Inherit home, refi immediately?

Couple fears lender's due-on-sale clause

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Apr. 6, 2009

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Accordingly, readers who are interested in exploring a reverse mortgage must make sure that they ask prospective lenders about all costs associated with that kind of mortgage and demand that the lender put this information down in writing. This will enable you to shop and compare.

Do not just rely on one mortgage lender; there are many such reverse mortgage lenders in the country, and you will find different charges and costs. Do the numbers before committing yourself -- if indeed you really want such a mortgage.

Keep in mind that a reverse mortgage should be considered as a last resort.

DEAR BENNY: I own stock in a co-op apartment building and live in my apartment there. A while back the then-president made a remark at a stockholders meeting that struck me as off the wall. He said that no one would be able to sell their unit for a price under that of the last highest price sale. There is nothing in the bylaws stating this and I'm of the opinion that even if there were a bylaw referencing sale-price control by the board, it would be unenforceable not to mention illegal.

States have different laws, I realize. But do you have any background data on the ability of the board to control sales price in a co-op or condo? --Roger

DEAR ROGER: Most cooperative housing programs that I am aware of require that prospective owners must be approved by either a membership committee or the board of directors, or in some cases the entire cooperative membership. This is quite different from condominiums, which rarely provide such a veto right for prospective owners. ...CONTINUED

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But the right to veto a potential owner must be limited. Generally a potential owner can be turned down for only two reasons: (1) financial issues or (2) unwillingness to abide and adhere to the cooperative rules and regulations.

So, your board president may just have been "blowing a little smoke." However, in fairness, I can understand that if a contract comes in to buy a co-op unit at such a ridiculously low price that it would dramatically impact the property values of all other owners, and may be justification to reject that contract -- and the potential purchaser -- from becoming a member of the cooperative. However, the price, in my opinion, would have to be really low -- and not just "under the last sale price."

DEAR BENNY: My father co-signed on my mortgage approximately 12 years ago. We are both listed on the title/loan papers, although I have been the only one actually paying the mortgage all this time. If one of us died would the property automatically go to the other party or do we need to make further arrangements for that to happen and stay out of the probate process? Any help that you could give me would be greatly appreciated. --Kimberly

DEAR KIMBERLY: The answer depends on how title is held. This answer must be general in nature, because different states have different procedures. If you were married, you and your spouse would generally hold title as tenants by the entireties; on the death of one, the survivor would own the entire house.

But clearly you are not married to your father. Thus, you can hold title as joint tenants with rights of survivorship -- which means that on the death of one joint owner, the survivor owns the entire property, and probate regarding the house is not necessary. However, if you and your dad hold title as tenants in common, on the death of one owner, his/her share of the property will have to go through probate. On the death of one tenant in common, his/her share is distributed according to the last will and testament, or if there is no such will, then according to the laws of intestacy in your state. But probate is required for this type of title.

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@inman.com.

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