|June 10, 2013|
Previously published on June 2013
Our Maryland Laws Update is close to being published - look for it to arrive in your email box this month. Please note that we only will be providing the Update in electronic format this year. In the meantime, there are a few important laws you should be aware of that become effective on July 1:
Changes to the Tax Law Governing IDOTs and Refinancing in General
Introduced as SB346/HB1209 (effective July 1, 2013)
This law has many facets, all of which are discussed in detail by Ed Levin in our Real Estate Department's recent publication of Relating to Real Estate. Two important points to keep in mind are:
1. IDOTs. Currently, indemnity deeds of trust (IDOTs) securing guaranties of loans of up to $1 million are exempt from Maryland recordation tax. This law increases the amount for the exemption up to $3 million. All loans in a series that are part of the same transaction must be aggregated to determine if the $3 million threshold is reached; and
2. Refinancing. For a number of years, Maryland law has provided an exemption from recordation tax when recording a refinancing mortgage or deed of trust (mortgage) if the refinancing mortgage is secured by the principal residence of an individual who is the original mortgagor of the existing mortgage. The tax exemption applies to an amount secured by the refinancing mortgage up to the unpaid principal balance of the loan being paid off.
Effective July 1, 2013, the scope of this recordation tax exemption expands and will apply not only to individuals who are refinancing their principal residences but also to any person (which can include entities) and to any type of property. With the July 1st changes, the recordation tax exemption will be available to any refinancing mortgage to the extent the debt is being refinanced by the original mortgagor of the existing mortgage. The tax exemption will continue to apply only to an amount secured by the refinancing mortgage up to the unpaid principal balance of the loan being paid off. There also continues to be a requirement that the original mortgagor (or his/her/its agent) include certain information in the recitals or in the acknowledgment of the refinancing mortgage or provide a certain affidavit along with the refinancing mortgage.
Motor Vehicle Leasing - Payment of Tolls
Introduced as HB420 (effective July 1, 2013; applicable to previously incurred tolls that are unpaid on that date)
This law clarifies that in the motor vehicle leasing context, a "person alleged to be liable" for tolls means either the registered owner (the lessor) or a person to whom a registered owner has transferred liability. Further, it provides that if at the time of the toll transaction the vehicle is in the possession of the lessee, and the lessor - who will receive the "notice of toll due" in the first instance - provides a copy of the lease or other "acceptable documentation" identifying the lessee to MTA within 30 days of the "notice of toll due," then the lessee will be liable for the toll and will be sent a "notice of toll due." Motor vehicle lessors should stay focused on the regulations mandated by this law to ensure this process of shifting liability to lessees is clear and effective.