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SINGLE vs DUAL DEED INFORMATION 

This document presents an overview of factors commonly reported by Worldwide ERC® membership as influencing their decisions on whether to use one or two deeds in a particular jurisdiction. The second column identifies states where the cost to use a second deed is minimal. In these states, the benefits of taking title may outweigh the minimal cost savings realized by use of a single deed process.  The third column identifies a number of issues in various states that may prompt employers or RMC’s to use two deeds in those jurisdictions.  Additional factors, footnotes and citations are included.  For a more detailed explanation, refer to “Blank Deed: State Issues, and Use after Rev.Rul. 2005-74” available in MasterSource. 

This document is provided for general information purposes only, and Worldwide ERC® makes no representations regarding its accuracy or completeness.  Worldwide ERC® strongly suggests consulting with your tax and legal advisors to determine the appropriate policies for your organization.

Last Revised – October 24, 2016

 

MINIMAL COSTS

Possible State Concerns 

Alabama

 

 

Alaska

X

Challenge to Notarization of Blank Documents possible¹ 

Arizona

X

Challenge to Notarization of Blank Documents possible¹

Arkansas

 

 

California

 

Challenge to Notarization of Blank Documents possible¹; County recorder practices vary, with some questioning date of Deed vs date of recording for property tax evaluation.

Colorado

X

Challenge to Notarization of Blank Documents possible¹.  Transfer tax is minimal

Connecticut

X

If the second deed is recorded within 6 months of the first deed, it is exempt from seller paid transfer tax.

Delaware

 

False Claim / Qui Tam²

District. of Columbia

 

False Claim / Qui Tam² for recordation tax

Florida

 

Challenge to Notarization of Blank Documents possible¹

Georgia

 

 

Guam

 

 

Hawaii

 

False Claim / Qui Tam²

Idaho

X

 

Illinois

 

False Claim / Qui Tam²

Indiana

X

False Claim / Qui Tam²

Iowa

 

 

Kansas

X

 

Kentucky

 

A Statement of Consideration attesting to the accuracy of the sales price must accompany each deed when presented for recording.  If the sales price between the Transferee and Company is different from the sales price between the Company and the Buyer, the use of the blank deed may expose the Transferee and/or the Company to penalty.

Louisiana

X

Only New Orleans Parish has transfer tax

Maine

 

 

Maryland

 

 

Massachusetts

 

 

Michigan

 

Challenge to Notarization of Blank Documents possible¹

Minnesota

 

Notary restrictions may limit who can complete deed

Mississippi

X

 

Missouri

X

 

Montana

X

 

Nebraska

 

 

Nevada

 

False Claim / Qui Tam²

New Hampshire

 

State views a relocation sale as two separate, taxable transactions

New Jersey

 

 

New Mexico

 

Challenge to Notarization of Blank Documents possible¹

New York

 

State views a relocation sale as two separate, taxable transactions; False Claim / Qui Tam²

North Carolina

 

 

North Dakota

X

 

Ohio

 

 

Oklahoma

 

An agreement between the relocation industry and Oklahoma eliminates that state’s requirement that companies (and their employees) buying and selling transferee homes in the state must be licensed as Oklahoma real estate agents, but only if companies take title to the homes.

Oregon

 

 

Pennsylvania

 

State views a relocation sale as two separate, taxable transactions

Puerto Rico

X

Notary law requires parties to a deed to execute on the same day.

Rhode Island

 

False Claim / Qui Tam²

South Carolina

 

 

South Dakota

 

 

Tennessee

 

 

Texas

X

In Texas, lenders require that the deed and the security interest instrument (the deed of trust) have the same date.

Utah

X

 

Vermont

 

 

Virginia

 

 

Washington

 

State views a relocation sale as two separate, taxable transactions

West Virginia

 

 

Wisconsin

 

 

Wyoming

X

 

Additional Factors:

FHA Anti-Flipping Rules - The Federal Housing Administration’s mortgage insurance program is increasingly popular among potential borrowers, particularly first time homebuyers and those looking for minimal down payment options.  The “FHA Anti-Flipping Rules” are most commonly known for restricting a mortgage’s eligibility for the FHA program if the seller has owned the property for less than 90 days.  Properties sold by an employer or relocation company in connection with the relocation of an employee are exempt from this restriction.  However, the regulation also provides that a mortgage will be ineligible for the program if the seller of the property is not the owner of record.  The relocation company may be required to take title to the property if the buyer is attempting to secure FHA-insured financing. 

Lender Requirements - There has been a considerable increase in the number of transactions where the buyer’s lender requires the relocation company to take title to the property as a condition of financing the purchase.  The most common rationale is the perceived risk of fraud when the seller is not the record owner of the property.  It may be possible on a case by case basis to overcome these objections by explaining the purpose and structure of a relocation home sale transaction, particularly if the concern is addressed early in the loan underwriting process.  However, this is not always possible; it may be necessary for the relocation company to take title to the property if the buyer is unable to find alternative financing.

Footnotes

  1. In some states notary statutes or guidelines prohibit a notary from notarizing an “incomplete” document (i.e. a deed-in-blank, with no buyer).  However, there is an argument that a blank deed is complete because it contains the name and signature of the transferee and is a “negotiable” instrument, like a check missing a payee’s name.
  2. False Claim laws, particularly in states with “Qui Tam” statutes, might allow private citizens to seek redress for transfer taxes or recording fees avoided by use of the blank deed. Whether the statute applies to taxes or transfer tax on a deed, the interpretation of the law in each state is not always absolutely clear.  Such a statute in Florida led to litigation that was costly to resolve for the industry and the companies involved. 

Citations

Connecticut: Transfer Taxes - General Statutes of Connecticut § 12-498(a)(18).

Delaware: False Claims - Delaware Code § 1201.

District of Columbia: False Claims - D.C. Code § 2-381.02

Hawaii: False Claims - Hawaii Revised Statutes §661-21 

Illinois: False Claims - Illinois Compiled Statutes  § 740 ILCS 175/3. 

Indiana: False Claims – Indiana Code § 5-11-5.5-2

Kentucky: Statement of Consideration - Kentucky Revised Statutes § 382.135

Nevada: False Claims - Nevada Revised Statutes § 357.040.

New Hampshire: Transfer Taxes - New Hampshire Revised Statutes 78-B:1

New York: Transfer Taxes - Consolidated Laws of New York – Tax § 1401-1402; False Claims - Consolidated Laws of New York – State Finance § 189

Oklahoma: Oklahoma Real Estate Commission - Q2 2000 “Commission Comment”

Pennsylvania: Transfer Taxes - Pennsylvania Code § 91.170.

Rhode Island: False Claims - State of Rhode Island General Laws § 9-1.1-3  

Washington

Transfer Taxes –

(1)     Attorney General Opinion – AGO 1957 No. 70 – May 23, 1957

(2)     Washington Administrative Code § 458-61A-110(4).

The foregoing is intended as general information only. Regarding your specific situation, Worldwide ERC® suggests that you consult with your own tax or legal advisor as appropriate.

For reprint information contact: GovernmentRelations@WorldwideERC.org

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