TO:        All Members

FROM:  Jean Partridge, President NYSLTA

RE:        State Budget Bill

The New York State Legislature and Governor Andrew Cuomo have agreed on several pieces of legislation that comprise the State budget. The budget bill is both a financial budget for the State as well as a policy document.  As many of you recall, it was the 2014 budget bill that contained the licensing of title agents, under which we all operate.

The intent of this memo is to highlight some of the changes enacted in the budget that title insurance staff, business owners and senior executives should be aware of.

Revenue Budget Part O

1.      Tax Law 1401 (a) – Definitions

(a)(2) NEW– the definition of person expanded to include officers, employee, members and managers of entities who are under a duty to act for such entity, in complying with this article or who have so acted.

2.      Tax Law 1404 (a) – Liability for Tax

(a)   Transfer Tax (pursuant to 1402 of the tax law) is payable by the grantor – UNLESS the contract states otherwise; IF grantee pays the tax because seller failed to pay (when seller was obligated to pay same) THEN grantee has a cause of action against the grantor. IF transfer tax is paid by the grantee on residential real property pursuant to a contract of sale, the amount of such tax is excluded from consideration. 

NOTE: This change only affects the NYS Transfer Tax and does not change the New York City DOF’s application of gross up provisions to NYC RPT. We have been informed that this may change to conform with the State’s new rules by a future change in the NYC law.

3.      Tax Law 1409

(a) – LLC Disclosure requirement Section 1409(a) requires all LLCs that are either grantors or grantees in a deed transferring real property to disclose all their members before the real estate may be transferred. NOTE: This disclosure is currently required as an addendum to the TP584 form.

(a)(2) removes disclosure requirement if a member is an LLC and is a publicly traded entity, a REIT, an UPREIT or a mutual fund.

Revenue Budget Part U

Section 1. Real Property Law 333

(1) ADDED Transfer tax forms will be permitted to be submitted to the State Department of Taxation and Finance and the State will issue a receipt; this receipt will allow a document to be submitted for recording to the county clerk without the usual transfer tax forms

Section 5. Tax Law 1407 Designation of agents

(b)   1 (2) When the new combined form (per Tax Law Sec. 1423) is used and the Clerk is presented with a receipt from the Commissioner of Finance, the recording officer is relieved of its responsibility to collect transfer taxes. However, the clerk is still entitled to receive their share of the transfer tax.

(c)    2 NEW (2) alphanumeric change – When no receipt from the Commissioner of Finance is attached, the Clerk shall accept the transfer tax payments

Section 8. Tax Law 1423

– NEW IN ITS ENTIRETY Modernization of real property transfer reporting.

(a)   Commissioner of Finance is authorized to implement a system for electronic filing and submission of transfer tax forms; Commissioner of Finance may combine the TP and Equalization forms

(a)(1) Paying the transfer tax online and using the combined form is optional – submission of both forms to the Clerk will continue to be permissible. Clerk cannot accept combined form.

(a)(2) All items on combined form that would have otherwise appeared on the RP-5217 remains subject to public disclosure.

(a)(3) The act of submitting the combined form electronically shall be deemed the signing of said form. The requirement that all the grantors and grantees shall sign the return shall not apply. However, the fact that a grantor or grantee has not electronically submitted the form shall not relieve that grantor or grantee of any liability for the tax imposed by this article.

(b) If combined form is submitted electronically then fees are payable to the Commissioner of Finance  The Clerk’s or the recording officer's fees will be paid their share of the taxes and fees on the 12th of each month, provided the recording information is provided to the Commissioner of Finance . 

(c) The party submitting the same shall be provided with an electronic receipt, a printed copy of same will be submitted to the Clerk by the submitting party in lieu of submitting the forms and payments. Clerk to retain for 3 years.

(d) Clerk to provide Liber and page to Commissioner of Finance upon recording.  

As always, Agents should confer with their Underwriter for guidance. The changes listed in this memo are not comprehensive. Business owners and managers should review the entire document with an accounting professional.