August 19, 2008
Dear Real Estate Professional:
Federal/DC: The $5,000 first-time homebuyer's credit for DC residents did expire on 12/31/07. Quote from Congresswoman Holmes-Norton's website: "The invaluable $5,000 D.C. Homebuyer Tax Credit and the Business Tax Credits expired on December 31, 2007, and has yet to be extended for 2008. The DC tax credits were included in HR 6049, the Renewable Energy and Job Creation Act of 2008. It passed the House on May 21st, and is now being considered in the Senate. These tax credits have been highly rewarding for DC home and business owners, and I'm working with my colleagues to help push DC's tax credits through congressional protocol. Potential homeowners, planning to purchase a property in 2008, should consider waiting for final passage of HR 6049." CLICK HERE for link to Congresswoman Holmes-Norton's website on this issue.
Federal/DC: The $7,500 first-time homebuyer's credit for DC residents (US Citizens only, not resident aliens) was codified in part of the federal Housing and Economic Recovery Act of 2008 and applies to closings that occur between August 10, 2008 and June 30, 2009 and the Act does allow for construction by the owner to occur after the closing date (if purchase is from a home-builder, the construction has to be completed by the closing date. The credit cannot be combined with the $5,000 credit referenced in the preceding paragraph. In general terms, a first-time buyer is one who has not owned a principal residence for 3 years prior to the closing. The credit fades out as MAGI (" "Modified Adjusted Gross Income" ) increases and disappears for people that have an MAGI of more than $95,000 (married - $170,000). Note!: although called a "credit", this is really a loan. Repayments have to start two years after the purchase amortized without interest over 15 years. For example, if the full $7500 were received, payments of $500/year would be made starting in year 3. If the house is sold before the 15th year, the balance of the credit has to be repaid if there was a gain on the sale of the house to cover that repayment (if the house is sold at no gain, the unpaid balance is forgiven). This is a loan personal to the taxpayer and not filed as a lien on the property. If the taxpayer forgets to tell the settlement company to pay off the IRS, then the tax payer will receive a bill well after settlement and the amount is collectible against the taxpayer by IRS just as any tax.
DC: Jackson & Campbell, P.C. makes available a Chart of Pending D.C. Legislation .
Federal/RESPA: On March 14, 2008, after six years, seven roundtables and thousands of industry comments HUD released expansive, proposed rules to reform the more than 30-year-old rules of RESPA. The revisions have been welcomed with mixed reviews. The major revisions include the new definition for “required use;” revisions to Section 8 kickbacks to allow for negotiated discounts; the allowance of average cost pricing; requiring a standardized Good Faith Estimate (GFE) form; implementing the tolerance rule; requiring a closing script; and applying yield spread premiums as a credit to the borrower. An excellent summary of the far-reaching proposals has been prepared by Bonnie Pannhoff, Esq., of Jackson & Campbell, P.C. and is available by clicking here .
DC: Lower Income Abatement Program. To qualify, the property must now cost less than $320,000. CLICK HERE for link to DC web page on this issue.
MD: Montgomery County, Real Estate Taxes: May now be paid online at https://www.montgomerycountymd.gov/apps/tax/index.asp According to a memorandum issued by the County, "You can make ... payments ... using an electronic check and receive a confirmation number which you can use as proof of payment when transferring real property either by the standard walk-through method or by the increasingly popular e-Transfer Program (whereby many companies submit electronic intake forms for deeds and deeds of trust from the comfort of their offices). You can pay the property taxes on-line thru the property tax web page using the one-time direct debit from your escrow account. Then print out the payment confirmation receipt and attach a copy to your recording package if you are using the walk-through method. The e-Transfer customers can simply type the confirmation number on the electronic intake sheet."
MD: Domestic Partnership Exemption - Real Property: A new Maryland State law exempting transfers between domestic partners from county transfer tax and state recordation tax became effective on July 1, 2008, and can be found under Section 12-108 ( c )(VIII) and Section 13-403 (b) of the Tax-Property Article of the Annotated Code of Maryland. The Montgomery County Affidavit requires that two forms of evidence be attached (see item 8 in the attached affidavit). For information regarding the state transfer tax, please contact the courthouse recording office on 240-777-9470.
General: A NY case recently held against a lender that financed a purchaser who was procured by a "foreclosure scam artist", holding that "Considering the present difficulties faced in the subprime mortgage market, a lender underwriting a mortgage has a duty to investigate and ascertain the economic status of the purchaser/mortgagor and whether the purchaser/mortgagor may be committing a fraud against the seller in the underlying transaction.” Mathurin v. Lost & Found Recovery, LLC, 19 Misc.3d 756, 854 N.Y.S.2d 629 (N.Y.Sup.2008).
DC: The Court of Appeals recently addressed the propriety of assessing attorneys fees when a wrongful lis pendens is filed. CLICK HERE for link to Opinion in 1629 Georgia v. Universal Community Development.
DC: A Notice of Rulemaking regarding WASA Certificates of Redemption allows OTR to delay issuing a Certificate of Redemption for a property that has gone to tax sale, until "other agencies" (e.g. DCRA, WASA) report to OTR whether amounts owed to those agencies have been paid. According to Richard Wise, Esq., of Greenstein DeLorme & Luchs, P.C. " The issue arises when a property goes to tax sale at least in part on account of delinquent WASA charges which followed WASA having assigned the indebtedness to OTR for purposes of the tax sale. When the property is redeemed, one would expect that OTR would remit the amount paid on account of the WASA charges to WASA. That has not been happening. WASA would not sign off on having a certificate of redemption issued because WASA had still not been paid out of the redemption payment held by OTR. WASA would also not release recorded WASA liens, again because WASA has not received its portion of the redemption payment. This emergency rulemaking would allow issuance of a certificate of redemption by OTR because now WASA can certify that all amounts are current, excepting for the amount earlier referred to OTR for tax sale, for which OTR has been paid in the redemption payment. The issue which remains is whether WASA will release recorded WASA liens where a complete redemption payment has been made, but funds have not been remitted by OTR to WASA." CLICK HERE for link to Notice of Rulemaking.
Federal Bankruptcy: U.S. Supreme Court resolves the issue of transfer tax exemptions for pre-confirmation transfers that are included in the plan - no exemption available. Fla. Dept. of Revenue v. Piccadilly Cafeterias, Inc., 128 S.Ct. 2326 (2008). CLICK HERE for an excellent analysis performed by Jack Murray of First American Title.
VA: New Foreclosure Legislation: Addressing foreclosures under certain "high-risk mortgage loans." This appears to be Virginia's effort to provide some additional protections to borrowers, at least with respect to a certain class of loans. CLICK HERE for link to legislation.
General: An excellent discussion of the legal duties of a settlement officer, escrow agent, and title company has been prepared by Joyce Palomar, Esq., who is the author of Title Insurance Law (Thomson*West Publishing). CLICK HERE to see the discussion.
DC: The Alternative Legal Services Organization (ALSO) has been incorporated as a nonprofit in Washington, DC providing legal services with fees on a sliding scale, on matters including divorce and custody, wills and estates, landlord and tenant, small claims, and simple contracts. The organization also proposes to make home visits to disabled and elderly clients and actively seeks attorneys who may be able to devote a small amount of resources to make this effort a success. www.also-dc.com.
General: Courts have recently been taking a very hard line when reviewing foreclosures to determine if the foreclosing entity was the actual holder of the note and whether the entity has all the requisite authority and standing to advance claims. The court in Nosek v. Ameriquest Mortgage Co., 2008 WL 1899845 was particularly exasperated as evidenced by the severity of the sanctions involved. Click HERE for a good discussion on this issue.
DC: OTR (Office of Tax and Revenue) now has additional information available on-line. CLICK HERE for instructions on how to access the information.
DC: OTR. Tax sale is scheduled for September 17-19, 2008 at the Government Printing Office. It will be advertised in the Washington Post on August 21st, The Washington Times on August 22nd and The Current Newspaper on August 28th. In the past, the list has also been available at www.cfo.dc.gov.
DC: The most recent list of useful DC Government phone numbers is found HERE .
Articles of Interest to the Business Community:
Changes to the Internal Revenue Code’s treatment of trust income.
Click here to read the article by Mackenzie P. McNaughton, Esq., of Jackson & Campbell, P.C., in The Practical Tax Lawyer's Spring 2007 issue.
Warning to Employers: Employee's Use of Laptops and Blackberrys Outside of the Office May Give Rise to Overtime Liability.
Click here to read Jackson & Campbell's Employment Law Practice Group newsletter on the topic.
Upcoming Seminars of Interest to the Real Estate Community:
Tax Sales: Proceeding to Judgment and Beyond. DC Bar. September 5, 2008 at noon. www.dcbar.org and go to Go to For Lawyers, Events to register. Registration is open to people who are not members of the Bar.
TOPA: Grand Success or Abject Failure? DC Bar. September 12, 2008 at 12:30 p.m. www.dcbar.org and go to Go to For Lawyers, Events to register. Registration is open to people who are not members of the Bar.
Green Building Laws in DC and MD. DC Bar. October 29, 2008 at 12:00 p.m. www.dcbar.org and go to Go to For Lawyers, Events to register. Registration is open to people who are not members of the Bar.
Conservation Easements. DC Bar. November 19, 2008 at 12:30 p.m. www.dcbar.org and go to Go to For Lawyers, Events to register. Registration is open to people who are not members of the Bar.
Like Kind Exchanges – When to consider an exchange, the process, the red flags, and the benefits. DC Bar. December 10, 2008 at 12:30 p.m. www.dcbar.org and go to Go to For Lawyers, Events to register. Registration is open to people who are not members of the Bar.
Troubleshooting Title and Title Insurance Problems. National Business Institute ("NBI") seminar set for December 10, 2008 at 9 a.m., in Fairfax, VA. Panelists include Russell Drazin, Esq. and Jason Pardo, Esq. of Jackson & Campbell, P.C. Click HERE for link to NBI Seminars.
Please feel free to circulate this newsletter to others in the industry, both within and outside your office.
Sincerely,
Roy L. Kaufmann of the Real Property and Asset Management Group
Jackson & Campbell P.C.
email: Roy L. Kaufmann at rkaufmann@jackscamp.com
voice: (202) 457-1600
web: www.JacksCamp.com
The contents of this Update are intended for general informational purposes only and should not be relied upon as legal advice or as a substitute for consultation with a qualified attorney. Moreover, the mailing hereof is not intended to create nor does it constitute an attorney-client relationship.
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