Bulletin: NJ000089

Dear Associates:

Effective August 1, 2004, the buyer of a residential property for consideration in excess of one million ($1,000,000) dollars must pay a fee of one (1%) percent of the total purchase price upon the recording of the deed. This new law is included in P.L. 2004, c.66 (A3115/S1713), signed by the Governor on June 30.

Called the "mansion tax" by the press, the new one (1%) percent fee applies to transfers of land 'zoned for residential use' whether or not the land is improved. If the purchase price is more than $1,000,000, the fee is payable to the county clerk at the time the deed is recorded.

It is anticipated that the new law shall be effective for all recordable deeds received by the county recording office on or after Monday, August 2. Should the State announce a different implementation time frame, or require the completion of any additional forms, we shall advise.

UNDERWRITING GUIDELINES

In all transactions where the consideration is in excess of one million ($1,000,000) dollars:

1) Verify whether the premises are zoned for residential use.

2) If zoned for residential use, the 1% fee must be collected and paid to the County Recording officer at the time of the recording of the deed.

If the fee is not collected and paid at the time the deed is presented for recordation, the deed will not be recorded by the county clerk.