Question: The standard sale agreement furnished by our buyer's agent has an "as is" clause to which our attorney objects. The seller's agent intimates we are being difficult and that "attorneys don't normally get involved in real estate transactions in this state." What can we do?

Answer: There are several issues here.

First, you are a principal in a real estate transaction. The buyer broker works for you. If you want to change a form agreement, if the language being changed is not required by the state, then it can make sense to perfect language you feel is unfair or inadequate. As well, of course, a buyer broker or attorney should be able to voice an opinion and explain why your change may not be acceptable or how other language may be better.

Second, there is no such thing as a "standard" real estate agreement -- one agreement which is the same in every way for every transaction. There may be some forms which are popular, but you have the right to modify forms or use other forms that reflect your preferences. The seller, of course, has the right to accept, reject or counter any offer you make.

Third, it doesn't matter whether attorneys are commonly used or not used in a given jurisdiction. It only matters that you as a principal want to use a lawyer.

Fourth, the seller's broker represents -- ta da -- the seller and not you. It may be that the current language very much benefits the owner, reason enough for the seller's broker to seek its retention.

Question: I am renting an apartment under a one-year lease which states that the owners pay the utilities. The place has recently sold but the transaction hasn't closed yet. During this time the new owner has put in hot water tanks to provide heat for the apartment. Do I have to pay the heating bills now?

Answer: When ownership of a property changes, the new owner must honor all existing leases. Unless there is a clause to the contrary, the owner must pay the heating bill. See an attorney or legal clinic for specifics if the owner seeks additional charges for heat.

Question: I'm in the process of purchasing a home offered for sale by owner. What questions should I ask the seller that will provide me with pertinent information about the property? Also, what questions should I ask that will give me information that most sellers don't want buyers to know?

Answer: This isn't going to work. There are a universe of potential questions and the odds are overwhelming that you will miss one or more -- and maybe pay thousands of dollars in excess costs as a result.

For instance, is the sale subject to a home inspection? Must the inspection be "satisfactory" to you? If the inspection is not satisfactory to you will you get your deposit back if the owner does not make repairs? Must the repairs be satisfactory to you? Can the seller limit repair obligations to a given dollar amount? Are you getting good, marketable and insurable title? How do you know?

Please, get a buyer broker or an attorney before you sign anything.

Question: My son and I have a question about capital gains that we aren't sure about. Hypothetically, imagine if I purchase a home for $150,000 and six months later sell for $200,000 -- and then turned right around and buy another home for $200,000 or more. Is there now a capital gains tax to be paid on the $50,000 made from the sale of the first home? I always thought there would not be as I would be investing it into another home of equal or greater value. My son feels that you would have to live in the home for two of the past five years to avoid capital gains.

Answer: Prior to 1997 there was something called the "rollover replacement rule" which said in general terms that if you sold one residence and bought another of equal or greater value that the capital gains tax on profits from the first property would be deferred. Then, when you reached age 55, you could sell a prime residence and shelter up to $125,000 one time from capital gains taxation.

However, under the 1997 tax reform measure the rules changed. The rollover rule and the over-55 rule were junked. The new rule generally says that if you have lived in your prime residence for two of the past five years and sell, profits of as much as $500,000 (if married) and $250,000 (if single) from the sale are not subject to a capital gains tax.

Before going further, please review IRS Publication 523, "Selling Your Home and speak with a CPA, tax attorney or enrolled agent.

Question: My brother and I want to buy a condo in Florida to use as a seasonal spot. When my broker asked the association if we could both go on the deed they said no. My brother is 62 and I'm 44. They said my brother would have to buy it and then I could use it.

Answer: Rules regarding discrimination would normally apply to any ownership requirement based on age -- however there are exemptionss for "adult" communities intended for those aged 55 and above under Title VIII of the Civil Rights Act of 1968 (the Federal Fair Housing Act), as amended by the Fair Housing Amendments Act of 1988 (the Fair Housing Act) and under the 1995 Housing for Older Persons Act (HOPA).

HOPA requires that to qualify as an "adult" property, "at least 80 percent of the occupied units must be occupied by at least one person 55 or older. The remaining 20 percent of the units may be occupied by persons under 55, and the community/facility may still qualify for the exemption."

Given that adult communities represent complex issues, you may be better served looking at other properties in the general marketplace. If this particular property continues to hold your interest, speak with an attorney who specializes in real estate matters or elder law before going further.

Question: Last year my mom and dad sold their house. I felt the price the agent listed it for was way too low, but she assured me it was right.

Well, the buyers lived in my parent's home for about a year, and now are selling it for $120,000 or so more than my parent's sold it for.

Surely houses have not appreciated in value that much within a year's time.

I'm very concerned. Could this possibly be a case of taking advantage of an elderly couple? (My parents were both in their 80's when they sold.)

Is there any recourse in a situation like this?

Answer: While your concern is reasonable, the fact is that many communities have seen enormous price jumps in the past year.

The National Association of Realtors reports that in the third quarter of 2005 home prices in 69 metro areas rose at a double digit pace. Average year-to-year gains of $100,000 or more were reported in such areas as Honolulu, Los Angeles, Miami and Phoenix.

More importantly, in any number of metro areas there are hot spots where prices have increased at a far greater pace than nearby communities.

To ease your discomfort, look at the neighborhood homes for sale at the time your parent's home was on the market. Try to see how they compare in terms of condition and size. Your parents' broker should be able to provide this information.

Question: My mother-in-law signed a deed at the last second because my federal tax lien stopped my wife and I from qualifying. Now, three years later my wife and I are separated and soon to be divorced.

The mother-in-law refuses any acknowledgement of my financial participation such as down payment money, monthly payments and even compensation to her because she was not deducting the mortgage from her tax returns.

Can I get any compensation for my investment?

Answer: It's not your house. If your mother-in-law is on the deed then she owns the property. You have effectively been paying for the use of the house. Think of it as rent.

Divorces are terrible events and it should be in everyone's best interest to part with as little damage as possible, particularly if there are children involved. The suggestion here is that all parties should try to negotiate a reasonable compromise and realize that if this gets to court there may be a worse and more costly outcome for everyone. Perhaps a marital mediator can help. In any case, before going further meet with a divorce attorney or legal clinic for specifics related to your jurisdiction.

Question: Is there some recourse for the seller when the broker unilaterally reduces the asking price for the property? We never agreed to reduction in price, not verbally or in writing. We are two months into our three-month listing agreement and hardly any prospective purchasers have been through the house. Can we cancel our agreement?

Answer: A property may only be offered for sale under the price and terms outlined in the listing agreement. If the salesperson has offered the property for sale at any other price or terms, then speak with the salesperson and the supervising broker to see what happened. If you are not satisfied with their responses, then you may wish to ask the state real estate commission or department to investigate the matter.

As to ending the listing, most brokers will agree to an early termination if only to retain good community relationships.

Have a real estate question? Send your inquiry to Ask Realty Times. Because of the volume of mail received, Mr. Miller cannot respond to questions individually or privately. Published letters may be edited for space and style. For comments regarding other Realty Times articles, please contact individual authors by pressing here. For past columns, please press Ask Realty Times.

This column is designed to provide accurate and authoritative information in regard to the subject matter covered. It is made available with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services. If legal services or other expert assistance is required, the services of a competent professional person should be sought.

Published: December 9, 2005

Use of this article without permission is a violation of federal copyright laws.

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