State Deed Prepartion Issues

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Can anyone share an engagement letter or procedure which one would use when asked by an out-of-state attorney to record a deed?

For instance, let us suppose the client did not tell his attorney that he was being sued and the property is being transferred to an irrevocable trust. If I am reviewing the deed on behalf of the out-of-state attorney as a matter of form only, I don't want to be implicated or brought in on a scheme to defraud. Furthermore the out-of-state attorney may be uninsured or underinsured. How can one protect themselves when the deed is being done as a matter of courtesy for the out-of-state attorney and you have no contact with the client. Any thoughts?

Stephen Greer
Anchorage, Alaska

I practice only in Maine, although I am also licensed in Massachusetts. I would never try to record a deed or probate a will in Massachusetts without local counsel, having learned the hard way....

Many years ago, I offered to do a simple Massachusetts probate as a favor to a Maine business client. I read the appropriate code and rules, filled out the forms completely and correctly, and sent them off with a check for the filing fee to the Middlesex County Probate Court. And then I waited.

In Maine, we get informal appointments for a personal representative within 3 or 4 days. I figured a couple of weeks was probably not a concern in Massachusetts. The highways are much more clogged, so I figured the courts must be too.

After a lapse of several more weeks the need for an executor to sign something arose. I called the clerk. She said that it could take "forever" and that I ought to move to have the executor appointed temporarily. Dutifully I did so, all the while marveling on how different things were"down there." I got a hearing date and drove two hours to Cambridge, Massachusetts. The judge never called my motion and did not have the file.

The clerk could not find the file either. She asked me when I had filed it. I told her that I had mailed the original application several months ago and the motion a couple of weeks ago. She looked at me crosseyed and said "You MAILED it." Then she went into a back room and came out with a cardboard box full of unopened mail. She dug around for a minute and pulled out my two envelopes, both still unopened, one containing a check, and assembled the file. Then she informed me "We don't have time to open mail around here. Most people know to drop things off."

The next day I hired local counsel. This is a true story.

Jonathan T. Harris
Lambert, Coffin, Rudman & Hochman
477 Congress Street
P.O. Box 15215
Portland, ME 04112
(207) 871-7033
(207) 871-0394 fax
http://www.lcrh.com
jharris@lcrh.com

__________________________________

What do I use to recommend out of state attys?...Martindale, Naela, referrals from other attys I know, referrals from clients, news articles, seminar presenters..the list goes on.

Although there are many Pennsylvania members from ABA-PTL and Naela on the list none of us have volunteered to do cut rate deeds. Some of us have been burned in the past because the issue is far greater then simply preparing a deed, which of course can be accomplished for $200 as quoted, at a reasonable profit. However the question in Pa is broader because of the application of the realty transfer tax. If the issue is simply dividing assets between husband and wife to maximize credit shelter planning, then no big deal, no realty transfer tax and $200 covers the cost of the deed preparation and recording fees.

However if the transfer is to Revocable Trust to avoid ancillary probate the rules become quite tricky as to when the realty transfer tax applies. Generally if all beneficiaries including all contingent and default beneficiaries are exempt then the transfer into trust is exempt. Note, a default to intestate heirs would be taxable because not all intestate heirs are tax exempt. The question quickly becomes how much to charge to prepare a deed and how much to charge to review a revocable trust that you did not prepare. You need to determine the relationship of all beneficiares and understand the dispositve scheme.

The realty transfer tax is commonly 2% of the fair market value of the real estate. In many cases that can be an unexpectant hit when the recording tax bill is given to the client who was not informed of the cost.

In Pa a deed is easy, the tougher questions have to do with transfers into trust when you did not prepare the trust and don't know anything about the client.

Fred Nice
Reading Pa
I am curious as to the criteria others on this listserve use to assist a client in selecting an "out-of-state" attorney to prepare deeds and other estate planning documents.

Charles Ian Nash, Esq.
As pointed out by another list member, preparation of deeds in California requires similar assessments of the nature of the transaction due to the infamous Prop 13 reassessment issues. There are several cases proving that self-help or under-qualified legal assistance can yield disastrous financial results by triggering a reassessment of a low property tax basis parcel to current full cash value because the wrong method of vesting and transfer was selected. Therefore, I think Fred's concerns for rendering competent and complete advice are well founded, at least in a handful of jurisdictions with quirks. However, I think some of the "analysis" required may be accomplished relatively quickly and easily by the proper coordination and dialogue between the referring attorney and the deed-preparing attorney. I for one am willing to give this a shot a few times to determine if it is feasible to render competent advice in the fee ranges being quoted; if it isn't, and I feel like $200 doesn't cover my overhead and risk factor, then I will exercise my vote to take myself out of the Deed Pool. Wasn't that a Clint Eastwood movie? ;~)

Entrepreneur Law
Hugh A. Sanders
610 Newport Center Drive, Suite 1199
Newport Beach, CA 92660
(949) 644-7899
(949) 644-2298 (Fax)
Sunday, Nov. 7, 1999
From: Rob Robertson, Austin, Texas

The comments about out-of-state deep drafting, fees, etc., prompt me to ask readers who perform these service how they address, if at all, the topics of the accuracy of the legal description, title insurance, IRS form 1099 requirements, if any, etc. It seems to me as a bare minimum the client would have to sign a well-drafted disclaimer.

Also, I ask in connection with the inquiry that started this thread whether a 1099 is required, and if so, what person involved with the transaction in question is required by IRS regulations to file it?

It seems to me that if one must gather facts, analyze the transaction, "educate" the client, obtain a disclaimer, possibly have to followup with IRS filings, and be open to later complaints, $200 is a real bargain.
Sunday, Nov. 7, 1999
From: Rob Robertson, Austin, Texas

The comments about out-of-state deep drafting, fees, etc., prompt me to ask readers who perform these service how they address, if at all, the topics of the accuracy of the legal description, title insurance, IRS form 1099 requirements, if any, etc. It seems to me as a bare minimum the client would have to sign a well-drafted disclaimer.

Also, I ask in connection with the inquiry that started this thread whether a 1099 is required, and if so, what person involved with the transaction in question is required by IRS regulations to file it?

It seems to me that if one must gather facts, analyze the transaction, "educate" the client, obtain a disclaimer, possibly have to follow-up with IRS filings, and be open to later complaints, $200 is a real bargain.
While there may be some element of self-interest in the laundry list of state-specific requirements in Florida, I think as many (but perhaps different) issues exist in all other states as well. Rather than seeing it as a deliberate effort to generate local legal business, I believe the
situation is just the product of an evolution of case law, statute, and regulation which is not always coordinated, not always consistent, and not always logical. States remain parochial about the land within their borders, not only in the laws and requirements governing conveyancing, but in other legal areas, such as probate and the requirements of ancillary administration. Each state has its laws, and each state has its lawyers. I just happen to have landed in Florida. But hey, the next time a need a deed done in NY (if I recall correctly, that's where your from), you'll be on the top of my list.

Marc H. Feldman
Feldman & Roback
Bradenton, Florida
voice: (941) 758 - 8888
Fax: (941) 751 - 5556

mhf@realestateplanning.com
www.realestateplanning.com
My concern is that I get sued for my failure to check title if I did not discover that the conveyance my client asked me to prepare was not effective because of some preexisting encumbrance that I did not know of because it arose after the date of the deed that the client showed my when I was retained.

Kenneth Lorch
Holleb & Coff
55 East Monroe Street
Suite 4000
Chicago, IL 60603
Direct Dial: 312-419-4413
Telecopier: 312-807-3900
E-Mail: Klorch@Holleb-law.com
What would be the amount of damages which could be recoverable if the Trustee did not furnish any consideration in connection with the conveyance to the trust?

Charles Ian Nash, Esq.
Frese, Nash & Torpy, P.A.
Melbourne, Florida
Ken,
I understand your concerns, but I don't think it's such an issue. I can't see the trustees suing themselves over encumbrances to the title that they created or allowed. Granted, the successor trustee could sue the executor, I guess, but these are usually one and the same in my practice. Granted that a future owner could sue the successor trustee, I guess, for encumbrances created by the grantor of the trust and not corrected upon transfer to the trust, so maybe there is increased liability - if, at state law, the same future owner would not be able to sue the estate of the original owner/trust grantor after the lapse of the claim statute, and if the trust and its corpus still exist. I do warranty deeds. I'm just now getting on the bandwagon with endorsements, not previously realizing that it was an issue. Evidently, it is, and some companies will deny coverage.

--tim
barkley@barkleylaw.com
www.barkleylaw.com
(301) 829-3778
Ken's comment is well taken, but the client doesn't have to agree to pay for a title search, etc. every time they transfer title - especially to themselves. If they want to do it without a title search, as my clients always do in the context of a transfer to a self-trusteed RLT, they sign a statement that they didn't want a title search, and away we go. If their title insurance company wants a new title search to endorse the policy to cover the RLT, that's a different issue entirely, but I've never seen it happen.

The Garn-St. Germaine legislation that Ken refers to only requires notice, not consent, by my reading, and I've never had a lender even acknowledge the letter. In MD the tax exemption is automatic upon recording, providing we cite the appropriate code section in the land instrument intake sheet.

All FWIW.

tim barkley
While there may be some element of self-interest in the laundry list of State-specific requirements in Florida, I think as many (but perhaps different) issues exist in all other states as well. Rather than seeing it as a deliberate effort to generate local legal business, I believe the situation is just the product of an evolution of case law, statute, and regulation which is not always coordinated, not always consistent, and not always logical. States remain parochial about the land within their borders, not only in the laws and requirements governing conveyancing, but in other legal areas, such as probate and the requirements of ancillary administration. Each state has its laws, and each state has its lawyers. I just happen to have landed in Florida. But hey, the next time a need a deed done in NY (if I recall correctly, that's where your from), you'll be on the top of my list.

Marc H. Feldman
Feldman & Roback
Bradenton, Florida
voice: (941) 758 - 8888
Fax: (941) 751 - 5556

mhf@realestateplanning.com
www.realestateplanning.com
Can anyone share an engagement letter or procedure which one would use when asked by an out-of-state attorney to record a deed.

For instance, let us suppose the client did not tell his attorney that he was being sued and the property is being transferred to an irrevocable trust. If I am reviewing the deed on behalf of the out-of-state attorney as a matter of form only, I don't want to be implicated or brought in on a scheme to defraud. Furthermore the out-of-state attorney may be uninsured or underinsured. How can one protect themselves when the deed is being done as a matter of courtesy for the out-of-state attorney and you have no contact with the client. Any thoughts?

Stephen Greer
Anchorage, Alaska
Sunday, Nov. 7, 1999
From: Rob Robertson, Austin, Texas

The comments about out-of-state deep drafting, fees, etc., prompt me to ask readers who perform these service how they address, if at all, the topics of the accuracy of the legal description, title insurance, IRS form 1099 requirements, if any, etc. It seems to me as a bare minium the client would have to sign a well-drafted disclaimer.

Also, I ask in connection with the inquiry that started this thread whether a 1099 is required, and if so, what person involved with the transaction in question is required by IRS regulations to file it?

It seems to me that if one must gather facts, analyze the transaction, "educate"the client, obtain a disclaimer, possibly have to follow-up with IRS filings, and be open to later complaints, $200 is a real bargain.
While there may be some element of self-interest in the laundry list of state-specific requirements in Florida, I think as many (but perhaps different) issues exist in all other states as well. Rather than seeing it as a deliberate effort to generate local legal business, I believe the situation is just the product of an evolution of case law, statute, and regulation which is not always coordinated, not always consistent, and not always logical. States remain parochial about the land within their borders, not only in the laws and requirements governing conveyancing, but in other legal areas, such as probate and the requirements of ancillary administration. Each state has its laws, and each state has its lawyers. I just happen to have landed in Florida. But hey, the next time a need a deed done in NY (if I recall correctly, that's where your from), you'll be on the top of my list.

Marc H. Feldman
Feldman & Roback
Bradenton, Florida voice: (941) 758 - 8888 Fax: (941) 751 - 5556
mhf@realestateplanning.com www.realestateplanning.com
My concern is that I get sued for my failure to check title if I did not discover that the conveyance my client asked me to prepare was not effective because of some preexisting encumbrance that I did not know of because it arose after the date of the deed that the client showed my when I was retained

Kenneth Lorch
Holleb & Coff
55 East Monroe Street Suite 4000
Chicago, IL 60603
Direct Dial: 312-419-4413 Telecopier: 312-807-3900
E-Mail: Klorch@Holleb-law.com
What would be the amount of damages which could be recoverable if the Trustee did not furnish any consideration in connection with the conveyance to the trust?

Charles Ian Nash, Esq.
Frese, Nash & Torpy, P.A.
Melbourne, Florida
Ken, I understand your concerns, but I don't think it's such an issue. I can't see the trustees suing themselves over encumbrances to the title that they created or allowed. Granted, the successor trustee could sue the executor, I guess, but these are usually one and the same in my practice. Granted that a future owner could sue the successor trustee, I guess, for encumbrances created by the grantor of the trust and not corrected upon transfer to the trust, so maybe there is increased liability - if, at state law, the same future owner would not be able to sue the estate of the original owner/trust grantor after the lapse of the claim statute, and if the trust and its corpus still exist. I do warranty deeds. I'm just now getting on the bandwagon with endorsements, not previously realizing that it was an issue. Evidently, it is, and some companies will deny coverage.

--tim barkley@barkleylaw.com
www.barkleylaw.com
(301) 829-3778
Ken's comment is well taken, but the client doesn't have to agree to pay for a title search, etc. every time they transfer title - especially to themselves. If they want to do it without a title search, as my clients always do in the context of a transfer to a self-trusteed RLT, they sign a statement that they didn't want a title search, and away we go. If their title insurance company wants a new title search to endorse the policy to cover the RLT, that's a different issue entirely, but I've never seen it happen. The Garn-St. Germaine legislation that Ken refers to only requires notice, not consent, by my reading, and I've never had a lender even acknowledge the letter. In MD the tax exemption is automatic upon recording, providing we cite the appropriate code section in the land instrument intake sheet. All FWIW.

tim barkley
While there may be some element of self-interest in the laundry list of State-specific requirements in Florida, I think as many (but perhaps different) issues exist in all other states as well. Rather than seeing it as a deliberate effort to generate local legal business, I believe the situation is just the product of an evolution of case law, statute, and regulation which is not always coordinated, not always consistent, and not always logical. States remain parochial about the land within their borders, not only in the laws and requirements governing conveyancing, but in other legal areas, such as probate and the requirements of ancillary administration. Each state has its laws, and each state has its lawyers. I just happen to have landed in Florida. But hey, the next time a need a deed done in NY (if I recall correctly, that's where your from), you'll be on the top of my list.

Marc H. Feldman
Feldman & Roback
Bradenton, Florida
voice: (941) 758 - 8888 Fax: (941) 751 - 5556
mhf@realestateplanning.com
www.realestateplanning.com
Can anyone share an engagement letter or procedure which one would use when asked by an out-of-state attorney to record a deed. For instance, let us suppose the client did not tell his attorney that he was being sued and the property is being transferred to an irrevocable trust. If I am reviewing the deed on behalf of the out-of-state attorney as a matter of form only, I don't want to be implicated or brought in on a scheme to defraud. Furthermore the out-of-state attorney may be uninsured or underinsured. How can one protect themselves when the deed is being done as a matter of courtesy for the out-of-state attorney and you have no contact with the client. Any thoughts?

Stephen Greer
Anchorage, Alaska
Sunday, Nov. 7, 1999
From: Rob Robertson, Austin, Texas

The comments about out-of-state deep drafting, fees, etc., prompt me to ask readers who perform these service how they address, if at all, the topics of the accuracy of the legal description, title insurance, IRS form 1099 requirements, if any, etc. It seems to me as a bare minium the client would have to sign a well-drafted disclaimer. Also, I ask in connection with the inquiry that started this thread whether a 1099 is required, and if so, what person involved with the transaction in question is required by IRS regulations to file it? It seems to me that if one must gather facts, analyze the transaction, "educate" the client, obtain a disclaimer, possibly have to follow-up with IRS filings, and be open to later complaints, $200 is a real bargain. What I meant was, if I transfer real estate I believe I own to a revocable inter vivos trust I create and it is later determined that the title has a blemish (say a forged deed in the chain of title that occured before I ever purchase the real estate, what damages does the trust incur against me the transferor due to the fact that the trust did not pay me anything (no consideration) for my conveyance to the trust.

Charles Ian Nash, Esq.
Frese, Nash & Torpy, P.A.
Melbourne, Florida

Instead of a full blown title commitment, a title company can provide an "Ownership and Encumbrance Report" for usually $50 to $100.

Christopher A. Anselmo, Esq., CPA
Weston Hurd, et.al.
2500 Terminal Tower
Cleveland, OH 44113 216-687-3244
Chris@Anselmo.com

dcharris@interspring.com (DCHARRIS ATTORNEY AT LAW)

I am a past subscriber to the list and would much appreciate getting your list of deed providers when you have it complete. I am a member of the National Network of Estate Planning Attorneys.

Don Harris dcharris@interspring.com

Does it make sense for everyone participating to have a standard letter to be given to all clients that informs them that no title search or work was done but was prepared from information (including names and legal description) provided by the client; informs them about title insurance issues (for transfers to revocable and irrevocable trusts); obtaining consents from lenders? Also, in Minnesota, to record deeds for torrens (registered) property (as opposed to abstract property), a copy the duplicate certificate of title must be filed until sometime in 2000. We have found that locating this (safe deposit box, lender, registrar of titles or elsewhere) is potentially difficult and time consuming, so fees will be higher if not included in the package of information.

Name E. Burke Hinds
Firm: Messerli & Kramer P.A
Address: 1800 Fifth Street Towers 150 South Fifth Street
City, State Zip: Minneapolis, MN 55402-4218
Telephone: (612) 672-3788

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