New IRS Form to Request Release of Tax Lien: IRS announces a new form 12277 (Rev. June 2004). Click here to view IRS Form 12277

Virginia: Incorporated churches now exempt from recordation taxes. In a bill partially drafted by Alan Swendiman of Jackson & Campbell and introduced and sponsored by State Senator Janet Howell, SB73 has taken effect which exempts from state and local recordation taxes deeds conveying real estate to an incorporated church or religious body, deeds of trust/mortgages given by such a body, and deeds conveying from such a body. A clause was added to make the effective date of the legislation January 1, 2004.

Maryland: Revocable Trusts may be exempt from refinance recordation tax, eliminating need for multiple deeds. The definition of "original mortgagor" has been expanded to include a subsequent trustee of a revocable trust. Caveats: a) must be principal residence of settlor of trust and b) the trustee or settlor had to have incurred the debt secured by the deed of trust. An affidavit must be presented at recording setting forth the foregoing, as well as the unpaid principal balance of the existing mortgage. Amendment to Tax - Property Article 12-108(g) effective July 1, 2004.

DC: Tax Sales: Tax Sale purchaser, who affirmatively took steps to keep the property vacant, was held LIABLE to the party who redeemed the property. Real Estate Escrow, Inc. v Lee E. Fitzgerald. D.C. App 00-CV-1292.

DC: New Site for D.C. Courts: www.dccourts.gov was launched last week. Previously information had been hosted through the DC Bar site. Although it now contains general information (direct dial phone numbers, judicial assignments, if court is open during a storm or emergency, information for pro se litigants, etc.) plans are to expand its capabilities, including log-in for jurors, court calendars,

DC: Electronic Filing at Recorder of Deeds. First American Title Ins., Landata (subsidiary of Stewart Title) and Larry Todd, Recorder of Deeds, gave a demonstration of the new electronic recording system now operational in D.C. Title companies that are armed with a good scanner (with automatic document feed) and access to the internet, are able to utilize this system. For those title companies without these resources or who want to dip their toe into the water, FATICO also provides the electronic recording service. The advantage to recording electronically: fast (usually you get your numbers in a few minutes), no having to wait in line, you get a copy of your document immediately that bears the recording number, you can forward that copy directly to the lender/owner, etc., no errors in calculation of costs of recording, document is included in index that night (as opposed to the "through date" currently indicated on the ROD/Landata website). For those who want to set up their own system, contact Steve Sexauer at Landata at: ssexauer@landata.com. For those who want to utilize First American as a facilitator, contact Larry Blassingame at lblassingame@firstam.com.

Maryland: Electronic Recording. Montgomery County has also implemented electronic recording. Right now, it is a form of "pre-recording" wherein you still have to produce the originals, but all the leg-work is done beforehand. To register contact Usha at 240-777-8983.

Maryland: Montgomery County tax incentives to low to moderate homeowners. Gross income for household cannot exceed $35,000 and total net worth of household cannot exceed $200,000. Deadline is September 1. Click here for details

Federal Tax Incentive Program for low-income homebuyers. "American Dream Downpayment Initiative" Click here for details

Virginia: Increase in state recordation tax. For the first time since 1948, the state recordation tax levied on both the purchase price and on the mortgage amount (grantee and grantor taxes) as been increased by ten (10) cents to $.25 per $100. Thanks to good lobbying by GCAAR, the original proposal was defeated which would have increased the tax 300%.

Maryland: Interest Rate changes on tenant's security deposits. Effective October 1, 2004, HB 723 lowers the state-mandated interest rate on security deposits from 4% to 3%. Given that the rest of us only earn 1% on our bank accounts, we have decided to ask our landlord to please accept much more money from us to increase our security deposit.

Caution when handling 1031 Transfers: Unless carefully supervised by knowledgeable counsel, settlement companies should require waivers of liability and should be careful not to make representations about what will (or will not) be eligible for shelter under section 1031 of the Internal Revenue Code. The parties should seek independent counsel and the settlement company should just follow the instructions. This area is fraught with complicating factors: Only costs associated with the SALE or PURCHASE of the property (called "exchange expenses") can be paid for with "exchange dollars". Other expenses of the TRANSACTION are not to be paid with "exchange dollars" (i.e. a separate check should be provided). "Transaction Expenses" could be lender prepayment penalties, points as loan fees, and real estate tax-prorations. Payment of some extraneous bill of Seller on the HUD-1 would be an obvious example of "boot". Similarly, a seller should consider paying security deposits and rents with a separate check. If you must reflect security deposits/rents on the HUD-1, it should be done without referencing them as credits or debits.

Reminder to Title Companies: We suggest that your purchasers be given copies of their title binders before closing and initial off on the B-2 exceptions. Special caution should be taken to explain any conservation easements that may affect the property. Similarly there should be an explanation about the difference between a house location drawing and a survey, buyer's initials on the drawing, and an explanation of the survey exception. By following these two simple steps, you can avoid many lawsuits.

DC: Status of DC Legislation:

B15-133 Rental Housing Conversion and Sale Act of 1980 Amendment of 2003: Still in committee. No other details. Click here for text (remember to add B15-133 when prompted)

A15-426: Deed Recordation Tax and Related Amendments Amendment Act of 2004" adding exemption from DC Transfer/Recordation Taxes for domestic partners. Projected effective date is September 8, 2004. Click here for text

DC: Status of Federal Legislation:

Senate Bill 1175 "First-Time Homebuyers' Tax Credit Act of 2003" establishing $5,000 federal credit for first-time purchasers of real estate in DC. Passed by House, Passed by Senate; According to office of Eleanor Holmes Norton, "Going to conference, but not sure when". Click here for text (Search by bill number)

Upcoming Seminars and Continuing Education:

Examining Real Estate Titles and Surveys. Conducted by National Business Institute. Lecturers: Roy L. Kaufmann of Jackson & Campbell, P.C. and Eric M. Schneider of Fidelity National Title. . 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.