Relating to Real Estate

In this Issue:

• Changes to the Tax Law Governing IDOTs and Refinancings in General Are Effective July 1, 2013

• The Time to File for the Homestead Tax Credit Has Been Extended to December 31, 2013

• Who Needs an SNDA (Subordination, Non-Disturbance, and Attornment Agreement)?

• TransForm Baltimore Will Change Baltimore City Zoning

• Here Comes the Rain Tax

• Responding to Environmental Inspections

• Disclosure Requirement for Baltimore City Real Estate Contracts

Changes to the Tax Law Governing IDOTs and Refinancings in General Are Effective July 1, 2013

This law is discussed in more detail by Ed Levin in our Real Estate Department's May, 2013 publication of Relating to Real Estate. Two important points to keep in mind are the following:

1. IDOTs. Currently, indemnity mortgages or indemnity deeds of trust (either of which is called an IDOT) securing guaranties of loans of up to $1 million are exempt from Maryland recordation tax. This law increases the amount for the exemption up to $3 million. All loans in a series that are part of the same transaction must be aggregated to determine if the $3 million threshold is reached.
2. Refinancing. For a number of years, Maryland law has provided an exemption from recordation tax when recording a refinancing mortgage or deed of trust (either of which is called a "mortgage") if the refinancing mortgage is secured by the principal residence of an individual who is the original mortgagor of the existing mortgage. The tax exemption applies to an amount secured by the refinancing mortgage up to the unpaid principal balance of the loan being paid off. Effective July 1, 2013, the scope of this recordation tax exemption expands and will apply not only to individuals who are refinancing their principal residences but also to any person (which can include entities) and to any type of property. MORE.

The Time to File for the Homestead Tax Credit Has Been Extended to December 31, 2013

We have previously written about the Maryland homestead property tax credit and the requirement to make a filing with the Maryland State Department of Assessments and Taxation in order to preserve the right to the credit. See Gordon Feinblatt's Legal Bulletins titled "To Preserve Your Right To The Homestead Property Tax Credit, You Must File With The SDAT" dated April 9, 2012, and "It's Not Too Late!!! To Preserve Your Right to the Homestead Property Tax Credit, You Must File with the SDAT Immediately" dated December 27, 2012. The law had provided that the credit would be lost for anyone who did not file by December 31, 2012.

Because many eligible homeowners did not file in time, the Maryland General Assembly passed emergency legislation to extend the filing deadline until December 31, 2013. MORE.

Who Needs an SNDA (Subordination, Non-Disturbance, and Attornment Agreement)?

One of the closing documents in a real estate financing transaction when the property is leased is a Subordination, Non-Disturbance, and Attornment Agreement (SNDA). SNDAs have a number of purposes and uses, and they serve to connect the lender with the tenant. MORE.

TransForm Baltimore Will Change Baltimore City Zoning

The City of Baltimore is in the process of rewriting its entire Zoning Code through legislation known as TransForm Baltimore.

The legislation was introduced to the City Council on October 22, 2012, and assigned to the Council's Land Use and Transportation Committee.

Following a number of public hearings, the Planning Commission recommended approval of the legislation in March 2013, subject to numerous amendments.

The Committee then held a meeting on April 3, 2013, at which the Planning and Health Departments made presentations to the Committee and reports from various City agencies were read into the record.

As a result of the revisions, the zoning classifications of some properties will change. New zoning categories and design guidelines could affect the potential use, development and redevelopment of your property.

We expect the Committee to hold its next hearing in September. After that, the Committee will hold additional public hearings throughout the City. While it may still take quite some time before the new Zoning Code is adopted by the City Council, we recommend that you determine now whether and how your property may be affected by the new Zoning Code.

You can access copies of the Zoning Code legislation and maps at www.rewritebaltimore.org.

If you believe that your property may be affected in a negative manner, contact your City Council Member as soon as possible. Please contact Danielle Zoller at (410) 576-4036 if you have any questions.

Here Comes the Rain Tax

In response to requirements of the U.S. Environmental Protection Agency (EPA) to improve water quality in the Chesapeake Bay, the Maryland General Assembly passed legislation last year requiring Baltimore City and the nine largest counties to establish a stormwater remediation fee (the so-called "rain tax") to improve their stormdrain systems and overall stormwater management. The fee was required to be in place by July 1, 2013. This article summarizes the current status of stormwater fees in the jurisdictions that are required to adopt the fees. MORE.

Responding to Environmental Inspections

Margaret M. Witherup, a member of our Environmental legal team, wrote an article titled "Responding to Environmental Inspections," that was published in the March 2013 edition of Chemical Engineering magazine. Click herefor a link to the article. The information contained in the article may be valuable to any facility that might be subject to environmental inspections by a regulatory agency such as the U.S. Environmental Protection Agency or a State environmental agency.

For any questions, contact Michael C. Powell.

Disclosure Requirement for Baltimore City Real Estate Contracts

Effective on October 1, 2012, pursuant to Ordinance 12-53, contracts of sales of ALL real property in Baltimore City must include the following disclosure about the proximity of the subject property to heavy-industrial and railroad operations. We note that there is no penalty for failure to include this disclosure.

For the disclosure of heavy-industrial and railroad operations, the buyer is advised that the property may be located near heavy-industrial operations (that is, land uses limited to an M-3 Industrial Zoning District under Baltimore Zoning Code Title 7, Subtitle 4) or near railroad operations.

These operations may involve the use of machinery, trucks or trains, 24 hours a day, 7 days a week, and may create or cause noises, odors, fumes, bright lights, vibrations and safety hazards.

Detailed information on the location of heavy-industrial (M-3) zones and the location of railroad tracks can be found on the "Baltimore CityView" website at http://cityview.baltimorecity.gov.

For more information, please contact Ed Levin.