QUESTION
Is swap of houses with a selling price of $1.00 legal?
Asked on Oct 16th, 2012 on Estate Planning - Michigan
More details to this question:
My brother acquired a single family house by swapping his house for another party's house. The other party received $1.00 from my brother for this transaction. My brother's property was assessed by the county property tax department for $5,000 more than the property he bought. His wife completed this transaction when my brother was morbidly depressed and didn't know what kind of document he was signing. Done through a general practice lawyer's office. Any legal recourse possible?
10 ANSWERS
Probate Attorney serving Newport, OR
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Minor, Bandonis & Haggerty P.C.
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A variety of possibilities, depending on a variety of circumstances. Needs investigation by a lawyer.
Answered on Oct 18th, 2012 at 4:14 PM
If you feel that undue influence has been used in this transaction, you should consult a real estate attorney about your possible remedies.
Answered on Oct 17th, 2012 at 4:19 PM
Business Planning Attorney serving Livonia, MI
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Frederick & Frederick Attorneys at Law
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It is highly unlikely there is recourse. It is likely that this was done as a way of avoiding transfer tax, which is about $7 per thousand of sales price. If they had treated this as a sale for full value, then each party would have had to pay hundreds, if not more than a thousand dollars in tax. When you are talking about a house, a difference in appraised value of $5,000 is not really that much. The argument could be made that your brother got the better of the deal because the property taxes will be lower on his property than the one he got rid of. I think your brother is stuck with this deal. I am sorry I could not give you better news.
Answered on Oct 17th, 2012 at 2:45 PM
Civil Litigation Attorney serving Aptos, CA
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Richard E. Damon, P.C.
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If he lacked mental capacity to understand the transaction, the deal could theoretically be undone.
Answered on Oct 17th, 2012 at 2:44 PM
Yes, a house swap in general is a valid transaction. If you think that fraud was involved because one of the parties was incapacitated, that could invalidate the transaction.
Answered on Oct 17th, 2012 at 2:44 PM
Trusts Attorney serving Sacramento, CA
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Law Office of Victor Waid
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You can swap property for any price you agree to. As to the assessed value, you need to interface with the assessor's office and appeal the assessment value. I doubt you would have any claim against the lawyer.
Answered on Oct 17th, 2012 at 2:44 PM
If the swap of homes involved property jointly-owned by your brother and his wife, there may reluctance by most judges to undo what they did together unless there is clear and convincing evidence that your brother lacked the mental capacity to make the sale. Even if he was the sole owner, the fact that his wife agreed will make proving his lack of capacity that much more difficult because she will testify otherwise. Your conclusion that the exchange was made by the other party paying $1 for $5,000 more property is a property tax assessing issue that does not demand legal recourse because every piece of real estate is unique. Your brother and wife evidently had reasons for making the sale.
Answered on Oct 17th, 2012 at 2:43 PM
Business Law Attorney serving Bingham Farms, MI
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James T. Weiner, P.C.
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Generally you have to pay state and county transfer taxes on real estate when it is sold or transferred. The swap you describe will be for $1 plus other consideration. The other consideration is the value of the other house he gave in exchange.. Thereafter the local property tax assessor has the legal obligation to re-assess the house for property tax purposes at the fair market value (e.g. full market price oif hted house ) and this swap will "uncap" any property tax limitations and the SEV and Taxable value should be the same (and 1/2 of the fair/full market value). This is the law. What legal recourse are you talking about? He has the option to challenge the valuation assement but its set at the fair market value. The $1 he "paid" for the house is not a real number so it is irrelevant. Does he not like the entire transfer and want to void it and what does his wife have to do with it? If he signed the document he signed it.. and apparently his wife was part owner so.
Answered on Oct 17th, 2012 at 2:43 PM
Assessed value is not necessarily 50% of the market value of the house in the real world. Given the amount of money involved, it may not be cost effective to challage the transaction or seek other relief. For some reason the wife wanted to live in the new house rather than the old one. If your brother has a problem with this, you can help him get a more detailed review of the facts by a good attorney but he will most likely have to pay the attoreny his or her hourly rate.
Answered on Oct 17th, 2012 at 2:42 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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If your brother was not competent to contract at the time there may be an issue. You, actually he, needs to see an attorney with the details.
Answered on Oct 17th, 2012 at 2:41 PM