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November 13th, 2014 by Claire
October 7th, 2011 by Marc
This is not legal advice. For legal advice, consult an attorney about your specific situation. Never rely on a blog – even one authored by an attorney.
I just authored a post on Rain City Guide regarding a buyer’s potential liability under a federal law, the Foreign Investment in Real Property Tax Act (FIRPTA). If you don’t have time to check it out, here’s the quick-n-dirty:
FIRPTA requires a buyer to determine whether the seller of real property is a “foreign person” as defined by the act (essentially any non-resident alien). If the seller is a foreign person, then the buyer is responsible for withholding 10% of the sale price and forwarding it to the IRS. This insures that the seller pays the tax due on the gain from the sale.
Here’s where it gets really interesting: if the seller is in fact a “foreign person,” yet the buyer fails to so determine and fails to withhold and forward the 10% to the IRS, then the buyer is liable for the 10%. Ouch! That’s quite a bite! The current NWMLS form contracts specifically inform the Closing Agent to make this determination and to withhold these funds on the buyer’s behalf if appropriate. However, most escrow instructions (which supplement the contract) relieve escrow of this responsibility. As a result, most Closing Agents don’t determine whether seller is a foreign person and won’t withhold the funds. So if you’re the buyer, and if the seller is indeed a foreign person, you run a risk of serious liability to the IRS absent this determination and withholding.
At WaLaw, we’re lawyers. It is part of our job to insure you comply with the law. Unlike your average real estate agents (I suspect “almost all” is more appropriate) we appreciate this law and the obligations it imposes, plus the penalty if you don’t comply. When you hire us, you know that you won’t fall into this trap. Oh, and you’ll save alot of money, too!
April 27th, 2011 by Marc
“Short sales” continue to grow in number and now — with REOs — represent a substantial portion of the real estate market. When seeking a short sale, the owner will invariably be asked by the lender to submit a “hardship letter.” Owners should make the hardship letter as compelling as possible, while — needless to say — remaining honest and accurate. (more…)
April 20th, 2011 by Marc
This post is neither legal nor tax advice. Moreover, this post is focused on Washington State, and the laws of each state differ. For actual legal or tax advice, you need to consult an attorney or tax professional about your specific situation. Rely on a blog for legal or tax advice at your peril.
Short Sale vs. Foreclosure: What’s the difference and is one better than the other? Many, many people now own property that is worth less than the amount owed on it. Moreover, many people purchased the proverbial “starter home” within the last five years, and they’re ready to move on to their next home (commonly kids are on the way). Under these circumstances, an owner can either sell the home and then write a check at closing for the balance owed — OUCH! — or get rid of the home with, hopefully, cancellation of the balance of the debt. (more…)
March 30th, 2011 by Marc
I’d love to think otherwise — indeed my business benefits from market activity, just like the business of every other real estate broker. But my wishes are irrelevant — its the data that tells the story. And right now, that story is looking like a real tear-jerker. (more…)
March 22nd, 2011 by Marc
There are many “REO” properties on the market these days. For those who understand the process, an “REO” home may present an excellent buying opportunity. But understanding the process is essential because these properties also present unique challenges.
First, an explanation of the term “REO”: it stands for “Real Estate Owned.” This term is used in a bank’s balance sheet to identify properties owned by the bank other than properties it actually uses (like a branch office). Typically, the bank becomes the owner of such a property when the bank forecloses after an owner/borrower stopped paying the mortgage. At the foreclosure auction, the bank usually bids the amount owed. If somebody bids higher, then that bidder buys the property and the bank is repaid in full. If nobody bids higher, then the bank is the winning bidder and becomes the owner. (more…)