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<p class="MsoNormal"><span style="font-size:12.0pt">Apologies for cross-posting but this I think will be of interest to real estate lawyers statewide, regarding deeds that gift equity in a property and the REET exemption. I am doing further research but I think
this is where things stand. Title officers and escrow personnel will probably roll their eyes at my naivete.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">DOR’s policy appears to be that, in order to assert the gift exemption from excise tax, the REET Affidavit must cite a non-existent WAC.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">The spreadsheet of valid exemption codes is available on DOR’s website, at a link shown at:<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><a href="https://dor.wa.gov/taxes-rates/other-taxes/real-estate-excise-tax/real-estate-excise-tax-exemptions-commonly-used#gift">https://dor.wa.gov/taxes-rates/other-taxes/real-estate-excise-tax/real-estate-excise-tax-exemptions-commonly-used#gift</a><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">The “valid exemption codes” link embedded in the “Disclaimer” section on that page leads to a download of an Excel spreadsheet:<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><a href="https://dor.wa.gov/sites/default/files/legacy/Docs/forms/RealEstExcsTx/REETExemptions.xlsx">https://dor.wa.gov/sites/default/files/legacy/Docs/forms/RealEstExcsTx/REETExemptions.xlsx</a><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">These are apparently all the allowed exemption codes.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">So, on gifts:<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><a href="https://app.leg.wa.gov/WAC/default.aspx?cite=458-61A-201">WAC 458-61A-201(3)</a> is the exemption for gifts of equity where grantor’s debt is assumed or refinanced by the grantee. It reads in its
entirety:<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:12.0pt">(3) <b>Assumption of debt.</b> If the grantee agrees to assume payment of the grantor's debt on the property in return for the transfer, there is consideration, and the transfer is
not exempt from tax. Real estate excise tax is due on the amount of debt assumed, in addition to any other form of payment made by the grantee to the grantor in return for the transfer. However, equity in the property can be gifted.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">However, you cannot cite that WAC subsection. Nor are you permitted to cite the bare “WAC 458-61A-201” without a subsection. It will be bounced, because you are required to choose one of the following non-existent
subsections:<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">WAC 458-61A-201(a)(1)<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">WAC 458-61A-201(a)(2)<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">WAC 458-61A-201(b)(1)<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">WAC 458-61A-201(b)(2)<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">WAC 458-61A-201(b)(3)<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">WAC 458-61A-201(b)(4)<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">These “subsections” are actually derived from the paragraph numbers on the Supplemental Statement
<a href="https://dor.wa.gov/sites/default/files/legacy/Docs/forms/RealEstExcsTx/RealEstExTxSpplmtlStmt.pdf">
https://dor.wa.gov/sites/default/files/legacy/Docs/forms/RealEstExcsTx/RealEstExTxSpplmtlStmt.pdf</a>, for:<o:p></o:p></span></p>
<p class="MsoNormal"><b><span style="font-size:12.0pt">A. Gifts with consideration<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-indent:.5in"><b><span style="font-size:12.0pt">1</span></b><span style="font-size:12.0pt">. Grantor (seller) has made and will continue to make all payments after this transfer on the total debt of $ and has received from the
grantee (buyer) $ (include in this figure the value of any items received in exchange for property). Any consideration received by grantor is taxable.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-indent:.5in"><b><span style="font-size:12.0pt">2</span></b><span style="font-size:12.0pt">. Grantee (buyer) will make payments on % of total debt of $ for which grantor (seller) is liable and pay grantor (seller) $ (include
in this figure the value of any items received in exchange for property). Any consideration received by grantor is taxable.<o:p></o:p></span></p>
<p class="MsoNormal"><b><span style="font-size:12.0pt">B. Gifts without consideration<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-indent:.5in"><b><span style="font-size:12.0pt">1</span></b><span style="font-size:12.0pt">. There is no debt on the property; Grantor (seller) has not received any consideration towards equity. No tax is due.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-indent:.5in"><b><span style="font-size:12.0pt">2</span></b><span style="font-size:12.0pt">. Grantor (seller) has made and will continue to make 100% of the payments on the total debt of $ and has not received any consideration
towards equity. No tax is due.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-indent:.5in"><b><span style="font-size:12.0pt">3</span></b><span style="font-size:12.0pt">. Grantee (buyer) has made and will continue to make 100% of the payments on total debt of $ and has not paid grantor (seller) any consideration
towards equity. No tax is due.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-indent:.5in"><b><span style="font-size:12.0pt">4</span></b><span style="font-size:12.0pt">. Grantor (seller) and grantee (buyer) have made and will continue to make payments from joint account on total debt before and after
the transfer. Grantee (buyer) has not paid grantor (seller) any consideration towards equity. No tax is due.</span><span style="font-size:12.0pt"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><a href="https://dor.wa.gov/taxes-rates/other-taxes/real-estate-excise-tax/real-estate-excise-tax-exemptions-commonly-used#gift">DOR’s website states</a>:<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:12.0pt">The exemption code entered in section 7 of the affidavit must reference the WAC 458-61A-201
<b><i>and the selection made on the supplemental statement in section A (Gifts with consideration) or section B (Gifts without consideration)</i></b>.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Which would be (sort of) okay if the Affidavit itself actually said that. But the Affidavit form says “If claiming an exemption,
<b><i>list WAC number</i></b> and reason for exemption. <b><i>WAC number (section/subsection)</i></b>.” And the instructions attached to the form state: “If you are claiming a tax exemption,
<b><i>cite the specific Washington Administrative Code (WAC) number, section and subsection</i></b> and provide a brief explanation.” So whatever you do, for a gift, don’t follow the instructions on the form! Follow the hidden instructions on DOR’s website!<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Interestingly, DOR apparently does allow a cite to WAC 458-61A-201(2), even though (2) does not define an exemption. It reads:<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:12.0pt">(2) <b>Consideration.</b> See WAC <a href="http://app.leg.wa.gov/WAC/default.aspx?cite=458-61A-102"><b>458-61A-102</b></a> for the definition of "consideration." Consideration may
also include:<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:1.0in"><span style="font-size:12.0pt">(a) Monetary payments from the grantee to the grantor; or<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:1.0in"><span style="font-size:12.0pt">(b) Monetary payments from the grantee toward underlying debt (such as a mortgage) on the property that was transferred, whether the payments are made toward existing or refinanced
debt.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">SO: You <b><i>can’t</i></b> cite WAC 458-61-A-201<b><i>(2)(a)</i></b> or
<b><i>(2)(b)</i></b>, even though those exist (though it’s true they do not define exemptions). You
<b><i>can</i></b> cite <b><i>(2)</i></b>, though it’s not at all clear what exemption that is supposed to mean. Instead, you
<b><i>can</i></b> cite <b><i>(a)(2)</i></b> or <b><i>(b)(2)</i></b>, even though those don’t exist and actually refer to paragraph numbers in the Supplemental Statement and not WAC subsections.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">In conclusion—in dealing with a gift transfer that is exempt under WAC 458-61A-201, pursuant to DOR’s published spreadsheet, it appears that the only WAC “exemption cites” that DOR will accept are:<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">WAC 458-61A-201(2) (which isn’t an exemption)<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">WAC 458-61A-201(a)(1) (which doesn’t exist)<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">WAC 458-61A-201(a)(2) (which doesn’t exist)<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">WAC 458-61A-201(b)(1) (which doesn’t exist)<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">WAC 458-61A-201(b)(2) (which doesn’t exist)<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">WAC 458-61A-201(b)(3) (which doesn’t exist)<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">WAC 458-61A-201(b)(4) (which doesn’t exist)<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Happy Tuesday.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<div>
<p class="MsoNormal"><span style="font-size:12.0pt">Sincerely,<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Eric<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Eric C. Nelsen<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Sayre Law Offices, PLLC<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">1417 31st Ave South<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Seattle WA 98144-3909<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">206-625-0092<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><a href="mailto:eric@sayrelawoffices.com"><span style="color:#0563C1">eric@sayrelawoffices.com</span></a><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><b><span style="font-size:12.0pt;background:aqua;mso-highlight:aqua">Covid-19 Update -
</span></b><span style="font-size:12.0pt">All attorneys are working remotely during regular business hours and are available via email and by phone. Videoconferencing also is available. Signing of estate planning documents can be completed and will be handled
on a case-by-case basis. Please direct mail and deliveries to the Seattle office.<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
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<div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b><span style="font-size:12.0pt">From:</span></b><span style="font-size:12.0pt"> wsbarp-bounces@lists.wsbarppt.com <wsbarp-bounces@lists.wsbarppt.com>
<b>On Behalf Of </b>Chris B<br>
<b>Sent:</b> Friday, December 3, 2021 10:09 AM<br>
<b>To:</b> WSBARP@lists.wsbarppt.com<br>
<b>Subject:</b> [WSBARP] Recording Standards Commission<o:p></o:p></span></p>
</div>
</div>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">RCW 65.24.040 established a new entity, known as the Recording Standards Commission (RSC). Its purpose, per that statute is:<o:p></o:p></span></p>
<p class="Default"><o:p> </o:p></p>
<p class="MsoNormal"><i><span style="font-size:12.0pt">The Recording Standards Commission is intended to clarify existing laws regarding the recording of documents with county recording departments and county auditors. Recording standards and practices vary
from county to county which creates confusion and liability. Simplified and standardized recording standards and fees are therefore needed to better harmonize practices throughout the state.<o:p></o:p></span></i></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">The 13 members of the commission are mostly county auditors, as well as a representative from the Washington Mortgage Bankers Assn, Escrow Association of Washington and Washington Land Title Association.
One seat was also set aside for a member of the WSBA. I was nominated and approved to represent WSBA.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">The Commission held its first meeting yesterday, with the attachment as its starting point re: issues to work on. As you can see, most of the issues are technical in nature as to how the various recorder’s/auditor’s
offices work. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">I want to bring to the RSC all of your various gripes about county recorders/auditors offices. One thing I have learned already is that these offices consider themselves entirely separate (and mostly with
no accountability) on issues from the DOR relating to REET. However, I am pushing for them to at least become aware of these sorts of issues from practitioners. So (at the risk of blowing up my email in-box), I invite all member of the WSBA Real Property
section to email me your issues and concerns with various recording offices. Please identify which county office you are writing about when you respond.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">I have a one year appointment to the RSC, so please bookmark my contact info.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><b><span style="font-size:12.0pt">Please note our new website and email address as of 1/1/21.<o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">Chris Benis<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">First Avenue Law Group, PLLC<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">321 First Avenue West, Seattle, WA 98119<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">206.447-1900 office – 206.447.9075 fax – www. firstavenuelaw.com
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"> <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">This message contains information that may be CONFIDENTIAL AND PRIVILEGED. Unless you are the addressee (or authorized to receive for the addressee), you may not use, copy or disclose to anyone the message
or any information contained in the message. If you have received the message in error, please advise the sender by reply e-mail
<a href="mailto:chrisb@firstavenuelaw.com">chrisb@firstavenuelaw.com</a>, and delete this message. Thank you very much.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt">To comply with recent IRS rules, we must inform you that this message, if it contains advice relating to federal taxes, was not intended or written to be used, and it cannot be used, for the purpose of avoiding
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