ARIZONA
INTERNATIONAL REAL ESTATE GUIDE
TIPS FOR BUYING AND SELLING IN ARIZONA
CHICAGO TITLE AGENCY LOCATIONS
TEMPE
4500 S. Lakeshore Dr. #200 (480) 874-7045
CHANDLER
2121 W. Chandler Blvd. #200 (480) 899-0201
GILBERT
335 E. Germann Rd. #101 (480) 539-6854
ESPLANADE
2398 E. Camelback R. #110 (602) 667-1046
BILTMORE
2398 E. Camelback Rd. #110 (602) 553-4806
DESERT RIDGE
20860 N Tatum Blvd #140 (602) 667-1230
SCOTTSDALE RAINTREE
8800 E. Raintree Dr. #230 (480) 675-4899
SCOTTSDALE PRINCESS
8501 E. Princess Dr. #110 (480) 538-1940
SCOTTSDALE - MAIN OFFICE
7500 N. Dobson Rd. #150 (602) 667-1000
GOODYEAR
1300 S. Litchfield Rd. #220-A (623) 434-9205
FIRPTA - DOES THIS APPLY TO YOU?
FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT
FIRPTA is a U.S. law governing the sale of real property by non-resident aliens and foreign entities when the property is located within the United States.
IS SELLER A US CITIZEN OR A US RESIDENT?
Does the BUYER have definite plans to use the property as his residence and sales DOES NOT EXCEED $300,000?
YES
Complete Buyer’s Declaration for $300,000 Residence Exception form
NO
Buyer Requests 10% Withholding
YES
Complete Certification of Non-Foreign Status
Is SELLER recognizing a gain of more than 10%?
YES
See your CPA or tax attorney regarding application form 8288B for an IRS Withholding Certificate
Carefully review FIRPTA Withholding Agreement. All parties, including seller’s tax professional, must sign this agreement.
Escrow provides an estimated Seller Statement
IF SO INSTRUCTED, ESCROW WILL WITHHOLD 15% PENDING RECEIPT OF WITHHOLDING CERTIFICATE.
Internal Revenue Code Provides: Withholding is not required if the property is for use as a home and the sales price is not more than $300,000. The Buyer or a member of their family must have definite plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first 12 month periods following the date of transfer. When counting the number of days the property is used, do not count the days the property will be vacant.
ABOUT FIRPTA
WHAT YOU NEED TO KNOW
BASICS
When a foreign owner gets ready to sell, they could be subject to up to 15% (of the sales price) withholding unless the transaction is exempt from FIRPTA.
Most common exception: The Sales Price is $300,000 or less. The Buyer or a member of the family must have plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first twelve month periods after the sale.
POTENTIAL EXCEPTIONS
Seller provides a Certificate showing they are not a foreign seller. Seller receives a withholding certificate from the IRS excusing withholding.
FUNDING
All funds deposited in escrow must be by wire transfer. Outside of the US Wire Transfers/Swift Fee: International transfers are executed through SWIFT - Society for Worldwide Interbank Financial Telecommunication. There is an additional charge for this type of transfer. Typically the charge is a flat rate and does not exceed $100. The charge is deducted from the wired funds and varies from bank to bank, so we recommend that our clients wire an additional $100 when wiring from outside of the U.S.
FORMS
Forms you may need are available at www.IRS.gov and some may be completed on-line.
W-7 Application for IRS Individual Taxpayer Identification Number.
8288-B Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests.
RIGHT TO SEEK LEGAL AND FINANCIAL ADVICE. DUE TO THE COMPLEXITY OF THE TAX LAWS, AND THE INTEREST AND PENALTY PROVISIONS THAT MAY BE ASSESSED, IT IS RECOMMENDED THAT BOTH BUYER AND SELLER CONSULT WITH THEIR RESPECTIVE ATTORNEYS OR FINANCIAL ADVISORS AS TO THEIR OBLIGATIONS THEREUNDER, IF ANY, PRIOR TO THE CLOSE OF ESCROW.
ARIZONA GOOD FUNDS LAW
Arizona law requires that “escrow agents not disburse money from an escrow account until funds related to the transaction have been deposited and available.” ARS - 6-834. The law specifies which forms of payments are acceptable for deposit.
The availability of funds for use in escrow is based on funds being deposited in our bank for the specified days shown below. The days refer to Business Days which are defined as calendar days other than Saturday or Sunday, and excluding most major holidays.
SAME DAY
Cashier, Certified, Tellers and Official Checks drawn on FDIC Insured Institution.
Checks made by an affiliate of a state or federally regulated depository institution where the check is drawn on the affiliated depository.
NEXT DAY IN STATE
US Treasury Checks.
Postal Money Orders ( for other money orders see Fifth Day)
Federal Reserve, Federal Credit Union, and Federal Home Loan Bank Checks.
State, Country, and Municipal Government Checks.
SECOND DAY IN STATE
See Caution
Credit Union and Travelers Checks
FIFTH DAY
See Caution
All other Money Orders (Non-US Postal ).
DRAFTS
NO disbursement until funds Received and Collected!
BUSINESS DAY
Funds are potentially available on the Business Day indicated above. A business day is defined as a calendar day other than Saturday or Sunday, and excluding most major holidays. If January 1, July 4, November 11, or December 25 fall on a Sunday, the next Monday is excluded from the definition of a business day. Note that individual banks may require additional hold periods longer than shown above. Late-day may be considered deposited on the next business day.
FOREIGN CHECKS
It is the policy of Chicago Title NOT to accept foreign checks into escrow. This includes foreign checks paid through a US Bank. All money coming from outside the United States must be sent via wire transfer. **
THIRD PARTY CHECKS
Chicago Title does NOT accept third party checks. Third party checks are drawn on a non-financial account, payable to a payee other than Chicago Title Agency.
CAUTION
Due to the length of time it takes to receive notice from the bank regarding NSF and returned items, we require written verification from the customer’s bank that the check has been paid for Personal, Corporate and Money Market checks, if 10 days have not elapsed since the funds were deposited into escrow.
** Intermediate Banks handling International Wire Transfers charge a Fee. Insure that your wire includes this fee or it will come in short on funds which will delay the disbursement.
CLOSING COSTS GUIDE TO
The below information is not necessarily all-inclusive and all the services for which payment may be non-allowable may not be identified.
OWNER’S TITLE INSURANCE PREMIUMS
REAL ESTATE COMMISSION
HALF OF THE ESCROW FEE
NOTARY FEES (IF APPLICABLE)
ANY LOAN FEES REQUIRED BY BUYER’S LENDER (ACCORDING TO CONTRACT)
PAYOFF OF ALL LOANS INCLUDING ACCRUED INTEREST, STATEMENT FEES, RECONVEYANCE FEES, AND ANY PAYMENT PENALTIES
TERMITE INSPECTION (ACCORDING TO CONTRACT)
HOME WARRANTY (ACCORDING TO CONTRACT)
ANY JUDGMENTS, TAX LIENS, ETC. AGAINST THE SELLER
RECORDING CHARGES TO CLEAR ALL DOCUMENTS OF RECORD AGAINST THE SELLER
TAX PRORATION FOR ANY TAXES UNPAID AT TIME OF TRANSFER OF TITLE
ANY UNPAID HOMEOWNER’S ASSOCIATION DUES
ANY BONDS OR ASSESSMENTS (ACCORDING TO CONTRACT)
ANY AND ALL DELINQUENT TAXES
THE SELLER CAN GENERALLY EXPECT TO PAY:
THE BUYER CAN
CLOSING COSTS GUIDE TO
The below information is not necessarily all-inclusive and all the services for which payment may be non-allowable may not be identified.
LENDER’S TITLE POLICY PREMIUMS
HALF OF THE ESCROW FEE
DOCUMENTS PREPARATION (IF APPLICABLE)
NOTARY FEES (IF APPLICABLE)
RECORDING CHARGES FOR ALL DOCUMENTS IN BUYER’S NAME
TERMITE INSPECTION (ACCORDING TO CONTRACT)
HOMEOWNER’S ASSOCIATION TRANSFER FEE (ACCORDING TO CONTRACT)
ALL NEW LOAN CHARGES
INTEREST ON NEW LOAN FROM DATE OF FUNDING TO 30 DAYS PRIOR TO FIRST PAYMENT DATE
HOME WARRANTY (ACCORDING TO CONTRACT)
HOME OWNER’S INSURANCE PREMIUM FOR FIRST YEAR
ALL PRE-PAID DEPOSITS FOR TAXES, INSURANCE, MIP, ETC.
WAYS TO TAKE TITLE IN ARIZONA
COMMUNITY PROPERTY
Requires a valid marriage between two persons
Each spouse holds an undivided one-half interest in the estate
One spouse cannot partition the property by selling his or her interest
Requires signatures of both spouses to convey or encumber
Each spouse can devise (will) one-half of the community property
Upon death the estate of the decedent must be “cleared” through probate, affidavit or adjudication
Both halves of the community property are entitled to a “stepped up” tax basis as of the date of death
JOINT TENANCY WITH THE RIGHT OF SURVIVORSHIP
Parties need not be married: may be more than two joint tenants
Each joint tenant holds an equal and undivided interest in the estate, unity of interest
One spouse cannot partition the property by selling his or her interest
Requires signatures of all joint tenants to convey or encumber the whole
Estate passes to surviving joint tenants outside of probate
No court action required to “clear” title upon the death of joint tenant(s)
Deceased tenant’s share is entitled to a “stepped up” tax basis as of the date of death
COMMUNITY PROPERTY WITH THE RIGHT OF SURVIVORSHIP
Requires a valid marriage between two persons
Each spouse holds an undivided one-half interest in the estate
One joint tenant can partition the property by selling his or her joint interest
Requires signatures of both spouses to convey or encumber
Estate passes to surviving spouse outside of probate
No court action required to “clear” title upon the first death
Both halves of the community property are entitled to a “stepped up” tax basis as of the date of death
TENANCY IN COMMON
Parties need not be married: may be more than two tenants in common
Each tenant in common holds an undivided fractional interest in the estate and can be disproportionate (ie: 20%-80% or 60%-40%)
Each tenant’s share can be conveyed, mortgaged or devised to a third party
Requires signatures of all tenants to convey or encumber the whole
Upon death the tenant’s proportionate share passes to his or her heirs by will or intestacy
Upon death the estate of the decedent must be “cleared” through probate, affidavit or adjudication
Each share has its own tax basis
NOTES ON “SOLE AND SEPARATE” TITLE IN ARIZONA
Arizona is a community property state. Property acquired by a husband and wife is presumed to be community property unless legally specified otherwise. If a married person acquires title as “Sole and Separate”, his or her spouse must execute a disclaimer deed to avoid the presumption of community property. Parties may choose to hold title in the name of an entity, e.g. a corporation, a limited liability company, a partnership (general or limited), or trust.
FOR ALL TYPES OF TRANSACTIONS, WE'VE GOT YOU COVERED.