Bulletin: NJ000112

Date:
August 04, 2006
To:
All Issuing Offices in New Jersey
RE:
Commercial "Mansion Tax" Signed Into Law APPLIES TO DEEDS RECORDED ON/AFTER AUGUST 1ST

 Dear Associates:

The commercial "Mansion Tax" (A4701 / S1982) amending N.J.S.A. 46:15-7.2 was signed by Governor Corzine on July 8, 2006.  The new law imposes a one percent (1%) fee on the purchaser of Class 4A commercial property for over $1 Million.  Class 4A properties are all commercial properties other than industrial properties or apartments.   Property classes are defined in the New Jersey Administrative Code at §18:12-2.2.

The new law applies to transfers of commercial property on or after August 1, 2006, however,   deeds recorded on or before November 15, 2006 under a contract entered into before July 1, 2006 will get special treatment.  While the 1% fee must still be paid upon recording, the fee will be refunded upon submission of a proper claim to the Division of Taxation.

The law also applies to non-deed transfers of a controlling interest (over 50%) in an entity that owns Class 4A property where the total consideration for transfer is in excess of $1 million.  This provision is intended to prevent the avoidance of the new transfer tax by a sale of a company owning Class 4A property rather than a sale of the property itself.

The New Jersey Division of Taxation will be issuing an amended RTF-1EE Affidavit of Consideration form reflecting the change to include Class 4A commercial property together with Class 2 Residential, Class 3A Farm property and Class 4C Cooperative apartment transfers for over $1 million as requiring the additional 1% fee.  Associates are reminded that every deed for over $1 million regardless of property class must be accompanied by a completed RTF-1EE form.

Copies of both A4701 and S1982 are available at:  http://www.njleg.state.nj.us . Copy and distribute this bulletin to your escrow officers, title examiners, title officers, searchers and anyone else that you feel should know about it.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
NJ000098 This Bulletin has been replaced by NJ000112.
Related Bulletins:
NJ000089 New Jersey 'Mansion Tax' Payable by the BUYER as of August 1st
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None