July 5th, 2021 at 1:31 pm
A. When the property is held in the name of a trust.
B. When the property is non-owner occupied.
C. When the owner is an LLC.
D. When the property is involved in a probate sale.
E. All of the above.
Answer: Answer A is not the best answer. Most trusts are exempt from the TDS requirement. However, they are not exempt if the trust is a revocable trust, and the trustee is a natural person who has personally owned or occupied the property within the last year.
Answers B and C are wrong. Sellers often try to claim they are TDS-exempt because the property is non-owner occupied or owned by an LLC, but those sellers are not exempt as according to the TDS law. For non-owner occupied properties or those owned by an LLC, the sellers or their authorized representatives should fill out the TDS as best as they can, based on what they actually know, but they can add a comment explaining that they do not reside in the property.
Answer D is the correct answer. A probate transaction generally involves a property that is held in the name of an individual who has died, and there are no other co-owners of the property who have a right of survivorship. If that property is sold through a probate court process, the executor or administrator representing the estate of the deceased is exempt from the TDS requirement.
Practice Tip: The most notable TDS exemptions for our day-to-day practice are as follows:
• Certain trust sales (unless the trust is a revocable trust, and the trustee is a natural person who has personally owned or occupied the property within the last year).
• Probate and conservatorship sales;
• Certain new construction sales (e.g., those that are subject to a public report requirement);
• Bankruptcy sales;
• Other court-order sales;
• Foreclosure sales; and
• REO or bank-owned transactions.
For a full list of all the TDS requirements, see C.A.R.’s legal Q&A on Transfer Disclosure Statement Exemptions (password-protected for C.A.R. members only).
-Thank You to Dean Stalter (Broker of Record) for suggesting this week’s legal tip!
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