REAL ESTATE EXCISE TAX

REAL ESTATE EXCISE TAX

A transfer by a vendee of his interest to a third person where no consideration is involved except the assumption of the vendee's liability to pay the balance of the purchase price is excluded from the term "sale."

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                                                                     July 9, 1957

Honorable George W. Kupka
State Senator
Twenty-seventh District
801 South G Street
Tacoma, Washington                                                                                                                Cite as:  AGO 57-58 No. 95

Dear Sir:

            This is in answer to your letter of March 28, 1957, relating to the applicability of the one percent real estate tax imposed under chapter 28.45 RCW.

            Specifically, you have asked whether a transfer by a vendee of his interest to a third person, where no consideration is involved except the assumption of the vendee's liability to pay the balance of the purchase price, is excluded from the term "sale" in RCW 28.45.010, and therefore is not a taxable transfer.

            Our answer to your question is in the affirmative.

                                                                     ANALYSIS

            In your letter you referred to an opinion of this office dated September 29, 1955, to the prosecuting attorney of Pierce County (AGO 55-57 No. 141).  You have inquired if this opinion is to be construed as also concluding that the exclusion from the term "sale" in RCW 28.45.010, as amended by chapter 132, Laws of 1955, applies to a deed of a vendee's interest in a contract of sale to a third  [[Orig. Op. Page 2]] person where no consideration passes except the third person's obligation to assume the unpaid balance of the purchase price.  Stated differently, the vendee has decided to abandon his contract and a third person has assumed the obligation.

            RCW 28.45.010, as amended by chapter 132, Laws of 1955, provides in part as follows:

            "The term (sale) shall not include . . ., or deed in lieu of foreclosure of a mortgage or the assumption by a grantee of the balance owing on an obligation which is secured by a mortgage or deed in lieu of forfeiture of the vendee's interest in a contract of sale where no consideration passes otherwise . . ."

            The applicable portion of the above statute involved is "or deed in lieu of forfeiture of the vendee's interest in a contract of sale where no consideration passes otherwise."  In our prior opinion, we concluded that the above exclusion is not restricted to the original parties but applies as well to a third party grantee where the purpose of the transfer is to avoid foreclosure.  We think the same conclusion is applicable in respect to a third party transferee of a vendee where the purpose of the transfer is to avoid a forfeiture of the original vendee's interest.

            The phrase "where no consideration passes otherwise" in the above statute refers to consideration other than a third party assumption of the obligation to pay the balance of the purchase price.  Accordingly, a transfer "where no consideration passes otherwise" includes a transfer from a vendee to a third party where the only consideration is the third person's obligation to assume the unpaid balance of the purchase price.

            We trust the above may be helpful.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

ROBERT L. SIMPSON
Assistant Attorney General