May 22, 2008
Dear Real Estate Professional:
DC: Rental Housing Act Forms. AOBA (Apartment and Office Building Association) has marched forward to work with the DC Department of Housing and Community Development’s Rental Accommodations Division to develop some forms in connection with residential rental real estate. A meeting will be held today, and appended to this newsletter is an AOBA announcement with links to the proposed forms. Caution, these are proposed forms and not yet valid.Click AOBA Action Alert About Rental Housing Forms. The existing forms are linked here: Instructions For Preparing and Issuing an Offer of Sale Notice with a Third Party Contract for Either a Single Family House, Rented Condominium Unit or Rent Cooperative Unit .
DC: Recent Omnibus Domestic Partnership Equality Amendment Act of 2008 (Bill 17-135) passed unanimously on May 8, 2008 has some substantial changes affecting real estate. Domestic partners may now hold as tenants by the entirety. The nomenclature in the DC Deed Recordation Tax Act and Rental Housing Conversion and Sale Act has been changed to include gender-neutral terms. Further, domestic partners will now be treated the same as spouses in the administration of DC Tax laws. Click Omnibus Domestic Partnership Equality Amendment Act of 2008 .
DC: There are some significant statutes affecting real estate that have been introduced before the DC Council. The details may always be found on the Jackson & Campbell list of recent legislation (see link below), but, some noteworthy bills involve proposed changes to the foreclosure procedures, elimination of the conversion fee for vacant properties, requiring landlords to remediate properties before the properties are renovated for conversion, imposition of vacant tax rate to non-blight properties, according to the District a right of first refusal on residential properties (similar to the TOPA rights that tenants now enjoy), according sweeping power to DCRA to deal with "nuisance" properties.
DC: Vacant Properties. Numerous D.C. properties have recently been reclassified as Class 3, or vacant property, by the D.C. Department of Consumer and Regulatory Affairs (DCRA) after a recent aggressive initiative by DCRA to identify all vacant properties in the District of Columbia. The result is the issuance by the Office of Tax and Revenue (OTR) of many tax bills reflecting an increase in taxes because of a reclassification of the subject real property to Class 3. At present, occupied residential property is taxed at $.88/$100 of assessed value, commercial property is taxed at $1.85/$100 of assessed value and vacant property is taxed at $5/$100 of assessed value, so the increase in the amount of the tax bills for reclassified property is staggering! There is also discussion in the DC Council about doubling the tax. Property owners who believe their property was incorrectly classified as vacant and recently received a tax bill at the higher tax rate are urged to contact the DC Department of Consumer and Regulatory Affairs (DCRA) immediately. Time is of the essence! The exemptions for unoccupied Class 3 property are listed in the attached Vacant Property Registration Form which is required to be filed within 30 days of a property becoming vacant. Direct your exemption requests to Nicholas Majett Deputy Director for Compliance & Inspections DCRA 941 North Capitol Street, N.E. Washington, D.C. 20002 202-442-8937 nicholas.majett@dc.gov. Click Vacant Property Registration Form.
Click Letter from Nicholas Majett about Vacant Property exemptions. [Special thanks to Elisabeth Zajic of First American Title Insurance Corporation for her contribution to this item].
Federal: Proposed Amendments to the “Family and Medical Leave Act” have some significant changes: Employees, instead of having to give 2 days notice, could give the standard notice they give for any absence, i.e. before the shift starts; Employers could get certification directly from the medical service provider (but not more information than is set forth on the formal certification form); the return-to-duty certifications would be changed to be more specific: i.e. that the employee is fit to return to his specific duties.
DC: Bill increases the recordation tax on economic interests up to the same level as other transfers. This is found deep in the FY 2009 Budget and Budget Support Act (See Title VII, Subtitle M, Section 7033). Click 2009 Budget Support Act .
DC: Changes in Recorder of Deeds procedures. Recorder of Deeds has instituted filing fees for previously free recordings, i.e. Tax Sale Certificates and Certificates of Redemptions. Also, when calculating the recordation tax due on non-exempt deeds of trust (i.e. commercial) that refinance earlier recorded deeds of trust, the ROD is requiring evidence as to the remaining principal balance on the paid-off deed of trust. ROD is now calculating the tax on the difference between the new money and the paid-off principal balance. Lenders and commercial closers should be cognizant of this abrupt change for any deals in the pipeline.
DC: Tax Sale has now been scheduled for September 17 - 19, 2008. Note a decision by Judge Zeldon in a tax sale case wherein she explains that due process considerations trump the statute and, when they are not complied with, a judgment will be vacated (hardly good news for the marketability of title as contemplated by 47 DC Code 1384).Click VCRT v. Sinnette .
DC: Tax Sale refund requests made by bidders after redemption must now be accompanied by a "Buyer's Report" and "Registration" (both of which were delivered to the bidders at the auction and which we all hope were retained) and the original of the Tax Sale Certificate. As to the property owners who wish to purchase a Certificate of Redemption, such requests must now be accompanied by a money order or certified funds.
Virginia: Fairfax County: Regional Congestion Relief Fee (Local Grantor's Tax) Information. Government web site discusses application process for relief of the fee. Click Fairfax County Circuit Court.
Virginia: Excellent Recording Manuals prepared by LandAmerica. http://www.jackscamp.com/news/FormNo4VirginiaRecordationTaxExemptions.pdf http://www.jackscamp.com/news/StatutoryRequirementsforRecordings2008.pdf http://www.jackscamp.com/news/VirginiaRecordingFeesandTaxes2008.pdf Maryland: Foreclosure Process has changed as announced by the Commissioner of Financial Regulation.Click New Maryland Foreclosure Process.
Federal: 1031 Exchanges. Under the new IRS Revenue Procedure 2008-16, the IRS will not challenge whether a dwelling unit with limited personal use qualifies as property held for productive use in a trade or business or for investment for purposes of Section 1031. This procedure defines a “Safe Harbor” of personal use within which a taxpayer can feel free to use their property without having to worry about falling outside the protections of Section 1031, and incurring tax liability. Note, however, that there may be some exchanges that fall outside the procedure’s ambit that still receive Section 1031 treatment; the procedure merely supplies a definite Safe Harbor within which the IRS will not challenge the properties usage. If one wants to use this Safe Harbor procedure the IRS will focus on whether personal use is too high and if actual rental income is generated. Specifically: • The property in question must be a dwelling unit; and • The dwelling unit must be owned at least, o 24 months before the exchange for relinquished properties, o 24 months after the exchange for replacement property; and • Within the applicable 24 month period, in each of the two 12-month periods, the tax payer must rent the dwelling unit to another unrelated person at fair value rental for 14 days or more. A related person may rent at fair value if the dwelling is a principal residence for the related person.
DC: Lower Income Abatement/Share Equity Homeownership. Click New Income Guidelines.
DC: Travis Parker, of the DC Office of Planning announced that the public website for the zoning review process is now up and running. You can visit at www.dczoningupdate.org. This will be the place that you can sign up to get information on individual subject areas or participate in working groups. Please click on the “Keep Me Informed” link and sign up for the working groups that you are interested in. All publicly available documents will be posted on that site and anyone will be able to post comments and questions.
DC: First American Title has announced that it is discontinuing its DC plant operation and will cease to take title orders and recordings as of June 9.
The U.S. District Court for the Eastern District of Pennsylvania has held that an underwriter which has been sued by an insured because the insured was not offered the reissue rate has a cause of action against the agent that failed to offer the discount. The court, in permitting the underwriter to join the agent, found that Pennsylvania law required compliance from both the underwriter and the agent and a failure to abide by the state statute was actionable. 2009 Markocki v. Old Republic National Title Insurance Co..
DC: Jackson & Campbell, P.C. maintains a list of the status of D.C. legislation of interest to the real estate and title industries. The latest version is available here: Pending D.C. Legislation .
Upcoming Seminars of Interest to the Real Estate Community:
TOPA: Grand Success or Abject Failure? - May 28, 2008
Luncheon Seminar sponsored by the D.C. Bar Real Property, Housing, and Land Use Section. An examination of DC’s controversial “TOPA” legislation. A lively presentation and discussion of legislation and case law examining the stakeholders’ perspectives on administration of the Act, benefits and drawbacks to the community, and implications on title and marketability of real estate. This event is likely to be a "sell-out" so early registration is suggested. Register at www.dcbar.org.
The Importance of Title to the Real Estate Transaction scheduled for July 11, 2008
An NBI teleconference which will be an intermediate level seminar providing an overview of title examination and title insurance coverage for attorneys, paralegals, lenders, title companies and real estate professionals. One of the panelists will be Clifton Mount of Jackson & Campbell, P.C. Click HERE for details.
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.
If you wish to not receive these mailings, click here or reply to this message.
.gif)
.gif){kind=small}