[WSBARP] Short Platt developer and excited buyer

Wed Jun 24 11:37:15 PDT 2015

Thanks Robert
All of 108 assumes a transfer to a contractor as the first step.
Very interesting. 108 (4) b is the usual situation where the land owner transfers to the developer the larger parcel so it can be subdivided (and someone pays REET on the value of the bigger piece) and then gets back the one acre.
In this case the client is getting from the developer the larger piece, then in effect client (on paper) does the development short plat and then giving the remaining 7 lots (35 acres)  to the developer and he wants to just pay the REET on the value of the 5 acres.  Not sure that this rule would be applied?
108 (4) c seems closer but again the first transfer is to the developer not to the homeowner as in our case.   In looking at both of those, it seems like the REET on the transfer to the homeowner of the 40 acres must be based on the value of the whole ($35,000 x 5 = $175,000) not the $35,000 for the lot my client is actually wanting to purchase and  end up with??

108 (4) 7 doesn’t seem to fit either?

Josh

Joshua F. Grant, PS
Attorney at Law
P. O. Box 619
Wilbur, WA 99185
tel 509 647 5578
fax 509 647 2734

From: Robert R. Cole 
Sent: Wednesday, June 24, 2015 10:29 AM
To: wsbarp at lists.wsbarppt.com 
Subject: Re: [WSBARP] Short Platt developer and excited buyer

Actually 108 (4) (b)

Very Truly Yours,

Robert R. Cole

Law Office of Cole & Gilday, P.C. 

10101 - 270th St. NW 

P.O. Box 249 

Stanwood, WA 98292 

(360) 629-2900 (Telephone) 

(360) 629-0220 (Fax) 

This message contains confidential and privileged information that is intended only for the named recipient(s).  Unless you are the named recipient or authorized agent thereof, you are prohibited from reading, copying, distributing or otherwise disseminating such information.  If you receive this communication in error, please notify the sender immediately.

On 6/24/2015 10:09 AM, Josh Grant wrote:

  Thanks Jeanne

  Client later advised me that he really didn’t need to borrow on this piece (he has another house he can encumber and he had all but $30,000 of what was needed to build his house).  I had another list-mate opine that if there is a clear agreement in the beginning showing that the parties intended to end up with the 5 acres being transferred only, that the REET could get an exemption “to clear title”.  I don’t see how that could be done.  The client will be deeding back 35 acres of greatly improved land with a deed “to clear title”.  and the gift tax could be an issue (but I doubt that the eventual bare lots are going to be that much?).  Interested in anyone’s view of the REET.

  Josh

  From: Jeanne Dawes 
  Sent: Tuesday, June 23, 2015 3:33 PM
  To: WSBA Real Property Listserv 
  Subject: Re: [WSBARP] Short Platt developer and excited buyer

  Josh, if I understand correctly the developer is going to deed the entire 40 acres to your client?  Sounds dangerous.  In addition to Steve’s comments, there may be some tax consequences, if the value of the property is more than the annual gift tax exemption.  One more thought, the Treasurer will assess REET on the FMV, even if the purchase price is $1.  Additionally, the bank still won’t lend on just part of it, they will want to take the entire 40 as security.  Big problem on the deed back to the developer if it is now subject to a mortgage.    It sounds like a bad idea.

  Jeanne 

  Jeanne J. Dawes

  Attorney at Law

  Gore & Grewe, P.S.

  103 E. Indiana Avenue, Suite A

  Spokane, WA 99207-2317

  Voice:  509-326-7500

  Fax:      509-326-7503

  jjdawes at goregrewe.com

  INFORMATION CONTAINED IN THIS E-MAIL TRANSMISSION IS PRIVILEGED AND CONFIDENTIAL. 

  From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Josh Grant
  Sent: Tuesday, June 23, 2015 2:20 PM
  To: wsbar
  Subject: [WSBARP] Short Platt devloper and excited buyer

  Developer is developing a 40 acre piece.  He will be short platting it into 5 acre pieces.  Surveyor is telling him this should be no problem in getting this approved.

  My client is a prospective buyer.  They have a legal description for his five acres from the surveyor.  He wants to get going with a new house.  I told him, “no, you have to wait til the short plat is approved, for a bunch of legal reasons, but in addition the bank won’t lend you the $250,000 for the new house til you are a fee owner”.

  So now the two of them have agreed as follows:

  Developer will sell the 40 acres to the client for the agreed upon purchase price of the five acre ($35,000). Developer will continue to pay all costs to get the short plat approved (about a year from now).  Developer will be obligated to pay all costs even though client will be signing the applications etc.  Developer will be granted an option to purchase the 35 acres back when the short plat is finally approved for $1.00.

  Would the 1% excise tax be based on the $35,000 first sale?  Probably.  The transfer back of the 35 acres for $1.00 plus all the development costs... what would the excise tax be based on?

  I see lots of problems from the developer’s side, but what else would the buyer be exposed to if this never gets approved?

  and if this is a doable thing, anyone have forms for the option to purchase ?  (yeah right).

  Thanks

  Josh

  Joshua F. Grant, PS
  Attorney at Law
  P. O. Box 619
  Wilbur, WA 99185
  tel 509 647 5578
  fax 509 647 2734

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