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posted: 7/27/2012 5:14 AM

How to sell a home when a spouse or co-owner 'goes missing'

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An estimated 500,000 home sales are delayed each year because a spouse, an heir or an unrelated co-investor cannot be found. A "quiet title" action can clear the way for a deal to be completed.

Q. My husband left me and our two kids about four years ago. I have done everything possible to find him, but have had no luck. Now I would like to sell the home we bought together several years ago, but my sales agent says I can't transfer title to a buyer because my husband's name is still on the deed. What can I do?

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A. Believe it or not, your problem is rather common. Each year, hundreds of thousands of real estate transactions are delayed because one of the people whose name appears on the ownership records cannot be found. Sometimes the missing person is an estranged husband or wife, while other times it is simply an heir or nonrelated co-investor.

If you knew where your husband is, you obviously could ask him to sign a quitclaim deed to the house, and your troubles would be over. But since your efforts to locate him have been fruitless, your best bet now is to contact a local real estate attorney and file a quiet-title action in court.

The judge will set a hearing date for your missing spouse to appear in court and establish his claim to the property. If he doesn't show up, the judge likely will order the property to be sold and that his share of the proceeds be held in a special account until he is eventually found or is declared legally dead. Either way, you'll be able to sell the home now and get at least half the proceeds.

Because your letter suggests you have been paying for the food and care of two children, the judge might order that your husband's share of the home's resale profit be reduced to reimburse your family's housing and related expenses through the years.

Q. Both of my parents passed away several years ago, and they left me a small parcel in another state that they had purchased but never developed. I want to sell the land now, but all the agents I have interviewed on the phone would charge me a commission that's equal to 10 percent or 15 percent of the purchase price instead of the usual 5 percent or 6 percent commission I paid when I sold my own house before. Are they trying to rip me off because I live so far away?

A. No, the agents aren't trying to cheat you. Although most salespeople charge a 5 percent or 6 percent commission to sell a house, their usual fee to market a vacant parcel often is more than twice that.

Why? Because there aren't many potential buyers for most vacant lots, and these sell for much less than a parcel with a home on it. Only by charging a double-digit commission can the agent earn about as much as he or she would get by selling a property that was already developed.

Q. I graduated from college in June, but I now owe $94,361 in federal student loans for the cost of my education. I want to buy a house in the next year or two, but there's no way I could ever save enough money for a down payment or qualify to get a mortgage with this kind of debt! Would filing for bankruptcy help me?

A. It's doubtful. There are a handful of debts that a bankruptcy filing can never wipe out, including child support and alimony payments, and most tax liens.

Federally backed student loans, such as the money you received from the government, also tend to fall into the same group. Uncle Sam rightfully considers that the taxpayers who funded your college costs should be paid back after you get a job, in part because the cash is needed to help younger people get the same chance at a higher education that you got.

Judges in bankruptcy court can make exceptions to this rule, but they're extremely rare. Generally, student loans can be discharged in bankruptcy only if you can show that repaying the loan would cause "undue hardship," a very tough standard to meet. And even then, "you must be able to show not only that you cannot afford to pay your loans now, but also that you have very little likelihood of being able to pay your loans in the future," according to Internet do-it-yourself legal giant nolo.com.

Your newly minted degree would suggest that you should soon be able to get a job and start paying off your student loan, so you probably wouldn't qualify for such an exemption. And even if you did, few lenders would be willing to give you a mortgage with an equally fresh bankruptcy filing on your record.

Avoiding bankruptcy and starting to repay your student loan now not only would be the right thing to do, but it also would help you to establish a solid credit record, which will help you qualify for a mortgage after your work career begins.

• For the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers, P.O. Box 4405, Culver City, CA 90231-4405.

2012, Cowles Syndicate Inc.

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