Land Title member, Jason C. Bergman wrote an article that was published in the NY Law Journal recently.

The article is Title Aspects of Foreclosure Sales: Clearing Confusion.

Click the attached file link below to download the article.

City of Rye
1051 Boston Post Road
Rye, New York 10580
Tel: (914) 967-7372
E-mail: building@ryeny.gov
http://www.ryeny.gov

CITY OF RYE
Building Department

November 17, 2021

S E C O N D N O T I C E

New City Law Requiring Inspection of all
Private Sewer Laterals Prior to Sale of Property

Last May, the Rye City Council adopted Local Law 4-2021, which requires property owners obtain a Discharge Compliance Certificate (“DCC”) from the City Building Department prior to the transfer of title of any real property in the City. Enforcement of this law will begin on January 1, 2022.

The purpose of the law is to insure that the private sewer line (i.e. “sewer lateral”) extending from a building to a public sewer line is operating correctly and is free of conditions such as cracks or breaks that may allow infiltration of stormwater or groundwater into the pipe and that the lateral does not have any unauthorized connections such as sump-pump discharges, roof leaders or yard drains. Infiltration and unauthorized inflows contribute to overwhelming public sewer systems so that they do not operate properly and potentially release untreated sewage into waterbodies.

Under the new law, property owners will be required to submit to the Building Department a certification from a licensed plumber that the lateral has been inspected. A video recording of the lateral will also be required, which will allow the Building Department to verify the plumber’s certification and determine if any corrective measures to the lateral are necessary. A DCC will only be required when there is a “renewal event,” which is defined as a transfer of real property or certain building or plumbing improvements.

In anticipation of the enforcement of this law the City Building Department has posted the DCC application form and submission requirements online at www.ryeny.gov. Please visit the Building Department page on the City’s website, click on “Permits and Forms” and download the “Sewer Lateral Dischage Compliance Certificate” application. This is a new program for us so please be patient, but we are targeting a 2-4 week turnaround to issue certificates upon submission of a complete application. If you are involved in a property sale that you anticipate occurring after January 1, 2022 we encourage you to retain a plumber now to conduct the required inspection and make a submission to the City Building Department.

If you have any questions, please call or email the City Building Department.

The amended Family Leave (S2928-A) bill now includes siblings.

In March 2021, the Legislative Committee reviewed the bill and made the following comment:

"... passage of this bill would not uniquely affect the title industry however, it is worth noting that NYS family leave is up to 12 weeks of paid time off work. Expanding eligibility may negatively impact small businesses including title agents.

It pertains to the Family Leave Act and expands the definition of family member for the purposes of paid family leave to include siblings."

In April of 2017, the Education Committee presented a CE/CLE session on sales tax for land title insurance transactions.

You can download a PDF of that presentation from this page.

If you have questions about sales tax, please email Bob Treuber at RGT@NYSLTA.ORG.

There has been much confusion regarding the calculation of the New York State Transfer Tax and Mansion Tax as a result of the amendment to Subdivision (a) of Section 1404 of the tax law (effective July 1, 2021). The most significant change in the law affecting our industry is that New York STATE no longer requires “grossing up” the purchase price for the NY STATE TRANSFER TAX when paid by the purchaser on a residential transaction (see italicized language below).

The amendment to TAX LAW SECTION 1404 states:

The real estate transfer tax imposed pursuant to section fourteen hundred two of this article shall be paid by the grantor and such tax shall not be payable, directly or indirectly, by the grantee except as provided in a contract between grantor and grantee or as otherwise provided in this section. If the grantor has failed to pay the tax imposed by this article at the time required by section fourteen hundred ten of this article or if the grantor is exempt from such tax, the grantee shall have the duty to pay the tax. Where the grantee has the duty to pay the tax because the grantor has failed to pay, such tax shall be the joint and several liability of the grantor and the grantee; provided that in the event of such failure, the grantee shall have a cause of action against the grantor for recovery of payment of such tax, interest and penalties by the grantee In the case of a conveyance of residential real property as defined in subdivision (a) of section fourteen hundred two-a of this article, if the tax imposed by this article is paid by the grantee pursuant to a contract between the grantor and the grantee, the amount of such tax shall be excluded from the calculation of consideration subject to tax under this article. (emphasis added)

According to the New York State Department of Taxation and Finance: “A clear reading of the amended statue provides ONLY the New York State Transfer Tax is not to be included in consideration where paid by the grantee on residential real property. So, in the case where a grantee is required to pay the New York CITY Real Property Transfer Tax (RPT) or anything else of that matter on behalf of the grantor, such amount is to added to the consideration for purposes of calculating the New York State transfer tax and mansion tax.”

Stated differently, the purchase price still must be grossed up by the amount of RPT transfer tax paid by the purchaser when calculating the New York STATE transfer tax and the Mansion Tax.

NOTE: There are NO changes in the law regarding the calculation of RPT transfer tax. The RPT transfer tax paid by the purchaser will still be grossed up by the amount of NY State transfer tax AND the amount of the NY City RPT transfer tax paid by the purchaser.

For example, assume a purchase price of 1 million dollars with the purchaser paying the NYS and NYC transfer taxes. The Gross up would be calculated as follows: