Bulletin: MD2015008

Date:
April 08, 2015
To:
All Maryland Issuing Offices
RE:
UNDERWRITING - Tax Exemption Increased on Indemnity Deeds of Trust

Dear Associates:

This Bulletin amends and supplements Bulletin MD2012004 dated May 24, 2012.

Effective July 1, 2013, indemnity mortgages or deeds of trust (IDOTs) that secure a guarantee of repayment of a loan or a series of loans that are part of a transaction for less than $3,000,000 are exempt from recordation taxes. MD Tax-Property §12–105(f)(1) and MD Tax-Property §12–105(f)(7)(iii)(2).

http://mgaleg.maryland.gov/webmga/frmStatutesText.aspx?article=gtp§ion=12-105&ext=html&session=2015RS&tab=subject5

Although the taxation of IDOTs seems relatively straightforward as a result of this statute, be advised that Maryland counties often interpret tax statutes on a jurisdiction-by-jurisdiction basis. Some counties have a particular dislike for granting tax exemptions of any dollar amount where individuals create IDOTs with entities that they own a part of, either as borrowers or as guarantors.  

Note also that certain counties require that an IDOT be accompanied by a county affidavit attesting to the structure of the transaction. Some counties may also collect state and county transfer taxes on IDOTs.

For all of the reasons above, questions regarding the taxation of IDOT transactions require you to contact the county clerk or finance office prior to closing to determine the proper amount of tax to be collected.  

Please contact a Maryland underwriter if you have any questions about taxation of IDOTs.  

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

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:
MD2012004 New Recordation Tax on Indemnity Deeds of Trust
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None