WAC 458-61A-215
Clearing or exiting title, and additions
to title. (1) Introduction. The real estate excise tax does
not apply to quitclaim deeds given for the sole purpose of
clearing title if no consideration passes otherwise. This
rule does not apply to deeds executed for the purpose of
adding persons to title, except in cases of persons added to
title for co-signing security purposes only.
(2) Examples. The following examples, while not
exhaustive, illustrate some of the circumstances in which a
conveyance of real property may or may not qualify for
exemption under this rule. These examples should be used only
as a general guide. The taxability of each transaction must
be determined after a review of all the facts and
circumstances.
(a) An exiting minority partner gives the partnership a
quitclaim deed for the purpose of removing any presumptive
interest. This transfer is exempt from real estate excise tax
under this rule.
(b) An heir to an estate gives the estate a quitclaim
deed for the purpose of removing any presumptive interest they
have in the estate. This transfer is exempt under this rule.
(c) A developer deeds greenbelts, streets or common areas
in a development to the homeowners association upon completion
of the development and under the terms and covenants of the
development. This transfer is exempt under this rule.
(d) Joseph owns a residence and goes to a bank to
refinance. His credit is not good enough to obtain the new
loan in his name only, but he can qualify if he obtains a
co-signor/co-borrower. Joseph's parents agree to co-sign the
loan. The bank requests that the parents also go on title
with Joseph, and he quitclaims a half interest to his parents.
Although the deed may be phrased as a gift to his parents, the
deed acts as a security interest for his parents in the event
Joseph defaults. The addition of Joseph's parents to the
title is exempt under this rule, provided Joseph makes all the
mortgage payments, and Joseph receives no consideration from
his parents for the transfer.
(e) The parents described in (d) of this subsection who
have been on title with their child are now issuing a
quitclaim deed to Joseph to exit title. Joseph has now paid
off or refinanced the mortgage in his name only. The parents'
intention was to go on title as "co-signors" only, not as
co-purchasers of the property, and they have not made any
payments toward the repayment of the loan. This transfer is
exempt under this rule.
(3) Documentation. A narrative that explains the nature
of the clearance of, or addition to title must be signed by
both grantor and grantee, or agents of either, and attached to
the real estate excise tax affidavit. The original narrative
will be retained with the original affidavit at the county
office and a copy of the narrative will be attached to the
department's affidavit copy.
[Statutory Authority: RCW 82.32.300, 82.01.060(2), and82.45.150
. 05-23-093, § 458-61A-215, filed 11/16/05,
effective 12/17/05.]