[WSBARP] Exchange of co-ownership interests

[Robert West]

Party A and B are unmarried and jointly own 2 parcels, parcels 1 and 2.
Parcel 2 is debt free; parcel 1 is subject to $400,000 loan.  The parties
want to divide ownership so that A will own parcel 1 (and assume debt
payments) and B will own parcel 2, subject to a note and deed of trust in
favor of A for #150,000 to equalize net equities. A straight exchange will
be subject to an excise tax based on the debt, so how can that be voided or
minimized?  Suggestions include: (i) a "friendly" partition action which
should be exempt from an excise tax; or (ii) transfer title to parcel 1 into
a formal tenancy-in-common in which there would be an agreement and terms
defining when and how B will be cleared from title, and granting A exclusive
occupancy and control in the interim under a limited power of attorney.  An
LLC might work, but would that be a 'red flag" to the current lender?  Any
thoughts or comments would be appreciated.  

 

Robert E West Jr

West Law Offices PS

332 1st St NE

Auburn, WA 98002

(253) 351-9000

rwest at westlawoffices.com

 

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