California AB 1888: New California Law on Real estate transaction transparency
CA Governor Brown approved Assembly Bill 1888 in June 2014, eliminating the option for parties to avoid disclosing in public records the amount of documentary transfer tax payable at closing of real estate transactions.
Purpose of this law is to make the value of each such transaction readily apparent, which many purchasers and sellers typically try to avoid.
Counties and cities are authorized to levy documentary transfer tax upon the recordation of documents transferring interests in real property.
CA Revenue and Taxation Code Section 11932 had provided that a document submitted for recordation must show the amount of documentary transfer tax due either on its face, or in a separate statement that is not recorded.
With the tax shown on the face of the recorded document, determining the purchase price in a transaction should be easy since the county/city tax used to determine the documentary transfer tax is known.
Parties wishing to avoid disclosing this information historically previously were previously allowed the ability to submit a separate, nonrecorded statement.
AB 1888 amends Section 11932 to address this lack of uniformity. Assemblyman Phil Ting, the bill’s author, said that the purpose was to provide for transparency in the administration of California’s documentary transfer tax law, to resolve issue relating to the availability of transfer tax information under the California Public Records Act (CPRA), and [to] ensure that real estate appraisers have access to transfer tax information in order to accurately appraise real property. He had contended that “the public is entitled to the information on the separate document concerning transfer taxes,” and that elimination of that option would resolve “any Public Records Act questions” while providing “confidence in the fair administration of California’s tax laws.”
Effective as of Jan. 1, 2015, Section 11932 – should make pricing information easier to determine.
Source of some information is article by Stroock & Stroock & Lavan LLP, Los Angeles law firm.
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This post about California law is for information only and is not the providing of legal services. If you have questions about legal issues with your real estate transaction, you should contact an experienced real estate attorney.