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LawTalk
LawTalk, Attorney
Category: Real Estate Law
Satisfied Customers: 35309
Experience:  I have 30 years legal experience. Additionally, in CA I held a Real Estate Broker's license.
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The beneficiaries are in process of selling a home in a

Customer Question

The beneficiaries are in process of selling a home in a trust for which an independent party is the trustee (a lawyer). The trustee has a buyer and the house was sold "as is" to that buyer. The septic test failed under Title 5 and a new septic is needed. The trustee is looking for my father's estate (my father who is now incapacitated and I serve as DPOA) to transfer money for the septic repair, and as a cushion for his fees. Is there another way of getting this done without my father's estate funds paying for it? Does my father's estate have to provide the money? Do contractor's defer their payment until the sale of the house? How do illiquid trusts handle these situations?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  LawTalk replied 1 year ago.

Good afternoon,

I'm Doug, and I'm very sorry to hear of your situation. My goal is to provide you with excellent service today.

First of all, some contractors are willing to wait until the close of escrow to be paid, and can even be paid through escrow. However, that agreement would have to be worked out with each contractor individually.

While you don't say it specifically, I will presume that your father is the Trustor and placed the property in the trust prior to his incapacitation, and that the trustee is liquidating the trust per direction of the Trust document.

If the trust is under-capitalized and has no liquid assets, then it is up to the Trustor, or if they choose to assist, to the beneficiaries of the trust to pay for the necessary maintenance of the property, and in this case to provide for the repairs necessary to the sale of the property.

While you as the DPOA cannot be forced to transfer estate funds to the trust in order to make the property salable, there is really nowhere else that the funds can realistically be expected to come from. And it would be in the best interest of the Trust, and it would allow your father's intended purpose for the trust to be fulfilled, were the cash input be made. Finally, if the language of the trust allows for it, the cash input could be provided as a loan to the trust, which would be repaid to the estate on the sale of the property.

You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.

Please remember to rate my service to you so that I can be compensated for helping you.

I wish you and yours the best in 2015,

Doug

Customer: replied 1 year ago.

The trustee was assigned after my father was incapacitated and he knew the only asset was the house.

Does the septic have to be done by the seller? Can't we offer a further discount off of the sale price and have the buyer do it?

Expert:  LawTalk replied 1 year ago.

Good afternoon,

Thanks for the additional information. Yes the buyer could pay for it out of their own pocket, but that seems unlikely as they won't be inclined to pay for such a repair when they don't own the property yet.

I also presume this is not an all cash purchase and a lender is involved. The lender won't make the loan until the repair is made in most cases. In a very few cases the lender will allow a septic escrow---but again, this is your money that you have to put out. Here is a link describing this and other failed septic issues in sales:

http://www.maxrealestateexposure.com/greater-metro-west-ma-home-sellers/title-v-septic-system-law/

The further discount will only work if your buyer is paying all cash. A lender won't provide a mortgage for a residence with a failed septic that is not "guaranteed" to be immediately repaired---thus the septic escrow.

You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.

Kindly, remember to rate my service to you. That is how I am credited for assisting you.

I wish you and yours the best in 2015,

Doug

Expert:  LawTalk replied 1 year ago.

This seems like a very crucial matter for you, and your questions and issues suggest that an in-depth conversation might better suit your needs. If you are interested, I can offer you a phone conference as opposed to continuing in this question and answer thread. I will make that offer to you after I get this posted to your question thread. All you need do is accept the offer if you would like me to call. Let me know if you don't want a call and I can continue here.

Thanks in advance,

Doug