Question: I found a house I liked, so I called my broker to show it to me. He showed up and said that I will not get the house and should not place a bid on it, only to find out he purchased it for himself 30 days later. He had refused to write an offer for me. Can he do that?

I would have written the offer with a different broker if I knew the first one would not write one for me. He told me he would not write an offer one hour before the seller started to open the bids.

Writing to real estate regulators would be a joke. Do I have any other options? This guy is a crock.

Answer: The first thing a real estate regulator would want to know is whether you have any evidence to support your allegations.

Like courts, regulators do not fine brokers or suspend or revoke licenses without evidence. And like courts, no one would want a system where an allegation is the same as a conviction. There is a presumption of innocence in our legal and regulatory systems, and that's not a joke.

Was the licensee engaged by you as a buyer broker? If yes, you were a "client" and the broker was hired as your agent. If you were a "customer" then the broker had an obligation to treat you fairly, but was not required to provide the fiduciary duties of an agent. Your status as an client or customer would be important to a regulator.

Did you remain in touch with the broker and make your interests known? Why you did not go to another broker? You had a month before the broker submitted his offer -- and whether he submitted an offer or not you could certainly bid on the property.

We have not, of course, heard the broker's side. Could he argue that you were given the first chance to buy the property, passed on it and later changed your mind? Could he ask if his advice not to instantly write an offer was misconstrued and that he was merely suggesting that you wait a bit?

Question: My son got an interest-only loan two years ago and it will be up in three months. Is there anything out there to which he can refinance?

Answer: Are you saying your son has a balloon note where the entire debt must be repaid after two years, or are you saying he has a loan where during the first two years he's allowed to make interest-only payments and then the loan becomes a 1-year ARM for the rest of the mortgage term?

If your son has a two-year balloon, speak with lenders immediately about replacement financing -- otherwise the property can be lost to foreclosure. Ask the current lender if the loan can be extended. If the property cannot be refinanced it would be better to sell than to have it foreclosed.

Once that's taken care of, contact the Office of the Comptroller of the Currency and ask if the loan meets the guidelines outlined in the OCC's letter to national lenders published in the Federal Register on February 7, 2005.

More likely, what your son has is a 30 mortgage which allows interest-only payments during an initial start period, say two years in this case. This may also be a loan you want to refinance -- but maybe not.

Imagine that the loan started two years ago and that the interest rate has been 6 percent. For a $200,000 loan your son would be paying $1,000 a month for interest and nothing for principal. Now imagine that in the third year your son must make fully amortizing payments and that the interest rate is now 6.75 percent. The loan has 28 years remaining, so the monthly cost for principal and interest in year three would be $1,326.45. In year four and thereafter the cost could be different if interest levels change.

This is a huge payment increase but not necessarily unaffordable. Your son should surely speak with lenders about replacement financing, perhaps a fixed-rate loan. Even at the same 6.75 percent interest rate, his costs would decline to $1,297.20 because the remaining loan term would go back to 30 years.

However, the real reason to get a fixed-rate loan is to prevent future payment hikes if interest levels rise further.

Question: A long-term (20+ years) homeowner is trying to sell their house and found that the tax assessor's description was missing a bedroom and half bath and approximately 500 square feet. The house was not remodeled and remains the same as it was when built 60+ years ago. There is no indication when the error occurred. The neighboring properties, also over 60+ years old, seem to have both the correct descriptions and square footage.

How does one cure the defect?

Is the homeowner liable for back tax assessments?

Is this type of situation covered by title insurance?

Does the assessor bear some responsibility since this appears to be a clerical error?

If the homeowner lists the property on an MLS without a full description, does the new owner become liable for the defect?

Will the new owner's title insurance protect them from an unknown lien arising from the defect?

Answer: There are millions of properties and it follows that some assessments will be inaccurate.

To start, there's no question regarding the ownership history of the property or its location, thus this is not an instant title insurance issue. Also, there is currently no tax lien -- and there might never be a lien.

The way to resolve this matter is to have an attorney contact the assessor's office and explain the facts and circumstances involved without disclosing the property's address. This is plainly an error and not an effort by the homeowner to hide improvements. Also, it should be pointed out that the owner bought the property 20+ years ago even though the assessment information was incorrect at that time. In other words, both the owner and the assessor's office operated in good faith.

My suspicion is that the assessment office will change the assessment going forward and maybe for the current assessment period, but that there will be no penalty.

An additional tax would reflect the increased value of the property -- but is there any value differential? If the property is currently taxed the same as like homes nearby then there is a case to be made that there are actually two errors -- an incorrect assessment description making the home too small and a tax which reflects the value of a larger property.

There could be back taxes, but could they go back before the last assessment period? There could be a penalty, but this is not a situation where an owner hid an improvement so a penalty seems unlikely.

In the end, if the owners are charged for additional taxes they would simply get a bill. If paid, there would be no lien and thus no title issue. If unpaid, there could be a lien which would have to be resolved before title could change. There would be no hidden liens.

As to the MLS listing, it would be appropriate to have a note in the comments area which discloses that the property is larger than the measures shown in the tax assessment.

Question: I'm a broker with a client who is trying to purchase a church that has been vacant for a few years now. We discovered there was a 35-year-old-lien on the property which was held by a private investor. Unfortunately the investor is in a nursing home unable to communicate. His wife initially said she would come up with a number to give the attorney for a pay off.

After giving a verbal number, one of the seller's children (who was secretary for the church at the time the lien was allegedly paid off) questioned the amount. The lienholder's wife decided she was not going to deal with it and would not give a payoff amount. She said she will leave it up to her children to deal with it when she is gone. Can she just withhold the lien amount? What are our options?

Answer: Is there a lien at all? Either the obligation was paid off or it wasn't. If it was paid there should be a check or other record. If it wasn't, then the lienholders have an obligation to immediately release the debt if owners are ready to pay it off.

In this situation it would be wise to review church and bank records for the period when the payoff may have occurred. If there are no available records, then the matter cannot remain perpetually unresolved.

The question can be forced by demanding that the investor provide pay-off information. The debt, if any, is owed to the investor, not the family because the obligation has not been transferred to them via a will and it may never be transferred to them. If the investor is not competent, a court can appoint a guardian or trustee to resolve the matter. For details, see a local attorney.

Question: When does the exclusion for capital gains period begins. We started our construction loan about two years ago and moved in about three months ago. We will convert the construction loan to a permanent loan shortly. I know we need to own the property for two years which we are obviously covered for already. Additionally, I know there is a use rule. Does that use time period begin when the construction loan was started, when we moved in, or when we convert the construction loan to a permanent loan?

We sold our other home about one year ago and avoided capital gains with it. Does that affect us not being able to sell where we are now within the same two year period?

Answer: For purposes of the residential write-off, the key is two years of occupancy. As the IRS states :

"To exclude gain, a taxpayer must both own and use the home as a principal residence for two of the five years before the sale. The ownership and use periods need not be concurrent. The two years may consist of 24 full months or 730 days. Short absences, such as for a summer vacation, count as periods of use, but longer breaks, such as a one-year sabbatical, do not. The taxpayer also must not have excluded gain on another home sold during the two years before the current sale."

In answer to your second question, you may only use the residential write-off once every two years. For specifics, please see a tax professional.

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