What documents let a property manager make tax-free purchases as an agent for the FDIC or RTC when receivership records do not include a new deed?

Plain-English summary

The Comptroller allowed a management company to document tax-free purchases made as an agent for the Resolution Trust Corporation or Federal Deposit Insurance Corporation without a deed transferring each asset to the receiver.

The company still needed a written agreement making it the RTC's or FDIC's purchasing agent. For proof of ownership, it could use the failed institution's deed together with written proof that the institution had been placed in receivership and the receivership's effective date. The letter reasoned that federal law transferred the failed institution's rights and title to the receiver by operation of law, so a separate deed for each property ordinarily would not exist.

What this means for you

The ruling addressed documentation, not an automatic exemption for every contractor or manager working with a federal receiver. The manager needed both an actual purchasing-agency agreement and records connecting the property to the failed institution and the receivership.

Common questions

Was a newly recorded deed to the FDIC or RTC required? No. The Comptroller recognized that title passed by operation of law.

What ownership evidence was sufficient? The prior thrift's deed plus proof that the thrift entered FDIC or RTC receivership and the effective date.

Was proof of receivership alone enough? No. The stated policy also required a written agreement appointing the management company as purchasing agent.

Citations and references

• 12 U.S.C. Section 1821(d) — FDIC succession to the failed institution's rights and title by operation of law
• 12 U.S.C. Section 1441a(b)(4) — RTC receiver powers and rights referenced in the letter

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9109L1131G08

Original ruling text

September 23, 1991

Dear **:

Thank you for your recent letter. According to your facts, your
company has been asked to manage for the Resolution Trust Corporation
(RTC) real property that was formerly owned by a now insolvent
savings and loan (S & L).

You were aware of our stated policy that, in order to make tax free
purchases on behalf of RTC or FDIC, a management company
must have both: (1) A written agreement between the management
company and RTC or FDIC that makes the management company a
purchasing agent for RTC or FDIC; and (2) Documentary proof
that title to the managed property is held by RTC or FDIC.

Question: Is a copy of the deed held by the insolvent thrift,
along with written proof that the RTC placed the S & L into
receivership, sufficient to satisfy requirement (2)?

Answer: Yes. It is apparent from the governing federal statutes
that RTC and FDIC assume title to and control of the assets of
a failed institution by operation of law. It follows that there
is ordinarily no formal document (such as a deed) that would
evidence transfer of title to any individual asset from the
thrift to the RTC or FDIC.

Therefore, a written agency agreement with RTC or FDIC, coupled
with proof that the insolvent institution owned the real property,
and that the institution is now in federal receivership (and
the effective date of receivership), will be sufficient back-up
documentation to enable a management company to make tax-free
purchases on behalf of RTC or FDIC.

This opinion is based on the facts presented. Different facts,
though similar, might lead to different answers. If you have
further questions, feel free to write or call me at 1-800-252-5555,
ext. 3-3889.

Sincerely,

John Christian, Attorney
Tax Administration

DATE: September 16, 1991

TO: Lucy Glover

FROM: John Christian

SUBJECT: FDIC/RTC; Property managers

OUR POLICY

In order for a management company to make tax-free purchases
for the FDIC or RTC, we currently require that the company
have: (1) A written agreement with FDIC/RTC that makes it a
purchasing agent for FDIC/RTC; and (2) Proof that title to
the managed real property has passed to FDIC/RTC.

TAXPAYER QUESTION

The president of a management company writes that the RTC
does not actually document transfer of title to individual
assets. He asks whether "a copy of the deed held by the S&L,
along with proof that the RTC placed the S&L into receivership",
would be sufficient to meet requirement (2).

PROPOSED ANSWER

Yes, this is sufficient to meet requirement (2).

APPLICABLE LAW

12 USC Sec. 1821 (d): FDIC as receiver shall by operation of
law succeed to all rights, titles, powers, and privileges of
the insured depository institution.

12 USC Sec. 1441a (b)(4): RTC as receiver shall have the same
powers and rights as the FDIC with respect to insured depository
institutions.

REASONING

It appears that title to the assets of an institution in receivership
transfers to the receiver by operation of law. In other words, FDIC
or RTC (acting as receiver for a failed institution) may manage or
dispose of real property assets without taking any action to formally
document a transfer of title to the real property.

May I give this taxpayer a positive response?