September 10th, 2018 at 10:04 pm
Fact Pattern: Henry and his wife, Wendy, purchased a home together about 40 years ago for $200,000. The home has always been their primary residence. It is now worth about $1.2 million. Unfortunately, Henry died. Because Henry and Wendy held title together as joint tenants, not community property, only the tax basis of Henry’s 50% share was stepped up to fair market value upon his death. Hence, if Wendy sells, she may be facing capital gains of roughly $500,000. That amount was simplistically calculated based on a $1,200,000 sales price minus a stepped-up $600,000 tax basis for Henry’s 50% share and a $100,000 tax basis for Wendy’s 50% share.
Multiple Choice Question: If Wendy now sells her home, how much can she exclude from capital gains tax? Pick the best answer:
A. $250,000.
B. $500,000 if Wendy sells within the same calendar year that Henry died.
C. $500,000 if Wendy sells within 2 years after Henry’s death.
D. $500,000, regardless of when Henry died. (more…)
September 4th, 2018 at 12:48 pm
Fact Pattern: In last week’s legal tip, you discussed a situation where, in response to the buyer’s Request for Repairs, the seller agreed to remediate mold in the property. The seller, however, failed to remediate the mold before the buyer’s final walk-through. Our client, the buyer, just wants to cancel. How does the buyer’s agent go about making sure that the seller agrees to cancel and return the deposit to the buyer? (more…)
August 27th, 2018 at 12:55 pm
Fact Pattern: I am the buyer’s agent for a pending sales transaction. In response to the buyer’s Request for Repair, the seller agreed to identify, remove, and remediate a mold/mildew odor in the property. The buyer had to remove all contingencies in exchange for the seller’s agreement to remediate. At our final walk-through, we could still smell the odor. The seller’s side said they had several mold experts try to find the source of the mold and remediate it, but to no avail. Escrow is scheduled to close in 2 days.
Multiple Choice: Can the buyer cancel the agreement? Pick the best answer:
A. No, because the buyer has removed all contingencies, and the final walk-through is not a contingency under the RPA.
B. No, because the seller has acted reasonably in proving that no mold is present.
C. No, because the buyer has not served a Demand to Close Escrow.
D. Yes, because the seller has failed to perform as promised. (more…)
August 20th, 2018 at 12:00 pm
Multiple Choice Question: I am the lease listing agent for an unfurnished home that will be leased out at $3,000 per month. The landlord wants to maximize the amount collected upfront from the tenant by requiring both a security deposit and a separate $1,000 pet deposit. How should that be structured? Pick the best answer:
A. $6,000 security deposit, plus $1,000 pet deposit.
B. $5,000 security deposit, plus $1,000 pet deposit.
C. $6,000 security deposit only, because pet deposits are illegal.
D. $6,000 security deposit only, because pet deposits are disadvantageous to landlords. (more…)
August 13th, 2018 at 2:29 pm
Question: In your Legal Tip last week, you talked about clients who are purchasing a new home from a builder. You said that, regardless of whether the builder labeled us as the “buyer’s agent” or “referral agent,” we should clarify in writing with the buyer what our role in the transaction will be, and act accordingly. What form should we use for that? (more…)
