It's possible to stay in a foreclosed house even after it's sold

I am one of the unfortunate who has to deal with eventual foreclosure. Can you tell me how long I can remain in my home until legally having to vacate? — Constance

Before the foreclose takes place, please talk to your lender — and not just a low-level
loan officer — but someone high in the company. With all the foreclosures taking place throughout the country, lend ers (at least the legitimate ones) do not want yet another foreclosure on their books. If no one buys at the foreclosure sale, the lender will be stuck with the house and will have to pay real estate taxes and insurance.

How long do you have to stay in the house if it is foreclosed? Technically, you have to move out when the house is sold. But again, talk with your lender. They may be willing to let you stay for a period of time, if you can pay some rent. Lenders do not want houses to be vacant.

If the home is scheduled for foreclosure, I would attend that sale. Find out who bought it — it may be the lender itself, if no one bids. Then discuss your situation with the buyer; once again, you may be able to strike a deal with that buyer.

To my knowledge, although you have to move out, it has been my experience that many homeowners whose property has been foreclosed upon just stay in the house until eviction proceedings are brought, and then they move out.

Avoid off-the-shelf forms

I'm a 66-year-old female living in California. I am divorced and own three homes — two rentals and one primary residence. I plan to leave my children an equal interest in my real estate holdings upon my demise. I do not have any other investments, savings, IRAs or holdings worth mentioning.

I need to generate a living trust, but keep postponing it due to the cost. I ran a search online and saw that one can order the necessary paperwork for $149. I am a Realtor (retired) and would be able to obtain prelims on my properties myself. What do you think? Would it be binding? — Marianne

I cannot recommend that you use what is generally referred to as "off the shelf" legal documents that you can get on the Internet. These documents are general in nature, and may not be specific for your needs.

Since you have the ability to assist a lawyer, I am sure that you can negotiate the attorney's fee. But I strongly recommend that you consult a local attorney who understands real estate and living trusts.

Brothers want to sell

I presently have a Starker (Section 1031) exchange with my brothers invested in a rental property. We had this set up for about five years. If we sell the whole property, can it be divided into three shares with each one of us owning one share for another exchange? It is hard to work with three owners when we live in different areas of the country. — Marilyn

If the property is in the name of a partnership, instead of in your three individual names, then when the property is sold, you either have to pay the appropriate capital gains tax or do another exchange. The new property (called the replacement property) must be in the name of the partnership.

If, on the other hand, the property is titled in your individual names, then when it is sold, each of you has the right to enter into another exchange on your own (or pay the tax and keep the balance of one-third of the sales proceeds).

If the property is in the name of a partnership, here's a tip: In the year before the property is sold, formally dissolve the partnership and put the property in the name of the three of you. Then next year you can each do as you want with your one-third share.

Lender must OK transfer

I purchased a townhouse in my brother's name until I resolved my financial difficulties. My intent is to have him transfer ownership to me this summer. How do I get my name on the deed and the mortgage? — Janet

Your brother will have to deed the property to you. You and your brother will have to explain the situation with the current mortgage lender. They may be willing to allow you to assume the obligations of that mortgage, and they may also release your brother from his obligations.

Much depends on the lender and the kind of loan currently on the house. If it was an ARM (adjustable-rate mortgage), the lender may be willing to cooperate with you. On the other hand, if the existing mortgage contains a lower rate of interest than is currently available, the lender will probably not allow you to take it over.

If you have cleared up your credit, and can qualify for a mortgage on your own, then it may all work out. If you are unable to qualify, ask your brother if he will guarantee the loan. This may convince the lender to allow the transaction to take place.

But your brother should consult a tax accountant to determine any tax consequences he may have when he transfers the property to you.

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