The Recorder by leader6


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                                                  The Recorder
L E T T E R                        Information contained in this newsletter is for reference purposes only and not to be construed as legal advice.

Vol. 8 No. 5                           Published by: J. Bonnie Rehder, Clay County Recorder                                      November 2005

     WIP those REJECTS into shape

WIP                                       Work In Process = WIP
ERER                                                                                                 ELECTRONIC RECORDING
                                         WIP “Work In Progress” is the new
Why We Reject                            method we use to track documents NOT
Katrina Victims                          yet recorded. We no longer manually log
Acknowledgements                         documents. You might have noticed we
                                         now enter WIP numbers on the green
State Deed Tax                           Real Estate Guide. WIP numbers are
CRVs                                     assigned to documents so we can track

        The Recorder                     The Clay County Recorder’s Office was                            ERER Resolution
                                         instrumental in developing WIP with
                                         Fidlar Software. We had the idea, did                  November 15, 2005 the Clay County Board of
   J. Bonnie Rehder                      the testing, wrote a manual and recently               Commissioners passed a resolution to make
     Clay County Recorder                did presentations to other counties in                 it apparent Clay County is ready and willing
       Registrar of Titles               Minnesota.                                             to electronically record real estate (ERER)
         Vital Statistics
           Passports                     WIP allows us to efficiently track and
                                         search for documents not yet recorded.                 BE IT RESOLVED, that Clay County wishes
        P.O. Box 280                     When a customer calls and asks a
        807 N. 11th St.                                                                         to move forward with the electronic recording
                                         question about documents sent in for                   of real estate records in our County
     Moorhead, MN 56560                  recording we can quickly answer if the                 Recorder’s Office. We understand both the
                                         documents were recorded. Before if the                 need and the importance of this service to
       P: (218) 299-5031                 documents had NOT been recorded
       F: ( 218) 299-7500                                                                       our customers.
                                         there wasn’t an efficient way to search.
                                         Now any staff person can quickly answer                Therefore having acknowledged this priority:
                                         questions.                                             BE IT FURTHER RESOLVED, that Clay
        DiAnn Streifel
        Chief Deputy                                                                            County Board of Commissioners certified
                                         Soon we will start using a NEW Real                    that:
   Deputy Registrar of Titles
                                         Estate Guide generated by WIP. We                             (1) The county complies with the
             Deputies:                   found our old form confusing when                                  standards adopted by the
                                         documents      were      returned and                              Electronic Real Estate Recording
          Annette Mahler                 resubmitted more than once. The new                                task force;
                                         guide will show the progression of the                        (2) The county uses software that
        Lisa Christianson                process in chronological order.                                    was validated by that task force.
       Kimberly Savageau
                                                                                                We plan to E-record our first document this
         Crystal Slininger                                                                      year. Future newsletters will include
                                                                                                information how to obtain ERER software and
                                                                                                how to become a trusted submitter so you
                                                                                                can electronically send documents in for
           Congratulations!                                           WE WANT TO RECORD!
                                                                             Rejects have increased.
                                                              To save time and avoid delays please review documents
                                                                          before submitting for recording.

                                                                          3 top reasons we
                                                                   1. Acknowledgement not complete,
    Kimberly Nelson (Deputy Recorder) and
                                                                   2. Legal descriptions are not complete or not attached
       Chris Savageau were married
           September 24, 2005.                                     3. Certificate Real Estate Value (CRV) not complete.

                                Birth Certificates for Katrina Victims
State Vital Records Offices are working through their National Association to assist those evacuees born in Louisiana in
obtaining birth certificates from Louisiana. Birth Certificates are needed by many evacuees to enroll children in school, get
identification and receive much needed benefits during this time.

The National Association for Public Health Statistics and Information Systems (NAPHSIS) has been in contact with Vital
Records Staff in Louisiana and has worked out procedures that states may follow to assist those evacuees in their state who
were born in Louisiana.

Questions on how evacuees in the State of Minnesota can obtain Louisiana birth certificates can be directed to Clay County
Recorder’s Office.

                           What is a “Complete Acknowledgement?”

First, you need to understand the definition of “Acknowledgement” in regard to “Instruments” according to the Black’s Law
Dictionary: Formal declaration before authorized official, by person who executed instrument, that it is his free act and deed.

“Complete” is a way for the Recorder’s Office to express the overall requirements of the format and the act. A “complete
acknowledgement” to the Recorder’s Office includes:

        1. The Venue (STATE of ________ & COUNTY OF _________) is to name the location where the notary is standing
               when the         acknowledgement of the individual signing takes place. If the venue doesn’t match up with
               the notary’s jurisdiction there is a problem.
        2. The acknowledgement includes a date (day, month and year) of acknowledgement.
        3. The acknowledgement includes the name(s) and marital status of the person(s) acknowledged.
               (Corporate type entity acknowledgement must include individual name(s), title(s) and name of entity.)
        4. The notary signature.
        5. The notary seal including notary expiration date.

           National Notary Association offers several types of training you can access from your desktop:

                       State Deed Tax - New Residential Construction
                                                    By William Lonergan
                                                   Special Taxes Division
                                              Minnesota Department of Revenue

I’m writing to help clarify how deed tax should be calculated on property transfers relating to new home construction. As a
general rule, Minnesota deed tax is calculated on the amount of consideration that is given in return for a conveyance of real
property (i.e. Deed).
Sale of lot only – If a lot is sold clear from any obligation to have a home built, deed tax is based only on the price of the lot.
Conditional sale of lot – If the lot is sold contingent upon a home being built, deed tax is based on the price of the lot and
the home. Even if a deed is recorded when the land is vacant the consideration is what the buyer is paying for the
conveyance, i.e. house and lot.
    A.) Tom Johnson sells 2 Acres to ABC Development Inc. for $150,000. Deed tax is paid on the $150,000 when the deed
         is recorded.
    B.) ABC Development Inc. develops the land and starts to sell the lots. The lots are sold under the condition that a
         home will be built. In this case, deed tax would be due on the price paid for both the house and the lot.

Minnesota Statute 287.221 New Residential Construction – In certain residential construction situations there will be
multiple deeds being recorded both at closing and prior to closing. e.g. Developer to Home Builder, Home Builder to future
M.S. 287.221 sets forth that deed tax on the price paid for the improvement (newly constructed home) can only be paid one
Example: Paul and Linda Thomas buy property from Wind Development, Inc. On June 15, 2004 they sign a purchase
agreement for their lot and the construction of a new home.

Lot $50,000 + House $200,000 = Total $250,000                       October 15, 2004 Closing – Property Value $250,000.

Deeds at Closing (2):

   1. Wind Development, Inc. to Wind Home Building, Inc.            2. Wind Home Building, Inc. to Paul and Linda Thomas.
         Deed Tax on value of lot - $50,000                                Deed Tax on land and improvements - $250,000

                            Non Real Estate Items Reported on CRVs
                                                  By Leonard F. Peterson
                                                 Supervisor Sales Ratio Unit
                                                   Property Tax Division

We have heard that counties are receiving Certificates of Real estate Value on which significant amounts for non real estate
items have not been identified. When these sales are used in the sales ratio study the level of assessment is understated.
This can result in loss of school and local government aid. It can also lead to additional tax court cases being filed if the
sales ratio falls below 90%.
Non real estate items may include personal property, closing costs and additional money borrowed to repair or improve the
property or for the seller’s personal use. The non real estate portion of the price should be reported as personal property and
itemized on the certificate. The total should be reported in item 5.
Non real estate items may also include points and prepaid interest sales. Points, prepaid interest or rebates paid buy the
seller should be reported in item 4 of the certificate of real estate value.
Commissions paid to an agent should remain in the sale price. However, any premiums paid by the buyer and added to the
sale price should be reported in item 5 (personal property) on the Certificate of Real estate Value.
                                               MINNESOTA – REVENUE

                              Deed tax - exemptions & minimum tax transfers
The following information will help you determine if a deed is exempt from tax or qualifies for the minimum tax of $1.65 ($1.70 in Hennepin
and Ramsey counties). The statements provided below in the “Minimum tax” section are optional but can be used by the grantor to state
the reason the document qualifies for minimum tax treatment. Either incorporate the statement into the deed or use Form M20 to indicate
which statement applies.
(In the absence of a qualifying reason, deed tax must be based at least on the fair market value of the property being conveyed. See, for
instance, Minn. Stat. § 287.20, subd. 2(g).)

Recordable documents transferring real property that are not                     f.   Deed transferring substantially all assets of a
deeds for deed tax purposes                                                           partnership pursuant to a continuation under section
1. Transfer of real property by court order. The order itself must                    708 of IRC.
   result in a change of ownership.
2. Transfer of real property through a referee’s or sheriff’s                         Please Note: All the co-owners must maintain the
   certificate of sale issued to the purchaser in a mortgage or lien                  same ownership percentage in the property and in the
   foreclosure sale.                                                                  entity holding the transferred real property after the
3. Transfer of real property through a referee’s, sheriff’s or                        designated transfer as they had before; or, vice versa.
   certificate holder’s certificate of redemption from a mortgage or
   lien foreclosure sale issued to the redeeming mortgage.                            In addition, if within six months an ownership interest
                                                                                      in the property or in the transferee entity is transferred
Exempt deeds, documents                                                               to some other party or entity, tax is due on the initial
1. Deed to or from the federal government of any agency or                            transfer.
   instrumentality thereof.                                                           Statement: This deed transfers real property as part
2. Deed between the parties to a marriage dissolution pursuant to                     of a designated transfer under Minn. Stat.
   the terms of the dissolution decree.                                               § 287.21.
3. Deed conveying a cemetery lot or lots.
4. Deed by a personal representative distributing the decedent’s        2.   Deed of real property resulting from the consolidation or merger
   property according to the terms of the will or probate court              of two or more corporations, limited liability companies, or
   order.                                                                    partnerships, or any combination of the two.
5. Deed between co-owners partitioning their undivided interest in           Statement: This deed transfers real property to complete a
   the same piece of property.                                               merger/consolidation.
6. Deed or other instrument of conveyance issued pursuant to a
   permanent school fund land exchange under Minn. Stat. §              3.   Deed gifting real property.
   92.121 and related laws.                                                  Statement: This deed transfers real property as a gift without
7. Deed or other instrument which grants, creates, modifies, or              conditions, benefits, or rewards.
   terminates an easement.
                                                                        4.   Deed correcting error (corrective deed).
Deeds qualifying for minimum tax                                             Statement: This deed was given without added consideration
1. Deed making a designated transfer (as defined in Minn. Stat. §            and merely corrects an error in a previously recorded deed.
       a. Deed between a sole owner and a legal entity owned            5.   Deed transferring property in exchange for less than $500 of
            directly or indirectly by that sole owner, or between            consideration, monetary or otherwise.
            two legal entities owned directly or indirectly by a sole        Statement: This deed transfers real property in exchange for
            owner.                                                           $500 or less of consideration.
       b. Deed between a husband and wife and a legal entity
            owned directly or indirectly by that husband and wife,      6.   Deed transferring real property to an intermediary as part of an
            or between two legal entities owned directly or                  IRC section 1031 exchange and the intermediary’s total
            indirectly by that couple.                                       documented fee for the transfer is $500 or less. A “full” deed
       c. Deed between co-owners and a legal entity owned                    tax will be paid when final transfer is made.
            directly or indirectly by those co-owners, or between            Statement: This deed is transferring property to an
            two legal entities owned directly or indirectly by those         intermediary as part of an IRC section 1031 exchange. A “full”
            co-owners.                                                       deed tax will be paid when the final transfer is made.
       d. Deed between a grantor and a revocable trust created
            by that grantor, or between revocable trusts created        7.   Deed written between a principal and agent, and the agent’s
            by the same grantor.                                             total compensation for the entire transaction, monetary or
       e. Deed transferring substantially all assets of a                    otherwise, is $500 or less.
            corporation pursuant to a reorganization under section           Statement: This deed is between a principal and agent for
            368(a) of IRC.                                                   $500 or less of consideration.

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