Real Estate Transactions

Selling or transferring real estate in California often comes with hidden costs. One of the most overlooked is the Documentary Transfer Tax (DTT) – a fee that can surprise even experienced property owners. However, many transfers qualify for exemptions that reduce or eliminate this tax entirely.

If you’re unfamiliar with how these exemptions work, you could end up paying thousands of dollars unnecessarily. The difference often comes down to legal knowledge and attention to detail. A qualified real estate attorney can help you take full advantage of every available exemption and avoid costly errors.

What Is the Documentary Transfer Tax?

The Documentary Transfer Tax is a one-time tax assessed on the transfer of real property in California. It is governed by California Revenue & Taxation Code §11911 and is typically …

The Foreign Investment in Real Property Tax Act (FIRPTA) requires buyers of U.S. real property interests from foreign sellers to withhold a portion of the purchase price and remit it to the Internal Revenue Service (IRS). This ensures that foreign sellers pay any applicable taxes on gains from U.S. property sales.

What Is FIRPTA Withholding?

Under FIRPTA, buyers must withhold 15% of the purchase price when acquiring U.S. real property from a foreign seller. The withheld amount is credited toward the seller’s potential tax obligations when they file a U.S. tax return.

Who Is Considered a Foreign Person?

FIRPTA applies only when the seller is classified as a foreign person, which includes:

• Nonresident aliens
• Foreign corporations that have not elected to be treated as domestic corporations
• Foreign partnerships, trusts, or

Seller financing, also known as a seller “carry back,” is when a property seller extends credit to a buyer to assist with the purchase. This approach can simplify transactions but requires compliance with various state and federal regulations. Here’s an overview of crucial points and common questions regarding seller financing.

Key Questions to Consider in Seller Financing

1. Specific Disclosures:

   • California law mandates specific disclosures for certain seller financing transactions. For instance, the Seller Financing Addendum and Disclosure (C.A.R. form SFA) is necessary for 1-4 unit residential properties when an arranger of credit is involved.

2. Arranger of Credit:

   • Typically, the buyer’s real estate agent acts as the arranger of credit. This role can be played by anyone who is not a party to the sale and who is involved

In the real estate market, buyers may have more leverage, which increases their chances of getting an offer accepted with contractual contingencies remaining intact. But what exactly are contingencies, and how do they affect real estate transactions? This article will explore the standard contingencies in the California Residential Purchase Agreement and Joint Escrow Instructions (C.A.R. Form RPA) and provide helpful tips for buyers and sellers.

Standard Contract Contingencies

The C.A.R. Form RPA includes at least five and as many as seven standard contingencies in the contract. These contingencies are:

• Loan
• Appraisal
• Investigation of Property
• Review of Seller Documents
• Preliminary (“Title”) Report
• Common Interest Disclosures – If applicable
• Review of Leased or Leaned Items – If applicable

It is important to note that the deadline for removal of each of these …

In a market where buyers have more leverage, sellers may be more willing to negotiate repairs than they typically are in a so-called “seller’s” market. Negotiating repairs can be a very important, yet very complicated, part of a sales transaction. Inspect early to allow time to negotiate

The standard time period in the Residential Purchase

Agreement and Joint Escrow Instructions (C.A.R. Form RPA) for the buyer to inspect the property and exercise their investigation contingency is 17 Days. If the buyer wants to have the best opportunity to negotiate any potential repairs with the seller, they should have their inspections done early and not wait until just before the deadline.

How can Buyers request repairs?

The buyer should use the Request for Repair (C.A.R. Form RR) to propose that the …