N E W S
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)
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
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.
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
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
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.