Heirs can refuse bequeathed property
A small but growing number of heirs are rejecting homes that were bequeathed by their relatives, in part because the housing slump has left some properties worth less than the amount that's owed to the bank.
Q. A few months ago, you wrote that a daughter had the right to continue living in the home that her late mother had left her in her will and also to keep her mom's low-rate mortgage, as long as the daughter made all the payments to the bank on time. I am in a different situation: My dad died in October from cancer and left me a house valued at about $150,000, but he owed close to $225,000 on the property because he had borrowed against the home to pay for his medical bills. Now prices for the homes in his neighborhood have dropped. I don't want the house (or to take over the loan) because the property is worth about $75,000 less than my father owed on the mortgage. Is it possible to reject a property that is left to you in a will, or must I be stuck paying the mortgage bill because Dad gave the home to me?
A. Don't worry, you should be fine. Federal law, as well as additional laws in each of the 50 states, allows you to "disclaim" an inheritance. This generally means that you aren't responsible for paying back the debts of the person who left you the property, provided that you did not also co-sign for their mortgage or other loans.
A small but growing number of heirs are rejecting homes that were bequeathed by their relatives, in part because the housing slump has left some properties worth less than the amount that's owed to the bank. But others say "no thanks" for other reasons, especially if the home is in dire need of costly repairs.
Your letter states that your father bequeathed his house to you in his will. That means that just about everything he owned will likely be going to probate court, and his assets (from the house or a stock-brokerage account he might have had, to his car in the garage) can be sold to pay off his creditors first.
Any money that might be left over, after all the mortgages and other debts are paid, would be forwarded to you and any other heirs that your dad had named. Contact the lawyer who prepared the will or the executor of the estate for more details.
Q. What does it mean when a property is advertised as having a "graded lease"?
A. A graded lease, sometimes called a "step-up" lease, is a rental contract that calls for specified rental increases at predetermined intervals.
For example, if you signed a three-year graded lease today, the contract might call for an initial monthly rent of $1,000, rising to $1,100 a year from now, and then stepped up to $1,200 in the third and final year.
Q. I was a huge fan of the mafia-themed "The Sopranos" show on HBO before it went off the air earlier this year. Now I hear that Satriale's, the New Jersey pork store where the TV mobsters did a lot of their "business," is going to be torn down and replaced with condominiums. Is this true?
A. As mob boss Tony Soprano might say, "It's already a done deal."
The building, which stood in Kearny -- a working-class community across the Passaic River from Newark and about 9 miles west of Manhattan -- was torn down by owner Manny Costeira in October. "Yes, we whacked the pork store," the owner says with a laugh.
Costeira plans to build a nine-unit condo project called "The Soprano" on the site of the demolished store, with prices ranging from about $325,000 to $385,000.
Though sales of the condos won't start until next year, Costeira is already making money from the site by selling 2- to 5-inch chunks of the demolition rubble for up to $50 each on the Internet.
Q. I have a credit card with an interest rate that shot up to nearly 20 percent after my 18-month, fixed-rate of 2 percent expired in October. If I pay the card off now in a lump sum and then close the account, will it hurt my credit score and make it harder to refinance my mortgage?
A. No, simply paying the bill off and then closing the account shouldn't have a major impact on your credit score.
If you made all of your payments on the card promptly, the account and its positive payment history will stay on your credit report for 10 years. But if you ever fell behind, the delinquency will remain on your record for seven years from the date it was reported by the card company, and thus could hurt your ability to refinance your mortgage at the lowest possible interest rate.
© 2007, Cowles Syndicate Inc.