As you navigate the world of real estate transactions, it’s crucial to understand the nuances of title vesting, a fundamental aspect of property ownership. This blog post will shed light on the various legal entities that can hold title in Washington State and provide insights into the required documentation and signatory procedures for each entity.
Entities That Can Hold Title:
Before delving into the documentation and signing processes, it’s essential to know which legal entities are eligible to hold title in Washington State. These entities include:
- Corporation: Corporations must provide Articles of Incorporation, by-laws, and potentially a resolution to sell the property. The authorized signatories should include titles such as John Doe, President/Treasurer.
- Limited Partnership: Limited Partnerships require the partnership agreement to identify the managing partner, who should sign as John Doe, Managing Partner.
- General Partnership: General Partnerships also necessitate the partnership agreement, and all partners are required to sign using the title John Doe, Partner.
- LLC (Limited Liability Company): LLCs should provide their operating agreement, specifying who is authorized to sign on behalf of the LLC. Authorized signatories can use titles like John Doe, Member, or Manager.
- Individual: For individual ownership, the property owner simply signs on their own behalf.
- Trust: Trusts require a copy of the trust document to identify the trustees. Authorized signatories can use the title John Doe, Trustee.
- Decedent’s Estate: In cases involving a decedent’s estate, the court appoints a Personal Representative, who signs the necessary documents as John Doe, Personal Representative.
Power of Attorney:
In some situations, a Power of Attorney (POA) may be used for signing on behalf of an entity or individual. However, specific conditions apply:
A POA can be used for a living individual, provided there’s language in the original paperwork allowing for its appointment. Signatories should use the format: John Doe, by Mary Doe, Attorney in fact.
A durable POA is suitable for an incompetent individual and typically requires a letter from a doctor as proof.
Dealing with properties involved in bankruptcy requires special attention. You’ll need a court order authorizing the property sale and approving the specific terms. Sometimes, a Bankruptcy Trustee or a Referee may be appointed to oversee the transaction. Additionally, proceeds from the sale might need to be deposited with an attorney for creditor payments.
In divorce scenarios, the signing process depends on the status of the divorce:
If the divorce is still in progress, both parties must sign. They should also agree on the distribution of proceeds.
If the divorce is final and the property was awarded to one party, that party signs. However, if the other party is entitled to funds, they need to sign a “payoff request” and relevant release documents, such as a Quit Claim Deed or Satisfaction of Judgment or Lien.
In some cases, the court may award the property to both parties, requiring both to sign and agree on financial matters.
If seller financing is involved, remember that the property title should be held in the name of the entity (if applicable), not the individuals.
Understanding title vesting in Washington State, the associated documentation, and signing procedures is crucial. Keep in mind that unexpected situations may arise, so collaboration with escrow and title professionals is vital to navigate any challenges that come your way.
Written by Escrow Professional, Laurie LeMay, LPO at Land Title Company