Is there a Property Title Transfer Service?

Question

Hi All!I am looking into transferring title of a REI property I just purchased into a yet-to-be-created LLC. Since I'm planning on scaling up to many homes in different markets, I'm wondering if there is a legal service that would handle filling out the proper forms, etc, and doing the transfer properly (I understand I'll need to be involved, e.g. with signatures).  Or is this something that my attorney would work with me on?

Thanks!

Stanley Bronstein · Answer

@Andy Mirza While I have only done a few transactions in California, I think if you used a Special Warranty Deed (which is just a form of a Grant Deed, but more specific) AND you filled out the transfer disclosure statement that shows it is exempt (as being from an individual to an LLC that the individual controls), you should be okay.

I would want a California lawyer to chime in on this, but I think California has you covered.

Like I said before, I'm a strong proponent of using warranty deeds instead of quitclaims, in most situations.

Your mileage may vary, and I respect that. I've just seen one or two too many quitclaim issues crop up over the past 25+ years.

Andy Mirza · Answer

@Stanley Bronstein I agree that Quitclaim Deeds are misused and you see posts where people throw that suggestion out like it's no big deal without regard to the title issues you mentioned.

The O.P. mentioned transferring a property from himself to his LLC. I assume that he did or is doing so to a single member LLC for liability protection. Pretty simple and straightforward. A Quitclaim Deed accomplishes the transfer without incurring a reassessment of property taxes. If it's not a single member LLC, then I would suggest consulting a title company and follow their suggestion.

Andy Mirza · Answer

In CA, we have prop 13, which limits property tax increases to 2% per year regardless of what the market value of the property is. The incentive is not to sell to keep your property taxes low. When you sell to another buyer, they are assessed at the market value when they bought the property. Basically, any transfer that is arms length will trigger the reassessment and property taxes will go up, sometimes pretty significantly.

Stanley Bronstein · Answer

@Andy Mirza I'm wondering if you could still use a Special Warranty Deed and put language in the deed that states the purpose of the transfer and that specifically says it is NOT arms-length?

In Arizona, we file something called an Affidavit of Value on arms-length transfers OR the deed has language stating it is exempt and explaining why.

That way the assessor knows whether or not to trigger a revaluation on a transfer.

Does California have something similar to this?

Andy Mirza · Answer

@Stanley Bronstein I don't know if CA has something like this. Arms length transactions typically go through an escrow company and title companies record the documents. "Grant Deeds" are the most common way of transferring title. I've never seen a SWD here or even a Warranty Deed.

When you record a Deed at the County Recorders office, you typically have to fill out some kind of transfer disclosure statement. It lists the exemptions that you can check off to avoid having your property re-assessed. One of those boxes is the transfer from the an individual to an LLC that the individual controls.

Alyssa Dyer · Answer

Hey! Did you get this handled? I know it's been a year, so you probably have, haha. Just wanted to check!

Jonathan James Look · Answer

@Andy Mirza @Stanley Bronstein Thanks for the input and discussion. I think I have what I need to make the title change when the time comes now, cheers!

Max T. · Answer

title company

Stanley Bronstein · Answer

@Andy Mirza I'm used to working in states (Texas and Arizona), where there is essentially no transfer tax.

Stanley Bronstein · Answer

@Andy Mirza It may be normal and the easiest thing to do, but I never recommend to my clients that they use quitclaims for non-arms length transactions such as you describe.

I have an ongoing situation in Texas right now where there are 3 lawyers (I'm one of them) trying to work out a mess caused by a quitclaim deed that would not even be an issue had the parties used a Special Warranty Deed 10 years back when one of the parties was trying to save a few bucks and used a quitclaim deed form they had in their files.

In my opinion, quitclaim deeds are often misused. Quitclaims should only be used to resolve title issues (such as heirship and such) and they should not be used to actually transfer title.

I realize there's more than one way to do things, but I would never counsel a client to use a quitclaim in the situation you describe.

Simply use a special warranty deed and be done with it. It's not really any more difficult and it removes the potential for title insurance issues in the future.

Is there a Property Title Transfer Service?

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