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My grandmother left her house in her will to her two daughters (my mother and my aunt) and me (her granddaughter). My aunt had no interest in living in the house, and hasn't had any involvement at all in its upkeep or paying taxes, repairs, etc. for the last 20 years. And, this arrangement has been fine with us all; no personal disputes involved, my aunt just doesn't care to be involved with home ownership. There is no lien on the house, the mortgage has been paid off for a very long time.
My aunt now wishes to "have her name taken off the house" (she doesn't consider herself a co-owner, but legally she is of course).
Can someone describe to me what an "arms length" transaction is and what it would mean (or not mean) in this situation? What's the process of removing a tenant in common so that ownership of the house reverts to the other two tenants in common? We basically know nothing about real estate law or how to go about doing this. Does this simply involve filing a quit claim deed? What questions should I ask the lawyer?
location: NY state
Last edited by Jeromeville; 05-07-2015 at 09:00 AM..
Are you going to be paying her for her share? Normally, you'd get an appraisal and then pay her 1/3 of the value, give or take any other financial arrangements between you. But it sounds like she doesn't really want to get paid? You may still want to pay her some type of nominal consideration, just so that the arrangement can withstand scrutiny. The actual paperwork to get the deed changed, the attorney should be able to explain all of that to you.
You probably need to talk to an accountant as well as an attorney though, because 1/3 of the value of a house essentially gifted by your aunt to you and your mother may have tax implications.
The process to transfer a Tenants in Common ownership is basically the same as transferring any other type of ownership. Your aunt would merely need to grant a Deed to the intended recipient(s) and have that recorded. A Quit Claim Deed would likely be sufficient, but double check that with your attorney. (I'm assuming that you are fully knowledgeable about all other aspects concerning the title and it is clear to convey. Nonetheless, you should double check what is recorded relative to the property. You will also need to see the Deed conveying the interest to your aunt to make sure that her name is indicated the same on the new Deed.)
First question: were the ownership interests equal? It sounds as if they most likely were, but you'd need to confirm that since Tenants in Common do not need to own equal portions of a property.
There may be gift tax consequences, so that's another thing you'd need to check with your attorney. There's a chance that you might fall under a lifetime exclusion, but you'd need to verify that. If gift taxes are an issue, you may want to try to calculate all of the expenses that your aunt didn't pay over the years and use those figures to adjust what is truly a gift. Those unpaid expenses may also be a consideration if you are planning to pay for your aunt's interest. (Of course, if you've had the benefit of living there, that may fall into the mix, too.)
That fact that you are related to your aunt disqualifies this as being an "arms-length" transaction. That aspect is irrelevant to your situation. This should be an easy transaction for your real estate attorney to handle. Whether you pay for the property or not will not affect the actual transfer. It also shouldn't matter whether your aunt has any heirs. As long as the property is in her name, and she is still alive, she is free to dispose of her assets without taking any heirs into account.
Note: if she were to die, however, her Tenants in Common interest would go to her heirs.
Last edited by jackmichigan; 05-07-2015 at 12:28 PM..
Reason: note
Don't forget that if you and your mom have been paying the taxes repairs etc there is monetary value on that also should be payable to you from the estate.
Don't forget that if you and your mom have been paying the taxes repairs etc there is monetary value on that also should be payable to you from the estate.
In all likelihood, the estate was probably closed years ago so there would be nothing to disburse. However, taking into account the monetary value of all of the taxes, insurance, repairs, etc., would still be a good idea in valuing either a purchase or gift.
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