This in-city refuge feels more like the suburbs. This home has been extremely well cared for by the current owners. Newer roof, gutter and downspouts, furnace, kitchen appliances and the eves and wood exterior have been painted. 3 bedrooms and 1.5 bathrooms up with a lovely kitchen that opens onto a den with large bay windows that capture the back yard which is a verdant surprise and doubles the living space most of the year. Below is a great room, bdrm, new 3/4 bth, laundry and lots of storage.
For more information, please click here!
Information Via McFerran University in Tacoma
With the barrier to home ownership so high for so many, parents and grandparents are looking at smart ways to help their children or grandchildren in this big purchase of a lifetime in smart ways that make sense. If you have been wondering about this, the article below is a good read. It is from McFerran University in Tacoma. They always seem to be up on the latest tax code and hot buttons and are a good source of information from a reputable law firm. That said, if you are going to actually make such a move, I strongly suggest a consult appointment to double check everything.
I know when I bought my first condo at 18.75% interest rate, my dad helped me out. And again when we bought our house, he helped with the down payment. He said it would give him more pleasure to see us in a good neighborhood in a started home while he was alive than to leave it for me after he was gone. Smart move dad! And we are ever so grateful!
PARENTAL GIFTS TO CHILDREN ARE A HOT TOPIC ON “LEGAL-LINE”……WHAT EVERY BROKER SHOULD KNOW ABOUT GIFTING………
Matters of gifting arise in our practice on a continuing basis. Recently a Broker contacted “Legal-Line” inquiring on behalf of parents who were interested in “helping” their son and daughter-in-law to acquire a new single-family residence, but were limited in their opinion by a $14,000.00 gift limitation. The problem was that $14,000.00 was less than they wanted to give and they had heard that gifts above this level were “taxable” and were concerned as they did not want to pay any gift tax.
This is an area of practice that we encounter on an on-going basis. There are plenty of misunderstandings out there on gifting and taxes. Especially now with new tax laws coming into existence, the questions only increase. I hope in this short writing to clarify some of those matters and provide all our readers some tax information that can be valuable for you in your practice.
MORE AND MORE PARENTS WISH TO GIFT FUNDS TO THEIR KIDS TO BUY HOMES
With the increased cost of homes and with more conservative lending standards, it is anticipated that a significant number of parents are going to gift cash to their children to enable them to purchase their first home.
ANNUAL GIFT EXEMPTION IS $15,000.00 PER DONEE IN 2018
This is where we start. The annual gift exemption has been at $14,000.00 since 2013 so many of our readers will remember that number. It is $15,000.00 per donee per year starting now in 2018. This is a long-established exemption to FEDERAL GIFT TAXES. [There is no GIFT TAX in Washington state. There is an ESTATE tax, but no gift tax in Washington State].
This means that each individual can give to EACH DONEE up to $15,000.00 per year with no gift tax and no gift tax return required. So, if a husband and wife wanted to gift to their son and daughter-in-law they could gift a total of $60,000.00 under this rule. A husband can gift $15,000.00 to his son and daughter in law and the same can be said for the wife to gift to son and daughter in law as well. No reporting to the government required.
WHAT IF THE PARENTS WANTED TO GIFT $200,000.00 OR EVEN MORE?
This is the situation we experienced recently in a “legal-line” inquiry that has prompted this weekly update. The parents wanted to gift $200,000.00, but were again concerned about gift taxes. This is a valid concern. However, we have ways of working through this situation with no tax concerns whatsoever.
IT’S CALLED “THE UNIFIED GIFT AND ESTATE TAX CREDIT”
Now that is a mouthful. At the Federal level, each individual has during his or her life a credit that can be used for gifts during life and for gifts at death. The amount has changed over the years and was, at one time, as low as a million dollars per individual.
With the new tax law coming into existence as of December 17th last year, the new tax law will change things now for the “better” (at least until 2025 when the new law sunsets). The new law allows an individual approximately $11.2 million in gift and estate tax exemptions and with “portability” (i.e. allowing a married couple to combine their credits), a married couple can exempt approximately $22.4 million in assets against their estate value. For majority of Americans, there is no longer a federal estate tax upon their death.
What does this mean? It means that each of us has a life-long credit on the books at the federal government. That credit is now over $11 million dollars that we can use as we may to gift DURING OUR LIFE or UPON OUR DEATH or BOTH!!! For most of the population this amount is well above their asset base and allows a freedom of gifting not realized in the past.
SO HOW WOULD OUR “LEGAL-LINE” PARENTS MAKE THEIR $200,000.00 GIFT?
They wanted to gift $200,000.00 to their son and daughter in law.
First: we would (as above) take advantage of the $15,000.00 per person per year and that would allow the parents to freely gift $60,000.00 with no tax consequences or reporting whatsoever. [Look at the calculations above].
Second: we would (as above) take advantage of the huge federal gift credit and freely gift $70,000.00 by the husband and $70,000.00 by the wife (for a total of $140,000.00) with no gift tax consequences EXCEPT they must file a gift tax return in the year of the gift, but no tax to pay just an informational return to file. Easy. Quick.
PRACTICE POINTER: If you have parents out there thinking of gifting, it is a marvelous way to help the kids get into their first home. They need NOT be focused on the limitation of the $15,000.00 rule. We are happy to consult and assist parents in utilizing their “Uniform Federal Gift and Estate Tax Credit. Just call our office.
WHAT IS THE APPROPRIATE DEED TO USE IN AN DECEASED ESTATE SALE CLOSING?
This has been a question that our firm has been involved in on many occasions and was the source of a call just recently from a local Broker over on the Eastside seeking clarification and confirmation.
We represented an estate a while back that was sued because it used the incorrect deed at closing. One of the issues was whether the Listing Broker had any liability for making sure the proper deed was utilized for that sale.
The facts are not that complicated:
****Seller was an estate of a deceased in King County, Washington. Personal Representative had been appointed appropriately by the court and had full power to sell the property without any further intervention of the court.
****Personal representative had never physically seen the real property and, in fact, lived in another state. Listing Broker appropriately listed the property for sale.
****Purchase offer came through by a cash purchaser and closed on that sale in escrow with estate conveying the real estate to the purchaser by Statutory Warranty Deed. Life was good. No problems.
****Purchaser, in anticipation of building fences along another border of the subject property, had the whole property surveyed only to find out to their initial dismay (and subsequent delight) that a forty (40) foot strip along the whole 480-foot boundary line had been adversely possessed by the neighbor and there was in place a fence there and all elements of adverse possession had been met years earlier. That 40ft x 480ft area had been adversely possessed by the adjoining land-owner.
****The purchaser never even imagined that property was part of the purchase, but it WAS INCLUDED in the legal description in the Statutory Deed and was a basis for a claim of breach of warranty of title against the estate and the escrow company.
****The escrow/title company was dismissed from the lawsuit as they told the court that they closed the real estate transaction according to the Purchase and Sale Agreement and that since it said (as contained in the state-wide forms) to use a Statutory Warranty Deed (and they did) that they should be dismissed. They were dismissed and rightfully so.
****The estate had, by Purchase and Sale Agreement, agreed to sell the real property. If they had not used a Statutory Warranty Deed, but a PERSONAL REPRESENTATIVE’S DEED, which is appropriate, then the extent of warranties offered would be far less reaching. The estate could purchase the land from the adversely possessing party in settlement of the lawsuit. That cost the original Estate seller a substantial amount of money.
****The estate looked to its Listing Broker to explain why the Listing Broker in taking a listing for an estate sale of property did not change by Addendum the type of Deed to the one appropriate for that type of transaction. The Broker and estate settled that issue. Was the Listing Broker negligent? I think so?
PRACTICE POINTER: In any transaction where you are representing the seller and the seller is an estate of a decreased person, make certain that you draft an appropriate Addendum changing the deed specified in the statewide forms to a Personal Representative’s Deed. Quick. Easy. Easy to explain to the buyer and their broker. This is the appropriate deed used in decreased estate transactions.
GOOD NEWS!!!! You now have your escrow and title company also looking out to protect you (as they protect themselves as well). You see, until last year a Personal Representative Deed had to be prepared by an attorney. Now your friendly LPO at your escrow dept. can draft it as part of their Limited Practice Officer’s license. That’s right. It is now one of the LPB approved forms for LPO’s to choose and prepare. This is good news.
PRACTICE POINTER TO LPO’ READERS: I would focus on requiring an Addendum every time it is appropriate as I am not convinced that you are relieved of liability especially now with the ability of an LPO to prepare this deed. Escrow folks need to be vigilant of this Deed requirement as well.
TOPIC NUMBER …. (3) …… THREE….
LIVING TOGETHER RELATIONSHIPS… SOME THINGS A REAL ESTATE LICENSEE NEEDS TO KNOW…
Oh, our wonderful legal line program that we have in place brings forth questions that in many cases, we would never expect to receive. One question came in a while back regarding parties who want to co-own some real estate. Such questions are the bread and butter of our real estate law practice. But, as we suggested that the folks come in and talk with us, we quickly determined that this was not just an ordinary “co-ownership” or “co-tenancy” or LLC or Real Estate or anything like that. THESE PEOPLE WERE LIVING TOGETHER!!!
Game changer? ABSOLUTELY. A real strong yes. You see, this raises several issues that our real estate partners are seeing daily. Thank goodness you do not have to legally advise folks who are choosing to own property together about their legal rights that you would want to know the state of the law in Washington State on what we used to call: “Meretricious Relationships”, but the term of art today in Washington State is….
COMMITTED INTIMATE RELATIONSHIPS
We review in this industry update a recent case that came down in 2017 from the Court of Appeals (Division 1) up in Seattle. This is the case that I used with the recent folks that were referred by one of you as I found that case on point AND it really gives our readers a primer on how the courts in Washington treat unmarried co-owners of property. You may be surprised. Read on……
MORGAN v. BRINEY (Division 1, 2017)
*****The Morgan/Brinley relationship started in 1987 resulting in them living together since 1990.
*****In 1992, they separated but continued to “date”.
*****They moved back living together and purchased a home in 1995 that only one name, Mr. Briney, was on title. The male party Briney was also the only one liable on the loan and it was only Mr. Briney that made the down payment out of his own funds.
*****Tensions arose about remodeling their new home and Morgan moved out for 8 months.
*****She (Morgan) moved back in and they collaborated about the remodeling, but Briney paid for all the remodeling work and most of the living expenses as well.
*****In 2013, Morgan moved out and initiated an action to divide the property.
WHAT IS A COMMITTED INTIMATE RELATIONSHIP ACCORDING TO THIS COURT OF APPEALS?
The court said that a committed intimate relationship exists when there is a stable, marital-like relationship where both parties co-habit together with knowledge that a lawful marriage between them does not exist.
If such relationship DOES exist as determined by the court, it evaluates the interest that each party has in the property acquired during the period of the relationship, and then makes a just and equitable distribution of such property.
The court found, that by the time that they purchased the house together, they met the above test.
It did not matter much to the Court that Mr. Briney deposited the down payment. It didn’t matter that Mr. Briney was the only one on the mortgage loan. It didn’t matter to this Court that Ms. Morgan’s name was NOT even on title!!! She was not obligated in any manner for any obligation for the home. Morgan paid for nothing.
The courts’ analysis:
- They had been living together months before the house purchase.
- They looked for the house together.
- They agreed together to buy a house that needed work.
- They moved into the house together.
This case, I believe, illustrates for all of us in the trade that as we progress in the future many more of our customers and clients will be entering these kinds of relationships, attempting to avoid some of the traps of marriage. There are traps for the unwary as there are traps for parties that enter marriage relationships. Parties entering into such committed relationships need to know that this case really illustrates the uncertainty that exists in the division of property arising out of committed intimate relationships, and the value that can arise from parties entering into a written agreement relating to the characterization of property co-owned notwithstanding the fact that they are not married. The parties in this case did NOT have any written agreement at all.
PRACTICE POINTER: Always encourage your clients, who are purchasing property together, to talk with a competent real estate attorney and draft an agreement between them that will OVERCOME the uncertainties that Morgan and Briney experienced when the courts determined how their property was going to be divided. These co-ownership agreements are not expensive and can be of real value when parties may need to separate sometime in the future.
You have the option to read this opinion below:
2017 WL4369547 (Div. 1, 2017).
400 Highland Drive Seattle, WA 98109
Listed at: $1,800,000
To be perched high off a coveted street, to see all there is to see and enjoy a true sense of privacy; is the ultimate luxury. Be captivated by views of Lake Union to the Sound, with downtown cityscape and the Space Needle in between. This home has them all. Period touches throughout include the tall coved ceilings, Batchelder fireplace, original wood floors, period lighting and door hardware A legal mother-in-law to rent or for your house guests. Front patio as well as back landscaping are fab!
Virtual Tour: https://vimeo.com/evanparker/review/268046485/62a6a2592b
Listing Details: https://www.windermere.com/listing/WA/Seattle/400-Highland-Dr-98109/78749250
“Short of a war or stock market crash…”
This month, Arch Mortgage Insurance released their spring Housing and Mortgage Market Review. The report explained that an increase in mortgage rates and/or home prices would impact monthly payments this way:
- A 5% increase in home prices increases payments by roughly 5%
- A 1% rise in interest rates increases payments by roughly 13% or 14%
That begs the question…
What if both rates and prices increase as predicted?
The report revealed:
“If interest rates and home prices rise by year-end in the ballpark of what most analysts are forecasting, monthly mortgage payments on a new home purchase could increase another 10–15%. That would make 2018 one of the worst full-year deteriorations in affordability for the past 25 years.”
The percent increase in mortgage payments would negatively impact affordability. But, how would affordability then compare to historic norms?
Per the report:
“For the U.S. overall, even if affordability were to deteriorate as forecasted, affordability would still be reasonable by historic norms. That is because the percentage of pre-tax income needed to buy a typical home in 2019 would still be similar to the historical average during 1987–2004. Thus, nationally at least, even with higher rates and home prices, affordability will just revert to historical norms.”
What about home prices?
A decrease in affordability will cause some concern about home values. Won’t an increase in mortgage payments negatively impact the housing market? The report addressed this question:
“Even recent interest rate increases and higher taxes on some upper-income earners didn’t slow the market, as many had feared…Short of a war or stock market crash, housing markets could continue to surprise on the upside over the next few years.”
To this point, Arch Mortgage Insurance also revealed their Risk Index which estimates the probability of home prices being lower in two years. The index is based on factors such as regional unemployment rates, affordability, net migration, housing starts and the percentage of delinquent mortgages.
Below is a map depicting their projections (the darker the blue, the lower the probability of a price decrease):
If interest rates and prices continue to rise as projected, the monthly mortgage payment on a home purchased a year from now will be dramatically more expensive than it would be today.
The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact me.
The Washington State economy added 96,900 new jobs over the past 12 months, representing an annual growth rate of 2.9%—still solidly above the national rate of 1.5%. Most of the employment gains were in the private sector, which rose by 3.4%. The public sector saw a more modest increase of 1.6%.
The strongest growth was in the Education & Health Services and Retail sectors, which added 17,300 and 16,700 jobs, respectively. The Construction sector added 10,900 new positions over the past 12 months.
Even with solid increases in jobs, the state unemployment rate held steady at 4.7%—a figure that has not moved since September of last year.
I expect the Washington State economy to continue adding jobs in 2018, but not at the same rate as last year given that we are nearing full employment. That said, we will still outperform the nation as a whole when it comes to job creation.
HOME SALES ACTIVITY
- There were 14,961 home sales during the first quarter of 2018. This is a drop of 5.4% over the same period in 2017.
- Clallam County saw sales rise the fastest relative to the first quarter of 2017, with an increase of 16.5%. In most of the other markets, the lack of available homes for sale slowed the number of closings during this period.
- Listing inventory in the quarter was down by 17.6% when compared to the first quarter of 2017, but pending home sales rose by 2.6% over the same period, suggesting that closings in the second quarter should be fairly robust.
- The takeaway from this data is that the lack of supply continues to put a damper on sales. I also believe that the rise in interest rates in the finalquarter of 2017 likely pulled sales forward, leading to a drop in sales in the first quarter of 2018.
- With ongoing limited inventory, it’s not surprising that the growth in home prices continues to trend well above the long-term average. Year-over-year, average prices rose 14.4% to $468,312.
- Economic vitality in the region is leading to robust housing demand that far exceeds supply. Given the relative lack of new construction homes— something that is unlikely to change any time soon—there will continue to be pressure on the resale market. As a result, home prices will continue to rise at above-average rates in the coming year.
- When compared to the same period a year ago, price growth was strongest in Grays Harbor County at 27.5%. Ten additional counties experienced double-digit price growth.
- Mortgage rates continued to rise during first quarter, and are expected to increase modestly in the coming months. By the end of the year, interest rates will likely land around 4.9%, which should take some of the steam out of price growth. This is actually a good thing and should help address the challenges we face with housing affordability—especially in markets near the major job centers.
DAYS ON MARKET
- The average number of days it took to sell a home dropped by seven days when compared to the same quarter of 2017.
- King County continues to be the tightest market in Western Washington, with homes taking an average of 24 days to sell. Every county in the region saw the length of time it took to sell a home either drop or remain essentially static relative to the same period a year ago.
- In looking at the entire region, it took an average of 61 days to sell a home in the first quarter of this year. This is down from 68 days in the firstquarter of 2017 but up by eleven days when compared to the fourth quarter of 2017.
- Anyone expecting to see a rapid rise in the number of homes for sale in 2018 will likely be disappointed. New construction permit activity—a leading indicator—remains well below historic levels and this will continue to put increasing pressure on the resale home market.
This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the first quarter of 2018, I have left the needle at the same point as fourth quarter of last year. Price growth remains strong even as sales activity slowed. All things being equal, 2018 is setting itself up to be another very good year for sellers but, unfortunately, not for buyers who will still see stiff competition for the limited number of available homes for sale.
Outdoor living during the spring and summer months in Seattle is extremely popular. Months of cold, wet winters are followed by glorious spring colors and warm summer days of vivid blue skies.
In this post, we thought that now would be the best time to share some pretty garden trends for 2018.
Leisure time should be just that: relaxing and rejuvenating. So why labor relentlessly to create and maintain a perfect landscape? Wabi-sabi, is the Japanese art of accepting transience and imperfect beauty. Relax and appreciate nature as it is, with humble imperfections, weeds and all. Recognize (and tell others) that dandelions and clover in untreated lawns are not blights. They are status symbols for ecological horticulture. Consider natural grasses and groundcovers as low-maintenance substitutes for sod. Opt for perennials instead of annuals, let flowers go to seed and give nature license to evolve on her own.
RECLAIMING SMALL OUTSIDE SPACES
For many of us these days, space is at a premium and with house prices continually on the rise, more and more people are living in apartment blocks or tiny lots. Garden designers are determined to make even the smallest of spaces useful and attractive, and manufacturers have taken notice. Look for a better choice in planters that slot onto balcony rails. New models will have coverings for protecting plants from cold temperatures so that you can even grow seeds and vegetables on your balcony alongside your flowers.
Self-watering wall planter systems have been improved for 2018 and the hanging macramé plant holder is having a bit of a revival. Add a small patio heater and you have an outside space you can enjoy all year round with minimal effort.
Pantone’s Ultra Violet is the color of the year. Maybe that’s why you find purple flowers in this year’s plant varieties and garden design. It’s easy to incorporate this color in the garden as there are many flowers and shrubs with this beautiful color. However, there are also several edible purple plants that you can grow. Purple vegetables are not only interesting and pretty, their unique color denote anthocyanins which are very beneficial to your health.
This is a style that keeps popping up time and again. However, 2018 has taken the re-wilding trend up another notch. It is still all about working with nature, growing wildflowers and supporting our pollinating insects. Re-wilding means adjusting plant selections to better support local wildlife and growing both seed-producing and berry-bearing plants. However, now it is also about using ‘green’ gardening products, natural solutions to bug and slug killers instead of chemicals and insecticides and using peat-free products.
Outdoor entertaining and kitchen areas are tipped to be a key trend for Spring/Summer 2018. We are not talking about a little nook corner just off the kitchen. Alfresco dining spaces are being pushed out into the garden itself and made into a major feature. These dedicated outdoor dining areas are surrounded by in-ground and container plants for that lush feeling. Special flooring, comfy furniture and mood lighting turn it into a little haven. Complete the trend with a sunken fire pit, barbecue or pizza oven and you might never want to leave.
LIGHTING THE WAY
Adding lighting to your garden is not a new thing. However, in this age of renewable energy, garden lighting companies are turning away from the more traditional lighting solutions we have seen in the past. The advances in solar energy capture, means that we can light up our gardens in a variety of fun, affordable and better ways. No more changing batteries or wiring up the garden with electricity.
The wide range of lighting methods allows you to create whatever ambiance you want. Simple stand-alone lights can mark pathways, either discreetly embedded into the path edges or standing loud and proud along the side. Multi-colored fairy lights can be tangled among the overhead branches of a tree creating dazzling shapes and textures. Solar Mason jars can be hung from above or used as table lighting. Festoon lights can create an ambient glow around any outdoor space creating romantic nooks.