[WSBARP] King Co Recording Exasperation #1,000,____

[Dwight Bickel]

The local excise tax people don't like that clearing title regulation. They will require use of the gift regulation. My guess is that if you use the gift supplement form, which explains the lack of consideration and the lack of assumption of debt, no real estate sales tax will be required. Way easier to "knuckle under" than to reason with, argue with, or educate that person!

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Jennifer L White
Sent: Thursday, February 23, 2023 11:35 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] King Co Recording Exasperation #1,000,____

Hello fellow listserv colleagues:
My latest frustration with a King Co filing rejection.
Facts: Mother, widowed, goes to buy a home. She pays 100% of the purchase price. There is no debt. For reasons I don't wish to publish, at the last minute at closing (without consultation with any advisor), Mother adds one of her adult daughters to the title. This child did not pay even one cent towards the purchase and I don't believe she has ever lived there. Mother then decides she wants her off title. No consideration is passing to daughter to get her off title. I prepare a QCD and ETA citing WAC 458-61A-215(1) (WAC attached for your reference). I additionally prepare a written narrative of the facts and have them both sign it, which is submitted along with the ETA (as required by (3) of the WAC).
Rejection: Reasoning - this is a gift. Resubmit and use the published gift supplement form.

This is NOT a gift. This is a title clearance. Any ideas on how to approach this problem other than knuckling under and re-submitting it as 'required' by this county minion?




WAC 458-61A-215 Clearing or exiting title, and additions to title. (1) Introduction. The real estate excise tax does not apply to quitclaim deeds given for the sole purpose of clearing title if no consideration passes otherwise. This rule does not apply to deeds executed for the purpose of adding persons to title, except in cases of persons added to title for co-signing security purposes only.

(2) Examples. The following examples, while not exhaustive, illustrate some of the circumstances in which a transfer of real property may or may not qualify for exemption under this rule. These examples should be used only as a general guide. The taxability of each transaction must be determined after a review of all the facts and circumstances.

(a) An exiting minority partner gives the partnership a quitclaim deed for the purpose of removing any presumptive interest. This trans-fer is exempt from real estate excise tax under this rule.

(b) An heir to an estate gives the estate a quitclaim deed for the purpose of removing any presumptive interest they have in the es-tate. This transfer is exempt under this rule.

(c) A developer deeds greenbelts, streets or common areas in a development to the homeowners association upon completion of the de-velopment and under the terms and covenants of the development. This transfer is exempt under this rule.

(d) Joseph owns a residence and goes to a bank to refinance. His credit is not good enough to obtain the new loan in his name only, but he can qualify if he obtains a co-signor/co-borrower. Joseph's parents agree to co-sign the loan. The bank requests that the parents also go on title with Joseph, and he quitclaims a half interest to his pa-rents. Although the deed may be phrased as a gift to his parents, the deed acts as a security interest for his parents in the event Joseph defaults. The addition of Joseph's parents to the title is exempt un-der this rule, provided Joseph makes all the mortgage payments, and Joseph receives no consideration from his parents for the transfer.

(e) The parents described in (d) of this subsection who have been on title with their child are now issuing a quitclaim deed to Joseph to exit title. Joseph has now paid off or refinanced the mortgage in his name only. The parents' intention was to go on title as "co-si-gnors" only, not as co-purchasers of the property, and they have not made any payments toward the repayment of the loan. This transfer is exempt under this rule.

(3) Documentation. In order to claim this exemption, a narrative that explains the nature of the clearance of, or addition to title must be available and provided to the county treasurer or the depart-ment upon request. The narrative must be signed by both grantor and grantee, or agents of either, and attached to the real estate excise tax affidavit.
[Statutory Authority: RCW 82.45.150, 82.32.300, and 82.01.060. WSR 14-06-060, § 458-61A-215, filed 2/28/14, effective 3/31/14. Statutory Authority: RCW 82.32.300, 82.01.060(2), and 82.45.15

Jennifer L. White, Esq.
[cid:image001.jpg at 01D9477D.DCAFC090]

jen at appletreelaw.com<mailto:jen at appletreelaw.com>
2200 S 76th Ave
Yakima, WA 98903
509.225.9813

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