Changes ‘a foot part 2

We just got a bulletin from GCAAR (Greater Capitol Area Association of Realtors) about a big change to MD legislation regarding short sales.  Reason #102 that I'm not licensed in MD.  WHO thinks of this stuff?  Check out what they sent us:

"On Friday, January 8, the Montgomery County Finance Department's Transfer Office put forth a memo regarding how they process and charge recordation and transfer taxes on Short Sale Transactions.  The position the County has taken has caused some grave confusion and concerns for many in the real estate industry because it is contrary to how short sale transactions have been charged recordation and transfer taxes to date.  The following is the excerpt from the County's memo:

  • We tax on the unpaid principal balance of the mortgage as if the excess debt over and above the sale price is being waived/cancelled.
  • We will rely on your assertion of the unpaid principal balance and WILL NOT typically require a copy of a payoff statement or a seller's last mortgage bill.
  • We will tax on the Short Sale price ONLY IF evidence is presented to us that the excess debt over and above the sale price is being paid off by the debtor or pursued by the lender.
GCAAR as well as the Maryland Association of REALTORS┬« (MAR) have taken the position that this interpretation of the Maryland State law is clearly against the plain language, which states that the taxes can ONLY be charged on the amount of "consideration."  It has always been our understanding that consideration is interpreted to mean the sales price.  Therefore, on short sales, the taxes paid should not include the amount of the mortgage not being paid off. 
 
GCAAR is working directly with MAR since this is an interpretation of Maryland state law.  We are going to be speaking with Montgomery County's Finance Department regarding GCAAR's concerns and how this will put a halt to short sale transactions throughout the county.  MAR is speaking with the state legislators to look into the possibility of an Attorney General's opinion on the law or a possible legislative change and/or codification of the current law. 
 
If you have any questions, please contact Meredith Weisel, VP of Public Policy for Maryland at mweisel@gcaar.com."
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