Ask the TITLEMAN™ - Quit Claim; Commercial Property; Community Property

by John T. Lotardo aka TITLEMAN™
Sr. VP/General Counsel, Stewart Title & Trust of Phoenix, Inc.

Q. Our mother died 5 years before father Quit Claimed their house (in its entirety) to another daughter and son-in law. If our parents had the Deed to the house as Community Property and not Community Property Right of Survivorship, could my father Quit Claim the entire Real Property or just his share? Wouldn’t my Mother’s share by law go to the children? Is it legal to Quit Claim our mother’s share- even though she was deceased? Can a community property Deed by both parents on a property, be Quit Claimed by one after the death of the other? I say that my mother’s half interest belonged to her 6 children. Now, the house was sold, the daughter and son-in-law reaped all profits.
A. If I understand your question correctly you are questioning whether your Father had the right to transfer title of a piece a property that he held with your mother as Community Property. Well it depends. I assume that she had no will outlining her wishes. If so, that would have helped. Your Father would normally be the one who inherits your Mother’s Community Property interest in the property- that is if he had no step-children (children who were not his children but were the children of your mother with someone else, for example). If there were, they would be presumably entitled to her share in the property. Now, let’s assume that all of the children were the joint children of your Mother and Father. With that said, the property does not “automatically” transfer to your Father. This is because the property was not held with a right of survivorship clause. He would have to do a form of probate proceedings. This could be done in several ways, whether formally, informally or by way affidavit. The statutes outline the process for each. A review of the chain of title should disclose how her interest was handled. A bit more research is in order to see what was actually done in order for him to transfer the entire interest in the house to the daughter and son-in-law.

Q. I have a couple of questions regarding commercial property real estate transactions. 1) What is the average cost of a title insurance policy on a multi-million dollar property located in Phoenix, AZ? Also, is it customary for the buyer or seller to pay? 2) What is the cost of transfer taxes and/or documentary stamps for this size transaction? Also, is it customary for the buyer or seller to pay?
A. Thank you for the email. It is difficult to say what the average cost for such a transaction would be since each title insurer has their own rate structure. I can say that those rates are based on filed rates with the Arizona Department of Insurance. It also depends what type of policy is issued. Is a Standard Owner’s policy being issued or is an extended policy being issued? What kinds of special endorsements are being issued? Is there a lenders policy as well? I have seen where the seller pays for the Owners Standard Policy and the buyer pays for the additional cost to upgrade to an Extended Coverage Policy. But, who pays for what is part of the negotiation process. I am not aware of any current transfer tax, although there has been talk about one for some time.

Q. I have a question involving a property owned by a father and son, as joint tenants, as sole and separate to their respective interests. Father now wants to deed his interest to the son so he owns it solely. The question that is arising is whether the son’s spouse needs to disclaim her interest again. I can see both sides of the coin on this one. On the one hand, the father can do whatever he wants with his interest since he holds it sole and separately. On the other hand, I could see an argument that the son’s spouse may claim an interest. What is the proper way to do this?
A. There is always discussion on that one, because of the presumption of Community Property. Since a deed now from the son’s wife would help overcome the presumption, I would have her disclaim her interest in the newly acquired interest coming to the son from the father. That way, you shouldn’t have that issue.

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Copyright John T. Lotardo. All rights reserved. John Lotardo (aka the TITLEMAN™) is Senior Vice-President and General Counsel for Stewart Title & Trust of Phoenix, Inc., and State Underwriting Counsel for Stewart Title Guaranty Company. He is a member of the National Advisory Councils for GoGetEscrow.com, GoGetLoan.com, GoGetNotary.com and GoGetRealEstate.com. The information supplied is of a general nature and should not be relied upon as comprehensive legal advice. Please consult with your own local legal counsel. For more about John, visit: www.GoGetEscrow.com/Get/Titleman or www.AskTheTitleman.com.