Ten dollars for a house..

Factual Questions
1

The last two houses I have bought have contained a clause similar to the following:

“That for, and in consideration of, the sum of TEN (10) dollars, cash in hand paid, said Grantor does grant to… (me) the property situated (my house and land)…”

And then at the bottom of the deed there is an asterisk that says “The actual amount of consideration is XXX dollars.” (And XXX is the TRUE purchase price of the house)

What’s the deal with the confusion? Why not put in the contract the actual amount paid. It sure didn’t help with any taxes!

Thanks…

2

It could be earnest money

3

[QUOTE=garygnu]
It could be earnest money
[/QUOTE]

No, this was in the transaction, not in the premilinary papers. Plus, I put down 5 grand in earnest money. Not 10 bucks! :slight_smile:

4

[QUOTE=jtgain]
Why not put in the contract the actual amount paid. It sure didn’t help with any taxes!
[/QUOTE]
Just a WAG, but it’s possibly because those documents (or copies of them) will be circulated to various government agencies. They don’t necessarily need to know the full price, just that it was a legal transfer and that title is now held by you.

Years ago, I worked for a city property tax assessment department. We had to keep up to date with who owned what property in the city, so the provincial registry office would send us copies of titles that had been registered that (day? week? I forget). Anyway, we didn’t care what the full price of the property was, we just needed to see that some money changed hands, making it a legal transfer; and the name of the new owner. Purchasers and their lawyers were free to put the full price on the documents we’d eventually get, but most didn’t. We’d instead see, “for the sum of two dollars ($2.00) and other good and valuable consideration.” If the full price was asterisked at the bottom, we never saw it; it had been masked out during the photocopying.

If the stated consideration is ten bucks now, I guess that’s inflation. :slight_smile: But that was all that was required by our office, and undoubtedly others: some money changed hands (doesn’t matter how much, just as long as the documents show that some did, and ten bucks works as well as anything), and the new owner is _____. Like I said, just a WAG, but backed with a little experience too.

5

[QUOTE=Spoons]
Just a WAG, but it’s possibly because those documents (or copies of them) will be circulated to various government agencies. They don’t necessarily need to know the full price, just that it was a legal transfer and that title is now held by you.

Years ago, I worked for a city property tax assessment department. We had to keep up to date with who owned what property in the city, so the provincial registry office would send us copies of titles that had been registered that (day? week? I forget). Anyway, we didn’t care what the full price of the property was, we just needed to see that some money changed hands, making it a legal transfer; and the name of the new owner. Purchasers and their lawyers were free to put the full price on the documents we’d eventually get, but most didn’t. We’d instead see, “for the sum of two dollars ($2.00) and other good and valuable consideration.” If the full price was asterisked at the bottom, we never saw it; it had been masked out during the photocopying.

If the stated consideration is ten bucks now, I guess that’s inflation. :slight_smile: But that was all that was required by our office, and undoubtedly others: some money changed hands (doesn’t matter how much, just as long as the documents show that some did, and ten bucks works as well as anything), and the new owner is _____. Like I said, just a WAG, but backed with a little experience too.
[/QUOTE]

Your reply works; and you are right about the “other valuable considerations” clause. It’s in there, and I forgot to include it.

But as I said, as a ruse to the taxing authorities, it doesn’t work. At least in my situation. The first time it was listed in county tax documents, it contained the full purchase price. IOW, I have never seen any fee, tax, or otherwise on the 10 bucks in the document. Maybe the county authorities have caught up with the ruse?

6

Damn! Our property tax is tied to sale price. I wish I’d thought of that when I bought my house. I probably pay 2x my neighbor’s taxes – even though he’s a nicer house – only because I bought mine more recently!

Of course, I think the benefits offset this minor inconvenience. Whoever buys his house is screwed. :wink:

7

[QUOTE=Balthisar]
Damn! Our property tax is tied to sale price. I wish I’d thought of that when I bought my house. I probably pay 2x my neighbor’s taxes – even though he’s a nicer house – only because I bought mine more recently!
[/QUOTE]
Yeah, I’m running into similar situations. I’m looking to buy a new house and those I’m considering are about twice as old, and half the size of my parents’ houses yet I’ll be making the highest mortgage payments out of all three of us.

8

[QUOTE=Balthisar]
Damn! Our property tax is tied to sale price. I wish I’d thought of that when I bought my house. I probably pay 2x my neighbor’s taxes – even though he’s a nicer house – only because I bought mine more recently!
[/QUOTE]

Don’t they periodically reassess the value of homes in your area?

9

[QUOTE=Balthisar]
Damn! Our property tax is tied to sale price. I wish I’d thought of that when I bought my house. I probably pay 2x my neighbor’s taxes – even though he’s a nicer house – only because I bought mine more recently!

Of course, I think the benefits offset this minor inconvenience. Whoever buys his house is screwed. :wink:
[/QUOTE]

But, as I said, if this was some attempt to throw off the county tax assessors, it didn’t work. They county knows exactly how much I paid for my house. All property taxes, and other fees were tabulated off of the actual purchase price.

Maybe at one point in time, the TEN dollar thing would work, but I would think not. Surely the county assessor wouldn’t look at that and say, “Well, I guess he only paid 10 bucks for that house! His taxes are 20 cents per year..”

10

[QUOTE=vetbridge]
Don’t they periodically reassess the value of homes in your area?
[/QUOTE]

It’s complicated, and since we’re talking this, I may have a question to ask that some good, Michigan lawyer may have the answer to.

Back in 1994 we added this wording to our state Constitution: “1. Limit annual assessment increase for each property parcel to 5% or inflation rate, whichever is less. When property is sold or transferred, adjust assessment to current value.”

So this means that the value upon which we are taxed is limited to the lesser of 5% or the rate of inflation, regardless of the increase in assessment. We still see the new assessment in every tax bill, but the tax base always complies with the limits. This means…
[ul]
[li]No matter how the house increases in value, the taxes won’t necessarily force you out of your house if values run away.[/li][li]When you purchase a new home, it’s suddenly taxed at the assessed value. So your neighbors that have been there since 1994 are probably paying the decreased rate.[/li][li]If your property values go down (as they are here) your taxable value does not go down.[/li][/ul]
I think, though, that improvements are taxed at the current value. More than “safety,” I have to imagine this is the real reason we have to pull a permit for every bloody damned thing we do in my township. So say my value is 210, my assessment is 105, and my taxable value is 102. Now if I make an improvement such that my house is suddenly worth 220, my assessment jumps to 110, and I think the taxable value jumps to 107,000 (adding half the value of the improvement). It doesn’t reset the taxable value up to today’s value, but it factors in the improvements at today’s values.

Anyone know if this is true for Michigan? I’ll have a major bearing on the projects I choose to undertake in the future.

11

[QUOTE=Balthisar]
It’s complicated, and since we’re talking this, I may have a question to ask that some good, Michigan lawyer may have the answer to.

Back in 1994 we added this wording to our state Constitution: “1. Limit annual assessment increase for each property parcel to 5% or inflation rate, whichever is less. When property is sold or transferred, adjust assessment to current value.”

So this means that the value upon which we are taxed is limited to the lesser of 5% or the rate of inflation, regardless of the increase in assessment. We still see the new assessment in every tax bill, but the tax base always complies with the limits. This means…
[ul]
[li]No matter how the house increases in value, the taxes won’t necessarily force you out of your house if values run away.[/li][li]When you purchase a new home, it’s suddenly taxed at the assessed value. So your neighbors that have been there since 1994 are probably paying the decreased rate.[/li][li]If your property values go down (as they are here) your taxable value does not go down.[/li][/ul]
I think, though, that improvements are taxed at the current value. More than “safety,” I have to imagine this is the real reason we have to pull a permit for every bloody damned thing we do in my township. So say my value is 210, my assessment is 105, and my taxable value is 102. Now if I make an improvement such that my house is suddenly worth 220, my assessment jumps to 110, and I think the taxable value jumps to 107,000 (adding half the value of the improvement). It doesn’t reset the taxable value up to today’s value, but it factors in the improvements at today’s values.

Anyone know if this is true for Michigan? I’ll have a major bearing on the projects I choose to undertake in the future.
[/QUOTE]

Florida has a similar provision. It also kind of locks you in. I pay $900/yr in property taxes, but if I sold this house and bought an identical house two streets over, I would suddenly pay almost $4000 /yr in taxes. This makes no sense to me.

It also hampers my ability to sell this house, as someone would have to pay the increased assessment. So, I pay $900 /yr this year, and next year someone else would have to pay $4000, for the same county services. This makes no sense to me.

To me it is all smoke and mirrors. Government needs to have the political will to make itself smaller, and institute fair, equitable, and low property tax rates.

12

Why should your taxes go up just because the guy down the street paid more than you for his house?

13

Let me simplify the $10 question. (I’m no lawyer; this is from a high school business law class, circa 1967)

The basic elements of a contract are an offer, an acceptance, and consideration (payment). There is another bushel of pesky details, such as, it can’t involve illegal actions.

Anyway, that’s why many contracts have the standard phrase, “_____ dollars and other consideration.” In 1967, it was $1. The standard amount has grown, but it doesn’t matter, as long as it’s in there.

If I made any major mistakes, actual lawyers might drop by to point at me and laugh. I welcome that. We’re fighting ignorance, here, not preserving my ego.

14

[QUOTE=jtgain]
Government needs to have the political will to make itself smaller, and institute fair, equitable, and low property tax rates.
[/QUOTE]

For true equity, there’d be no property taxes at all. Is private property the most precious thing there is? If it can be forfeited for not paying taxes, then all we’re really doing is paying rent to the government. Of course there has to be some funding mechanism for our services. Perhaps we’re all entitled to 1/2 acre with 1000 foot^2 structure, and everything beyond that is taxed as a luxury. ::shrug::