Question: I had mentioned to my neighbor (she is also my friend) that my house will be on the market by the end of the year. She has expressed an interest in buying it for her elderly mother. My friend would continue to live in her house while her mother would live next door.

Are there any special precautions that I need to take before this transaction actually comes to fruition? Since I wouldn't necessarily need to contact a Realtor, how would the appropriate paperwork be drawn up as well as other necessary requirements whatever they might be?

Answer: Unless you have a great deal of experience in buying and selling real estate, we suggest that you hire a Maryland real estate licensee that has a verifiable reputation in the marketing and successful sales of homes in your area. You could also hire a real estate attorney but the attorney will most likely be more useful in telling you which forms need to be used and what disclosures you need to make whereas a real estate licensee -- as we've described in the previous paragraph, should be able to provide you with the forms and disclosure information as well as important marketing advice and reports such as the best price to ask for your home in the current market, for only one example.

You appear to have a good and justifiable plan for the sale of your home to your friend. And that is exactly why you should have an objective representative who is bound by law to represent your best interests, such as a real estate licensee. Your home is a valuable asset. It is the most valuable asset most people own. However, when two friends get involved in a real estate transaction, it is our recommendation that both be represented by real estate licensees.

Friends tend to trust each other too much and let too many things be overlooked. It isn't a bad thing, just sloppy business procedures that can dissolve friendships quickly.

Question: Do you answer questions regarding issues outside of Texas?

Answer: Yes. If you read the Houston Chronicle, or TexasRealEstate.com, or some other website in which we appear, check out RealtyTimes.com. It contains article written by us but that are completely different and original content.

Once there, select "About Realty Times" then select "Our Columnists" from the drop-down menu. Ask George & Chuck is the first grouping in the left-hand column. When you select it, you can open a list of the articles we've published. They are usually scheduled for publication on Realty Times the second and fourth Tuesday of each month.

Question: I am currently being charged for hazard insurance through my escrow that is rolled into my mortgage payment. I also have a comprehensive homeowner's policy that I pay separately. I do not live in an area that would require extra insurance (flood). Do I need both? I was not aware I should not have both until I found out from a friend that just bought a house. Thanks for your help!

Answer: Some of what you stated in your email to us does not make sense, unless you have two different insurance companies and one of the policies is being paid out of your escrow account and the other you are paying directly. If that is the case, you need to communicate with the agent or agents representing the insurance companies and inform the insurance company because you are being charged for double coverage. However, before you do that (since we believe you are not being charged double), please read on.

We need to make sure you understand and are using the correct terminology to describe the different types of "insurance" policies, as follows:

1. Title Insurance: Owner's (or mortgagor's) Policy -- Usually a one-time fee paid by either a buyer or the seller (and in many cases by the seller) to make sure there is an unbroken chain of title to the property you purchased which enables the Title Company to issue a Title Insurance Policy to the purchaser (you) guaranteeing good and marketable title;

2. Title Insurance: Mortgagee's (or lender's) Policy -- Usually a one-time fee paid by the buyer that guarantees the lender that there is an unbroken chain of title on the property against which the lender is loaning the buyer purchase money;

3. Mortgage Insurance (also referred to as PMI, MI, or Up Front MI depending upon the type of loan) -- This is an insurance policy that a lender may require when a down payment is less than 20 percent of the purchase price, that guarantees the lender against a default by the purchaser (you);

4. Homeowner Insurance -- Covers various hazards such as fire, wind, hail, theft, etc. It is sometimes called a "Comprehensive Policy;"

5. Flood Insurance -- This is a policy that provides coverage against rising water only and the premium is based upon the official flood zone map.

In most cases, if you are paying a Comprehensive Homeowner's Insurance Policy yourself, then the insurance the lender collects through your escrow account is Mortgage Insurance. Flood Insurance can be required by your lender if you are in a flood-prone zone according to the official flood zone map, or you can choose to have this insurance, which is a good idea. Either way, you can pay it through your escrow account or you can pay it yourself. Your closing or settlement statement (identified as a HUD-1) will list all the charges to your side of the statement (the left side) that were paid by you when you purchased to property.

We therefore recommend that you communicate with the insurance agent who represents the company you are paying on your own to check what insurance policies you have in place and whether or not you are paying Flood Insurance.

Question: I apologize in advance if you have already answered a question of this nature. My husband and I recently purchased some land 1/2 mile up the road from where we live now. The school district was essential as we didn't want to change where our kids were already going and we are both graduates of the district.

Now, we are almost finished with the building of our new home and find out the listing was incorrect and we are in a different school district. After contacting the listing Realtor, he apologized for the error, and explained that he knew the correct school district and didn't know why he listed it wrong. He offered for us to finish building and then he would discount his commission and sell it for us.

It just doesn't seem adequate as we've worked very hard towards this dream and designed the house ourselves. I know you don't give legal advice but can you just tell me if this is a common occurrence? And how it is usually dealt with? I have contacted a few attorneys who don't seem to have experience with this. Our kids are middle-school aged and active and settled with their current district and friends.

We never would have bought this property had it been listed correctly and feel there must be something in place to protect us from this kind of thing.

Answer: There are at least two schools of thought on how best to deal with this situation:

1. That is the type of error an Errors & Omissions insurance company usually handles. The Listing Realtor from whom you bought the land should have E & O coverage, but if he does not there is a chance that his business insurance policy may have applicable coverage. Either way, you need to contact a Missouri Attorney who is experienced in litigating real estate matters. If you do not have an attorney, check out the Missouri State Bar Association's website at mobar.org .

   One of the problems you are most likely going to encounter is the proximity to your existing home and the land that you purchased from the Realtor being only 1/2 mile up the road. Said another way, if it was so important that your children remained in the same school district, why did you not check out the location of the unimproved land with the school district before you purchased it?

2. We believe that the listing agent clearly misrepresented the school district issue according to your allegations, so you really did not need to question beyond that. However, the listing agent also offered a compromise that was not unreasonable. You could very well suffer no economic loss other than the time in selling this property and buying another. A settlement is almost always better than the expense of protracted litigation. However, make sure you get this listing agent to commit to his agreement with you in writing. Make sure you take into consideration all of your expenses in connection with the listing agent's error.

The advice that goes with both recommendations is to: 1. hire an attorney; 2. remain in your existing home if you can (or rent a temporary home in the correct school district if you cannot); and, 3. have your attorney speak with the listing Realtor who sold you the land, to work out the details of any compromise agreement that might be available to you. However, you should probably inform the attorney that you are not seeking protracted litigation.