Q. I’m an official resident of Florida now. My neighbor is also a widow and her attorney recently set her up with something called a “Lady Bird Deed” to ease the transfer of her house upon her death. I’ve asked other friends at my senior center about this, and no one else I know has one of these. Can you please explain its use/validity? I don’t want to spend money going to an attorney unless it is a good thing to do.
A. My dear, you might as well ask me if taking your neighbor’s medications is a good thing to do. As always, what’s appropriate for one person could be disastrous for another.
There’s no evidence that President Lyndon Johnson ever used a Lady Bird in his estate planning, but the name is certainly intriguing. It’s a type of deed that passes property on your death to a specific person, regardless of your will and outside probate. The Lady Bird, which is available in only a few states (yes, Florida is one), has some additional provisions appropriate for a person who contemplates qualifying for Medicaid coverage in the future.
There’s no room here to go into detail about uses, drawbacks and possible complications. If you are interested, you’ll have to discuss your specific situation with a Florida lawyer who specializes in Elder Law.
Q. My father rolled some of his debt into his mortgage a few years ago and currently owes just under what the house may be worth. It is an older home and has not been updated. His pension and Social Security cover his payments. However, he has been diagnosed with Alzheimer’s. When the time comes to put him in an assisted living facility or nursing home, my sister believes that we can turn the house over to the mortgage company to free him from those payments. Is this true? Is it a good idea?
A. I’ve never heard of a mortgage company that will agree to take property and cancel the mortgage. Sorry about that.
Call a couple of local brokers and ask whether the house is likely to sell for enough to cover the mortgage some time in the next few years. You should be able to get opinions as a free service with no obligation. Most brokers welcome the opportunity to view a house and make friends.
Q. We have a property listed with an agent. At present there are people interested, but it seems they can’t get full mortgage price. My question is if we decide to sell on land contract will the listing agent still be given a commission? And how do we legally handle the land contract? Do we need to go through a lawyer?
A. For those unfamiliar with a land contract (sometimes called “contract for deed”): The buyers move in as tenants, with a written contract allowing them to buy at a certain price in the future. Meanwhile, they usually pay an additional amount above their monthly rent, to be held in trust by the seller and used eventually toward the purchase price. Every contract is different, reflecting the needs of the parties. The agreement may be that they will receive title — ownership — when they’ve paid the entire purchase price, or perhaps when they’ve paid enough to qualify for a regular mortgage loan on the remainder.
I don’t know your situation or why you’re considering a land contract, but I am absolutely certain that each party should have an attorney who specializes in real estate. You need a contract that states the eventual purchase price (which might, for instance, change with inflation). Where will those be held in trust? Will that sum be returned if the buyers drop out in the future? Who will pay property taxes — and what happens if they’re not paid? Would the buyers would have the right to sell their contract, allowing a different buyer to take over where they left off? Would you have the right to approve or disapprove the next buyer?
You need to know a lot about your buyers’ finances, why they can’t qualify for a mortgage now, how dependable is their income, do they have a record of paying their bills on time? The buyers, meanwhile, would want to know whether the property might have a mortgage or other liens against it right now and that you wouldn’t borrow against it in the future.
For the seller, a land contract may provide tenants who treat the property as their own and take good care of it. For the buyer, it can result in homeownership that isn’t available any other way. But lots can go wrong, and both parties need professional guidance.
Ÿ Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (include a stamped return envelope), or readers may email her through askedith.com.
© 2013, Creators Syndicate Inc.Copyright © 2014 Paddock Publications, Inc. All rights reserved.