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<p>Law Office of<br>
<strong>F.ANDREKITA SILVA</strong><br>
<strong>_______________________________________________________ </strong><br>
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April 27, 2023<br>
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Jane,<br>
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It is extremely common for the court to award one party the real property and the other a lien for their equitable interest in their share of the community property.<br>
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The party who was not awarded the real property (spouse A) executes a quit claim deed giving Spouse B their interest (the deed usually says that the consideration is for lien for equitable interest in community property).<br>
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The promissory note secured by a deed of trust ensures that spouse A doesn’t execute quit claim deed, then Spouse B sells property and all security for award is gone.<br>
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Some say that the decree of divorce is sufficient to completely transfer interest but I wouldn’t count on that. There is no specific burden on one or the other to prepare the necessary paperwork. However, if Spouse B wants to make sure her interest is secured, her attorney would want to take the laboring oar. If Spouse A wants to make sure the transfer is complete, they would prepare the quit claim deed.<br>
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Neither document is complicated.<br>
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Decrees often say that parties shall cooperate with the execution of any documents necessary to facilitate the terms of the divorce decree. But, there is an implied consent, even if the language is not there.<br>
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Both parties should cooperate with the recording of a REET affidavit, which is accompanied by the quitclaim deed.<br>
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It is a non- taxable event.<br>
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You don't say whether the receiving party/ spouse had a deadline to pay the judgment or lien to the other side.<br>
If not, that was an unfortunate oversight. <br>
<br>
andrekita<br>
Law Office of F. Andrekita Silva<br>
1325 Fourth Avenue, Suite 940<br>
Seattle, Washington 98101-2509<br>
206-224-8288<br>
<a href="http://www.seattle-silvalaw.com/">www.seattle-silvalaw.com</a><br>
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Quoting Joshua McKarcher <<a href="mailto:josh@mckarcherlaw.com">josh@mckarcherlaw.com</a>>:</p>
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<p class="MsoNormal"><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>Jane,</span></p>
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<p class="MsoNormal"><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>My take is that you have two options:</span></p>
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<p class="MsoNormal"><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>1. Finish the job the parties and their lawyers apparently did not. Figure out what documents were signed or not; record the ones that should have been; obtain deeds or notes that never were drafted or executed; etc. But recognize that this sounds like “a fair bit of work” with all that you’re referencing below.</span></p>
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<p class="MsoNormal"><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>2. Draft a plan that gives your client’s interest in his/her property to whoever he/she wishes just as normal and make sure they understand that will mean “the devisee gets whatever is yours, and gets to figure out how to title and resolve that interest during probate.” (This is the “see how this all turns out during lifetime and hope it all just gets sold one day and converted to cash or something like that” option.) Obviously make darn sure the client has a rock solid property POA that will allow an agent to spring into action the random day in the future when the other spouse suddenly wants to “do” something and is demanding cooperation.</span></p>
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<p class="MsoNormal"><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>I would likely, if I opted for #2, simply do a will-based plan and not attempt to deed out to an RLT, because I suspect you’ll hit up against all manner of confusion, rejection, time wasting, etc. In my world, part of the point of funding an RLT is to “scrub clean” real property to ensure, as best one can, clean chain of title (by fixing things while the grantor is still alive, etc.). But that is option #1 above, so then this whole paragraph would not apply.</span> <span style='font-size:12.0pt;font-family:"Segoe UI Emoji",sans-serif'>😉</span></p>
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<p class="MsoNormal"><span style='font-size:12.0pt;font-family:"Times New Roman",serif'>Good luck! Best, Josh</span></p>
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<p class="MsoNormal"><b>From:</b> wsbapt-bounces@lists.wsbarppt.com <wsbapt-bounces@lists.wsbarppt.com> <b>On Behalf Of</b> Jane Bitz<br>
<b>Sent:</b> Thursday, April 27, 2023 1:26 PM<br>
<b>To:</b> WSBA Probate & Trust Listserv <wsbapt@lists.wsbarppt.com><br>
<b>Subject:</b> Re: [WSBAPT] Divorce & Property Transfers</p>
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<p class="MsoNormal"><span style="font-size:12.0pt">Nick:</span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt">Thanks for your reply. The properties awarded to my client include the principal residence, but also include some separate and some community property investment properties and a community property business real estate. </span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt">In the “Exhibit A. Agreed Distribution of community and separate property to the Respondent spouse it says: “$418,000 equalization payment/disproportionate award of community property payable via deed of trust/promissory note as described in CR(2)(a) transcript filed herewith.” I don’t have that document.</span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt">In our search of the records online, we can’t find the “deed of trust/promissory note” recorded nor are there any Quit Claim deeds from the Respondent to the Petitioner to clear the title to the community property real estate that was awarded to him.</span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt">Just looking for some guidance on the proper course of action re: the real estate transfers.</span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt">Jane.</span></p>
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<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>> <b>On Behalf Of</b> Nick Pleasants<br>
<b>Sent:</b> Wednesday, April 26, 2023 5:13 PM<br>
<b>To:</b> WSBA Probate & Trust Listserv <<a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a>><br>
<b>Subject:</b> Re: [WSBAPT] Divorce & Property Transfers</p>
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<p class="MsoNormal">Jane,</p>
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<p class="MsoNormal">Your statement that one spouse was awarded property in a divorce subject to an equitable lien for the other spouse’s community property interest does not sound right. The whole point of the divorce proceeding is to divide the community property. The result should be that the Divorce Decree spells out who gets what property, not subject to any lien for the other spouse, but possibly subject to a mortgage (although those often have to be refinanced within a period of time to get the other spouse off the mortgage obligation).</p>
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<p class="MsoNormal">Let’s assume the Decree awarded the real estate to your client not subject to any liens. Then the ex-spouse would execute a quitclaim deed to your client.</p>
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<p class="MsoNormal">If ex-spouse refuses to sign a quitclaim deed, you can (a) cite ex-spouse for contempt, or (b) request the court to appoint a commissioner (usually another attorney) under Ch. 6.28 RCW to convey the real estate consistent with the terms of the decree.</p>
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<p class="MsoNormal">If the decree does have that lien language, then I’m not sure the divorce was really settled, as it appears something needs to be resolved as to what ex-spouse’s community property interest in the home is valued at.</p>
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<p class="MsoNormal">Best,</p>
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<p class="MsoNormal">Nick</p>
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<p class="MsoNormal"><b><span style="font-size:12.0pt;color:black">Nicholas Pleasants | Shareholder</span></b></p>
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<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a>> <b>On Behalf Of</b> Jane Bitz<br>
<b>Sent:</b> Wednesday, April 26, 2023 2:35 PM<br>
<b>To:</b> WSBA Probate & Trust Listserv <<a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a>><br>
<b>Subject:</b> [WSBAPT] Divorce & Property Transfers</p>
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<p class="MsoNormal"><span style="font-size:12.0pt">Hi All:</span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt">I have never practiced in Domestic Relations law. I now have an estate planning client who was recently divorced and awarded real estate in the divorce decree, subject to an equitable lien for the other spouse’s community property interest in the real property. When I research the properties on line, I see that the now divorced spouse is still on title for the properties. The divorce decree was granted in Stevens County and there are properties in both Stevens and Spokane counties that are still jointly in the names of the now divorced couple.</span></p>
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<p class="MsoNormal"><u><span style="font-size:12.0pt">My questions are</span></u><span style="font-size:12.0pt">:</span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt">What is the best practice to put these properties into the client’s name?</span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt">Does the spouse who was not awarded the properties in the property division also have to sign a Quit Claim Deed?</span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt">Is there any excise tax issue if there is an existing mortgage on any of the properties?</span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt">Thanks for your input.</span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt">Jane.</span></p>
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<p class="MsoNormal"><b><span style='font-size:14.0pt;font-family:"Cambria",serif;color:#4472C4'>Jane G. Bitz</span></b></p>
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