Tag Archives: SALE

What happens to lease when rental property with tenants is sold?

Q: We are looking to purchase a single-family home that is currently occupied by renters. (college students) The current lease expires 25 July. What happens to this lease if we buy property in March? Is lease still enforceable until July? Does lease go with house? Or is it null in void at time of sale since landlord of record is no longer owner? We would like to have lease continue, as the rental money was part of our buying decision, just not sure of the legality.(Pittsburgh, PA)

A: What does your sales agreement with the seller say on this? Language addressing the renters should be included in the sales agreement, normally referred to as assignability. Also, what does the lease agreement between the current owner and the tenants say regarding a sale of the premises, if anything? If you don’t want them to remain, and they have no lease, they are month-to-month tenants and you are probably stuck with them 30 days. If you want them to remain, and they feel the same, the lease will be honored unless the sales agreement and lease state to the contrary. Most leases and most sales agreements have language which addresses assignability of the lease.

Can my brother and I sell the house where my mom has lifetime rights?

Q: She was diagnosed with dementia and was put in a nursing home. She will never leave this facility. She has some sort of lifetime estate in the deed. (Braddock Hills, PA)

A: It depends on the wording of the life estate. Many life estates are worded, “until death or unable to return home”. I would have the agreement reviewed by an attorney first. Obviously, if the life estate has been fulfilled, and it is clear she cannot return to the home, you can sell the home. Remember, there are inheritance tax consequences of her life estate, in that the life estate itself is subject to inheritance tax.

Borough won’t let me sell my house

Q: I am selling a rental house. The borough won’t let me sell it until I get a building inspector to check it for dye tests, taxes, etc. It is now costing me $5,000.00 more when the buyers said they would take it as is and would pay for it since I’m selling it so cheap. Can a municipal borough stop my sale and make me pay for the things before I sell the house? The borough has held us all up for three months. Is this legal when it was already checked two years before I sold? Also, my borough is deep into debt and just got a new building inspector who is a part-timer, third party paid assassin. The new owner doesn’t understand this either. (West Mifflin,PA)

A:  Generally, when you sell a home, the seller must bring the house “up to code” (safety codes to ensure there are safety violations). You can obtain a list of what the borough requires before the municipal inspector comes for his inspection. If everything is up to code before the inspection, a certificate of occupancy is issued by the borough, and there is no reason for the inspector to come back a second time. The purpose of this is to ensure that every time a house is sold it is safe in that it meets all electrical, fire and structural safety standards. Normally, the expense of obtaining the permit is on the seller. However, the seller can negotiate with the buyer to bear this responsibility. I do not know what you have negotiated with the buyer or what your sales agreement says regarding this issue, but you might want to see if the buyer will pay for this expense.

I received 1099-S from the sale of mom’s home. Is this a requiring 1041 filing?

Q: The county valued the house at $131,100 and it sold for $129,900. Doesn’t this count as a loss and therefore not income? (West Mifflin, PA)

A: Form 1099-S is used to report gross proceeds from the sale and exchange of real estate and certain royalty payments. A 1099-S form must be provided to the recipient and a copy mailed or emailed to the IRS. Just as you would list it and attach it to a personal return, you use it on the 1041 Schedule D (decedent’s fiduciary return). You will list the stepped-up value of the house based on what the fair market value was at death. So, if you sell it within in a year of your mother’s death, it is doubtful there will much of a capital gain or loss. There are other factors needed to be known here before I could conclude that the estate will not face a capital gain. It is also relevant as to whether you received the house as a beneficiary, or sold it from the estate as executor. I would suggest that you consult with an estate attorney.

Can we buy the same house with another Agent after initial Buyer Agency Contract expired?

Q: Can we buy the same house through another Agent after the expiration of initial Buyer Agency Contract, without any liability to the first Agent?

A: Be careful. Read the contract carefully. It is possible that the first agent will claim a commission if he was the one who first procured or engaged the seller for you. I suggest your contact a lawyer who handles real estate litigation.