How to transfer ownership of a house with unpaid taxes. This reader’s wife wants to transfer her joint tenancy ownership in a property with back taxes due.
Q: My father-in-law transferred ownership in his house in Michigan to his four daughters as joint tenants before his death a couple of years ago. Now, my wife, one of the four owners, wants to get rid of her one-quarter interest in the house by doing a deed to the other three owners. The property taxes have not been paid in 2018 at all. Can my wife transfer her ownership to the other three owners with back taxes due?
A: The real issue is why your wife wants to get rid of her one-quarter interest in the home. Given that the property taxes haven’t been paid (more on that in a moment), it’s likely that your wife may have issues with her sisters and they may not agree on how the property is being (or should be) managed.
Does everyone feel this way? Is it time to dispose of the property? Depending on the answers to these questions, your wife and her sisters each have options they should explore.
How to Transfer Ownership of a House with Unpaid Taxes
One option for all of them is to sell the property. When all owners agree to sell the home, they can enlist the help of a real estate agent to market the property, find a buyer and close on that sale. At the closing, any outstanding bills (like property tax bills) can be paid off and whatever is left over can be split between the sisters.
Option #2 is that one or two of the sisters can sell to the remaining owners. In this case, your wife wants to sell. Do her sisters want to buy her share of the property? As a condition of the closing, your wife can require that the outstanding debts be paid and she may have to forfeit a portion of her share of the proceeds in order to pay those bills.
If your wife doesn’t care about the money – but doesn’t want to be on the hook for property taxes – she can use a quit claim deed to give the property to her sisters. But this is usually best done when everything is on the table and there is an agreement amongst all the owners.
Transferring Ownership Between Family Members
Is the issue personal? We know that not all families get along. Your wife may have one or more sisters who are impossible to deal with. In this case, the best idea is to just see if you can sell the property. If a co-owner refuses to sell, there should be a discussion about why the co-owner doesn’t want to sell and then if the co-owner will buy the property from the other owners. (There may be a multitude of reasons why an owner doesn’t want to sell but the main reason is usually that they live in the home, or use it frequently, in the case of a vacation home, and don’t want to move.)
If no one does anything – and the property taxes aren’t brought to current status, you could lose the property in a tax sale. So, we suggest finding a compromise. Your wife should approach one or more of her sisters to see if they are interested in buying her share of the home.
If they are, great. You can proceed to closing. If not, your wife could do nothing and see what happens. Perhaps the very real threat of losing the property in a tax sale or a new buyer who emerges will force everyone’s hand.
If she plays the waiting game, make sure she has umbrella liability insurance that covers her in case something happens at the home. She might not be able to control what goes on with the home or whether somebody or nobody is buying insurance to cover the home, but she can cover herself by purchasing an umbrella insurance policy. This umbrella policy can give her coverage on her existing home, auto and any other property she owns.
Using a Quitclaim Deed to Transfer Ownership of a House
Finally, if she’s tried everything and she just wants to get rid of it or she wants to get rid of it because she feels her sisters deserve it more than she does or for other altruistic reasons, she can convey her one-quarter interest to one or more of her sisters. For example, if she simply wants her share to go to her three sisters equally, her quitclaim deed would transfer her share to her sisters and her three sisters would each end up owning a one-third interest in the home. She also could give her interest to only one of the sisters and that sister would end up owning half of the home.
The next steps it to speak with a smart real estate attorney who can assist with the decisions she needs to make, advise her of her obligations and options and can help with the paperwork. Good luck.