Russell S. Drazin
rdrazin@pardodrazin.com
Jason A. Pardo
jpardo@pardodrazin.com
Pardo & Drazin, LLC
www.pardodrazin.com
(202) 223-7900 (main)
Pardo & Drazin, LLC is a real estate law firm with offices in the District of Columbia and Montgomery County, Maryland. The firm serves as general counsel to Counselors Title, LLC.
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Introduction
In the footsteps of the comprehensive changes to Maryland's foreclosure statutes and rules, the District of Columbia recently has overhauled its foreclosure statutes and regulations. Those amendments are codified as the Saving D.C. Homes from Foreclosure Amendment Act of 2010, effective March 12, 2011 (D.C. Law 18-314; D.C. Official Code §§ 42-815, et seq. (2011 Supp.)), the Saving D.C. Homes from Foreclosure Temporary Amendment Act of 2011, effective November 26, 2011 through July 8, 2012 (D.C. Law 19-41; 58 DCR 8686), and Chapter 27 (Foreclosure Mediation) in Subtitle C of Title 26 of the District of Columbia Municipal Regulations, effective December 30, 2011.
At their core, the new statutes and regulations create for certain to-be-foreclosed borrowers a right to require their lender to consider — in good faith and through a District-controlled mediation process — alternatives to foreclosure. Whether the right to require mediation will avert foreclosures remains to be determined.
Putting that aside, several effects of the new statutes and regulations are clear. First, the legislative and rulemaking processes imposed an effective moratorium on residential mortgage foreclosures during the end of 2010 and much of 2011. Second, the length of time needed to foreclose a residential mortgage after default and acceleration has been expanded, from a "real world" 45 days to 90-135 days. Third, the right to require mediation — even if unexercised by a borrower — increases the cost of a residential mortgage foreclosure.
Importance to the Title Industry
Title agents insuring recent District of Columbia foreclosure sales, or District of Columbia transactions with a recent foreclosure sale in the chain of title, must understand the District's recently-amended statutes and regulations. The failure of foreclosing lenders and trustees to strictly comply with the amended statutes and regulations — once a title insurance policy is issued — becomes this industry's potential liability. If you are a title agent, you are the gatekeeper. Protect yourself from claims.
This article briefly examines currently-in-force District of Columbia law as it pertains to the non-judicial foreclosure of a deed of trust, mortgage, or other security instrument (i.e., a forced sale at public auction pursuant to a "power of sale" provision in a security instrument). This article does not address federal law, such as the Servicemembers Civil Relief Act, as it pertains to those foreclosure sales. Of course, title agents are cautioned to satisfy their underwriter's requirements, which may be broader than currently-in-force District and federal law.
District of Columbia Foreclosure Requirements
The starting point for a review of the sufficiency of any District of Columbia foreclosure sale is the foreclosed security instrument. That security instrument, which will almost always be a deed of trust, memorializes the "private law" created by the parties to that instrument. While District of Columbia law establishes minimum requirements for a foreclosure sale, the foreclosed deed of trust may impose greater requirements. If those greater requirements, if any, were not satisfied, the foreclosure sale may be subject to challenge. Title agents must read and understand the foreclosed deed of trust.
Assuming an uncured default under the foreclosed deed of trust (which will almost always arise out of a monetary default under the debt instrument secured by the deed of trust), and satisfaction of any requirements of the deed of trust that are greater than the minimum requirements established by District of Columbia law, the sufficiency of a District of Columbia foreclosure sale is determined by ensuring strict compliance with the minimum requirements established by District of Columbia law.
Foreclosure of Residential Mortgage
The term "residential mortgage" means a loan secured by a deed of trust or mortgage used to acquire or refinance real property which is improved by 4 or fewer single-family dwellings, including condominium or cooperative units.
The requirements for foreclosing a residential mortgage shall be satisfied solely through the use of official District-created forms.
1. Notice of Default on Residential Mortgage
The lender shall give written notice of a default on a residential mortgage ("Notice of Default") by certified mail, postage prepaid, return receipt requested, and by first-class mail, to the borrower and, if different from the borrower, to the person who holds record title to the encumbered real property at his or her last known address and the property address. The Notice of Default shall include several attachments, most notably a mediation election form and a loss mitigation application. The Notice of Default, any supplement thereto, and the mediation election form shall be recorded in the land records within 2 business days of the mailing of the Notice of Default. The Notice of Default and all attachments shall be mailed to the Mediation Administrator (i.e., an individual designated by the Commissioner of the Department of Insurance, Securities, and Banking to administer mediation services) within 2 business days of the mailing of the Notice of Default.
No later than 7 days after the mailing of the Notice of Default, the Mediation Administrator shall mail various notices to the borrower regarding the foreclosure mediation process. No later than 20 days after the mailing of the Notice of Default, the Mediation Administrator shall mail those various notices a second time.
2. Mediation Certificate
The lender shall obtain a Mediation Certificate (i.e., a document issued to a lender evidencing compliance with the mediation requirements) from the Mediation Administrator in a manner described below. The Mediation Certificate shall be recorded in the land records.
To participate in mediation, no later than 30 days after the mailing of the Notice of Default, the borrower shall return the mediation election form and a $50 fee to the Mediation Administrator, and the loss mitigation application to the lender.
The borrower shall forfeit the right to mediation if the borrower does not timely return the mediation election form and the $50 fee to the Mediation Administrator, and the loss mitigation application to the lender. If the borrower elects to waive mediation, the Mediation Administrator shall issue a Mediation Certificate to the lender no earlier than 45 days, but no later than 60 days, after the mailing of the Notice of Default.
For each borrower electing to participate in mediation, the Mediation Administrator shall schedule a mediation session to commence no later than 45 days after the mailing of the Notice of Default. Mediation shall be concluded within 90 days of the mailing of the Notice of Default, unless extended for an additional 30 days by mutual consent of the parties.
If the borrower fails to attend a scheduled mediation session without good cause shown, no later than 10 days after the scheduled mediation session missed by the borrower, the Mediation Administrator shall issue a Mediation Certificate to the lender.
If the mediator determines that the parties, while acting in good faith, are not able to agree to a loan modification or to any other options in lieu of foreclosure, no later than 5 days after the mediation session at which the parties were not able to reach an agreement, the mediator shall prepare and submit to the Mediation Administrator a recommendation that the matter be terminated. After reviewing and considering the mediator's report and any recommendations therein, no later than 5 days after receiving the mediator's report, the Mediation Administrator may issue a Mediation Certificate to the lender or refer the matter to another mediator.
If the parties enter into a settlement agreement in lieu of foreclosure and the borrower breaches the terms of the settlement agreement, the lender shall apply to the Mediation Administrator for a Mediation Certificate. No later than 10 days after the receipt of the application, the Mediation Administrator may issue a Mediation Certificate to the lender, the issuance of which shall not be unreasonably withheld.
A Mediation Certificate shall expire one year from the date of its issuance unless extended by the Mediation Administrator for an additional six months.
3. Notice of Intention to Foreclose a Residential Mortgage
At least 30 days in advance of the foreclosure sale, the lender shall give written notice of the intention to foreclose a residential mortgage ("Notice of Intention") by certified mail, postage prepaid, return receipt requested, and by first-class mail, to the borrower and, if different from the borrower, to the person who holds record title to the encumbered real property at his or her last known address.
At least 30 days in advance of the foreclosure sale, the Notice of Intention shall be recorded in the land records. A Mediation Certificate shall be recorded in the land records prior to, or contemporaneously with, the Notice of Intention.
A foreclosure sale of a property secured by a residential mortgage shall be void if a lender records a Notice of Intention without recording in the land records prior to, or contemporaneously with, the Notice of Intention, a Mediation Certificate.
Except with respect to a lender's failure to obtain and record a Mediation Certificate, and except with respect to defects in a recorded Notice of Default, any supplement thereto recorded therewith, and the mediation election form recorded therewith, a Mediation Certificate shall serve as conclusive evidence that all other provisions of the statutes and regulations have been complied with and can be relied upon by a bona fide purchaser and a bona fide purchaser's lender, their successors or assigns.
4. Advertising; Notice to Juniors; Trustee's Deed
The foreclosure sale should be advertised in a newspaper with general circulation in the District of Columbia, at least five times within a 10-day period.
Written notice of the foreclosure sale should be sent to junior lienholders.
A trustee's deed conveying title to the foreclosed property from the trustee to the successful bidder at the foreclosure sale should be delivered and recorded in the land records.
Foreclosure of Non-Residential Mortgage
At least 30 days in advance of the foreclosure sale, the lender shall give written notice of the foreclosure sale ("Notice of Foreclosure Sale") by certified mail, postage prepaid, return receipt requested, and by first-class mail, to the borrower and, if different from the borrower, to the person who holds record title to the encumbered real property at his or her last known address.
At least 30 days in advance of the foreclosure sale, the Notice of Foreclosure Sale shall be recorded in the land records. An Affidavit of Non-Residential Mortgage Foreclosure shall be recorded in the land records prior to, or contemporaneously with, a Notice of Foreclosure Sale.
The foreclosure sale should be advertised in a newspaper with general circulation in the District of Columbia, at least five times within a 10-day period.
Written notice of the foreclosure sale should be sent to junior lienholders.
A trustee's deed conveying title to the foreclosed property from the trustee to the successful bidder at the foreclosure sale should be delivered and recorded in the land records.
Final Thoughts
The Saving D.C. Homes from Foreclosure Temporary Amendment Act of 2011 amended the Saving D.C. Homes from Foreclosure Amendment Act of 2010. Certain of those amendments were prompted by, and are important to, the title insurance industry. Those certain amendments include (1) eliminating the exclusion of owner-occupied real property from the definition of a "residential mortgage" — thereby removing the burden upon this industry of determining whether real property is owner-occupied, and (2) establishing a recorded Mediation Certificate as conclusive evidence that all other mediation-related requirements of District law have been satisfied, save those matters that can be assessed by reviewing documents recorded in the land records.
The Saving D.C. Homes from Foreclosure Temporary Amendment Act of 2011 is temporary (expiring July 8, 2012), and no permanent legislation is pending. Whether the amendments become permanent, whether the amendments change, and whether additional amendments are proposed, are unknown at this time. Certainly, however, the arduous legislative and rulemaking processes since November 2010 suggest that this is not the end. Stay tuned!
Monday, April 9, 2012
Tuesday, January 17, 2012
How Foreclosures Turned Rentals Can HELP The Housing Crisis: Neighborhoods Keep Appeal and Can Minimize Loss of Properties
Turning foreclosures into rentals
NEW YORK (CNNMoney) -- Federal officials hope to launch a pilot program in early 2012 to convert government-owned foreclosures into rental properties.
The program, which was cited by Federal Reserve Chairman Ben Bernanke last week as one way to address the housing crisis, would sell foreclosed homes now owned by Fannie Mae (FNMA, Fortune 500) and Freddie Mac (FMCC, Fortune 500) to investors in bulk. The properties would then be converted into rentals.
The initiative began back in August, when the Federal Housing Finance Agency, the Treasury Department and the U.S. Department of Housing and Urban Development announced they were seeking suggestions on ways to dispose of repossessed homes now owned by Fannie Mae, Freddie Mac and the Federal Housing Administration.
In addition to getting the properties off the government's books, officials are hoping putting the homes back into productive use will stabilize neighborhoods and housing values. Also, it is looking to expand the supply of rentals, which are increasingly in demand.
The agency is not releasing details on how the rental program would work, instead saying it is "proceeding prudently but with a sense of urgency to lay the groundwork for the development of good initial transactions in early 2012."
Converting these homes to rentals can both help the neighborhood and minimize losses to Fannie, Freddie and the FHA, which hold about 250,000 properties, Bernanke told lawmakers last week.
He urged lawmakers to ramp up their efforts to fix the housing market, placing particular emphasis on the problem of vacant homes on the market.
"Restoring the health of the housing market is a necessary part of a broader strategy for economic recovery," he said. Bernanke's comments launched a full-court press by Federal Reserve officials last week to raise awareness of the continuing problems plaguing the housing market. His proposals were quickly followed by Fed Governors Sarah Bloom Raskin, who spoke on ramping up enforcement of mortgage servicers, and Elizabeth Duke, who said Fannie Mae and Freddie Mac could do more to help heal the housing market.
Meanwhile, New York Fed President William Dudley gave a speech that touched on a wide range of housing policies -- including principal reduction and mortgage refinancing -- that he believes will boost the economy.
The Fed has already tried to boost real estate sales by pushing mortgage rates down to record lows through massive bond-buying programs.
But the renewed push for housing help indicates that the Fed, which has basically run out of monetary policy ammunition to revive the real estate market, is urging the federal government to ramp up its efforts.
"The Federal Reserve is signaling in even stronger terms the need for the government to do more to help housing," said Jaret Seiberg, a policy analyst with the Washington Research GroupAdministration officials said they are continuing to work with the agency to develop the program.
Housing, stocks, gold and oil: Hot or not in 2012?
Until now, most foreclosed homes have been sold individually because investors have demanded bigger discounts to buy large numbers of properties.
But federal officials are warily eyeing the expected surge in foreclosures as banks ramp up their action against delinquent homeowners. The process had been stalled since late 2010 when banks' shoddy paperwork practices came to light.
There are close to 2 million homes in the late stages of delinquency, according to Lender Processing Services. Since foreclosed properties often sell below market value, they can wreak havoc on home prices.
NEW YORK (CNNMoney) -- Federal officials hope to launch a pilot program in early 2012 to convert government-owned foreclosures into rental properties.
The program, which was cited by Federal Reserve Chairman Ben Bernanke last week as one way to address the housing crisis, would sell foreclosed homes now owned by Fannie Mae (FNMA, Fortune 500) and Freddie Mac (FMCC, Fortune 500) to investors in bulk. The properties would then be converted into rentals.
The initiative began back in August, when the Federal Housing Finance Agency, the Treasury Department and the U.S. Department of Housing and Urban Development announced they were seeking suggestions on ways to dispose of repossessed homes now owned by Fannie Mae, Freddie Mac and the Federal Housing Administration.
In addition to getting the properties off the government's books, officials are hoping putting the homes back into productive use will stabilize neighborhoods and housing values. Also, it is looking to expand the supply of rentals, which are increasingly in demand.
The agency is not releasing details on how the rental program would work, instead saying it is "proceeding prudently but with a sense of urgency to lay the groundwork for the development of good initial transactions in early 2012."
Converting these homes to rentals can both help the neighborhood and minimize losses to Fannie, Freddie and the FHA, which hold about 250,000 properties, Bernanke told lawmakers last week.
He urged lawmakers to ramp up their efforts to fix the housing market, placing particular emphasis on the problem of vacant homes on the market.
"Restoring the health of the housing market is a necessary part of a broader strategy for economic recovery," he said. Bernanke's comments launched a full-court press by Federal Reserve officials last week to raise awareness of the continuing problems plaguing the housing market. His proposals were quickly followed by Fed Governors Sarah Bloom Raskin, who spoke on ramping up enforcement of mortgage servicers, and Elizabeth Duke, who said Fannie Mae and Freddie Mac could do more to help heal the housing market.
Meanwhile, New York Fed President William Dudley gave a speech that touched on a wide range of housing policies -- including principal reduction and mortgage refinancing -- that he believes will boost the economy.
The Fed has already tried to boost real estate sales by pushing mortgage rates down to record lows through massive bond-buying programs.
But the renewed push for housing help indicates that the Fed, which has basically run out of monetary policy ammunition to revive the real estate market, is urging the federal government to ramp up its efforts.
"The Federal Reserve is signaling in even stronger terms the need for the government to do more to help housing," said Jaret Seiberg, a policy analyst with the Washington Research GroupAdministration officials said they are continuing to work with the agency to develop the program.
Housing, stocks, gold and oil: Hot or not in 2012?
Until now, most foreclosed homes have been sold individually because investors have demanded bigger discounts to buy large numbers of properties.
But federal officials are warily eyeing the expected surge in foreclosures as banks ramp up their action against delinquent homeowners. The process had been stalled since late 2010 when banks' shoddy paperwork practices came to light.
There are close to 2 million homes in the late stages of delinquency, according to Lender Processing Services. Since foreclosed properties often sell below market value, they can wreak havoc on home prices.
Great Time to Buy a Home in the New Year!!! Fabulous article found on Quickenloans.com's Blog
Top 5 Reasons to Buy a Home in 2012
by Jonathan Slappey on January 6, 2012 in Home Buying
The American dream of homeownership is a very feasible aspiration for 2012.
There are many benefits of owning a home. Yet some first-time buyers are skeptical of purchasing with the uncertainty surrounding the housing market.
The uncertainty many reference when speaking about the housing market involves a specific date when home values will increase. Since no one can pinpoint this date, the word uncertainty (when paired with the housing market) often reveals a negative connotation.
There are some factors we can be certain about in this housing market such as home values rebounding. This is true; the housing market often moves in cycles.
It’s safe to assume that many Americans harbored the same uncertainty during the George H. W. Bush administration in the early 1990s when the national homeownership rate fell from its previous historic high of 64.4 percent in 1980 to a low of 64.1 percent in 1991.
In the 1960s Lyndon Johnson illustrated a correlation between homeownership and accountability by stating “owning a home can increase responsibility and stake out a man’s place in his community…The man who owns a home has something to be proud of and reason to protect and preserve it."
This statement is still true more than 50 years later. There are many reasons to take pride in homeownership such as:
•Appreciation – Buying a home now (at the current rates) can almost ensure your home’s appreciation in the future. Mortgage rates are near historic lows and home prices in many parts of the country are down. This is the perfect recipe for home appreciation. Additionally, many foreclosed homes are available for a fraction of the original cost. This can translate to a higher profit if you decide to sell once the market rebounds.
•Property Tax Deductions – For income tax purposes, real estate property taxes for a vacation home and first home are fully deductible. The IRS (Publication 530) provides detailed tax information for first-time buyers that may answer many questions about what deductions homeowners are eligible for.
•Preferential Tax Treatment – If you own your home for more than a year and receive more profit than the allowable exclusion after the sale of your home, the profit will be considered a capital asset. Capital assets are given preferential tax treatment.
•Equity Building – Many factors such as credit qualification, loan flexibility, and annual percentage rate (APR) contribute to the final decision of what type of mortgage loan best fits your goals. Yet, a new trend being used by some homeowners is to actually add money to their monthly payment to decrease the principal balance of their loans at a much faster pace. This trend is called equity building. Equity builders usually select a home loan with a lower interest rate (and a shorter term loan such as a 15-year fixed) to help build equity faster. This rapid payment process allows borrowers to:
•Pay off the principal balance faster
•Lock in near-record-low interest rates
•Shorten the length of their home loan
•Own their home faster
•Pay substantially less mortgage interest
Equity building is a beneficial trend that’s becoming more and more popular with fiscally responsible homeowners. Also, home equity is the largest single source of household wealth for most Americans.
•Pride – Homeownership offers many benefits to many different types of people. For some homeowners, playing your music as loud as you want and painting the walls the color of your choice is a perk. For me, homeownership will permit me to build an NBA regulation size basketball court on my own property. For my coworker Joel Jarvi, home ownership may allow him to build the indoor slide of his dreams. No matter who you are, homeownership is a purchase, commitment, and journey that’s sure to bring you pride.
Furthermore, when the uncertainty surrounding the housing market fades and the market rebounds, homeownership may in fact transform that pride to profit through a home sale.
Read more: http://www.quickenloans.com/blog/top-5-reasons-buy-home-2012#ixzz1jjP5BC6e
by Jonathan Slappey on January 6, 2012 in Home Buying
The American dream of homeownership is a very feasible aspiration for 2012.
There are many benefits of owning a home. Yet some first-time buyers are skeptical of purchasing with the uncertainty surrounding the housing market.
The uncertainty many reference when speaking about the housing market involves a specific date when home values will increase. Since no one can pinpoint this date, the word uncertainty (when paired with the housing market) often reveals a negative connotation.
There are some factors we can be certain about in this housing market such as home values rebounding. This is true; the housing market often moves in cycles.
It’s safe to assume that many Americans harbored the same uncertainty during the George H. W. Bush administration in the early 1990s when the national homeownership rate fell from its previous historic high of 64.4 percent in 1980 to a low of 64.1 percent in 1991.
In the 1960s Lyndon Johnson illustrated a correlation between homeownership and accountability by stating “owning a home can increase responsibility and stake out a man’s place in his community…The man who owns a home has something to be proud of and reason to protect and preserve it."
This statement is still true more than 50 years later. There are many reasons to take pride in homeownership such as:
•Appreciation – Buying a home now (at the current rates) can almost ensure your home’s appreciation in the future. Mortgage rates are near historic lows and home prices in many parts of the country are down. This is the perfect recipe for home appreciation. Additionally, many foreclosed homes are available for a fraction of the original cost. This can translate to a higher profit if you decide to sell once the market rebounds.
•Property Tax Deductions – For income tax purposes, real estate property taxes for a vacation home and first home are fully deductible. The IRS (Publication 530) provides detailed tax information for first-time buyers that may answer many questions about what deductions homeowners are eligible for.
•Preferential Tax Treatment – If you own your home for more than a year and receive more profit than the allowable exclusion after the sale of your home, the profit will be considered a capital asset. Capital assets are given preferential tax treatment.
•Equity Building – Many factors such as credit qualification, loan flexibility, and annual percentage rate (APR) contribute to the final decision of what type of mortgage loan best fits your goals. Yet, a new trend being used by some homeowners is to actually add money to their monthly payment to decrease the principal balance of their loans at a much faster pace. This trend is called equity building. Equity builders usually select a home loan with a lower interest rate (and a shorter term loan such as a 15-year fixed) to help build equity faster. This rapid payment process allows borrowers to:
•Pay off the principal balance faster
•Lock in near-record-low interest rates
•Shorten the length of their home loan
•Own their home faster
•Pay substantially less mortgage interest
Equity building is a beneficial trend that’s becoming more and more popular with fiscally responsible homeowners. Also, home equity is the largest single source of household wealth for most Americans.
•Pride – Homeownership offers many benefits to many different types of people. For some homeowners, playing your music as loud as you want and painting the walls the color of your choice is a perk. For me, homeownership will permit me to build an NBA regulation size basketball court on my own property. For my coworker Joel Jarvi, home ownership may allow him to build the indoor slide of his dreams. No matter who you are, homeownership is a purchase, commitment, and journey that’s sure to bring you pride.
Furthermore, when the uncertainty surrounding the housing market fades and the market rebounds, homeownership may in fact transform that pride to profit through a home sale.
Read more: http://www.quickenloans.com/blog/top-5-reasons-buy-home-2012#ixzz1jjP5BC6e
Tuesday, September 27, 2011
How to Access and Use Counselors' Online Calculator
COUNSELORS CALCULATOR TUTORIAL
An interesting application on our website allows you to calculate preliminary closing costs. By answering a few mandatory questions, you can have your free quote sent right to your email in a matter of seconds!! In order to correctly use this tool, please visit our homepage at http://www.ctitle.net/ and follow these directions:
1) Please click on the blue "Let Us Save You Money!/ Get a Quote" box on the right.
An interesting application on our website allows you to calculate preliminary closing costs. By answering a few mandatory questions, you can have your free quote sent right to your email in a matter of seconds!! In order to correctly use this tool, please visit our homepage at http://www.ctitle.net/ and follow these directions:
1) Please click on the blue "Let Us Save You Money!/ Get a Quote" box on the right.
2) Then continue to the next page where you are required to fill out:
- whether you are refinancing or purchasing
- if it is your primary residence
- the property type
- the property location
- sales price and/ or loan amount
- the property address
- your name and email to send the quote
3) Then Press "Get My Quote"! Your quote will appear immediately and will also be sent to your email for easy printing.
**Always remember that Counselors keeps all of the information you have given us very secure.
If you are at all hesitant to complete the online form, PLEASE give us a call at (202) 686-0100 to speak to an attorney in person.
If you are at all hesitant to complete the online form, PLEASE give us a call at (202) 686-0100 to speak to an attorney in person.
Monday, August 22, 2011
Friday, August 19, 2011
COUNSELORS TITLE OPENS NEW OFFICE IN DUPONT CIRCLE
Christopher Darby, Esq. Announced New Office Manager
Washington, D.C. (August 12, 2011) - Counselors Title announced the opening of its new Dupont Circle office which joins other locations in Friendship Heights, Gaithersburg/Kentlands, Bethesda, Rockville, and Germantown. Counselors Title is an independently owned and operated title and escrow company serving Washington, DC, Maryland, and Virginia. Founded in September 2007 by five former managers of Universal Settlements, among the largest and most well respected title companies in the Washington Metropolitan area, Counselors Title brings over 75 years of combined experience in one of the most active and competitive real estate and mortgage markets in the country. Counselors is proud to announce the opening of its new Dupont office and the new office manager and title industry expert Chris Darby.
Chris Darby has offered clients exceptional, professional, and friendly real estate services since 1998. He is a member of the District of Columbia and Maryland Bar Associations. Chris is an active member of the local real estate community with service to and membership in the D.C. Land Title Association and the Greater Capital Area Association of Realtors ("GCAAR") where he has served on the Contract and Clause Committee since 2001. Chris regularly teaches real estate continuing education courses for local realtors and was honored by GCAAR as its 2007 Affiliate of the Year for his service to the real estate community. Chris is excited to focus on strengthening Counselors' presence in downtown DC and capitalizing on the local market's emerging growth.
"Dupont Circle was the logical step in this company's expansion," says Counselors' attorney Chris Darby. Counselors based its decision on the attraction of Dupont's wide range of style and pricing. Not only has Dupont become one of D.C.'s more stylish neighborhoods, it has maintained its appeal because of its convenient central location near commercial work, dining, shopping, entertainment venues, and historical landmarks. With convenient access to downtown DC, Northern Virginia and Maryland, the Dupont location allows the real estate community another option to service their real estate needs.
For more information regarding Counselors Title, please visit http://www.ctitle.net . For legal advice email askus@ctitle.net and for the latest real estate news, follow The Counselor at http://counselorstitleblog.blogspot.com/
Contact: Chris Darby
chris@ctitle.net
1320 19th Street, NW
Suite 201
Washington, DC 20036
(202) 787-5600
Monday, May 2, 2011
Property Tax Ups and Downs
The proposed tax assessments for the 2012 tax year in the District of Columbia (October 1, 2011 to September 30, 2012) have recently been released. Many District residents may find that their assessments have decreased but actually see an increase in their real estate tax liability. District residents, you are not alone. This same issue has arisen in Maryland. This seemingly impossible scenario is a direct result of real property tax “caps” put into place in both jurisdictions known as the Owner Occupied Tax Credit in the District and the Homestead Credit in Maryland. While this will not be true for all homeowners, the situation is prevalent and properly illustrates the need for all homeowners to familiarize themselves with their property tax bills.
Assessments
Assessed values establish the value of a property for purposes of determining its real estate tax liability. In Maryland, properties are assessed on three year cycles and increases in the assessed values are phased in on each property over the course of the three year assessment term. Decreases take effect immediately and remain in place for the three year term. The District of Columbia re-assesses every property every year, with the recently released assessments effective for the tax year beginning next October. There are a number of approaches used in each jurisdiction to determine assessed value, including sales and cost approaches. Irrespective of the means through which the valuations are arrived upon, both District and Maryland laws require that the assessments be set at 100% of the estimated market value.
Where the assessment is not in line with market values, homeowners should be ready to appeal their assessments. For current owners, the District allows until April1 for appeals. Maryland owners have forty-five (45) days from the date of their assessment notice to file their appeals. New homeowners in both jurisdictions have the ability to appeal their assessments for a limited time after their purchase. While the timeframes for these post-purchase appeals may be greater than the standard appeal periods, the right to appeal and timeframes for doing so are strictly adhered to. These provisions must be consulted at the time of purchase. For information on the appeals process, owners should consult:
District - otr.cfo.dc.gov/otr/cwp/view,a,1330,q,594359.asp
Maryland - www.dat.state.md.us/sdatweb/appeal.html
Caps
They may have different names, but the effect of the “caps” in the District and Maryland are the same. The history behind the caps is not unique to our jurisdictions. Briefly, as property values increased rapidly in the middle part of the mid-2000s, many long-time residents saw their assessments, and subsequently their tax liability, increase dramatically. The legislatures were appealed to and subsequently enacted legislation that restricted the real property tax liability increases in certain situations. Owner-occupants who have properly filed for the Homestead Deduction/Credit in the District and Maryland now see their property tax liability increase from year to year capped at ten (10) percent over the prior year’s liability.
While assessments over the past decade may have increased by 50, 75 or even over 100%, the effect of the cap makes it such that it could take a number of years before a Homesteader would pay taxes at the full assessed value. Many residents subsequently have been paying property taxes that are a great deal less than the assessments would otherwise dictate. As a result, it is quite possible that a homeowner, even after seeing his/her assessment reduced, will continue to have their actual tax liability increase until the “caps” catch up with the new assessment.
What to Do
First, make sure that tax assessments are accurate. If they are not, be sure to appeal.
Second, if you are entitled to Homestead benefits (or any other tax credits) in your jurisdiction (DC otr.cfo.dc.gov/otr/cwp/view,A,1330,Q,594163.asp and MD www.dat.state.md.us/sdatweb/homestead.html), make certain that you have filed for them. Third, review your tax bills to make sure that they are correct and reflect the benefits for which you have filed and are entitled. You can review your property tax information in the District at www.taxpayerservicecenter.com. In Maryland, assessments can be reviewed at www.dat.state.md.us and the tax information can be seen on the various county/city websites.
Keep in mind that, if your taxes are going up by ten percent per year, that isn’t necessarily a bad thing. It means that you are receiving the benefit of the cap and it is preventing your taxes from being even higher. For additional information, please consult your real estate professional or the real estate attorneys at Counselors Title, LLC.
Assessments
Assessed values establish the value of a property for purposes of determining its real estate tax liability. In Maryland, properties are assessed on three year cycles and increases in the assessed values are phased in on each property over the course of the three year assessment term. Decreases take effect immediately and remain in place for the three year term. The District of Columbia re-assesses every property every year, with the recently released assessments effective for the tax year beginning next October. There are a number of approaches used in each jurisdiction to determine assessed value, including sales and cost approaches. Irrespective of the means through which the valuations are arrived upon, both District and Maryland laws require that the assessments be set at 100% of the estimated market value.
Where the assessment is not in line with market values, homeowners should be ready to appeal their assessments. For current owners, the District allows until April1 for appeals. Maryland owners have forty-five (45) days from the date of their assessment notice to file their appeals. New homeowners in both jurisdictions have the ability to appeal their assessments for a limited time after their purchase. While the timeframes for these post-purchase appeals may be greater than the standard appeal periods, the right to appeal and timeframes for doing so are strictly adhered to. These provisions must be consulted at the time of purchase. For information on the appeals process, owners should consult:
District - otr.cfo.dc.gov/otr/cwp/view,a,1330,q,594359.asp
Maryland - www.dat.state.md.us/sdatweb/appeal.html
Caps
They may have different names, but the effect of the “caps” in the District and Maryland are the same. The history behind the caps is not unique to our jurisdictions. Briefly, as property values increased rapidly in the middle part of the mid-2000s, many long-time residents saw their assessments, and subsequently their tax liability, increase dramatically. The legislatures were appealed to and subsequently enacted legislation that restricted the real property tax liability increases in certain situations. Owner-occupants who have properly filed for the Homestead Deduction/Credit in the District and Maryland now see their property tax liability increase from year to year capped at ten (10) percent over the prior year’s liability.
While assessments over the past decade may have increased by 50, 75 or even over 100%, the effect of the cap makes it such that it could take a number of years before a Homesteader would pay taxes at the full assessed value. Many residents subsequently have been paying property taxes that are a great deal less than the assessments would otherwise dictate. As a result, it is quite possible that a homeowner, even after seeing his/her assessment reduced, will continue to have their actual tax liability increase until the “caps” catch up with the new assessment.
What to Do
First, make sure that tax assessments are accurate. If they are not, be sure to appeal.
Second, if you are entitled to Homestead benefits (or any other tax credits) in your jurisdiction (DC otr.cfo.dc.gov/otr/cwp/view,A,1330,Q,594163.asp and MD www.dat.state.md.us/sdatweb/homestead.html), make certain that you have filed for them. Third, review your tax bills to make sure that they are correct and reflect the benefits for which you have filed and are entitled. You can review your property tax information in the District at www.taxpayerservicecenter.com. In Maryland, assessments can be reviewed at www.dat.state.md.us and the tax information can be seen on the various county/city websites.
Keep in mind that, if your taxes are going up by ten percent per year, that isn’t necessarily a bad thing. It means that you are receiving the benefit of the cap and it is preventing your taxes from being even higher. For additional information, please consult your real estate professional or the real estate attorneys at Counselors Title, LLC.
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