Life Insurance

Answer: You always need homeowners insurance. In addition to providing hazard (fire) insurance, a homeowners insurance policy includes negligence liability coverage.

Liability for your tree that fell on the neighbor's property depends on the cause. If it was a windstorm (an act of God), then you have no liability to your neighbor because you were not negligent.

However, if the tree was diseased or was leaning toward the neighbor's house when it fell and damaged the neighbor's property, you would be liable for negligence, and your homeowners insurer would pay for the damage. Please ask your insurance agent to explain further.

Q: How can a second residence qualify for the $250,000 single or $500,000 married capital gains tax exemption, or the tax-deferred exchange benefit?

A: To qualify for the Internal Revenue Code 121 principal-residence-sale tax exemption up to $250,000 (up to $500,000 for a married couple filing a joint tax return), you must own and occupy the home as your primary residence at least 24 of the last 60 months before its sale.

To qualify for the Internal Revenue Code 1031 tax-deferred exchange benefits, the property must be a rental and must be traded for another "like kind" rental property of equal or greater cost and equity. For details, please consult your tax adviser.

Q: I own a house where my elderly mother holds a life estate. She lives alone in the house and might someday opt for a smaller apartment. If this happens, and she refuses to release her life estate, do I have any legal recourse?

If the life-estate document was poorly written, it is open-ended and gives your mother a life estate without stating what happens if she moves out for longer than six months.

Should that happen, you would probably have to bring a quiet title lawsuit to terminate her life estate. For details, please consult a local real estate attorney.

Robert Bruss answers real estate questions of general interest. Write to Robert Bruss, 251 Park Road, Burlingame, CA 94010, send e-mail to robertjbruss@aol.com or visit bobbruss.com.

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