Legal Question in Real Estate Law in California

Will this transfer be a gift, or a sale at fair market value? What is the exact relationship between the transferor and the transferee? Is the property now worth more than when it was initially acquired? What is the purpose of the proposed transfer?

These questions, and perhaps others, really need to be answered in order to advise you well.

In many cases, the best way to transfer property within a family is not by deed but by living trust or will. Trusts in particular are preferred because they bypass probate and give a step-up in tax basis that may save the new owner(s) thousands in capital-gains tax.

As for triggering reassessment, the relationship between the parties determines exemption. A parent-child transfer is exempt, for example; uncle-to-nephew or brother-to-sister is not.

For less than 1% of the property value, a lawyer specializing in family wealth planning or trusts and estates can explain in detail and set up a will or trust, or if appropriate, draw up the right kind of deed.

In California, warranty deeds are not often used. We use grant deeds when the grantor has and is willing to say he has good title; when title is doubtful, a quitclaim is appropriate. A bigger problem than selecting the wrong kind of deed is filling it in wrong. The granting clause and the property description need to be accurate, or a mess can result.

I need more information regarding the parties and the transfer details to answer. This office can advise as to the best form of transfer and draft the transfer documents for a reasonable fee;. Contact me directly.

I agree with Mr. Whipple's response. I write separately to point out that California historically recognizes two types of conveyances, a "quit claim" deed, and a "grant" deed. The difference between the two has nothing to do with taxes.

A grant deed, carries an automatic warranty that the person granting the deed, has title to the property to grant. It also carries two implied covenants: 1) that prior to the execution of the grant deed, the grantor has not conveyed the estate to any person other than the grantee AND 2) that at the time of the execution, the property is free from encumbrances. (Civ. Code, sect. 1113.)

Because of these warranties, a grant deed will pass subsequently acquired title. If A executes a grant deed to B of Blackacre, but A does not have title to Blackacre at the time of executing the grant deed, A's subsequent acquisition of Blackacre will pass Blackacre to B.

A quitclaim deed does not do this. A quitclaim deed releases whatever interest the owner has in the property, which may be none. There are no warranties with a quitclaim deed, and a quitclaim deed will not pass after acquired title.

The choice between the two, has nothing to do with taxes.