How to Calculate the Fees for a Quitclaim Deed When You Are Creating a Trust
Quitclaim deeds are effective methods of transferring real estate interest from one party to another. Some families choose to place their real estate holdings into trusts so it can be protected for generations. Fees and real estate go hand-in-hand so you should pay close attention to them when dealing with quitclaim deeds to prevent being overcharged. Do your homework before taking action because fees and taxes will vary with each state and even each county.
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Instructions
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Assess your situation. It’s a good idea to have a grasp of the consequences, even if you choose to use professionals such as estate planners and real estate attorneys. Know what you are getting into. Signing a quitclaim deed effectively means you are giving all your interest away in a particular piece of property. It will be very difficult to get your property back once you have signed and recorded the deed.
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Review state and county laws. Get familiar with your county recorder’s procedures. Fees can vary significantly between counties within the same state. Additionally, some states allow you to use attorneys to record the transaction and others require witnesses other than the notary public to make the quitclaim deed valid. Check with your attorney or planner to decide how your trust should hold title and determine the consideration amount. The consideration amount is the money that is exchanged between parties to make the contract valid and should not be taken lightly.
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Calculate the transfer tax fees associated with the transaction. These fees will vary with each jurisdiction, but they are usually based on a formula. For example, if the property is in Los Angeles it will subject to a documentary transfer tax at the rate of 55 cents per $500, as of the date of publication. Additionally, it will also be subject to an additional city tax at a rate of $4.50 per $1,000, according to Los Angeles County. Rates are generally based on valuations as assessed by the county tax official. However, some counties will use the fair market value, which commonly shows higher appraisal values.
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Add in the recording fees. Be prepared to pay for quitclaim recording, additional page and notary fees. A multiple title fee may be required if the document contains more than one transaction. Additionally, you will have to pay for certified copies of the transaction and many states will charge per page. Each jurisdiction charges certain fees to complete the transaction and doing your homework can save you time by doing it right the first time.
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Tips & Warnings
Do keep certified copies of all documents involved in the transfer process. Banks will not accept regular copies when applying for a mortgage or home equity line of credit.
Don't underestimate the taxes. The county assessed value may be higher than the fair market value in slow economies. Be prepared to challenge the valuation with supporting evidence.
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