[WSBARP] Clearing co-signor names from title

Thu Mar 6 17:58:22 PST 2025

Sara,

These situations are a problem that all are having a problem with.  The Department of Revenue is out to collect more money for the State.  They audit a lot of excise tax filings and you have to spend a lot of time to explain to them why there is not basis for their claim for taxes.  Your client has to pay the attorney fees to contest the audit.  DOR takes the position you are quilty unless you prove your client is innocent.

I am going to try to meet with the Treasurer and personally explain the exemption.  If that does not work I might see ruling from the department before a try to file the matter.  There is a process for seeking an opinion before recording. I did that once and it worked for me. 

The forms they put out do not cover the situation.  I have a situation where only one of the parties was responsible under the promissory note.  So she is paying the other party some consideration for getting off title.  But the County says that there must be excise tax paid on the debt that the other party was not obligated to pay.

Randy
Randy M. Boyer                                                 ______
Attorney, WSBA# 8665
Law Office of Randy M. Boyer, Inc. P.S. 
7017 196th St. S.W.  Lynnwood, Washington 98036
( 425.712.3107|   Fax 425.778.2274
mail to: randyedlynlaw at gmail.com <mailto:randyedlynlaw at gmail.com>
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> On Mar 6, 2025, at 5:08 PM, Sara Longley <slongley at pnwtaxlaw.com> wrote:
> 
> Lovely listmates,
> 
> Having received no substantive responses to my over-long earlier email, I will ask a simpler question:
> 
> Is it possible to clear co-signor names from title using the exemption under 458-61A-215(2)(e), when the co-signors (parents) assisted the purchaser with a gift of money towards her down payment? 
> 
> It appears not, even when the gift was not intended to create any ownership interest.  But I would love to be wrong.
> 
> Thanks,
> Sara
> 
> <Outlook-cid_image0.png>
> Sara D. Longley, Attorney
> (Main) 360.378.4450 ext. 107
> (Direct) 360.468.7230
> Slongley at pnwtaxlaw.com <mailto:Slongley at pnwtaxlaw.com>
> www.pnwtaxlaw.com <http://www.pnwtaxlaw.com/>
>  
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> From: wsbarp-bounces at lists.wsbarppt.com <mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com <mailto:wsbarp-bounces at lists.wsbarppt.com>> on behalf of Sara Longley <slongley at pnwtaxlaw.com <mailto:slongley at pnwtaxlaw.com>>
> Sent: Thursday, March 6, 2025 9:56 AM
> To: wsbarp at lists.wsbarppt.com <mailto:wsbarp at lists.wsbarppt.com> <wsbarp at lists.wsbarppt.com <mailto:wsbarp at lists.wsbarppt.com>>
> Subject: [WSBARP] Clearing co-signor names from title
>  
> Hello listmates,
> 
> I have a client wishing to clear the names of her parents off the title of her King County home.  The parents were added as co-owners when they co-signed her mortgage for the purchase money.  They also helped her with the down payment.  My client made all the mortgage payments herself and the home is now paid off.  Dad is deceased, left his estate to Mom, and Mom has signed a Quitclaim Deed.
> 
> I am looking at the exemptions in the WAC and it appears that the standard exemption to clear co-owner names in these circumstances is 458-61A-215(2)(E).  It's all very straightforward, and the language of the WAC directly corresponds to my client's situation.
> 
> BUT the DOR form for use to claim this exemption, "Real Estate Excise Tax Certification Co-Signor Exemption", requires that the co-signors answer "NO" to each of a series of questions including "Did the "co-signor" contribute funds towards any down payment, earnest money, or closing costs related to the initial purchase [...]?"  And, because my client's parents gifted her money to help with the down payment, the answer to this question is yes and the form (though not the WAC) states that the co-signor exemption is not applicable to the transfer.
> 
> My clients' parents had no intention of retaining an ownership interest in the property.  According to my client they assisted all of their children with down payment money for home purchases, and the money was intended as a gift.
> 
> Any hints on how to work around this issue?  Can my client's mother sign a separate declaration stating the down payment was a gift and get back inside the exemption?
> 
> I believe my alternative would be a two-step process of recording a Lack of Probate Affidavit to pass Dad's interest to Mom, and then recording Mom's Quitclaim Deed to pass her interest to Client.  This is do-able, but I would much rather save the expense of the second recording fee and the additional drafting time.
> 
> Thanks in advance for any tips or advice you can offer.
> 
> Sara
> 
> 
> 
> 
> 
> <Outlook-cid_image0.png>
> Sara D. Longley, Attorney
> (Main) 360.378.4450 ext. 107
> (Direct) 360.468.7230
> Slongley at pnwtaxlaw.com <mailto:Slongley at pnwtaxlaw.com>
> www.pnwtaxlaw.com <http://www.pnwtaxlaw.com/>
>  
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