Ask a Broker: What can I do if I find problems with my home after an inspection? [09/08/2007]

By Peter G. Miller/CTW Features

Q: I bought a home and got an inspection. After the inspection, I found that a heavy metal sliding door did not slide. The owner said he would fix it with some oil.Later, after I moved in, I could not open the back door and asked a door specialist to look at it. He said the door needed replacing, and because that size was no longer made a larger hole would have to be cut in the wall, and a new installed would cost more than $3,000. Also, the back door from the garage was nailed shut, and pipes from the air conditioning leaked, completely ruining the carpeting and floor boards. The water softener didn't work and the bathroom walls were full of mold and the tiles were coming loose entire walls had to be replaced. So many things were wrong that should have been found in the inspection. The repairs to make the house livable totaled more than $10,000.The inspector said "if a door is blocked by boxes or something, they don't check it" and similar lame excuses. He said I could have looked things over before closing, and I should have asked them to come back for an additional charge to check things out. But how would I know what to look for and why should I pay them twice? It's not my job to be an expert in such things. They won't even return my inspection fee, and when I contacted the Better Business Bureau they could not find the company. What can I do?A: The inspector is right that he cannot examine areas that are blocked by furniture, carpets and boxes. That said, did no one including you and your broker not notice the mold and the tiles? Did no one try the back door to the garage? Were the carpets stained from the mold? If yes, did they smell? As to the door repairs, did you get only one estimate or did you shop around for a better deal?Did you have a pre-settlement walk-through with your broker? Were all furniture and boxes removed? If yes, were not the problems you mention somehow hidden? Thirty-one states now license home inspectors. If your state has a licensing program, contact state regulators and ask that they examine the inspection report and the home. Also, check the Internet to see if there's an available replacement door that would not require cutting a new hole in the wall.Q: Seven years ago we purchased a home for our kids. We made only the down payment, and since then they have made all of the mortgage and tax payments. They have now paid the down payment and we want to transfer the home to them, taking our names off the title. We have in the last four years been transferring certain ownership percentages to them, and at present the property is owned 60 percent by us and 40 percent by them. The value of the house has gone up about $500,000 since first purchased. Should we just continue giving them gifts of certain percentages each year until they get the last percentage and completely own the home? A: You have given your children a substantial head start through real estate, but you need to consider your next step. The fact that the property has appreciated by $500,000 is great news enough to fund college educations or to start a business but it also means that transfers are more complex.First, since the property has a mortgage, you need to be careful before transferring title. Special rules may apply that would allow you to transfer title to your children while preventing the lender from immediately calling the loan. Check with an attorney for specifics.Second, by changing the title there may be significant state and local transfer taxes, perhaps thousands of dollars.Third, there can be substantial tax consequences associated with big gifts. In general terms, you and your spouse can each give $12,000 a year to someone without a gift tax. This means the two of you can give a total of $24,000 to one child, $24,000 to another, etc. You could thus transfer ownership to the children on a gradual basis without paying a gift tax. It's also possible to give larger sums, but this gets you into the wonderful world of probate and estates. Lastly, be sure that both you and your children each have wills and living wills. Without such paperwork, you and your heirs potentially can face daunting costs and squabbles. For details, please speak with a qualified attorney and a tax professional before going further. CTW FeaturesNeed real estate advice? Peter G. Miller, author of "The Common-Sense Mortgage," would love to hear from you. Send your questions to peter@ctwfeatures.com. Due to the volume received, not all letters may be answered.