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E S T A T E

B Y : A M Y W O C H O S

Quit Quitclaiming

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Why this topic?

� Most common real estate document brought to clinics is quit claim deed. Clients have rarely considered whether this is the correct/best transfer option.

� There are some situations where it is clear the quit claim is not the proper transfer vehicle. In other situations, quit claims can be used, but could be risky for the grantor, the grantee, or both.

� Even when correct/best deed is used, filling it out correctly takes some knowledge of real estate terms and default rules.

What we will cover

� Basic real estate terms/concepts� Specific situations where quit claim deed is not the

correct/best option (i.e., other transfer options and how to use them)

� Potential problems with using the quit claim deed (i.e., clinic red flags and how to spot them)

� Basics on filling out a deed� Hypotheticals

Basic real estate terms and concepts

� Deed – Black’s Law dictionary – “In a more restricted sense, a written agreement, signed, sealed delivered, by which one person conveys land, tenements, or hereditaments to another. This is its ordinary modern meaning. ”

So, a written agreement transferring real estate.

Basic terms and concepts – types of deeds

� Quit claim deed – a release by the grantor to the grantee of the interest grantor may have in the property described in the deed. Does not guarantee (warranty) clear title. Conveys whatever interest the grantor has, whether something, nothing and everything in between.

� Warranty deed – a release by the grantor to the grantee of the interest that the grantor has to property described in the deed. The grantor warrants that she legally owns the property and that there are no outstanding liens, mortgages, or encumbrances. The grantor may be liable for damages if the grantee discovers the title is defective.

� Personal Representative’s Deed – special deed used only by someone who has been appointed by a court to be the personal representative of an estate, to transfer the deceased owner’s interest either to a third-party buyer or to an estate beneficiary. Similar to a quit claim deed but from an appointed party.

Basic terms and concepts – types of interests

� Joint tenancy – Ownership by two or more persons in which each owns an undivided interest in the whole. Joint tenancy creates a right of survivorship – if any of the joint tenants dies, ownership of the property is transferred to the survivors.

� Tenancy in common – Ownership by two or more persons in which each owns a defined interest (equal if not specifically defined) in the whole with no right of survivorship. If one of the owners dies, their share is transferred to their beneficiaries or heirs.

� NOTE: if the deed indicates more than one owner and the type of ownership interest is not specifically defined, then the default is ownership as tenants in common, unless the owners are two individuals who were married at the time the real estate was conveyed, in which case the default is joint tenancy.

Basic terms and concepts

� Life estate – an equitable interest in property which allows the grantor to use the property for his or her life. The holder of a life estate interest has no right to transfer or sell the property. The owner of the property cannot take possession until the death of the life tenant.

� Transfer on death – a designation wherein the Transfer on Death (TOD) beneficiary becomes the owner of property after the death of a sole owner or the death of the last of multiple joint owners. The ownership of the property does not change until that death(s). Recording is required for a TOD to take effect.

What you should have before you help anyone with preparing a new deed

� The current deed – always!

� Information on liens/property violations on the property (status of current property taxes, judgments against current owner(s) of property, etc.) –preferable.

Transfers after death of an owner – rarely a situation for a quit claim deed

� Sole owner or last joint owner of a property with a TOD Beneficiary dies. No need to quit claim!

� File the TOD 110 (now the HT/TOD 110) (available on Wisconsin Register of Deeds Association website and is Attachment A). Filed in the Register of Deeds office along with:¡ eRTR receipt (use exemption 11)[Note: Milwaukee Law Library

helps with these by appointment]¡ Death certificate¡ $30 recording fee

Transfers after death of an owner – rarely a situation for a quit claim deed

� An owner dies and property was held as “joint tenants.” To remove the deceased owner’s name from the deed and show correct current owner’s name – use form HT-110 (now HT/TOD 110)(available on Wisconsin Register of Deeds Association website and is Attachment A). Filed in the Register of Deeds office along with:¡ eRTR receipt (use exemption 11)[Note: Milwaukee Law Library

helps with these by appointment]¡ Death certificate¡ Copy of deed establishing joint tenancy¡ $30 recording fee

Transfers after death of an owner – rarely a situation for a quit claim deed

� An owner dies and property was held as “tenants in common.” Interest does not automatically revert to remaining owners. Can’t just “take his name off the title.” Only that portion of the property owned by the decedent may be transferred and must be transferred to decedent’s beneficiaries (if there is a will) or heirs (if there is not), unless otherwise designated (such as with a Transfer on Death).

� For probate procedures on transferring this interest – see “Post Death Real Estate Issues” in Brown Bag archives. However, will talk about one post-death transfer option –Transfer By Affidavit.

Transfer By Affidavit (PR-1831)

� Can only be used when the gross value of all of the decedent’s solely owned property is $50,000 or less.

� Can only be used by an heir (or trustee or guardian). (See Wis. Stats. 990.001(16) for heirship). Can’t be used by girlfriend or non-heir family or will beneficiary.

� If decedent received Medicaid or Family Care, there is a mechanism on form to notify the Wisconsin Estate Recovery Program.

� Form available at www.wicourts.gov. Filed in Register of Deeds office with $30 filing fee and eRTR receipt.

Limitations of the Transfer By Affidavit

� Affidavit only allows transfer to one person. Does not allow real estate or vehicle ownership to be transferred to multiple heirs. So is a multi-step process if more than one heir.

� No court order or signed agreement as to distribution. Any “interested person” can come back later, open an estate, and ask for a judicial determination as to whether the asset transfers and/or distributions were proper.

� Similarly, with regard to real estate, the affidavit is recorded with the current deed to show change in ownership. In most counties, the Register of Deeds will take as many affidavits as are filed. A formal probate would then be required to determine who the proper owner is.

Transferring property – who is the client and what is reason for the transfer?

� Is the client the grantor or the grantee? Quit claim deeds benefit the grantor, warranty deeds benefit the grantee.

� Has there been a relationship change (e.g., recently married person wants to add spouse, recently divorced person needs to transfer their interest in marital real estate pursuant to marital settlement agreement) – quit claim deed generally appropriate.

� Is this a sale or land contract situation? Very veryrare in clinic (at least pre-sale). Probably not suitable for brief legal advice.

Transferring the property – what is the reason for the transfer?

� Is the grantor trying to give the property to a family member or friend? Or is the grantor trying to do some pre-death planning?¡ Getting the information and talking through the options with

client may be beyond the scope of brief legal advice in general advice clinics in all but the simplest situations.

¡ Does the client (and do you) understand potential issues with giving away property?

Issues with “giving away” property

� Gift tax¡ If the property is conveyed for less than fair market value, it will be

considered a gift for income tax purposes. ¡ Gift tax is payable by grantor.¡ Gift tax exclusion for 2014, 2015, 2016 and 2017 is $14,000. For

2018, the annual exclusion is $15,000. If spouses own property together, the are each entitled to the annual exclusion.

� Medicaid issues¡ Transfer of any property is considered a “divestment” for Medicaid

eligibility purposes – though certain exceptions.¡ There is currently (for transfers since 2009) a 5 year “lookback”

period – so at time of determination for eligibility, will look back at transfers going back 5 years.

¡ Divestments during that lookback period may result in an period when the person is ineligible for Medicaid benefits, just when they need it most for skilled care.

Issues with transferring property - liens

� Is there a mortgage? How will that be addressed?� Are there other liens – judgment liens, condo liens,

hospital liens, construction liens, etc. Who will be responsible?

� Is there a lis pendens (a notice of a pending lawsuit involving real estate recorded with the real estate)? If the property is transferred, the grantee is bound by the ultimate results of the pending suit.

So, client is going to quit claim anyway – make sure to fill it out right

� Quit claim is Attachment B� Make sure you have correct names of grantor(s) and grantee(s). � If conveyance is to more than one person, make sure you identify

how the interest is being held – “as joint tenants” or “as tenants in common.” If tenants in common and the interests will not be equal, then make sure the division is specifically stated.

� Legal description – write it exactly as it is written on the previous deed. DO NOT USE LEGAL DESCRIPTION FROM TAX BILL!!!

� Must include tax key (parcel) number� Must be notarized.� If it is exempt from transfer fee, you must write “This conveyance is

exempt from transfer fee pursuant to Wis. Stats. sec. 77.25 (_).”Add subsection number. Statute is attachment C.

What the client does with the deed

� Fill out an Real Estate Transfer Return. Must be done electronically (eRTR). The Milwaukee Law Library helps fill these out by appointment. A receipt is generated at the end.

� Take the deed, Register of Deeds filing fee (currently $30, not waivable) and the transfer fee (if applicable) to Register of Deeds office - in Milwaukee, is in the courthouse, Room 103.

Hypotheticals

Client is looking to transfer property to her daughter who lives with her. Client has three other children. Property is worth $30,000.

What form should she use, if any, and why? What other components should be explained to client?

Hypotheticals

Client is looking to transfer her mother’s property to herself because she lives with her. Client has two siblings. Property is worth $25,000. What form should she use, if any, and why?

¡ If mother has already passed away, what form should she use, if any, and why?

¡ If property is worth $75,000, what form should she use, if any, and why?

¡ Client doesn’t want the property, but is managing her mother’s affairs after her death. What form should she use, if any, and why?

Hypotheticals

Client comes in with quit claim deed showing both her and mother as grantees. Mother has passed away and client wants to have property transferred solely into her name. Client has four siblings. What form should she use, if any, and why?

¡ Mother is still alive and she and client want an attorney to review the quitclaim deed before they finalize and record it. What form should she use, if any, and why?

Hypotheticals

Client wants to remove her deceased husband’s name from the deed to their home. What form should she use, if any, and why?

¡ Client’s husband’s name isn’t on the deed, but she wants the deed to be changed to her maiden name (which she has subsequently changed back to). What form should she use, if any, and why?

¡ Client’s husband is alive and they have recently gotten divorced. The divorce requires the property to be transferred into her name. What form should she use, if any, and why?

Questions…