DEAR BOB: In June 2001 we bought a million-dollar new home. But we soon began experiencing problems with the septic system. Surface sewage leaked to the surface. The county and the home builder tried to fix it, but they failed. They are still trying to fix it. In the meantime, we have to pump the septic system every 10 days. What is the best way to force our home builder to buy back our defective house so we can move on? – Melia W.
DEAR MELIA: Please consult a local real estate attorney. From your description, it appears there is no local sewer connection and you have a septic system with inadequate ground drainage.
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A building permit never should have been issued for your new house if the lot was not suitable for a septic system, which drains into the ground. The terminology is the lot won’t “perk.”
You could sue the home builder for breach of warranty. But at this late date, that might be unproductive. If I were in your situation, unless there are facts you didn’t reveal, I would sue the home builder for rescission of the sale and refund of your money due to misrepresentation and fraud.
SELL OLD HOME BEFORE BUYING A NEW HOME
DEAR BOB: I need to know the best way to buy another home before selling my current home. I don’t want to buy another home before I can sell my current home – Jacqueline B.
DEAR JACQUELINE: If you can afford to pay two mortgages at the same time, go ahead and buy the home you want to purchase before your sell your current home. But be sure to get pre-approved in writing for a new mortgage so you are certain you can qualify for another mortgage before you sell your current home.
As you probably know from reading this column, you should sell your old home before buying another residence. Then you won’t be under pressure to accept a low offer just to get rid of your old home at a bargain price for the buyer. Maybe you’ll need to move to a temporary apartment for a few months.
For example, when my parents bought the brand-new home where I grew up, their old home sold faster than they expected. As a result, they told me they lived in a residence hotel for several months before their new home was ready to move in. That’s what they told me. I was just a baby at the time.
$250,000 HOME-SALE TAX EMPTION AVAILBLE EVERY 24 MONTHS
DEAR BOB: I have a home in Duluth, Minn., and another home in Florida. My Minnesota home is my primary residence. Is there any way to claim both homes as primary residences? – Robert K.
DEAR ROBERT: Internal Revenue Code 121 says that to qualify for the $250,000 principal residence sale tax exemption (up to $500,000 for a qualified married couple filing jointly) you must own and occupy your primary residence at least two of the five years before its sale.
IRC 121 can only be used once every 24 months. That means you can sell your Minnesota home and then use IRC 121 again 24 months later to sell your Florida home if you meet the ownership and occupancy tests for both homes. For full details, please consult your tax adviser.
The new Robert Bruss special report, “Living Trust Pros and Cons for Avoiding Probate Costs and Delays for Your Heirs,” is now available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet download at www.bobbruss.com. Questions for this column are welcome at either address.
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