[WSBARP] Conveyance out of wholly owned LLC

Tue Feb 20 14:39:40 PST 2018

Hello all,

Property (residential investment property) is conveyed via quitclaim deed
into an LLC owned 100% by the property owner.  Upon sale out of the LLC,
will the title company require anything further from the owner in order to
insure title in the purchaser?

I did find the thread below that may bear on this question.

Thanks!

Bob Pampell

Robert Pampell, Attorney

21st Century Law Office (r)

19125 Northcreek Parkway, Suite 120

Bothell, WA 98011

voice: 425-329-2629
fax: 877-640-6403
cell: 425-501-4784
email:  <mailto:rpampell at swcp.com> rpampell at swcp.com

 <http://www.linkedin.com/in/robertpampell>
http://www.linkedin.com/in/robertpampell

  _____  

From: WSBA RPPT Real Property Discussion Forum
[mailto:wsbarp at LISTSERV.NETHELPS.COM] On Behalf Of Nick Bergh
Sent: Thursday, August 15, 2013 11:33 AM
To: wsbarp at LISTSERV.NETHELPS.COM <mailto:wsbarp at LISTSERV.NETHELPS.COM> 
Subject: Re: [WSBARP] Transfer to LLC

Forms of title policy were changed a while back to address the concerns
expressed by Patrick and Deborah as to transfer of title to a related
entity.  An owner's policy I recently obtained defines insured:

(c)"Insured": The Insured named in Schedule A.

(i) The    term    "Insured"    also includes

(A)            successors to the Title of the Insured by operation of law as
distinguished from purchase, including heirs, devisees, survivors, personal
representatives, or next of kin;

(B)        successors to an Insured by dissolution, merger, consolidation,
distribution, or reorganization:

(C)           successors to an Insured by its conversion to another kind of
Entity;

(D)            a grantee of an Insured under a deed delivered without
payment of actual valuable consideration conveying the Title

(1) if the stock, shares, memberships, or other equity interests of the
grantee are wholly-owned by the named Insured,

(2)  if the grantee wholly owns the named Insured,

(3)  if the grantee is wholly-owned by an affiliated Entity of the named
Insured, provided the affiliated Entity and the named Insured are both
wholly-owned by the same person or Entity, or

(4)  if the grantee is a trustee or beneficiary of a trust created by a
written instrument established by the Insured named in Schedule A for estate
planning purposes.

(ii) With regard to (A), (B), (C), and (D) reserving, however, all rights
and defenses as to any successor that the Company would have had against any
predecessor Insured

Patrick's and Deborah's concerns about lapse in coverage are valid if the
transferee does not fall within the definition of "insured". The same policy
provides:

The coverage of this policy shall continue in force as of Date of Policy in
favor of an Insured, but only so long as the Insured retains an estate or
interest in the Land, or holds an obligation secured by a purchase money
Mortgage given by a purchaser from the Insured, or only so long as the
Insured shall have liability by reason of warranties in any transfer or
conveyance of the Title. This policy shall not continue in force in favor of
any purchaser from the Insured of either (i) an estate or interest in the
Land, or (ii) an obligation secured by a purchase money Mortgage given to
the Insured.

________________________

Nick Bergh

Law Office of G N Bergh

2006 South Post Street

Spokane WA 99203-2049

ph 509-624-4295  | fx 509-344-1844

nick at gnbergh.com <mailto:nick at gnbergh.com> 

From: WSBA RPPT Real Property Discussion Forum
[mailto:wsbarp at LISTSERV.NETHELPS.COM] On Behalf Of Deborah Berg
Sent: Thursday, August 15, 2013 9:56 AM
To: wsbarp at LISTSERV.NETHELPS.COM <mailto:wsbarp at LISTSERV.NETHELPS.COM> 
Subject: Re: [WSBARP] Transfer to LLC

An alternative would be to use the QCD and get an additional insured
endorsement adding the LLC as an insured on the title policy initially
obtained by the client.  However, check the coverage amount on that policy -
the land may have increased significantly in value since it was obtained.
If so, you might want to get a new policy anyway, with increased coverage.

Deborah Berg

From: WSBA RPPT Real Property Discussion Forum
[mailto:wsbarp at LISTSERV.NETHELPS.COM] On Behalf Of Pat Aylward
Sent: Thursday, August 15, 2013 9:27 AM
To: wsbarp at LISTSERV.NETHELPS.COM <mailto:wsbarp at LISTSERV.NETHELPS.COM> 
Subject: Re: [WSBARP] Transfer to LLC

Although using a QCD is the common practice in that fact pattern, I do not
believe it is the best practice.  Assuming client had title insurance when
client bought, you can use that coverage if you use a Warranty Deed.  If a
title issue pops up, LLC makes claim against grantor on the warranty deed
and the grantor (the original individual owner) tenders the claim to the
insurance carrier.  Coverage does not end with transfer of the property.  If
you use a QCD rather than a warranty deed and don't get a new title policy,
LLC is running bare.  For that reason, unless there is some other very good
reason not to, I use a warranty deed.

J. Patrick Aylward
Attorney

Jeffers,Danielson, Sonn & Aylward, P.S.
2600 Chester Kimm Road
Wenatchee, Washington 98801
Telephone: 509.662.3685
Facsimile: 509.662.2452

 <http://www.jdsalaw.com/> www.jdsalaw.com 

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From: WSBA RPPT Real Property Discussion Forum
[mailto:wsbarp at LISTSERV.NETHELPS.COM] On Behalf Of Sandra Bates Gay
Sent: Thursday, August 15, 2013 6:12 AM
To: wsbarp at LISTSERV.NETHELPS.COM <mailto:wsbarp at LISTSERV.NETHELPS.COM> 
Subject: [WSBARP] Transfer to LLC

When an individual client who has ownership of real property and wants to
transfer it to a family (husband and wife) LLC, I have always used a Quit
Claim Deed for the transfer and claimed exempt from excise tax under WAC
458-61A-211(2)(a).  Is there any reason to use any other form of Deed other
than a QCD?

Sandi Gay

Sandra Bates Gay, P.S.

Attorney at Law

Suite 400 Bellevue Place

800 Bellevue Way N.E.

Bellevue, WA  98004-4273

Phone:  (425) 637-3040

Fax:       (425)952-0156

E-Mail:  sgay at sbglaw-wa.com <mailto:sgay at sbglaw-wa.com> 

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