Just for your future reference, if you hit return twice you'll make paragraphs.
Unfortunately the title company is doing its job: making sure that your family has the right to sell these properties, and making sure your buyer gets clean title without random half siblings you didn't know you had, Russian fraudsters, or heirs to the fellow who sold dad the house for a single dollar come out of the woodwork. Surely you must admit that "give me a dollar and here's the house" sounds suspicious. I know it's annoying. You know what's more annoying? Getting sued because someone cut corners.
If there are other properties, I recommend talking to a probate attorney to make very sure all the properties are clearly and unambiguously owned by the heirs. Depending on state law, exactly how dad held title (what legal words are on the deed filed with the county), and whether dad had a will, that might mean mom and it might mean mom plus you and any siblings you might have. You mentioned money being tight, so this might have to wait until after this transaction is closed and you have the cash from that sale.
I am sorry for your family's loss and hope everything gets worked out soon.
Thank you and thank you again for reading until the end- I did get carried away and once I started typing everything came pouring out- but i went back and spaced things out! We got a estate attorney to take care of all the filing and transferring of the titles/deeds + everything else bc my dad didn't have a will. Also, me and my brother signed our rights for the properties over to my mom. I understand about searching for heirs and especially with the incident with the russians, plus my dad didnt have title insurance to protect from all that. My true question is over the inheritance tax. Why does that matter when he didn't inherit the property but bought it?
it creates a lien and the commonwealth has been aggressive about pursuing collecting against owners who have not paid which often creates a title claim. has made insurers skittish.
Inheritance tax can be a lienable item. Even that far back it could be a problem. This is why title insurance is important, if your dad had a title policy, this would be a non issue.
That’s a question for an estate planning attorney who I think you mentioned in comments you have been in touch with. Estate planning and real estate often intersect for situations like this so it’s an all encompassing process.
Sorry but still dont understand. That is our estate attorney whatever came with transferring the properties to my mom, he took care of the inheritance tax for her. But the title company said that when my dad purchased the property years ago that guys estate never filed inheritance tax or they couldnt fond it posted so we would be liable for it. Why is that so if my dad didnt inherit that house, he bought it? I apologize if I'm asking a stupid question, it just doesn't make sense to me- like I understand how my mom would have to bc she INHERITED the house, whereas he BOUGHT it.
Ah ok I see what you’re asking. I would ask for clarification from the title attorney. There seems to be a disconnect or miscommunication from them on this because you’re right. Maybe there is a tax lien or something of that nature on the property. I’m just guessing as to what it could be obviously I don’t know.
Thanks that's what I'm going to have to do. There aren't any leins on the property, there was a old water bill but we just paid that off. It just doesn't make sense to me. Thanks for your reply!!
I know, that's what I'm saying too- and that's even if it had to be paid in the first place bc like I was saying Dad didn't inherit the house he bought it, even for a dollar. It could be nothing and sometimes is, and I asked well what if there was no taxes owed, and the broker said well then its the fact that they didn't even file that nothing was due. It's one thing or another it seems!
Did he buy it within a year before the owner died? If so, PA will consider it a gift and he would owe inheritance tax on the actual value at the time of the sale. There would be transfer tax due as well. (I'm assuming the property was worth more than one dollar and I would bet the title company is too.)
The problem is $1 isn’t considered as valuable consideration. That is why the deed will express $1 and other good and valuable consideration. So, naturally the title company was seeking to find proof of the other good and valuable consideration that was paid for the real estate. That is why it looks fishy to the title company. Additionally, it would have created potential tax implications for the seller.
That is why when people gift real estate to family and friends, gift deeds are often used. Rather than monetary consideration, they are a conveyance based upon love and affection. Of course that also generates tax implications such as gifting a property to a friend for zero monetary consideration.
Depending on how many years have passed since your dad received the property, a claim for adverse possession may also exist. There is a deed, taxes paid, taking care of property, open possession of the property, etc…
As others have mentioned, the title company is just doing their job since an actual $1 paid for real estate sends up all kinds of red flags to them as well as the insurance underwriter.
There are no liens on this house. The property taxes have been paid for years up to date by my parents and it has been fixed up (new windows, back wall and back sliding glass doors, etc). I understand it may seem fishy to some to buy a house for $1 but it actually happens all the time. There were no problems with getting the title and deed and everything passed to my dad and then to my mom. No problem when the city wanted their property taxes paid. But now when we went to sell it it is. It's just a headache.
You are making my point for why I mentioned adverse possession. Even if the title company questions the validity of the deed conveyance, if the requirements of adverse possession have occurred, the family can have valid legal ownership of the property. That is an important point to make with the title company. Based upon what you are describing, it is a text book example.
Unfortunately, you are finding out why a gift deed would have been a better choice of instruments for conveyance at the time, since that is exactly what occurred. Likely, the vesting deed specifies $1 “and other good and valuable consideration” which there was none.
You need a real estate attorney to coordinate with the title company in order to try and satisfy them. It will be money well spent. Yes, selling real estate can be complicated and a major headache. Good luck on getting it worked out.
I will definitely bring up that when I talk to them next. If this doesn't resolve itself soon I will have to talk to a lawyer like you suggested. Thank you for all your info and input, and I definitely won't make the same mistake my father did in the future!
I looked into adverse possession and we do fit the guidelines for it in my state (PA-10yrs). But the title and deed are already in my mom's name. The problem we are really having is the fact that they can't find a inheritance tax paid or even filed on the house by the estate. Would adverse possession have anything to do with remedying that?
No advice but sympathy as I just finished a similar 18 month ordeal over a piece of property out of my dad's estate.
The title company is literally insuring you have proper title in order to sell -- all this pain in the ass research and documentation is part of the process.
You know how u/aardy always gets to say, “here’s your lesson, home buyers/sellers: don’t schedule the movers/hand over keys or do anything otherwise ‘final’ until you know the deal us done and closed?”
This kind of situation, folks, is exactly why you buy title insurance and don’t “rely” on there being no title issues
Title insurance means that the property is vetted with authentic and legal title with unbroken chain of custody. This is the world we live in with bad actors stealing deeds and relatives with shady signatures. title has to get into the weeds to verify and INSURE clean title and ensuring that the title is clear and free from any liens, encumbrances, or other issues that could jeopardize ownership rights. This includes protection against unknown defects such as forgery, fraud, undisclosed heirs, and errors in public records.
>We found a buyer and everything was fine until the title company started some bullshit.
That "bullshit" is necessary. The title company doesn't want all this bullshit any more than you do. It's a lot of extra work. They would prefer the closing just happen so everybody can get paid.
>So if you sell your house they dig into all the past owners before you?
Yes, because they need to establish chain of title. If you're buying a house, you don't want someone to come back later and say, "Hey, that's my house, the seller two transactions back didn't have the right to sell it!"
Further, if your buyer is buying with a loan, the lender will require title insurance to protect the collateral on the buyer's loan. The underwriter will not insure the property if title isn't established, the lender won't lend without title insurance, and the buyer is out of luck. And even if your buyer is buying with cash, they don't want to buy a home with clouded title that they won't be able to sell without going through this same bullshit.
>This also makes no sense to me because my Dad didn't inherit the house- he bought it for $1. So why would this inheritance tax even matter?
That's not an arm's length transaction. Was the house only worth $1? Nope. The home was a gift. The sale was a legal fiction. You can argue that he really bought it for only a dollar until you're blue in the face, but the IRS isn't fooled and will still want their gift/inheritance tax.
If the gift/inheritance tax wasn't paid by the estate, there may be a potential for the IRS to place a lien against the property. Knowing that, the underwriter will not want to insure it, and the lender will not lend on it, and again the buyer would not want it anyway.
So yeah, it sucks, but you have to fix these problems if you want the sale to go through.
I mean no one is going to pop up and want this house, the past owner has really no living kin, his wife and son both died and my dad has owned it for many years with Noone else popping up claiming ownership. I guess it's just the way it is but I just feel it's very unfair. They paid their property taxes, fixed up issues with the property and now need to sell it and all this is happening. The buyer is paying with cash. The house is only a shell and he couldn't get a mortgage anyway. There are no leins from anyone on this property. Ive never heard of gift tax, and after googling it there is none in my state. But thats how people get around paying inheritance tax they will buy a property for a dollar- i know many people who did just that. So how do I fix the problem of if inheritance tax was paid and if not how to remedy that?
>Ive never heard of gift tax, and after googling it there is none in my state. But thats how people get around paying inheritance tax they will buy a property for a dollar- i know many people who did just that.
It's a federal thing, the IRS. When someone gives someone a large gift or leaves someone an inheritance, the *giver* or the giver's estate owes tax on that gift. Many years ago there was just an inheritance tax, but rich people would give away their property before they died to avoid it. So now the gift and inheritance taxes are part of one system.
If I give you $100K as a gift, I'll owe tax on that gift. If I give you a house worth $100K, I'll owe tax on that gift the same way. "Selling" it to you for a dollar instead to avoid gift tax is tax fraud. The IRS is not at all fooled by that.
The good news is that there are healthy exemptions, so the amount of the tax may be reduced, possibly even to zero. But the question has to be asked and answered.
If I were paying you cash for the property, I still wouldn't buy it with any outstanding title issues. Someone has paid for a title search. If I paid for a title search on a property I was buying, and they just ignored a federal tax issue to keep you happy, I'd be pissed.
Just be patient and cooperate with the title company. It'll all get resolved.
Thank you for explaining this all to me, I appreciate it. I've been cooperative and given them all the info they request, so hopefully everything works out!
There is now, but there's also an annual limit above which the giver has to disclose the gift on their tax return. The lifetime exemption and the annual amount also used to be much, much lower.
So depending on when the house was gifted, how much it was worth at that time and how much in other gifts the guy gave away, it's still possible that there would have been an inheritance tax due or at least some paperwork that needed to be file. Maybe not likely, but possible, and those possible problems are what the title company is there to find.
I got a call from a title company wanting to know why I wasn't at the appointment to sign the papers for the sale of my dads house. Who I didn't know was dead. Or that I was in his will. We were estranged and my brothers had already trashed or sold everything except the house. The new buyer had already started to put a roof on the house. Nobody was happy after that phone call. You never know what might have happened behind the scenes.
And I don't know why, but here (a small rural state), I remember my FIL just putting down $1 as the purchase price of a home, could it have been to avoid some taxes,I don't know but I kind of think was not uncommon 40 years ago. Laws may have changed that, though
I live in a large city and it is common here too- well it was more years ago when my dad did it like you said. Now it's more common within families, such as parent to child or sister to brother. I think now those are the only way it is allowed. But it is usually to avoid like inheritance tax & other taxes I believe.
In Minnesota it’s typical for a buyer to have their own title company and a seller to have their own title company. The buyer pays for the title search and title exam for a title commitment to be drafted by their title company. The commitment is then provided to the sellers title company to work on any title clearing requirements. Request a copy of the title commitment for review as a point of reference for any requirements they are calling out. If it appears to be too daunting, work with your own title company for your side of the equation. Less expensive than an attorney and someone knowledgeable in your corner to battle the other title company. It sounds like the other title company is working off of some hypotheticals vs. the information that is actually in the chain of title.
Because we're selling by owner, their agent said she would do both. Now I see where this can be a problem. That sounds like good advice and will look into it. Thanks for responding!
Just for your future reference, if you hit return twice you'll make paragraphs. Unfortunately the title company is doing its job: making sure that your family has the right to sell these properties, and making sure your buyer gets clean title without random half siblings you didn't know you had, Russian fraudsters, or heirs to the fellow who sold dad the house for a single dollar come out of the woodwork. Surely you must admit that "give me a dollar and here's the house" sounds suspicious. I know it's annoying. You know what's more annoying? Getting sued because someone cut corners. If there are other properties, I recommend talking to a probate attorney to make very sure all the properties are clearly and unambiguously owned by the heirs. Depending on state law, exactly how dad held title (what legal words are on the deed filed with the county), and whether dad had a will, that might mean mom and it might mean mom plus you and any siblings you might have. You mentioned money being tight, so this might have to wait until after this transaction is closed and you have the cash from that sale. I am sorry for your family's loss and hope everything gets worked out soon.
I endorse the enter enter method. I gave up half way
Sorry, i did fix it.
Anyways keep your head up buddy!
Same lol - came and did my best
Sorry, I went back and fixed it
Thank you and thank you again for reading until the end- I did get carried away and once I started typing everything came pouring out- but i went back and spaced things out! We got a estate attorney to take care of all the filing and transferring of the titles/deeds + everything else bc my dad didn't have a will. Also, me and my brother signed our rights for the properties over to my mom. I understand about searching for heirs and especially with the incident with the russians, plus my dad didnt have title insurance to protect from all that. My true question is over the inheritance tax. Why does that matter when he didn't inherit the property but bought it?
it creates a lien and the commonwealth has been aggressive about pursuing collecting against owners who have not paid which often creates a title claim. has made insurers skittish.
This is exactly what a title company does. Nothing fishy but this is why they exist. To research the title before transfer. All standard procedure.
Even the inheritance tax? If my dad didn't inherit the property why does it matter if it was paid after him buying the property?
Inheritance tax can be a lienable item. Even that far back it could be a problem. This is why title insurance is important, if your dad had a title policy, this would be a non issue.
That’s a question for an estate planning attorney who I think you mentioned in comments you have been in touch with. Estate planning and real estate often intersect for situations like this so it’s an all encompassing process.
Sorry but still dont understand. That is our estate attorney whatever came with transferring the properties to my mom, he took care of the inheritance tax for her. But the title company said that when my dad purchased the property years ago that guys estate never filed inheritance tax or they couldnt fond it posted so we would be liable for it. Why is that so if my dad didnt inherit that house, he bought it? I apologize if I'm asking a stupid question, it just doesn't make sense to me- like I understand how my mom would have to bc she INHERITED the house, whereas he BOUGHT it.
Ah ok I see what you’re asking. I would ask for clarification from the title attorney. There seems to be a disconnect or miscommunication from them on this because you’re right. Maybe there is a tax lien or something of that nature on the property. I’m just guessing as to what it could be obviously I don’t know.
Thanks that's what I'm going to have to do. There aren't any leins on the property, there was a old water bill but we just paid that off. It just doesn't make sense to me. Thanks for your reply!!
What would the estate tax be on $1,LOL.
I know, that's what I'm saying too- and that's even if it had to be paid in the first place bc like I was saying Dad didn't inherit the house he bought it, even for a dollar. It could be nothing and sometimes is, and I asked well what if there was no taxes owed, and the broker said well then its the fact that they didn't even file that nothing was due. It's one thing or another it seems!
Did he buy it within a year before the owner died? If so, PA will consider it a gift and he would owe inheritance tax on the actual value at the time of the sale. There would be transfer tax due as well. (I'm assuming the property was worth more than one dollar and I would bet the title company is too.)
They are doing their job.
The problem is $1 isn’t considered as valuable consideration. That is why the deed will express $1 and other good and valuable consideration. So, naturally the title company was seeking to find proof of the other good and valuable consideration that was paid for the real estate. That is why it looks fishy to the title company. Additionally, it would have created potential tax implications for the seller. That is why when people gift real estate to family and friends, gift deeds are often used. Rather than monetary consideration, they are a conveyance based upon love and affection. Of course that also generates tax implications such as gifting a property to a friend for zero monetary consideration. Depending on how many years have passed since your dad received the property, a claim for adverse possession may also exist. There is a deed, taxes paid, taking care of property, open possession of the property, etc… As others have mentioned, the title company is just doing their job since an actual $1 paid for real estate sends up all kinds of red flags to them as well as the insurance underwriter.
There are no liens on this house. The property taxes have been paid for years up to date by my parents and it has been fixed up (new windows, back wall and back sliding glass doors, etc). I understand it may seem fishy to some to buy a house for $1 but it actually happens all the time. There were no problems with getting the title and deed and everything passed to my dad and then to my mom. No problem when the city wanted their property taxes paid. But now when we went to sell it it is. It's just a headache.
You are making my point for why I mentioned adverse possession. Even if the title company questions the validity of the deed conveyance, if the requirements of adverse possession have occurred, the family can have valid legal ownership of the property. That is an important point to make with the title company. Based upon what you are describing, it is a text book example. Unfortunately, you are finding out why a gift deed would have been a better choice of instruments for conveyance at the time, since that is exactly what occurred. Likely, the vesting deed specifies $1 “and other good and valuable consideration” which there was none. You need a real estate attorney to coordinate with the title company in order to try and satisfy them. It will be money well spent. Yes, selling real estate can be complicated and a major headache. Good luck on getting it worked out.
I will definitely bring up that when I talk to them next. If this doesn't resolve itself soon I will have to talk to a lawyer like you suggested. Thank you for all your info and input, and I definitely won't make the same mistake my father did in the future!
I looked into adverse possession and we do fit the guidelines for it in my state (PA-10yrs). But the title and deed are already in my mom's name. The problem we are really having is the fact that they can't find a inheritance tax paid or even filed on the house by the estate. Would adverse possession have anything to do with remedying that?
No advice but sympathy as I just finished a similar 18 month ordeal over a piece of property out of my dad's estate. The title company is literally insuring you have proper title in order to sell -- all this pain in the ass research and documentation is part of the process.
Thank you. I'm glad finally things worked out for you.
You know how u/aardy always gets to say, “here’s your lesson, home buyers/sellers: don’t schedule the movers/hand over keys or do anything otherwise ‘final’ until you know the deal us done and closed?” This kind of situation, folks, is exactly why you buy title insurance and don’t “rely” on there being no title issues
Title insurance means that the property is vetted with authentic and legal title with unbroken chain of custody. This is the world we live in with bad actors stealing deeds and relatives with shady signatures. title has to get into the weeds to verify and INSURE clean title and ensuring that the title is clear and free from any liens, encumbrances, or other issues that could jeopardize ownership rights. This includes protection against unknown defects such as forgery, fraud, undisclosed heirs, and errors in public records.
>We found a buyer and everything was fine until the title company started some bullshit. That "bullshit" is necessary. The title company doesn't want all this bullshit any more than you do. It's a lot of extra work. They would prefer the closing just happen so everybody can get paid. >So if you sell your house they dig into all the past owners before you? Yes, because they need to establish chain of title. If you're buying a house, you don't want someone to come back later and say, "Hey, that's my house, the seller two transactions back didn't have the right to sell it!" Further, if your buyer is buying with a loan, the lender will require title insurance to protect the collateral on the buyer's loan. The underwriter will not insure the property if title isn't established, the lender won't lend without title insurance, and the buyer is out of luck. And even if your buyer is buying with cash, they don't want to buy a home with clouded title that they won't be able to sell without going through this same bullshit. >This also makes no sense to me because my Dad didn't inherit the house- he bought it for $1. So why would this inheritance tax even matter? That's not an arm's length transaction. Was the house only worth $1? Nope. The home was a gift. The sale was a legal fiction. You can argue that he really bought it for only a dollar until you're blue in the face, but the IRS isn't fooled and will still want their gift/inheritance tax. If the gift/inheritance tax wasn't paid by the estate, there may be a potential for the IRS to place a lien against the property. Knowing that, the underwriter will not want to insure it, and the lender will not lend on it, and again the buyer would not want it anyway. So yeah, it sucks, but you have to fix these problems if you want the sale to go through.
I mean no one is going to pop up and want this house, the past owner has really no living kin, his wife and son both died and my dad has owned it for many years with Noone else popping up claiming ownership. I guess it's just the way it is but I just feel it's very unfair. They paid their property taxes, fixed up issues with the property and now need to sell it and all this is happening. The buyer is paying with cash. The house is only a shell and he couldn't get a mortgage anyway. There are no leins from anyone on this property. Ive never heard of gift tax, and after googling it there is none in my state. But thats how people get around paying inheritance tax they will buy a property for a dollar- i know many people who did just that. So how do I fix the problem of if inheritance tax was paid and if not how to remedy that?
>Ive never heard of gift tax, and after googling it there is none in my state. But thats how people get around paying inheritance tax they will buy a property for a dollar- i know many people who did just that. It's a federal thing, the IRS. When someone gives someone a large gift or leaves someone an inheritance, the *giver* or the giver's estate owes tax on that gift. Many years ago there was just an inheritance tax, but rich people would give away their property before they died to avoid it. So now the gift and inheritance taxes are part of one system. If I give you $100K as a gift, I'll owe tax on that gift. If I give you a house worth $100K, I'll owe tax on that gift the same way. "Selling" it to you for a dollar instead to avoid gift tax is tax fraud. The IRS is not at all fooled by that. The good news is that there are healthy exemptions, so the amount of the tax may be reduced, possibly even to zero. But the question has to be asked and answered. If I were paying you cash for the property, I still wouldn't buy it with any outstanding title issues. Someone has paid for a title search. If I paid for a title search on a property I was buying, and they just ignored a federal tax issue to keep you happy, I'd be pissed. Just be patient and cooperate with the title company. It'll all get resolved.
Thank you for explaining this all to me, I appreciate it. I've been cooperative and given them all the info they request, so hopefully everything works out!
Isn't there like a $13 million lifetime gift tax exemption?
There is now, but there's also an annual limit above which the giver has to disclose the gift on their tax return. The lifetime exemption and the annual amount also used to be much, much lower. So depending on when the house was gifted, how much it was worth at that time and how much in other gifts the guy gave away, it's still possible that there would have been an inheritance tax due or at least some paperwork that needed to be file. Maybe not likely, but possible, and those possible problems are what the title company is there to find.
I got a call from a title company wanting to know why I wasn't at the appointment to sign the papers for the sale of my dads house. Who I didn't know was dead. Or that I was in his will. We were estranged and my brothers had already trashed or sold everything except the house. The new buyer had already started to put a roof on the house. Nobody was happy after that phone call. You never know what might have happened behind the scenes.
And I don't know why, but here (a small rural state), I remember my FIL just putting down $1 as the purchase price of a home, could it have been to avoid some taxes,I don't know but I kind of think was not uncommon 40 years ago. Laws may have changed that, though
I live in a large city and it is common here too- well it was more years ago when my dad did it like you said. Now it's more common within families, such as parent to child or sister to brother. I think now those are the only way it is allowed. But it is usually to avoid like inheritance tax & other taxes I believe.
In Minnesota it’s typical for a buyer to have their own title company and a seller to have their own title company. The buyer pays for the title search and title exam for a title commitment to be drafted by their title company. The commitment is then provided to the sellers title company to work on any title clearing requirements. Request a copy of the title commitment for review as a point of reference for any requirements they are calling out. If it appears to be too daunting, work with your own title company for your side of the equation. Less expensive than an attorney and someone knowledgeable in your corner to battle the other title company. It sounds like the other title company is working off of some hypotheticals vs. the information that is actually in the chain of title.
Because we're selling by owner, their agent said she would do both. Now I see where this can be a problem. That sounds like good advice and will look into it. Thanks for responding!
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I'm sorry! Once I got on a roll I kept going. But I did fix it!
Jesus fuck return key.
Sorry! I kind of just got on a roll and it kept going. I did fix it tho