Q: I am a single middle-aged woman with my 92-year-old mother living with me and recently put an offer on a house.

The listing agent, my agent and the seller know my mother is confined to bed with respiratory and heart problems. The house was on the market for more than a year before I submitted an offer. The seller did not disclose mold, leaky plumbing or roof issues. The listing agent claimed the musty smell was from a cleaning crew.

The seller's agent and the seller had to know there was a mold problem. The house was in escrow but never closed previous to my escrow. I asked both agents why it fell out of escrow but no one answered my question. My agent also was at fault for her lack of concern once mold was found. Before the mold discovery, I kept asking her what the funny smell was. After the discovery, she said, "All houses have mold."

A mold biologist's report found four random areas (in a 2,400-square-foot house) having very high levels of various forms of mold.

The owner refused to resolve the problem, claiming the mold was discovered beyond the 17-day inspection period. I threatened to back out of escrow unless proper remediation was made, noting their failure to disclose the mold condition.

The seller finally paid for a remediation but from a very unprofessional company that failed to remove carpet during the process and did not treat the walls as recommended by the biologist. I backed out of escrow. Now the seller refuses to release my full deposit of $50,000 under the premise that after I backed out, it took him four months to sell the house and that he sold it for less due to the dead real estate market. What are my chances of winning my full deposit in arbitration and recouping the $1,000 I paid for the biologist's report and being compensated for attorney's fees? Two attorneys told me to take half of my deposit because their fees would be more.

A: The arbitration clause may not be enforceable because all parties did not agree to arbitrate disputes. You could contact two more attorneys and review your situation with them. However, based upon your letter, it may be prudent to settle this matter and find a new property. Engage an attorney to negotiate the settlement of the earnest money dispute. Unfortunately, legal fees and an extended legal process probably outweigh the recovery of your entire earnest money deposit.

Q: My mother recently passed away. There was a revocable living trust in place at the time of her death with an older sibling as successor trustee. Her fully paid-off home is being sold to repay the balance on a reverse mortgage loan. The remaining proceeds from her assets will be split equally among her five remaining children. What taxes (i.e. inheritance or estate taxes) will we incur as a result? We want to follow all legal procedures to avoid any future problems.

A: Under IRS Rules, estates of up to $2 million are tax-free. This applies to estates created between 2006 and 2008. In 2009, this amount will increase to $3.5 million. For more information on the determination of gross estates and allowable deductions visit the IRS Web site (www.irs.gov) and review IRS Form 706.

Q: I have asked several people for information regarding an issue concerning defaulted second mortgages. I held one for property that went into foreclosure earlier this year and got no help. All I want to know is it possible for me to take any action against the folks that left me holding a $40,000 second mortgage or is it just a waste of time and money to do so?

A: Your second mortgage is in line to be paid after the first mortgage and any liens recorded on the property for work, material or taxes. Based on these factors, you need to consult an attorney and determine your legal remedies to collect on the second mortgage.