All Forum Posts by: Davido Davido

Grandson's adaption, if it complied with WA law, makes him legally the same as a natural born child as far as inheritance.   However, it is not 50/50 with mother.  Assuming there was no will, then the property goes to the daughter and her living siblings in equal shares.  Only if the daughter subsequently dies, do her children get her share interest in the property -unless the daughter specifies otherwise in her will.

Hello @Eric Roloson,

I may have different goals and timelines in mind, but if I was targeting the property, I would seek Quit Claim deeds from every heir I find, the Grandson, the Daughter, and the other grandson too.  The Affidavit of Lack of Probate can be used if you are named in the Decedent's will (not applicable for you), or when you are the legal heir (or have obtained the interest of the legal heir).   The order for legal heirs in WA can be found under RCW 11.04.015.

https://app.leg.wa.gov/RCW/default.aspx?cite=11.04.015 

Basically, the WA order of heirs is 1st the Spouse, then children, then the descendants of the children, then parents, then other descendants of the parents (brothers and sisters of the deceased), followed by the descendants of the brothers and sisters, then Grandparents of the deceased, followed by descendants of the Grandparents.  Since the owning couple is deceased, their children are the heirs.  Get a quit claim from all the children of the deceased couple, and you can file your Affidavit of Non-Probate.  

The Quit Claim deed will need to be notarized, so I recommend that you familiarize yourself with a couple different mobile notaries in your area.  My experience is that deciding to sign a deed is often an emotional choice, which can change at the slightest of difficulties.  Having a Notary come to the signer, can eliminate the difficulty of getting to a notary

 If you plan to resell the property and want it insurable, then definitely consult with a title company before signing any deeds.  They may have additional requirements and recommended forms.  

If you can not get the daughter to deed her interest, or if there are multiple children who are heirs, and some won't sign, that is when I would use the Grandson's Quit Claim Deed.  If the daughter dies, the quit claim deed gives you some title, and an arguable color of title until then.  If the other children do nothing with the property, it may be possible to claim it as abandoned.   If a property is abandoned by the owner, then you can take over the property, rent it out and eventually get clear title in your name via the WA laws of Adverse Possession (7 years with color of title).   See this Blog for a discussion of the legalities. 
https://www.biggerpockets.com/member-blogs/12388-abandoned-property-adventure-on-wildside

Be aware that a non owner and non lien holder can only pay another person's property taxes in WA (to prevent the property from being foreclosed for back taxes) up until the date the County starts its Foreclosure by filing a Certificate of Delinquency.  At that point, only the owner of record or a recorded lien holder can pay the back taxes.  So if you plan to take action on the property, it pays to be aware of the date your county files its Certificate of Delinquency.

I mention taking over the property without title, because in my experience with similar situations, the heirs do nothing with the property and the county forecloses.  I'd rather collect rent for years on a property that I don't own, than see it further wasted until its foreclosed.  That is not a workable plan for most people, but it can be done. 

@John D. Thank you for commenting.   Since my questions were first posted further research has led me to the conclusion that a Court looking at my actions would almost certainly determine that an Implied Trust exits between the legal owner of the properties and myself.  From your reply, an implied trust appears to be your observation as well; "the rents being collected are in effect being held in a trust/escrow account, with the beneficiary being the property owner,"

Implied Trusts can take several forms; Statutory, Resulting or Constructive.  A Constructive Trust is created by a reviewing court when a party has accidentally, mistakenly, dishonestly or otherwise received unintended title to or possession of assets that belong to a beneficiary.  Typically, a court declares that a constructive trust exists so it can order the first party to give the assets and any monies made from the assets to the beneficiary.  The main difference between a Resulting Trust and a Constructive Trust is that a Resulting Trust requires intent by the owner to transfer property, where as a Constructive Trust will be found by a court where possession is a result of accident, mistake or dishonesty.

 I agree that my actions related in this post would be considered an implied Trust.  If, I am challenged by a property owner or heir, or by a Tax Court, the Court is certain to order the real property, and the rents collected, to be returned to the owner.   That result, return of property and rents, is actually required by WA Statute.  Yet, even in States where there is no such Statute, return of property and rents would be required as equitable relief under the common law legal doctrine of Implied Trusts.  See; 
https://www.lawteacher.net/free-law-essays/property-trusts/constructive-trust-in-relation.php  (English Common Law)  
See also the similar; http://nevadalaw.info/element-for-a-claim-of-imposition-of-a-constructive-trust/ (Nevada Common Law)

As to the question of who must report and pay taxes on the rents I'm collecting, that income must be reported and taxes paid only by the person who has actually received income.   WA law recognizes the properties that I am renting, and the rent's I've collected, as belonging to the recorded owner of the real estate.  Therefore, the owners of the real estate described in this post have the duty to report their income when they either actually receive it, or when they constructively receive it (when they both know about the income and have the ability to access it).   

Despite the unsupported claims made by some CPA's in this thread, I have no duty to report or pay taxes on the rents I collect -unless I have either lawful title to the properties (via Court order under a claim of adverse possession), or unless I have beneficial use of the income by using the rents as though they were my own -possibly even by borrowing the rents as you have suggested might be the case. "...if he was borrowing against these funds, this would appear to negate the position that they were being held exclusively for the owner on title, as if the OP can borrow against them that appears to refute his previous argument as to their status."

It is clear that I have no current Tax Liability under a Constructive Trust theory because constructive trusts can only be created by Judicial decree after the fact.  There is no constructive trust until,a judge reviews the matter and makes a ruling.   However, even if a Tax Court declared that I am administering a trust, the trust would be classified as a grantor trust.  A grantor trust is a trust in which the grantor is treated as the owner of the assets.

A trust classified as a grantor trust, it is not required to file a separate Form 1041.  The trust is disregarded as a separate tax entity, and all income is taxed to the grantor (the owner of the real estate and the rents).   None of that changes until or unless I have legal title to the properties or unless I have beneficial use of the taxable income.

Thus you have astutely and correctly (in my opinion) observed that: 

• 1. "the rents being collected are in effect being held in a trust/escrow account"
• 2.  "it is possible tax may not be owed (by me) on these rents"  At least not yet.
• 3.  "borrowing against these funds, ... would appear to negate the position that they were being held exclusively for the owner"

Well done.  It took me a long time, but I've come to the same conclusions.

@Justin Tahilramani is correct. Your costs are too high -over $450 per square foot (based on a 650' ADU) with no expenses for land? Get the costs down to $150,000. You'll have enough available, you'll get it done and you'll turn a profit.

Use an already completed and engineered design that is close to what you want and can be purchased for a few hundred $. Set up a cheap website and get all your drawings on the website, then use Craigslist adds posted in out of state major cities with depressed economies. Your add should seek a builder, with tools, who can build your chosen design, within 6 months. Provide a link to your website so the design can be reviewed from anywhere, offer $2000 per week in cash with $1500 paid weekly and the rest paid in lump sum only upon completion. Also offer strong incentives for early completion (incentive like paying six months labor even if your builder completes it in 5 months). You'll have plenty of people interested, but choose wisely, many will be more interested in being paid, than in completing the ADU.

You could sweeten the deal by offering to let the out of state builder stay in a spare a room in your home. Also use less expensive materials if you are still over budget. Choose fixtures, finishes and appliances that can be upgraded later when the finances are stable. Under this arrangement you get an ADU very close to what you want, limit your labor costs to $50,000 and your materials to $100,000. You already have enough to get it built. You do have to manage the project and the builder, and you just do the permitting yourself.

Thank you Denise Evans!   Those cases will be very helpful and are Much appreciated.

@Denise Evans.  re: "I think you received bad advice from the local attorney. You can take DIY possession only if the property is legally abandoned. I am not aware of any statute or Supreme Court decision that says property vacant for five years is considered legally abandoned."

Denise, thank you sincerely for the many clear and insightful posts and replies you've made about Alabama Tax Sale Certificates and Redemption Rights.  It is not surprising or rare to receive bad advice from an attorney.  This blog post cites an example:  https://www.biggerpockets.com/member-blogs/12388/86731-abandoned-real-estate-legalities-there-are-two-sides-to-every-story

I am in WA (a tax Deed State), so Alabama's system is much different, but I follow US laws governing "legally abandoned" real property with considerable interest.  I would like to read any Alabama (or other state) court rulings defining "legally abandoned" real estate.  Would you be willing to send a link or reference to me regarding any court cases you are aware of or come across in the future that define or refer to definitions of real property abandonment?  

The Judicial definition of owner abandonment is important to me because I've taken over nearly 1 dozen parcels of WA real estate which I personally believe have been "legally abandoned" by the owners of record.  There are sure to be more in the future.  The above blog of my activities has been started to relate my efforts.

My current understanding of WA law is that real property is 'legally abandoned" when the property owner expressly abandons all his/her interest, or has implicitly abandoned the property when all of the following facts can be established: the owner has made no use of the property for several years; the owner failed to pay the mortgage or liens or property taxes for several years; the owner has done no maintenance for several years; the owner has failed to maintain contact information with the mortgage holder, lien holder, county treasurer, governing jurisdiction, and the local utility providers; and the owner (or his/her heirs) can not be located through diligent efforts. 

I am preparing to argue that in WA, a real property owner's abandonment is "legally implicit" when these facts can be proven by clear, cogent and convincing evidence.  Unfortunately, I have not found a WA judicial decision which specifically defines abandonment of real property.   My belief that implicit abandonment of Real Property can be recognized as a matter of law is untested.  The concept of implicit abandonment is supported by judicial rules for interpreting statutes which require giving effect to the legislative language.  The WA legislature has written real estate abandonment into several statutes.  In those statutes, facts sufficient that any reasonable person would conclude the property has been abandoned
appear to be relied upon. 

Any links to court cases that you become aware of will be much appreciated.   Thank you.

@Jay Hinrichs Well said!  "when you study for your real estate license.. the study materials go pretty deep into the Law. and then Ethics and that the two are not the same.. IE something can be perfectly legal but also unethical." 

@Michael Slockers "I'm wondering if all 59 pages are just like this one?"    No.  This page is an exception.  Most of the 59 pages describe how the members of BP realized, or have slowly come to realize, that the facially pleasant and prosperous Clayton Morris Real Estate offerings were founded in deception.

@Tal Perry Consider these facts.  1. The statute of limitations for mortgage(s) in Florida can be as low as 5 years. 
https://www.blankrome.com/publications/florida-supreme-court-holds-statute-limitations-does-not-bar-successive-mortgage     That means the existing mortgage is likely uneforecable.

2.  Florida allows adverse possession in 7 years -if you have color of title. 
http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0000-0099/0095/Sections/0095.18.html   That means you could just use the "abandoned" property as though it was yours and eventually acquire title through Adverse Possession.

3.  Since you have located the owner of record, prepare a Quit Claim Deed for him to sign, locate a mobile notary, buy the owner a meal and while listening to him over the meal ask him if he'll sign off on the property -then call the mobile Notary to come Notarize his signature right there at the table.   Then the property is yours, and you can defend against foreclosure as the owner.  You can clear the title immediately, by requesting a release or filing a Quiet Title suit - if the the mortgage is already beyond the statute of limitations.

4.  A lot with a derelict home can always be rented.   RV owners always need a place to "park".  If there is power, water and sewer, the rent can be significant.   Rent it out as an RV Storage spot.   In my blog, below, if have a post that includes a rental agreement for renting a vacant lot to an RV owner.

5.  Craigslist.org always has people willing to put labor into rebuilding a property -if they can live there cheap or free while building.   Most county's allow temporary living in an RV, if you have a permit to rebuild, or remodel the house.  

Best Wishes

@William Anthony McQueen Probate is the expected and generally preferred method of acquiring Real Property after the former owner dies.  But probating a property is not the only way to gain title.   In every county, there will also be instances in which none of the heirs will care enough or be motivated enough to deal with the property or put it through probate. Typically such properties remain vacant and derelict until they are foreclosed for delinquent property taxes.

If a property has been truly "abandoned" by the owner and heirs, it is possible to interrupt the property tax foreclosure process by paying the delinquent taxes yourself and simply using it as though it were your own. Eventually, (20 years in NC, or 7 if you have 'color of title'), you can have the title fully and legally quieted in your name. See:
https://www.biggerpockets.com/member-blogs/12388/86727-renting-without-owner-permission-can-this-be-legal-even-semi-legal

In regard to your question, "Should I be proactively replacing that stack with PVC while I have the bathroom gutted?"

I would not bother replacing cast iron Vent stack piping unless those lines are easy to access, or you see an obvious problem.  Vent stacks are intended to move only air.  Unless, they get plugged, vent stacks rarely create any problems.  

Cast Iron drain lines are of much more concern in that they carry wastewater are known to corrode over time.  On a 75 year old home, I'd replace any cast iron drain lines that are exposed and accessible.