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<p class="MsoNormal"><span style="color:#1F497D">John is probably right, but I vaguely recall an equitable doctrine that forbids a bank from foreclosing when the change in title is "internal" to the co-owners--that is, where the bank has already allowed title
to held in names of A and B, a transfer of B's interest to A leaves the bank in no worse position--and therefore foreclosure on such a technical change would be barred in equity.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D">Same result as if, say, title is held 50/50 A and B, and A transfers a 25% interest resulting in 25/75. Technically it's a transfer in violation of the covenant, but meaningless in terms of hypothetical impairment
of the bank's interest.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">Sincerely,<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">Eric<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">Eric C. Nelsen<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">SAYRE LAW OFFICES, PLLC<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">1417 31st Ave South<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">Seattle WA 98144-3909<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">phone 206-625-0092<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">fax 206-625-9040<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif""> wsbapt-bounces@lists.wsbarppt.com [mailto:wsbapt-bounces@lists.wsbarppt.com]
<b>On Behalf Of </b>John J. Sullivan<br>
<b>Sent:</b> Wednesday, October 11, 2017 8:38 PM<br>
<b>To:</b> WSBA Probate & Trust Listserv<br>
<b>Subject:</b> Re: [WSBAPT] Inherited mortgage<o:p></o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">Lisa:<o:p></o:p></p>
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<p class="MsoNormal">Yes, but the transfer from decedent was exempt to B&S. I am skeptical that B's subsequent transfer to S is covered by GSG. <o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">John J. Sullivan<br>
<br>
Sent from my iPhone<o:p></o:p></p>
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On Oct 11, 2017, at 6:06 PM, Lisa E Schuchman <<a href="mailto:lisa@lisaschuchman.com">lisa@lisaschuchman.com</a>> wrote:<o:p></o:p></p>
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<p class="MsoNormal">John,<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">That's my big question, too. As long as S is still there, in theory it shouldn't be a problem. But like I said, some banks haven't even heard of G-St. G, so who knows how they'd handle it. <o:p></o:p></p>
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On Oct 11, 2017, at 6:04 PM, John J. Sullivan <<a href="mailto:sullaw@comcast.net">sullaw@comcast.net</a>> wrote:<o:p></o:p></p>
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<p class="MsoNormal">Lisa:<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">If decedent is the only one on the note, lender can only foreclose - cannot go after B or S for deficiency. Usually in these scenarios clients muddle through and as long as payments continue to be timely the lender is satisfied. <o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">I agree with Eric that since B is not being relieved of personal liability there is no consideration to him from S for REET purposes. <o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">I do have one concern though. While Garn-St. Germaine exempts the transfer from decedent to B&S jointly at death, in not sure it exempts the subsequent transfer of B's interest to S by gift for purposes of due on sale. I'd argue there's
no trigger because one of the heirs still owns now the whole. But I'm not sure of that one. <o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">John J. Sullivan<br>
<br>
Sent from my iPhone<o:p></o:p></p>
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<p class="MsoNormal" style="margin-bottom:12.0pt"><br>
On Oct 11, 2017, at 3:07 PM, Eric Nelsen <<a href="mailto:Eric@sayrelawoffices.com">Eric@sayrelawoffices.com</a>> wrote:<o:p></o:p></p>
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<p class="MsoNormal"><span style="color:#1F497D">Agree with John. Personal obligation to pay a debt is determined by who signed the Promissory Note. A mortgage (Deed of Trust) is just an agreement to let the bank seize the house if the Note isn't paid.
</span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D">If mother is the only signer of the Note, then B and S have no
<u>personal</u> liability for the debt no matter what. Their inherited ownership of the house is subject to the lender's mortgage and right to foreclose for non-payment, so B and S have practical reasons to pay the debt they aren't liable for...but no matter
what B and S do with transfers of ownership, they aren't liable to lender on the original debt.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D">If B gift-quitclaims to S, there is still no need for indemnity that I can see, because B remains free of personal obligation on the Note.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D">Under that scenario, I think there is no REET due either. See
<a href="http://apps.leg.wa.gov/wac/default.aspx?cite=458-61A-103">WAC 458-61A-103(2)</a>.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D"> </span><o:p></o:p></p>
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<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">Sincerely,</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">Eric</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">Eric C. Nelsen</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">SAYRE LAW OFFICES, PLLC</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">1417 31st Ave South</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">Seattle WA 98144-3909</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">phone 206-625-0092</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;color:#1F497D">fax 206-625-9040</span><o:p></o:p></p>
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<p class="MsoNormal"><span style="color:#1F497D"> </span><o:p></o:p></p>
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<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">
<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">mailto:wsbapt-bounces@lists.wsbarppt.com</a>]
<b>On Behalf Of </b>John J. Sullivan<br>
<b>Sent:</b> Wednesday, October 11, 2017 2:41 PM<br>
<b>To:</b> WSBA Probate & Trust Listserv<br>
<b>Subject:</b> Re: [WSBAPT] Inherited mortgage</span><o:p></o:p></p>
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<p class="MsoNormal"> <o:p></o:p></p>
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<p class="MsoNormal">So B and S are both mortgagors on the existing mortgage? Or was the mortgage taken out by the decedent they inherited the property from? If the latter, neither is personally obligated on the underlying note. <o:p></o:p></p>
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<p class="MsoNormal"> <o:p></o:p></p>
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<p class="MsoNormal">If the former, B remains liable directly to lender under the promissory note. He would have to secure a release from the lender, which is rarely granted without S refinancing and qualifying separately. <o:p></o:p></p>
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<p class="MsoNormal"> <o:p></o:p></p>
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<p class="MsoNormal">Secure indemnification agreement with second position deed of trust? If brother is relieved of liability at time of transfer there might be consideration for REET purposes. <o:p></o:p></p>
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<p class="MsoNormal"> <o:p></o:p></p>
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<p class="MsoNormal">John J. Sullivan<br>
<br>
Sent from my iPhone<o:p></o:p></p>
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<p class="MsoNormal" style="margin-bottom:12.0pt"><br>
On Oct 11, 2017, at 2:27 PM, Lisa E Schuchman <<a href="mailto:lisa@lisaschuchman.com">lisa@lisaschuchman.com</a>> wrote:<o:p></o:p></p>
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<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond","serif"">Sister (S) and brother (B), both adults, inherited a house from their mother on her death. We’re getting ready to close the probate and transfer title to them. They understand
that they can keep the existing mortgage without additional need to qualify. But if B later gifts his share of the house to S, can B disentangle himself from the mortgage obligation and leave S fully liable? I know that Garn-St. Germain wouldn’t apply to
that transfer, but since S is already in the place of the mortgagor can B get out of it? Does anyone have a better suggestion?</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond","serif""> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond","serif"">Thanks.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond","serif""> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond","serif";color:black">Lisa E. Schuchman<br>
206-960-4212<br>
<a href="http://www.lisaschuchman.com/" target="_blank">www.lisaschuchman.com</a><br>
<br>
I learn, I give. – Gloria Steinem</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond","serif";color:black">NOTE: I do not use encrypted email. Messages sent to or from my office via email are not secure and may not be protected by attorney-client privilege. This email
address is not monitored at all times. If your matter is urgent, please phone my office during regular business hours.
</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Garamond","serif";color:black">Any tax advice included in this document and its attachments was not intended or written to be used, and it cannot be used, for the purpose of avoiding penalties
under the Internal Revenue Code.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:24.0pt;font-family:Webdings;color:green">P</span><span style="font-size:10.0pt;font-family:"Arial Narrow","sans-serif";color:green">
</span><b><span style="font-size:7.5pt;font-family:"Arial","sans-serif";color:#008100">Please consider the trees before printing this document</span></b><o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
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<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman","serif"">_______________________________________________<br>
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<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman","serif"">_______________________________________________<br>
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<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman","serif"">_______________________________________________<br>
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<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman","serif"">_______________________________________________<br>
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