New Jersey-2014-A941-Introduced

An Act eliminating the general purpose fee and the supplemental fee levied on transfers of title to real property, and amending P.L.1968, c.49 and repealing section 2 of P.L.2003, c.113.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 1 of P.L.1968, c.49 (C.46:15-5) is amended to read as follows:

1. As used in this act:

(a) "Deed" means a written instrument entitled to be recorded in the office of a county recording officer which purports to convey or transfer title to a freehold interest in any lands, tenements or other realty in this State by way of grant or bargain and sale thereof from the named grantor to the named grantee. A leasehold interest for 99 years or more or a proprietary lease of a cooperative unit and any assignment of a proprietary lease of a cooperative unit, shall be treated as a "freehold" for the purpose of this act. Instruments providing for common driveways, for exchanges of easements or rights-of-way, for revocable licenses to use, to adjust or to clear defects of or clouds on title, to provide for utility service lines such as drainage, sewerage, water, electric, telephone or other such service lines, or to quitclaim possible outstanding interests, shall not be "deeds" for the purposes of this act.

(b) The terms "county recording officer" and "office of the county recording officer" mean the register of deeds and mortgages in counties having such an officer and office, and the county clerk and his office in the other counties.

(c) "Consideration" means in the case of any deed, the actual amount of money and the monetary value of any other thing of value constituting the entire compensation paid or to be paid for the transfer of title to the lands, tenements or other realty, including the remaining amount of any prior mortgage to which the transfer is subject or which is to be assumed and agreed to be paid by the grantee and any other lien or encumbrance thereon not paid, satisfied or removed in connection with the transfer of title. The amount of liens for real property taxes, water or sewerage charges for the current or any subsequent year, or by way of added assessment or other adjustment, as well as of other like liens or encumbrances of a current and continuing nature ordinarily adjusted between the parties according to the period of ownership shall be excluded as an element in determining the consideration, notwithstanding that such amount is to be paid by the grantee.

In the case of a leasehold interest for 99 years or more as defined in subsection (a) of this section, the consideration shall be in the amount of the assessed value of the property at the date of the transaction for the purpose of levying local real property taxes adjusted to reflect the true value in accordance with the county percentage level established for the current year.

In the case of a proprietary lease of a cooperative unit or assignment thereof as defined in subsection (a) of this section, the consideration is the total price paid for the ownership interest held in conjunction with a cooperative unit, including the pro rata amount of any underlying mortgage or other obligation of the cooperative.

(d) "Blind person" means a person whose vision in his better eye with proper correction does not exceed 20/200 as measured by the Snellen chart or a person who has a field defect in his better eye with proper correction in which the peripheral field has contracted to such an extent that the widest diameter of visual field subtends an angular distance no greater than 20E.

(e) "Disabled person" means any resident of this State who is permanently and totally disabled, unable to engage in gainful employment, and receiving disability benefits or any other compensation under any federal or State law.

(f) "Senior citizen" means any resident of this State of the age of 62 years or over.

(g) "New construction" means any conveyance or transfer of property upon which there is an entirely new improvement not previously occupied or used for any purpose.

(h) "Low and moderate income housing" means any residential premises, or part thereof, affordable according to federal Department of Housing and Urban Development or other recognized standards for home ownership and rental costs and occupied or reserved for occupancy by households with a gross income equal to 80% or less of the median gross household income for households of the same size within the housing region in which the housing is located, but shall include only those residential premises subject to resale controls pursuant to contractual guarantees.

(i) "Basic fee" means the fee established by paragraph (1) of subsection a. of section 3 of P.L.1968, c.49 (C.46:15-7), which fee shall consist of a State portion and a county portion as prescribed under that paragraph.

(j) "Additional fee" means the fee established by paragraph (2) of subsection a. of section 3 of P.L.1968, c.49.

[(k) "General purpose fee" means the fee established by paragraph (3) of subsection a. of section 3 of P.L.1968, c.49.

(l) "Supplemental fee" means the fee established by subsection a. of section 2 of P.L.2003, c.113 (C.46:15-7.1).]

(cf: P.L.2004, c.66, s.1)

2. Section 2 of P.L.1968, c.49 (C.46:15-6) is amended to read as follows:

2. In addition to other prerequisites for recording, no deed evidencing transfer of title to real property shall be recorded in the office of any county recording officer unless it satisfies the following requirements:

a. If the transfer is subject to any fee established under section 3 of P.L.1968, c.49 (C.46:15-7) [or section 2 of P.L.2003, c.113 (C.46:15-7.1)], a statement of the true consideration for the transfer shall be contained in the deed, the acknowledgment, the proof of the execution, or an appended affidavit by one of the parties to the deed or that party's legal representative.

b. If the transfer is exempt from any fee established under section 3 of P.L.1968, c.49 (C.46:15-7) [or section 2 of P.L.2003, c.113 (C.46:15-7.1)], an affidavit stating the basis for the exemption shall be appended to the deed.

c. If the transfer is of real property upon which there is new construction, the words "NEW CONSTRUCTION" in upper case lettering shall be printed clearly at the top of the first page of the deed, and an affidavit by the grantor stating that the transfer is of property upon which there is new construction shall be appended to the deed.

(cf: P.L.2004, c.66, s.2)

3. Section 3 of P.L.1968, c.49 (C.46:15-7) is amended to read as follows:

3. a. In addition to the recording fees imposed by section 2 of P.L.1965, c.123 (C.22A:4-4.1), a grantor shall pay to the county recording officer at the time the deed is offered for recording the following fees:

(1) A basic fee, which basic fee shall consist of (a) a State portion at the rate of $1.25 for each $500.00 of consideration or fractional part thereof recited in the deed, and (b) a county portion at the rate of $0.50 for each $500.00 of consideration or fractional part thereof so recited; provided however, that on and after the tenth day following a certification by the Director of the Division of Budget and Accounting in the Department of the Treasury pursuant to subsection b. of section 2 of P.L.1992, c.148 (C.46:15-10.2) [or subsubparagraph (ii) of subparagraph (b) of paragraph (2) of subsection b. of section 1 of P.L.1992, c.148 (C.13:19-16.1) as amended], the State portion of the basic fee shall not be imposed; and

(2) An additional fee at the rate of $0.75 for each $500.00 of consideration or fractional part thereof recited in the deed in excess of $150,000.00; provided however, that on and after the tenth day following a certification by the Director of the Division of Budget and Accounting in the Department of the Treasury pursuant to subsection b. of section 2 of P.L.1992, c.148 (C.46:15-10.2) [or subsubparagraph (ii) of subparagraph (b) of paragraph (2) of subsection b. of section 1 of P.L.1992, c.148 (C.13:19-16.1) as amended], the additional fee shall not be imposed[; and

(3) A general purpose fee at the rate of:

(a) $0.90 for each $500.00 of consideration or fractional part thereof recited in the deed that is not in excess of $550,000.00, except that in the case of a conveyance or transfer of property for which the total consideration recited in the deed does not exceed $350,000.00, no general purpose fee shall be imposed;

(b) $1.40 for each $500.00 of consideration or fractional part thereof in excess of $550,000.00 but not in excess of $850,000.00 recited in the deed;

(c) $1.90 for each $500.00 of consideration or fractional part thereof in excess of $850,000.00 but not in excess of $1,000,000.00 recited in the deed; and

(d) $2.15 for each $500.00 of consideration or fractional part thereof in excess of $1,000,000.00 recited in the deed].

b. A deed subject to any of the fees established by this section, which is in fact recorded, shall be deemed to have been entitled to recording, notwithstanding that the amount of the consideration shall have been incorrectly stated or that the correct amount of such fee shall not have been paid. No such defect shall in any way affect or impair the validity of the title conveyed or render the same unmarketable; but the person or persons required to pay said additional fee at the time of recording shall be and remain liable to the county recording officer for the payment of the proper amount thereof.

(cf: P.L.2008, c.31, s.2)

4. Section 2 of P.L.2003, c.113 (C.46:15-7.1) is repealed.

5. Section 4 of P.L.1968, c.49 (C.46:15-8) is amended to read as follows:

4. a. The proceeds of the fees collected by the county recording officer, as authorized by P.L.1968, c.49 (C.46:15-5 et seq.) and by section 8 of P.L.2004, c.66 (C.46:15-7.2), shall be accounted for and remitted to the county treasurer.

b. (1) The county portion of the basic fee collected pursuant to paragraph (1) of subsection a. of section 3 of P.L.1968, c.49 (C.46:15-7) shall be retained by the county treasurer for the use of the county.

(2) The State portion of the basic fee, the additional fee, and the [general purpose] fee imposed pursuant to section 8 of P.L.2004, c.66 (C.46:15-7.2) shall be paid to the State Treasurer for the use of the State. Payments shall be made to the State Treasurer on the tenth day of each month following the month of collection.

c. (1) Amounts, not in excess of $25,000,000, paid during the State fiscal year to the State Treasurer from the payment of the State portion of the basic fee shall be credited to the "Shore Protection Fund" created pursuant to section 1 of P.L.1992, c.148 (C.13:19-16.1), in the manner established under that section.

(2) In addition to the amounts credited to the "Shore Protection Fund" pursuant to paragraph (1) of this subsection, amounts equal to $12,000,000 in each of the first 10 years after the date of enactment of the "Highlands Water Protection and Planning Act,"P.L.2004, c.120 (C.13:20-1 et al.) and to $5,000,000 in each year thereafter, paid during the State fiscal year to the State Treasurer from the payment of the State portion of the basic fee [fees collected by the county recording officer other than the additional fee of $0.75 for each $500.00 of consideration or fractional part thereof recited in the deed in excess of $150,000.00] shall be credited to the "Highlands Protection Fund" created pursuant to section 21 of P.L.2004, c.120 (C.13:20-19), in the manner established under that section. No monies shall be credited to the "Highlands Protection Fund" pursuant to this paragraph until and unless the full amount of $25,000,000 has first been credited to the "Shore Protection Fund" pursuant to paragraph (1) of this subsection.

d. All amounts paid to the State Treasurer from the payment of the additional fee shall be credited to the [Neighborhood Preservation Nonlapsing Revolving] New Jersey Affordable Housing Trust Fund established pursuant to P.L.1985, c.222 (C.52:27D‑301 et al.), in the manner established under section 20 thereof (C.52:27D‑320).

(cf: P.L.2004, c.120, s.61)

6. This act shall take effect immediately and apply to transfers of real property occurring on or after the 30th day following enactment.

STATEMENT

This bill eliminates the general purpose fee and the supplemental fee, two of the fees levied on the transfer of title to real property, which are collectively known as the realty transfer fee. The legislation maintains the basic fee, the additional fee, and the fee imposed on transfers of title to commercial and residential property whose transaction price is at least $1 million.

Having taken effect on August 1, 2004, the general purpose fee established pursuant to P.L.2004, c.66, is imposed on the seller of non-exempt real property whose selling price equals or exceeds $350,000. It applies to the full amount of the property sale and has the following schedule: $0.90 on each $500 of consideration on the first $550,000 of the value recited in the deed of transfer; $1.40 on each $500 of consideration between $550,000 and $850,000; $1.90 on each $500 of consideration between $850,000 and $1,000,000; and $2.15 on each $500 of consideration over $1,000,000. The State General Fund is credited with all the proceeds from this fee.

The supplemental fee created under P.L.2003, c.113 took effect on July 1, 2003 and applies to the seller of non-exempt real property, provided that the seller is neither a senior nor a blind nor a disabled citizen. The graduated fee pertains to the full amount of the property transaction and has the following structure: $0.25 on each $500 of consideration on the first $150,000 of the value recited in the deed of transfer; $0.85 on each $500 of consideration between $150,000 and $200,000; and $1.40 on each $500 of consideration over $200,000. Of the revenue generated, counties retain $0.25 on every $500 of consideration, of which a portion shall be utilized under certain circumstances to finance public health services under the Public Health Priority Funding Act. The remaining revenue accrues to the State Extraordinary Aid Account to fund property tax relief. In addition, the supplemental fee effectively voided a partial exemption of $1.00 per $500 of consideration for the first $150,000 of the transaction price of property upon which there is new construction.

As a consequence of this bill, property sellers would have to pay a diminished amount in realty transfer fees with the State and counties foregoing revenue. For example, the legislation lowers the fee liability by $1,210, or roughly 44 percent, for real property selling at $350,000. For a property selling at $650,000, the liability decreases by $2,690, or about 47 percent.