Bulletin: DC2014003

Dear Associates:

On September 12, 2014, the District of Columbia Office of Tax and Revenue issued OTR Tax Notice 2014-10 regarding the recordation and taxation of purchase money deeds of trust. Purchase money deeds of trust are exempt from recordation taxes so long as they comply with the terms of the District of Columbia statutes. In the past, the DC Recorder of Deeds has accepted an oral declaration that a deed of trust was for purchase money and did not strictly require adherence to the statutes. The Notice states that beginning January 1, 2015; a deed of trust will need to strictly comply with the statute in order to claim the purchase money exemption.

A copy of this Notice may be found on the ROD web site at http://otr.cfo.dc.gov/node/896382.

In order to obtain the exemption, a purchase money deed of trust will now need to specifically state on its face that it is a purchase money deed of trust along with the specific amount of purchase money being claimed. Please note that the statute also requires that the instrument reference the deed conveying title to the purchaser of the real property by date and instrument number. The Notice does not reference this requirement but we must assume that the Recorder of Deeds will expect this to be complied with as well.

Please note that the Recorder of Deeds also revised the FP 7/C form to permit them to better track any claim of the purchase money exemption. The amount of claimed purchase money will now need to be stated in the FP 7/C. This revised form is currently available for download and use on the ROD web site at http://otr.cfo.dc.gov/book/recorder-deeds-tax-forms. This revised form must be used for all recordings on or after December 31, 2014. An attempt to record with the old form after that date will be rejected. We encourage everyone to download the new form and begin using it on all future transactions.

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