TAXATION ‑- REAL ESTATE EXCISE TAX ‑- APPLICABILITY TO SALE OF INDIVIDUAL APARTMENT BY APARTMENT OWNER

TAXATION ‑- REAL ESTATE EXCISE TAX ‑- APPLICABILITY TO SALE OF INDIVIDUAL APARTMENT BY APARTMENT OWNER.

The sale of an individual apartment by the owner of an apartment building which entitles the purchaser to a warranty deed upon completion of payments, is a "sale" within the meaning of RCW 28.45.010; therefore the sale is subject to the real estate excise tax.

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                                                               November 27, 1961

Honorable John J. Lally
Prosecuting Attorney
Spokane County
Spokane, Washington

                                                                                                                Cite as:  AGO 61-62 No. 78

Dear Sir:

            By letter previously acknowledged you requested an opinion of this office on a question which we paraphrase as follows:

            Is the sale of an individual apartment by the owner of an apartment building, which entitles the purchaser to a warranty deed upon completion of payments, a sale subject to the real estate excise tax?

            We answer this question in the affirmative.

                                                                     ANALYSIS

            From the information you have made available to this office, it appears that the following facts have given rise to your request for our opinion as to the application of the real estate excise tax to the sale of individual apartments by the owner of an apartment building:

            The parties execute a contract of sale (a copy of which was enclosed with your request) wherein the vendor agrees to sell and the vendee agrees to buy an apartment in an apartment building together with perpetual cross-easements of support and rights of way in the building and grounds.  Included in the contract are stipulations regulating the use and maintenance by the vendees of those portions of the premises they will use in common.

            Upon payment of the full purchase price for the apartment the vendee is entitled to a warranty deed or if all apartments are fully paid for, a deed to the entire premises will be executed to a corporation  [[Orig. Op. Page 2]] or trustee for the use and benefit of all the purchasers if two-thirds of them so desire.

            It is elementary that the real estate excise tax applies to the sale of an individual apartment in an apartment house if it is a sale of real property within the meaning of chapter 28.45 RCW.

            RCW 28.45.010 reads in pertinent part as follows:

            "As used in this chapter, the term 'sale' shall have its ordinary meaning and shall include any conveyance, grant, assignment, quitclaim, or transfer of the ownership of or title to real property, . . . or any estate or interest therein for a valuable consideration, and any contract for such conveyance, grant, assignment, quitclaim, or transfer, . . ."

            It was held inWhite v. White, 16 N.J.L. 202, 31 Am. Dec. 232, that a house is real estate and therefore a room in a house must likewise be real estate as it has its share in the foundation.  To the same effect, see 42 Am. Jur. Property, § 13, p. 196; 73 C.J.S. Property, § 7, p. 161; Thompson on Real Property (Perm. ed.) § 63.  TheWhite case is cited as the authority in each text.

            A co-operative [[cooperative]]apartment arrangement was involved inIn re Pitts' Estate, 218 Cal. 184, 22 P. (2d) 694 (1933).  The contract between the parties differed from the one we are considering here but, if anything, the latter contract gives to the purchaser a much greater interest in the subject matter.  The court held in that case that the occupant of the individual apartment had a valuable interest in real property.  See 4 Powell on Real Property, § 631, et seq., for a discussion of the different types of co-operative [[cooperative]]apartment arrangements.

            From an examination of the entire transaction, it is clear that the vendor is selling real property.  The vendee will, when all payments have been made, either own his individual apartment in fee and the other parts of the premises as a tenant in common, or title to the whole property will vest in a corporation or trustee for the use and benefit of all the vendees.  In either case there is a contract for the sale of real property within the meaning of chapter 28.45 RCW.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

HENRY W. WAGER
Assistant Attorney General