About The CATIC Title Courier
The CATIC Title Courier is published monthly by the New Jersey State Office of CATIC Title Insurance Company. Our goal is to provide our agents, agent prospects, attorneys, industry partners, and friends with relevant and timely articles about local title and real estate issues, news, and matters of importance to the title insurance industry. You are receiving this newsletter because we believe you fall into one of these groups.
In addition to new regulations, legislation, or noteworthy Court decisions, as well as matters of general interest or subjects relevant to what we do every day, the Courier will also provide notice of CE & CLE seminars and industry and Bar events sponsored by CATIC Title Insurance Company. We welcome comments and questions on current articles, or suggestions for subjects to be covered in future editions.
If you have received this April edition of the Courier, you are on our monthly distribution list. To add recipients in your office, provide comments, or request information, please send an e-mail to Lydia at:
LydiaBell@CaticTitle.com
.
The CATIC Title Courier:
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Cannabis Does Not Get Passed In The House
Bill S2703 was scheduled for a vote in the New Jersey Senate on Monday, March 25th. An identical bill, A4497, was on the voting list for the same day in the Assembly. Called the “New Jersey Cannabis Regulatory and Expungement Aid Modernization Act,” the bill would legalize the personal use of cannabis by adults and create a Commission to regulate both personal and medical cannabis use. It also provided for the expungement of certain past marijuana offenses. The Governor said he would sign the bill into law, but the bill did not have enough votes for passage and was not brought to the floor.
Many predicted that New Jersey would be joining the states that have legalized recreational use of cannabis, which is currently legal for medical use only. This issue is of interest to the title insurance industry, as steps toward legalization will result in more New Jersey real estate transactions involving lands used in the cultivation, distribution, manufacture, or sale of marijuana.
The issue, of course, is the conflict between state and federal law. In April 2017, the largest U.S. title insurer issued an underwriting bulletin to its affiliated underwriters prohibiting the handling of escrow or the provision of title insurance if the underlying land was used or planned for use in growing, producing, distributing, or dispensing marijuana products. Many other title insurers have followed suit. Those that will insure transactions involving this use will insure the land transaction only, taking specific exception for the possible title impacts of federal enforcement, including loss or damage resulting from forfeiture of the property as a result of federal law.
At CATIC Title, our focus is always on the transaction itself, with customary title insurance services not being withheld when requirements or exceptions can be utilized to mitigate risk.
While cannabis didn’t get passed in the House, everyone agrees that the underlying issues are not going away.
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TALES FROM THE TRENCHES
Do I need to raise the issue of bulk sale requirements on the transfer of a one-family home used as rental property? That was the second bulk sale question we heard in a week. While bulk sale issues will never result in a lien on the property being transferred, a seller’s business tax liability can become a buyer’s liability if the bulk sale laws apply and the state notification procedure is not followed.
The law in question is N.J.S.A. §54:50-38. In a nutshell, when all or a part of a person’s business assets are sold or transferred in bulk and not in the ordinary course of business, the buyer must give ten days’ notice of the sale to the Director, Division of Taxation. The Director then has ten days to respond as to whether a possible claim for state taxes exists. The official notice form is the
C9600
. The Division of Taxation has also published
Technical Bulletin TB-60 as amended by TB-60R
which links to an
Asset Transfer Tax Declaration
to assist the Treasury Department in determining an escrow if bulk sale taxes are due. This law provides New Jersey with an enforcement/collection opportunity if taxes are due. While it is not a title insurance underwriting issue, it is a transaction issue whenever one deals with the sale of business assets.
Sometimes it is more difficult to determine if the bulk sale laws apply. Yes, a sale by an estate of business assets owned by the decedent does trigger notification. Yes, a deed in lieu of foreclosure where the lender is taking back income-producing property requires bulk sale notice as well. A traditional sale of a store, restaurant, or gas station is easy, but many transactions are not plain vanilla. A case-by-case application of the bulk sale law is the best rule to follow.
What about that single-family home used as a rental? Does bulk sale apply? Under an amendment to the law, the sale, transfer, or assignment of a one- or two-family home, condo, co-op, or seasonal rental unit is exempt so long as the seller, transferor, or assignor is an “individual,” “estate,” or “trust” as those terms are used for the purposes of the “New Jersey Gross Income Tax Act,” N.J.S. 54A:1-1, et seq., or any combination thereof, but the bulk sale laws WILL APPLY if the seller, transferor, or assignor is a business entity, including but not limited to a corporation or a partnership.
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All Signs Point To A Busy Spring!
A
recent article on HousingWire
reviews the results of a study by Black Knight concerning the number of homeowners who might benefit by refinancing. The study revealed that by refinancing, 3.27 million homeowners could reduce their mortgage rate by at least 0.75%. This number of homeowners represents a 75% increase since November 2018. Black Knight also notes that recent declines in interest rates may result in an increased number of “cash-out” refinances.
Add to that the
recent statement by the Federal Reserve
at the conclusion of its March meeting that it is not presently raising interest rates, and signaling that it will not be raising rates for the rest of 2019. This is a further indication that both the refinance and the purchase markets may be strengthening.
Last week’s statistics appear to bear out these predictions. The Mortgage Bankers Association
reported
that new mortgage applications jumped 18.6% and that applications to refinance existing mortgages surged 39%.
All in all, it is shaping up to be a very busy Spring!
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Have a Jimmy V Day!
The first week of April brings the Final Four. The last weekend of the NCAA Basketball Tournament and the crowning of the two National Champions is a major annual event. For some, memories of past tournaments and amazing basketball performances come to mind. For many, the recollection of Jim Valvano’s inspirational and memorable speech at the 1993 ESPY Awards is a vivid memory. Valvano, whose 1983 NC State basketball team won the National Championship against improbable odds, was terminally ill with cancer. Jimmy V told listeners to laugh, think, and cry each day, saying:
“When people say to me, how do you get through life or each day? It's the same thing. To me, there are three things we all should do every day. We should do this every day of our lives. No. 1 is laugh. You should laugh every day. No. 2 is think. You should spend some time in thought. No. 3 is you should have your emotions moved to tears, could be happiness or joy. But think about it. If you laugh, you think and you cry, that's a full day. That's a heckuva day. You do that seven days a week, you're going to have something special
.
”
It’s good to remember the words of Mr. Valvano. We wish all of our agents, associates, and friends “something special.”
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