MARYLAND AG OFFERS AN OPINION ON COLLECTION OF TRANSFER TAX AND DOCUMENTARY STAMPS ON SHORT SALES

In recent weeks I have been putting the word out that Anne Arundel County, Maryland is trying to collect transfer taxes and stamps on short sale transactions.  In a short sale transaction the lender will agree to take an amount less that what is actually owed to allow the seller to get out of the debt and to avoid foreclosure.  Anne Arundel County took the position that the difference between what was owed to the bank and the amount forgiven could be taxed at the time of transfer as "consideration".  No other county in Maryland has taken that position. 

Today I received the following information from the ALTA (American Land Title Association) relating to that practice.  The ALTA and MLTA took issue with this ruling and asked that the Maryland Attorney General review this matter and offer an opinion.  The opinion, while not binding on the counties, basically states that the amount forgiven by the bank is not "consideration" and thus should not be taxed by the clerk of the court. 

A copy of the letter may be found here Hixson 01 27 10.pdf (568,6 kB)

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Thank you

Charlene Perry