[WSBAPT] Excise Tax on Easement

Sat Apr 11 11:39:15 PDT 2020

I think there is no statutory basis for that WAC on easements look at  RCW 82.45.010 which defies a sale as a conveyence, grant , assignment, quitclaim, or transfer of or title to real property. An easement only conveys the right to use the property subject to the easement and doesn't affect the title or ownership. The balance of that WAC talks about tax on development rights etc

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of John J. Sullivan, Esq.
Sent: Saturday, April 11, 2020 1:37 AM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Excise Tax on Easement

Matt and Bryce:

How is it not taxable?? There is valuable consideration being paid by both fee owner. Up to now they've been tolerating trespass by each other. Now they're going to formalize the arrangement and grant each other enforceable rights to trespass.  It's not adverse possession, since it's been with permission. But for the mutuality there would be a cash payment by the recipient.

Sorry, but I think you get an appraiser to value each easement grant. I'm not a dirt attorney, so I can't tell you whether the neighbors record one easement that applies to both parcels, or separate ones from each side, but either way the value is the same. In the case of a single recording the consideration is combined and presumably the tax is split. In the case of separate recordings, they each pay there respective shares of the overall value - assuming the easement extends equally into parcels of equal value.

You could go for a letter ruling, but I'm not sure what argument you would have for exemption. There's definitely consideration being exchanged between the parties.

Unless ... and this is a half-baked thought ... you take the position the easement existed at the time the current owners took title (if supported by the facts) and you can get the prior owners to rerecord the prior deeds, with the "easement" recited in the deed, and claim exemption under WAC 458-61A-217. But that's really a half-baked idea. The dirt attorneys would have to opine on whether the "easement" existed at the time of the prior conveyance and should have been included in the old deeds. I think that's the only way this would pass muster.

It's late. If I'm way off base, let me know.

John J. Sullivan

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Bryce Dille
Sent: Friday, April 10, 2020 5:14 PM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Excise Tax on Easement

WAC 458-61A-111 states that an excise tax affidavit is only required where  valuable consideration is given It states the affidavit is not required if not taxable and your transaction would not fall under that category since it is not taxable under the WACS you cited.

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Matt Yates
Sent: Friday, April 10, 2020 4:50 PM
To: wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Excise Tax on Easement

Hello Listmates.  Posting the question below for another attorney at my firm.  Any input is welcome since we have not encountered this issue before.

Two adjacent lots share a driveway.  The owners want to establish a mutual easement for use of the shared driveway before one of the properties is sold to a third party.  The driveway easement will straddle the property line 10 feet on each side, and both lot owners will drive over the easement.  I'm looking at the excise tax WACs and see no exemption for this transaction - WAC 458-61A-11 says easements are taxed.

No money is being exchanged - the parties are just trying to forestall any disputes about the use of the shared driveway before selling to someone they don't know (there's also an included road maintenance agreement that is new).  This transaction feels more akin to the boundary line adjustment exception under WAC 458-61A-109(2)(b) and example (3)(a).  I know it's not a boundary line dispute and no quit claim deed is being given, but it still feels like it's a resolution of a dispute over USE of the property.  Would WAC 458-61A-215 apply?  Again that exemption talks about quit claim deeds, not easements.

Am I missing an exemption here?

If it will be taxed, how do I determine the value of the property to be taxed?

Also, since each is giving an easement to the other, are there 2 transactions requiring two separate Affidavits and taxes to be paid? (I feel I'm overthinking this part).

Matthew D. Yates
Attorney at Law
Yates Marshall, PLLC
10000 NE 7th Avenue, Suite 200
Vancouver, WA 98685
Phone: (360) 449-6100
Fax: (360) 449-6111
matt at yatesmarshall.com<mailto:matt at yatesmarshall.com> (New Email Address)
www.yatesmarshall.com<http://www.yatesmarshall.com>

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