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When business owners prepare to sell their company, they tend to focus on the headline items: purchase price, closing conditions, and transition plans. But when the business owns real estate, the deed quietly carries sizeable weight that can impact your liability for years after the keys change hands.
The Overlooked Asset in a Business Sale
Real estate is often one of the most valuable assets a business owns. Yet in many transactions, the parties treat the property transfer as an afterthought, assuming it automatically flows with the corporate entity. That’s a mistake. Depending on whether the transaction is structured as an asset sale (where assets are transferred individually) or a stock sale (where equity changes hands), the real estate may require an entirely independent transfer process. Washington law recognizes several types of deeds, and each one allocates risk differently. Choosing the wrong deed can shift unexpected liability onto the seller, or leave the buyer without the protection they assumed they were getting.
Which Deed Should You Use?
In Washington, the three most common deeds are:
- Statutory Warranty Deed: The most warranties and the strongest protection for buyers
- Bargain and Sale Deed: Middle‑ground protection
- Quitclaim Deed: No warranties at all and best for sellers
In a business sale, the parties often negotiate which deed will be used. Although statutory warranty deeds are the standard, sellers prefer quitclaim or bargain and sale deeds to limit post-closing exposure, while buyers push for statutory warranty deeds to ensure recourse. The right answer depends on the deal structure, the property’s history, and the parties’ risk tolerance.
Don’t Forget Title Insurance and Excise Tax
Even the best deed is not a substitute for title insurance. A title policy protects from surprises, such as old liens, boundary disputes, or recording errors that no one knew about at closing. In Washington, standard practice dictates that the seller pays for the owner’s standard policy, while the buyer covers any lender-required policies for extended coverage endorsements.
Furthermore, do not overlook the Washington Real Estate Excise Tax (REET). While an asset sale involving real estate triggers REET immediately on the property’s value, a controlling interest transfer (transferring more than 50% of stock/equity) also triggers REET if the entity owns Washington real estate. Failing to file the REET affidavit within 5 days of the transfer can result in interest and penalties.
The Takeaway
If your business owns real estate, the deed isn’t just paperwork, it is a risk‑allocation tool that dictates post-sale liability. Treat it with the same care as the rest of the transaction.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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