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Buyer’s new sales contract sometimes can be assigned to a third party

Buyers can transfer their contractual right to buy a house that they no longer want to purchase, provided certain conditions are met.

Dear Mr. Myers: I signed a contract to purchase a house about 15 days ago, but another one just came on the market that I like even better. My brother would like to take over the contract that I signed for the first home, but the seller is refusing to sell it to him and is threatening to keep my $7,500 deposit. If I transfer the sales contract over to my brother anyway, is the seller obligated to honor the deal, or am I going to lose the $7,500?

Answer: Most buyers usually can transfer their right to purchase a home to someone else, provided the sales contract doesn't specifically prohibit it. There are some exceptions, though, especially if the sales contract includes what real estate lawyers often call a "personal service element."

There are several types of personal service elements. A common one is created when the seller agrees to help finance part of the purchase by carrying back a second mortgage, which the buyer will repay over a period of months or even years.

If such financing is involved, the seller probably can block your right to transfer purchase of the home to your sibling. This would be especially true if your brother earns much less than you do, or if he has a long history of credit problems.

The seller also might be able to nix the transfer if, say, you agreed to close the deal in a mere 30 days but your brother can't close for several months. Talk to a real estate attorney for more details.

REAL ESTATE TRIVIA

Property and casualty insurers made $55.5 billion in after-tax profits last year, the Insurance Information Institute reports, the industry's second-best in history. The trade association credits the gains to fewer claims, higher premiums charged to homeowners and other factors.

Dear Mr. Myers: I have personally managed the four-unit apartment building I own for the past three years, but I'm sick of it -- dealing with delinquent tenants, the midnight calls to clear a stuffed-up toilet, etc. How much would it cost to a hire a professional management firm?

Answer: Property-management fees vary from one area to the next. Professional firms base their charges on a variety of factors, including the size of the building and the level of service that they're asked to provide.

Usually, though, you should expect to pay between 7 percent and 12 percent of the building's total monthly rent for the company's services. That doesn't include the cost of most unexpected expenses, such as a bill charged by a third-party plumber or electrician.

Several nonprofit trade associations can give you more information about property-management firms and can provide the names of those that work in your area. One is the National Association of Residential Property Managers (800-782-3452, www.narpm.org). Another is the Institute of Real Estate Management (800-837-0706, www.irem.org).

Dear Mr. Myers: When two co-borrowers own a home together but one of them dies, does the bank have the right to demand that the surviving borrower pay off the outstanding balance of the loan in a single lump sum?

Answer: No. The federal Garn-St. Germain Depository Institutions Regulation Act of 1982 specifically prohibits a lender from demanding that a mortgage immediately be paid in full because one co-borrower dies or a pair of co-owners gets a divorce. Terms of the loan, including the interest rate, can't be changed automatically either.

Of course, the bank can still demand that the loan be paid in a lump sum or else start foreclosure proceedings if the survivor falls behind on the monthly payments later.

In a related issue, another reader recently asked if she had to remove her late husband's name from the title to their home right away. Again, the answer is no.

Nonetheless, it's better to remove a deceased owner's name from the title sooner rather than later. One reason: Some con artists have been known to scour local obituaries and then "steal" the deceased's identity to surreptitiously refinance the loan to take out some extra cash or even attempt to sell the house itself.

It most areas, removing a loved one's name from the title to a property is relatively easy. It usually involves simply filing a copy of the death certificate and an "affidavit of survivorship" with the county recorder or similar agency.

Taking the late spouse's name off the title quickly won't just help to avoid identity theft, but also will make the eventual sale of the home go more smoothly.

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