, we were shocked to discover the nasty landlord (a big-time property investment company) deducted $1,325 for trumped-up charges, such as repainting the bedrooms. Now they say we owe $325 although the building manager said we left the apartment clean. Do we have to pay? How can we get our $1,000 deposit back? -- Bren C.

DEAR BREN: Many landlords attempt to charge vacating tenants for normal maintenance costs, such as repainting between tenants. Unless there was damage, such as nail holes in the wall requiring repainting, your ex-landlord appears to be trying to get you to pay for normal wear-and-tear maintenance.

The best place to resolve this dispute is the local small claims or housing court. Be sure to demand the landlord provide copies of the actual repainting bills. If a staff handyman painter repainted the apartment, most judges won't accept estimates of repainting costs.

DEAR BOB: My house is listed for sale with an excellent real estate agent. She tells me every time she shows the house to prospective buyers, the big German shepherd at the adjoining neighbor's home starts barking and the prospects lose interest. I've lived in my home for 12 years. The neighbor's dog never barks when I am in my back yard. I asked the neighbor to keep his dog indoors, but he refuses. Do I have any recourse? -- Margarita W.

DEAR MARGARITA: You ask a difficult question. In most towns, if a dog barks longer than 10 or 15 minutes, that is considered a nuisance under local ordinances.

Local procedures vary, such as calling the police or humane society animal control officer.

DEAR BOB: My husband died in 1997. We held title to our home as tenants in common and his will left everything to me. I was told I didn't need to have his will probated. Now, as I am thinking of selling my home to move to a retirement community, I'm beginning to wonder. Do I have to do anything about the title? -- Vivian R.

DEAR VIVIAN: Yes. Before you can convey marketable title to the buyer of your home, you must clear the title of your late husband's name so you can transfer title to your home buyer.

To do this, you should hire a lawyer to either probate his estate or use an alternate court procedure. Without knowing the exact details of his estate, I can't say much more, but, before you can sell your home, you must have title in your name alone so you can convey marketable title.

DEAR BOB: I keep hearing radio ads for "option mortgages." As I understand them, they let borrowers either pay interest only, amortized monthly payments, or even less. What do you think of these, and the new 40-year mortgages? -- Harold R.

DEAR HAROLD: If your home is in a rapidly appreciating market, and if you only plan to keep your home a few years, an interest-only mortgage can be a good deal.

The reasons are your monthly payments are at rock bottom and all your monthly payment is tax-deductible itemized interest. However, I don't recommend below-interest-only mortgages where the unpaid interest is added to the principal balance. The result can be owing more than you originally borrowed.

As for the 40-year amortized mortgages, their monthly payments are not much less than a 30-year mortgage but the extra interest over the extra 10 year mortgage life is huge. These new mortgages are not a good deal for most homeowners.

DEAR BOB: About three years ago, I exchanged my four-unit apartment building for a rental house where I ultimately want to live. My tenants recently moved out. Can I move in to convert it to my personal residence without owing tax? I heard there is a new tax law on this issue -- Hermina H.

DEAR HERMINA: Effective Oct. 22, 2004, Congress enacted a new tax law affecting rental property acquired in an IRC 1031 tax-deferred exchange, which is later converted to the owner's personal residence.

To qualify for the Internal Revenue Code 121 $250,000 or $500,000 principal residence sale tax exemption, the new law requires a property acquired in a tax-deferred exchange be held at least five years before sale. Of course, at least 24 months of those 60 months must be owner-occupied to qualify for IRC 121.

From your description, it appears you showed rental intent at the time of the tax-deferred exchange. After at least 24 months of owner occupancy, and at least 60 months of ownership, you can sell that property and qualify for the IRC 121 principal residence sale tax benefits. Consult a tax adviser for details.

DEAR BOB: We recently bought our first home. It is outside the city limits but close to the city. Shortly after moving in with our family of five, we found that the house has a septic tank system rather than being connected to the public sewer, which is about 200 feet away. It will cost us at least $15,000 to connect to the sewer because there is solid rock in the way. Do we have any recourse against the seller and the seller's realty agent for failing to tell us the home is not connected to the sewer? -- Ryan R.

DEAR RYAN: The legal answer depends on the seller's representations to you. Did the seller or the agent make any untrue disclosures about a sewer connection? Did you ask? Surely, the seller knew the home was not connected to the public sewer. However, unless the seller made an untrue disclosure to you or had a duty to disclose, the seller might not have any liability for misrepresentation.

DEAR BOB: About four years ago, my mother died. She left her house to my son, then age 13. He adored her and she appreciated all the attention and help he gave her. The problem is he is now 17. We have been managing the house for him, renting it to tenants. We need to sell the house to pay his college tuition starting next September. How can we sell the house, as he won't be 18 until February 2006? -- Hugo R.

DEAR HUGO: As you discovered, a minor child can receive and hold title to real estate, but a minor cannot convey title.

The only current alternative is to have a court-appointed guardian represent your son in the sale of the house.

I hope you can figure out some way to retain the house until your son becomes 18 and is then able to sell it. If you now have a prospective buyer, a lease with option to buy after your son becomes 18 would be perfect.

DEAR BOB: My older sister is in poor health. She has told me that after she dies, I will inherit her house. I know the house has a mortgage of about $175,000. When I inherit the house, what happens to that $175,000 mortgage? Is it canceled? -- Gwen H.

DEAR GWEN: Inherited property is conveyed "subject to" any liens against its title at the time of the decedent's death.

That means, after inheritance, you will have to make the payments on that $175,000 mortgage. If you fail to do so, the lender will foreclose and you will lose the house.

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

(c) 2005, Inman News Service