Changes to the Recordation Tax in Maryland for Refinancing Commercial Mortgage Loans: Recordation Tax Imposed Only on New Money

Maryland Governor Martin O’Malley signed into law an act providing relief to commercial borrowers that wish to refinance or modify loans originally secured by indemnity deeds of trust. This new law, effective July 1, 2013, revises a 2012 statute that required borrowers to pay the recordation tax on the entire balance of their new loans when refinancing an existing indemnity deed of trust.

The indemnity deed of trust structure was long used in Maryland to defer Maryland recordation taxes, which would otherwise be due if a borrower entered into a financing arrangement secured by a conventional deed of trust. As of July 1, 2012, however, this structure was no longer available to provide tax relief for loans greater than $1 million. The 2012 law thus closed a long-standing loophole which permitted borrowers that used the indemnity deed of trust structure to avoid the payment of hefty recordation taxes.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Topics:  Deed of Trust, Indemnity Deed of Trust, Loan Modifications, Mortgages, New Legislation, Recordation Taxes

Published In: Finance & Banking Updates, Commercial Real Estate Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sutherland Asbill & Brennan LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »