TITLE & ESCROW FOR
DOMESTIC PARTNERS
Multicultural Marketing Program
Caridad Stuart
Bay Area Multicultural Marketing Manager
Fidelity National Title Group
TODAY’S OBJECTIVES
• Background
• Title & Escrow Issues
• Things to Remember !
• Q&A
Background
•
According to the 1990 U.S. Census Bureau, unmarried couples comprised
approximately 4.5 million families- one-third of these unmarried couples were of the
same sex.
•
Census 2000 showed that same-sex couples live in 99 percent of all U.S. counties.
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Domestic partnership benefits are available to employees at more than 570
companies, 141 colleges and universities, and more than 87 city, county and state
governments.
•
Currently more than 10% of all employers offer domestic partner benefits. Among
companies with more than 5,000 employees, almost 1/4th or 25% offer these benefits.
•
More than 62% of Americans support domestic partners receiving equal access to
inheritance benefits.
Source: Partners Task Force for Gay & Lesbian Couples
Continued
• Census 2000 shows that more than 40% of same-sex “unmarried
partner” couples have lived together in the same home for more
than five years.
• Nearly one in four of the couples raise children.
• More than one in 10 gay and lesbian couples include a senior over
the age of 65. Nearly two-thirds of these couples have lived together
for more than five years.
Source: USA TODAY, “Don’t Ignore Gay’s Unions’ Social, Economic Impact.” Gary Gates
10/23/2003
• The greatest numbers of same-sex senior couples live in California,
New York, and Florida.
Demographics
Metropolitan Areas with Highest Percentage of Same-Sex
Households, 2000
Same-Sex Partner
Households by Area
Number
Percent of all households
in specified city
San Francisco CA
8,902
2.7
Fort Lauderdale FL
1,418
2.1
Seattle WA
4,965
1.9
Oakland CA
2,650
1.8
Berkeley CA
788
1.8
Atlanta GA
2,833
1.7
Minneapolis MN
2,622
1.6
Washington DC
3,678
1.5
Long Beach CA
2,266
1.4
Portland OR
3,017
1.3
Who are Domestic
Partners?
» Both persons have a common residence
» Neither person is married to someone
else or is in a domestic partnership with
someone else
» Both persons cannot be related by blood
» Both persons are at least 18 years
» Both persons are members of the same
sex OR
» The partners of the opposite sex , one or
both is over the age of 62 AND
» One or both meets specified eligibility
requirements under the Social Security
Act
» Both person are capable to consent to
the domestic partnership.
» Copy of form is attached. Form is to be
filed with the Secretary of State.
Declaration of Registered Domestic
Partnership
Domestic Partner Registry Facts
•
Enacted in 1999, the domestic partnership registry was the first of its kind in the US
where the principal privilege was just hospital visitation rights.
•
As of January 1, 2005, California-registered domestic partners are subject to nearly
all rights, protections, duties and obligations under state law that apply to married
partners.
•
Assembly Bill 205, known as CA Domestic Partners Rights and Responsibilities Act,
was signed into law on September 19, 2003 by Gov. Gray Davis.
•
Rights and duties under FEDERAL LAW do not apply to registered domestic
partners. This includes Social Security rights, rights under immigration law, veterans’
benefits and treatment as a couple under federal tax law and the Proposition 13
exemption from reassessment of jointly held property, upon separation or termination
of the marriage or after death does not apply to domestic partners.
DPR Facts Continued
As of 2007, California affords domestic partnerships most of the same responsibilities
as marriages under state law (Cal. Fam. Code s 297.5) Among these:
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Making health care decisions for each other in certain circumstances
Hospital and jail visitation rights
Access to health insurance plans
Spousal insurance policies
Wills, intestate succession, conservatorships and trusts
Property Tax provisions otherwise available only to married couples
Obligation to file state tax returns as a married couple
Community property rights and responsibilities previously only available
to married spouses
Title & Escrow Issues
1.
In general, all title and escrow practices applicable to spouses are applicable to registered
domestic partners.
2.
Change in Ownership Exclusion- Registered Domestic Partners: Effective January 1, 2006,
the following do not result in a change in ownership transfers of real property between
domestic partners:
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Transfers to a trustee for the beneficial use of a registered domestic partner, or the
surviving registered domestic partner of a deceased transferor, or by a trustee of
such a trust to the registered domestic partner of the trustor.
Transfers that take effect upon the death of a registered domestic partner.
Transfers to a registered domestic partner or former registered domestic partner in
connection with a property settlement agreement or decree of dissolution of a
registered domestic partnership or legal separation.
The creation, transfer, or termination, solely between registered domestic partners,
of any co-owner’s interest.
The distribution of a legal entity’s property to a registered domestic partner or former
registered domestic partner in exchange for the interest of the registered domestic
partner in the legal entity in connection with a property settlement agreement or a
decree of dissolution of a registered domestic partnership or legal separation
Title & Escrow Issues Continued
•
Effective January 1, 2006, SB565 allows a Domestic Partner, who is registered with
the Secretary of State, to be excluded from reassessment when a RDP is added or
removed from property title, whether by Deed or by death, provided that the interest
is conveyed to the RDP that remains on title.
•
Beginning with deeds recorded 1/3/06, the assessors office will identify transfers
between RDPs by reviewing the PCOR (Preliminary Change in Ownership Report)
that is typically filed with the Recorder’s Office at the same time the deed is recorded.
The PCOR is not a public document; it is merely collected by the Recorder and
forwarded to the Assessor together with an electronic copy of the deed.
•
The Assessor’s office procedure is to review the PCOR when processing deeds to
determine whether or not the transfer requires reappraisal to current market value for
assessment purposes. Therefore, it is imperative that all questions are answered
and that the form is signed and dated. To the extent that the assessor can identify
that the transfer was between RDPs, it will be excluded from reassessment.
Vesting Registered Domestic Partnerships
1.
2.
3.
4.
5.
6.
A and B, registered domestic partners
A and B, domestic partners
A and B, registered domestic partners as joint tenants
A and B, registered domestic partners as tenants in
common
A, a registered domestic partner as his/her sole and
separate property
A and B, registered domestic partners, with California
community property rights as applicable o registered
domestic partnerships
Vesting RDP Continued
• #1and #2 are equivalent to vesting married persons as
husband and wife. Domestic partners holding title in one
of these ways are subject to the same rules and
practices as are used for married persons holding title as
community property.
• #3, 4 & 5 are equivalent to vesting married persons as
joint tenants, tenants in common and separate property,
respectively. Domestic partners holding title in one of
these ways are subject to the same rules and practices
as are use for married persons holding title in the same
manner.
Community Property
•
On or after January 1, 2005, RDPs may take title to real property as community
property and community property with right of survivorship. As with Married couples,
real property, including property acquired between December 1999 and January 1,
2005, acquired by either or both partners during the RDP is presumed to be
community property.
•
Because community property is not a transfer, no change in ownership occurs upon
its application.
•
Because community property rights for RDPs are based on registration of the DP with
the Secretary of State and not on a marriage relationship, a transfer of real property
from one partner to himself and his RDP as “community property” is NOT excluded
from change in ownership under the interspousal exclusion. Therefore, this type of
transfer will result in a 50% change in ownership.
Joint Tenancy
• As with any other individuals, RDPs may hold title to
property as joint tenants.
• When insuring title into or out of a vested domestic
partnership, joint tenancies are handled in the same
manner as they would be handled for married couples.
Sole and Separate Property
• Deeds confirming an interest in real property as the
separate interest of a domestic partner should include a
community property disclaimer recital.
• For eg: “The grantor is executing this instrument for
the purpose of relinquishing all of grantor’s right,
title and interest, including, but not limited to, any
community property interest in an to the land
described herein and placing title in the name of the
grantee as his/her separate property.”
Death of a Domestic Partner
•
The interest of a deceased domestic partner could be subject to Probate codes and
the deceased partner’s interest may be therefore terminated of record by use of an
Affidavit similar to the one used when a spouse dies and the property is held as
community property (Affidavit of Death of Spouse) where title is held in a form other
than joint tenancy, tenancy in common or separately.
•
If the domestic partners hold title “with California community property rights and
survivorship rights,” a deceased partner’s interest may be terminated by an Affidavit
(Affidavit Domestic Partnership Succeeding to Title to Community Property by Right
of Survivorship).
Affidavit of Death
Title & Escrow
COPY OF DEED W/ VERBAGE
FOR PURPOSES OF RECORDING
CORRECTLY AND PCOR HERE…
COPY AND PASTE…
RDP & Reporting Requirements
• Effective January 1, 2007, a sale transaction wherein the sellers are
registered domestic partners, they may complete the applicable
California FTB Real Estate Withholding forms in accordance with
the way they file their state tax return.
• If RDPs file a joint return and are claiming they are exempt from
withholding, together they should complete only one applicable 593C form.
• If the sellers file separate tax returns, each seller should complete
an appropriate and separate 593 form disclosing their ownership
percentage.
• Federal Reporting Requirements: California RDPs cannot file a joint
tax return with the IRS. Sellers who are RDPs must complete a
separate 1099S indicating their ownership percentage.
Reporting Forms 593
CASE STUDY…
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Resale Transaction
Property located in San Francisco
Condominium Unit
Sales Price set by Mayor’s Office
1 Buyer (Male)
Typical Seller
Case Study Continued
•
Title was requested by buyer’s agent. As normal, a copy of the contract and
the buyer’s earnest money deposit was given to Escrow. Escrow was
opened. Buyer’s name JOHN DOE, an unmarried man and seller was Mary
Jane DOE.
•
Preliminary title report is received from title and Escrow Officer reviews the
preliminary report for taxes, liens, judgments, easements, etc.
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All looked to be standard- resale issues:
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Taxes due for 2007-2008
Tax Default for years 2004-2005, 2005-2006, 2006-2007
No supplemental taxes
Easements & CC*Rs were normal
Abstract Judgments (3)
An exception showing a sales price limitation but no worries it can be resolved thru the
Mayor’s office
• An SI for the buyer JOHN DOE… pretty common name!
Case Study Continued
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An SI was emailed to the buyer’s agent to be completed by buyer and
forwarded back to the Escrow Officer. In addition, a hard copy was mailed
to the buyer’s residence.
Days past and the Escrow Officer had not received the SI from the buyer or
the agent. The Escrow Officer continued to contact the buyer’s agent and
the buyer to emphasize the need for the SI.
The issue with the sales price was resolved by the Mayor’s office.
LOAN DOCS ARRIVE….
•
The loan documents were drawn by the lender as John Doe, an unmarried
man... Escrow drew the deed and escrow instructions as if title was to be
held by buyer as an unmarried man.
Case Study Continued…
THE SIGNING
•
The buyer, an older man in his mid 60s, arrives to the title company with a
young lady. The Escrow Officer assumed it was his daughter and began the
signing of his loan documents. The Escrow Officer mentioned to Mr. John Doe
that an SI was sent to him via email and mail, but that they had not received it
and escrow could not close until this was executed to meet one of the
exceptions on the preliminary report. Borrower executed all documents and off
they went.
•
The loan package was put together to send to the lender and the recording
package was put together along with the SI and sent to the title department.
Case Study Continued…
The Funding
•
Lender receives loan package and is immediately ready to fund the loan,
however, Escrow was waiting to receive buyer’s funds to close and asked to
hold off funding until notified.
•
Buyer brings in funds to close to escrow … Ready to Fund….
The Problem
• Remember the SI that was executed last minute at the signing table…
the Escrow receives a phone call from title. The title officer asked
where was the deed from the non-borrowing registered domestic
partner and by the way there is a lien against the buyer which will
need to be addressed in escrow.
Case Study
The ONLY RESOLUTION
• Escrow Officer immediately notified the lender that the buyer was in a
RDP and that the deed would have to change. In addition, in order to
meet funding cutoff for a file that was going to expire, the Escrow
Officer rushed to get a hold of the buyer’s RDP and get her to execute
a GD relinquishing her interest to the property.
•
Escrow Officer had to notify lender of the lien. The Escrow Officer had to rush
a demand request to the lien holder of the judgment that appeared and
request a verbal on funds due. The buyer had to rush and get a cashiers
check for additional funds to close.
YOU GET THE PICTURE! RIGHT?
Statement of Information Form
Things To REMEMBER!
DO
• ASK the question ahead of time
• COMMUNICATE w/ your customer
• Documentation: Make sure your customer can provide you with
evidentiary documents i.e. copy of filed Registered Domestic
Partnership certificate w/ the CA Secretary of State and forward to
your Escrow Officer
• FORWARD any and all forms provided by your Escrow Officer for
your customer to complete, including Statement of Information,
Borrower’s Authorization, etc.
DON’T
• ASSUME the relationship of your client (remember our case study)
• WAIT until last minute to do all of the above!
Thank You !
Caridad Stuart
Bay Area Multicultural Marketing Manager
Fidelity National Title Group
825 Broadway
Oakland CA 94606
Direct: 510-338-1852
Cell : 925-818-3169