This bulletin is being drafted in response to many errors made regarding the consequent collection of transfer taxes, recordation stamps and real property taxes in conjunction with the recording of deeds and deeds of trusts/mortgages in Prince George's County, Maryland ("P.G. County").
Real Property Tax:
Generally speaking, Maryland Code, Real Prop. Article §3-104(b) requires all outstanding real property taxes to be paid before property can be transferred. However, Real Prop. §3-104(c)(4)(i) allows property to be transferred in July, August, or September if a lender certifies that it has sufficient funds in an escrow account to pay the taxes. P.G. County has a specific form for this type of certification (Exhibit "A").
In P.G. County, all real property tax bills must be paid by September 30th in full unless paying semiannually. Semiannual payments are offered for owner-occupied residential property only. Each tax bill must have the statement "Principal Residence" on it. Payments may then be made in two equal installments - the first by September 30th and the second by December 31st.
Real property tax information can now be accessed online at the P.G. County home page http://www.co.pg.md.us/index.asp, then go to "Property Tax Inquiry" and search with property address or tax account number.
Notwithstanding the exemptions from STATE transfer tax contained in Real Prop. §§ 12-108, 13-207 and 13-403, the COUNTY will still charge COUNTY transfer tax upon transfers that are exempt from state transfer tax (see examples below). The current rate for P.G. County transfer tax is 1.4% unless the purchaser is a P.G. County teacher purchasing a home in P.G. County in which case the rate is 1.0% pursuant to the P.G. County Code Division 7, Section 10-187 (Exhibit "B"). In order to make a claim for such exemption from the County tax, P.G. County has a specific affidavit that must accompany the submission (Exhibit "C").
Example No. 1:
A property is transferred via quitclaim deed from the parents to the daughter. PG County will collect transfer taxes based on a portion of the unpaid principal balance of the outstanding mortgage on the property. In this case, it will be 1/3 of the unpaid principal balance unless there was no money owed on the home. If no money owned, then it will not be taxed at all; only the recording fee will be charged.
Example No. 2:
Mother owns property solely. Mother is refinancing and bank requires daughter to be added to deed and sign deed of trust. P.G. County transfer tax office will require that the parties pay transfer tax on the daughter's ½ interest based on the outstanding principle balance of the existing debt. P.G. County transfer taxes are due upon recording a "real" transfer (i.e., a deed), and on each subsequent mortgage, unless there was a purchase money mortgage at the time of transfer and that mortgage was in place more than a year after transfer.
If the property is to be the purchaser's primary residence, the purchaser can pay his/her share of the transfer tax in six equal installments. See Sec. 10-187(d) of the P.G. County Code. To do this, however, the purchaser must file the P.G. County Homeowner's Certification of Principal Residence form (Exhibit "D").
Additionally, when claiming the exemption from state transfer and/or recordation tax due to the deed being an inter-familial transfer, P. G. County requires that no consideration affidavit language be either incorporated into the deed or attached as a separate affidavit. The affidavit must state the relationship between the parties.
The current P.G. County recordation tax rate is $2.20 per $500 of the transaction. The recordation tax is imposed under Title 12 of the Tax - Property Article, Annotated Code of Maryland.
Every Deed of Trust involved in a refinance or home equity line of credit transaction must be accompanied by the P.G. County Finance Affidavit (the "Affidavit") (Exhibit "E"). A large percent of recent issues have been related to unrecorded deeds of trust that are rejected by P.G. County for either not attaching the Affidavit to the Deed of Trust or not filling out the Affidavit correctly. The Affidavit has two sections: one for recordation tax and one for transfer tax. Both sections must be completed (either A and B, or A and C).
Effective April 1, 2006: In order to correctly calculate taxes on documents being submitted for review, ALL refinances in P.G. County will be required to submit a copy of the previously recorded document being refinanced. The copy must include borrower's name, amount of loan, legal description of property and Prince George's County taxation stamps.
Finally, P.G. County has a special local documentary requirement; every deed must state the election district of the property (Maryland Code, Real Property Article §3-104(f)(2)). Such information can be located at the web page described above with the real property tax information.
Indemnity Deeds of Trust:
Unlike every other county in the State, IDOT's are not exempt from transfer taxes in P.G. County. IDOT's are subject to county transfer taxes if the property cannot meet Clause B of the Prince George's County Refinance Affidavit. If the property meets the requirements in Clause B, it is exempt from County Transfer tax. (See Prince George's County Code, Sec. 10-187. Transfer tax; exceptions.)
Shawn A. Goldfaden
Senior Underwriting Counsel
Stewart Title Guaranty Company
609 Global Way,Suite 122
Linthicum Heights, Maryland 21090
Fax: (410) 789-8407