Will This Title Change Trigger Higher Property Taxes?
My question is if a title change on a property triggers a new tax adjustment by the municipality.
The situation is that my client owns the entire 20 condominiums in a newly constructed complex on which I'm doing 10 residential loans to pay off his construction financing.
Since he rents these out during the 6 month tourist season in the resort area in which they're located, I couldn't get the numbers to work for a commercial mortgage due to the hospitality nature of the property and the lack of cash flow.
Since these are residential loans, they must close in his individual name, which requires quit claiming the property from his corporation to his personal name, close the loan, and then quit claim them back to the corp.
He claims that the title switch will trigger a new property tax by the municipality. Is this true?
He also claims that putting the loan in his personal name, and the title in his personal name, will void the pre-nup he has. Is this true?
He's objecting to terms on these two items, but his construction loan has been called and I'm out of all other financing options.
What is the average tenant stay for your client's rentals during the resort season? If less than 7 days, your client is operating an active (hotel) business and not a passive income (rental) activity. Would a commercial loan be possible in this instance, eliminating the need to do the title transfers?
since the consderation on the quit claim deed is nominal ("ten dollars and other good and valuable consideration"
the transfer stamps are not going to reflect the value of the property thererefore they should not trigger a re-assessment. There is a provision for "related persons" in such transfers.
As to the pre-nup who knows? You'd have to review the document since it is essentially a private agreement between the parties and they could agree to anything. However, even if it is a violation of the pre-nup this wouldn't necessarily make it impossilbe, just his wife would have to sign off saying that she's aware of the transaction and agrees to exclude it from the pre-nuptual agreement..
I know not how other states and Counties handle these matters, but here in California in Los Angeles, I avoid the Assessors office reassesment by a small statement re: Transfer within the entity now on title for purposes of clarification of purpose, or just an inner entity transfer. So they pass it and taxes stay as is.
Pre-nup's tricky, but only when there is money. My wife had me sign one so long ago it was baked in clay. The essence was what was mine remained mine and what was hers was also mine.
When I divested myself a little while ago. My children had a long talk with her. They convinced her that poverty with me would be more pleasurable then richness with them as her duties would include not only child care but intense on going house staffing. She chose gentle poverty. We are moving to a better location and a larger house. I mean if you are going to come down the scale of wealth the least you can do is be comfortable.
Lucius 8-) 8-)