Payment in arrears
Q. This past November, I made my normal mortgage payment. Then, in the middle of that month, we sold the house. And at the closing, I paid off the whole remaining loan.
Now they are after me to pay interest on that mortgage for Nov. 1 through Nov. 15. But I already paid for the whole month of November. In fact, they should refund me half a month's interest for the rest of November.
A person at the bank just told me the November payment included interest for the month of October. That doesn't sound right to me.
A. It is right, though.
The opposite of "in advance" is "in arrears," and that's how mortgage interest is paid. If you have the papers from back when you took out that loan, you'll see that your first payment wasn't due till after a full month had passed.
Q. My sister and I inherited a cottage three years ago. Last year, we sold it. Do I have to pay income tax on my share of the sale?
A. The IRS has received a report of that sale, and its computers will be looking for a matching income tax report from each of you. Your cost basis was probably half the value of the cottage when you inherited it. You could be liable for any amount you received over that figure, but you're entitled to deduct your costs of selling.
You may not have any tax to pay, if you took a loss on the sale, though the matter could be more complicated if you rented the cottage out while you owned it.
It's wise to have professional help with your tax return for the year in which you sell real estate.
Q. Is there any way we can go after the seller for problems on a house we bought five years ago?
The seller must have known about them but never told us. Some of the electric service wasn't legal, for instance. The septic system wasn't either. What can we do?
A. I don't know how many years you have to go after the seller for undisclosed defects. Ask your questions to a real estate attorney. Take along any papers, including bills and estimates for repairs, for an efficient interview.
If the lawyer thinks you may have a claim that isn't high enough to warrant further legal expense, ask for advice about taking the seller into small claims court on your own.
Q. Recently, I was involved in cleaning out and preparing a house in another state for sale. A relative died, and I was the executor.
I have read many times your advice about pricing a house right. My intention was to move it quickly. I used a real estate agent who knows the area, did her homework and was realistic about what needed to be done.
We got a good offer less than a week after the house was on the market. Settlement took place at the end of the next month.
Just wanted you to know your advice was on the mark.
A. Some years ago, my husband, who was a Realtor, found himself responsible for settling an estate in Montreal. It included a rundown house filled with junk.
With only a weekend up there to arrange everything, he drove around the neighborhood, noted phone numbers on "For Sale" signs and invited agents who were active in that area to come over immediately and talk with us.
Several brokers came that same afternoon and gave us standard presentations about how great they were. One, though, was sent from heaven. He immediately grasped the situation and offered to get the house cleaned out, send stuff to charities, arrange repairs, contact the post office -- everything we couldn't do from home. And he recommended about the same asking price the others did.
By email and Skype, we were guided through Montreal's unfamiliar closing procedures, and everything ended smoothly.
You're right; it's a great relief to put your problems in the hands of a competent agent.
• Contact Edith Lank on www.askedith.com, or 240 Hemingway Drive, Rochester NY 14620.
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