DEAR BENNY: My sisters and I inherited farm land from our father under his will. The lender said we could "just keep making the payments." It said its only interest was getting paid, and as long as it’s getting the payments it’s happy — and there would be no paperwork involved at all.
That sounded good — and easy — at first. But, then we realized that if we make the payments, we surely want the interest deductions.
So here’s the question: If we "just keep making the payments" without any paperwork, won’t the lender keep issuing the IRS Form 1098 (mortgage interest statement) in his name each year, since he’s the borrower? Or do you think it will issue the 1098s in our names if we so request?
If the lender continues to issue the 1098s in his name, what should we do, (other) than "just keep making the payments"? Should we try to assume the loan or try to refinance in our names? –Del
DEAR DEL: The general rule is that only a property owner has the right to deduct the mortgage interest. There are some exceptions however, and I suspect that, based on your situation, you should be able to convince the Internal Revenue Service that you can take those deductions.
But, there is a more serious situation. At some point in time, you will want to sell the farm or refinance. You will not be able to do this because you do not own the property.
Currently, the situation is in "legal limbo." I don’t know the probate laws in your state, so you really must consult a lawyer who handles probate matters. Your dad’s last will and testament will be submitted to the court, any expenses or debts that your father had will have to be paid (other than the mortgage), and then you and your sisters will be the legal owners of the property.
That should solve all of your concerns.
DEAR BENNY: I bought a new house in 1990 and have lived in it since. In December of last year, I started having problems with burst water pipes, and I’ve had a plumber out each month since then. The last plumber told me my house was built with (pipes that may be subject to) a class-action lawsuit. I checked on the Internet, found a site and a number. When I called, a recording said the suit ended last year. What can I do? The plumber said at this rate he will be here every month until the entire house is re-piped. I am on a limited income. –Nadine
DEAR NADINE: You may be referring to a class-action lawsuit involving polybutylene pipes. Unfortunately, as you stated, the lawsuit was settled and all claims had to be filed before May 9, 2009. According to what I learned on the Internet, there are no more funds available.
You should try to file a claim with your home insurance company, although I cannot guarantee success.
You may also want to discuss your situation with a lawyer in your area experienced in both real estate and litigation. You still may have a case against your seller (the developer) as well as the company that produced the pipe.
I recognize that your home is old, and readers will say, "Isn’t she precluded by the statute of limitations in her state?" That may be true, since statutes of limitation are designed to cut off litigation after a set number of years. Each state sets that time limit, which usually runs between three and five years.
But one exception to a statute of limitations is called the "discovery rule." If you had no knowledge about your pipes — or of the litigation — the statute will not start to run until you "discover" the problems.
It’s worth exploring. Otherwise, you will have to deal with the pipes until all are removed.
DEAR BENNY: I live in Elkhart, Ind., a city with one of the highest unemployment rates in the country. I purchased a one-bedroom condo in a very modest complex. We have been informed that there are 17 units in foreclosure or bankruptcy at this time. I received a letter from the homeowners association (HOA) that it is passing on the fees and insurance charges it can’t collect to those homeowners who are still here. It is expected to be a fairly large dollar figure.
My question: Is this allowed in general, or is there a way to fight this? My monthly HOA fee is $97 and I can barely afford these fees. And I cannot sell because of the housing market. Please give me some hope! –Steve. …CONTINUED
DEAR STEVE: I am not sure that I can provide much hope, although there are things that your association can do.
Your condo association cannot arbitrarily require those of you who are not in bankruptcy or in foreclosure to pay the fees for those other owners. All owners must be treated equally — including the requirement that every owner pay his or her percentage interest fee.
However, the condo association can impose a special assessment, so long as it is applicable across the board. Now readers will say: "What’s the difference? Either way, Steve will have to pay more and those who do not pay will not contribute to the special assessment."
You are correct: The result is the same, but the association board of directors should follow the rules.
So before your association hits you (and others) with those additional fees, find out what steps it has taken to cut down its expenses. For example, it can arrange for landscaping once a month instead of every week; it can close the swimming pool — although unit owners will no doubt object. It can reduce the amount of trash pickups.
There are lots of things a conscientious board of directors can do to reduce expenses. It won’t make units sell better, but I suspect they aren’t selling now.
Also, is the board aggressively pursuing delinquent owners? Just because a unit owner is in bankruptcy does not mean that the board cannot collect fees that accrue after the bankruptcy process began.
It’s not easy, and it’s not pleasant. And if it is any consolation, there are many associations all over this country in the same predicament.
DEAR BENNY: I have been divorced for some time now, waiting on my ex-husband to sell our home. Once the house is sold, I don’t expect to receive much of anything after paying off old debt.
I have since remarried and would like to move on and have my name released from the mortgage note. Per the court order, my ex has the house to live in, which was fine with me. With the decline in the housing market and where this home is located, I don’t see it selling anytime soon. Can you please give me some tips on how I can pursue some type of release from my name on the mortgage note? –Jeanette
DEAR JEANETTE: This is, unfortunately, a very common problem, and to some extent, it’s the fault of the divorce lawyers. Your lawyer should have tried to force your ex to either refinance the house immediately after your divorce was final, or sell the house within a certain period of time. Perhaps your lawyer tried this; I am not necessarily picking on him or her.
Lenders will generally not allow an ex-spouse to remove his or her name from the mortgage loan. The only way to do this is for the person living in the house to either refinance in his own name or sell the property.
It’s not a major problem if you want to get another mortgage on a new house, but your ex will have to cooperate. If you can show the new lender that for the past year, you have not made any payments on the old house (your ex will have to give you copies of his canceled checks), and assuming your own credit is good, you should be able to get another mortgage loan.
The real problem comes if your ex does not make the mortgage payments and lets the house go to foreclosure. Then, your credit will be impacted. Here’s a suggestion: Make sure that the current lender has your current mailing address, so that you will get any and all notices of any delinquencies.
Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@sandbox.inman.com.
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