Sussex County, DE County Realty Transfer Tax

"Document" means any deed, instrument or writing whereby any real estate within the unincorporated areas of Sussex County, or any interest therein, shall be quit-claimed, granted, bargained, sold or otherwise conveyed to the grantee, but shall not include the following:

(1)

Any will.

(2)

Any lease other than those described or defined in Subsection D below.

(3)

Any mortgage.

(4)

Any conveyance between corporations operating housing projects pursuant to Chapter 45 of Title 31 of the Delaware Code and the shareholders thereof.

(5)

Any conveyance between nonprofit industrial development agencies and industrial corporations purchasing from them.

(6)

Any conveyance to nonprofit industrial development agencies.

(7)

Any conveyance between husband and wife.

(8)

Any conveyance between persons who were previously husband and wife, but who have since been divorced, provided that such conveyance is made after the granting of the final decree in divorce and the real estate or interest therein subject to such conveyance was acquired by the husband and wife, or husband or wife, prior to the granting of the final decree in divorce.

(9)

Any conveyance between parent and child or the spouse of such a child.

(10)

Any conveyance to a trustee, nominee or straw party for the grantor as beneficial owner; for the beneficial ownership of a person other than the grantor where, if such person were the grantee, no tax would be imposed upon the conveyance pursuant to this chapter; or from a trustee, nominee or straw party to the beneficial owner.

(11)

Any conveyance between a parent corporation and a wholly owned subsidiary corporation, provided that such conveyance is without actual consideration.

(12)

Correctional deeds without actual consideration.

(13)

Any conveyance to or from the United States or this state or to or from any of their instrumentalities, agencies or political subdivisions and the University of Delaware.

(14)

Any conveyance to or from a corporation or a partnership where the grantor or grantee owns stock of the corporation or an interest in the partnership in the same proportion as his interest in or ownership of the real estate being conveyed; provided, however, that this Subsection A(14) shall not apply to any distribution in liquidation or other conveyance resulting from the partial or complete liquidation of a corporation, unless the stock of the corporation being liquidated has been held by the grantor or grantee for more than three years, provided, further, that this Subsection A(14) shall not apply to any conveyance from a partnership to its partners unless the partners' interest in the partnership has been held for more than three years.

(15)

Any conveyance by the owner of previously occupied residential premises to a builder of new residential premises when such previously occupied residential premises are taken in trade by such builder as a part of the consideration from the purchaser of new, previously unoccupied premises.

(16)

Any conveyance to the lender holding a bona fide mortgage, which is genuinely in default, either by a Sheriff conducting a foreclosure sale or by the mortgagor in lieu of foreclosure.

(17)

Any conveyance to a religious organization or other body or person holding title to real estate for a religious organization, if such real estate will not be used following such transfer by the grantee, or by any privy of the grantee, for any commercial purpose; provided, however, that only that portion of the tax which is attributable to and payable by the religious organization or other body or person holding title to real estate for a religious organization under 30 Del. C. § 5402 shall be exempt.

(18)

Any conveyance to or from a volunteer fire company, organized under the laws of this state; provided, however, that only that portion of the tax which is attributable to and payable by the volunteer fire company under 30 Del. C. § 5402 shall be exempt.

(19)

Any conveyance of a manufactured home as defined in 25 Del. C. § 7003, provided that tax on said conveyance has been paid under 30 Del. C. § 3002.

[Amended 10-12-2010 by Ord. No. 2152]

(20)

Any conveyance without consideration to an organization exempt from tax under § 501 (c)(3) of the Federal Internal Revenue Code [25 U.S.C. § 501(c)(3)].

(21)

Any conveyance between siblings, half-siblings or stepsiblings.

[Added 8-29-2000 by Ord. No. 1392]

(22)

Any conveyance to a nonprofit conservation organization when the property is purchased for open space preservation purpose.

[Added 3-30-2004 by Ord. No. 1672]

(23)

Any conveyance to or from an organization exempt from tax under § 501(c)(3) of the federal Internal Revenue Code when the purpose of said conveyance is to provide owner-occupied housing to low- and moderate-income households by rehabilitating residential properties and reselling said properties without profit.

[Added 3-30-2004 by Ord. No. 1672]

"Transaction" means the making, executing, delivering, accepting or presenting for recording of a document.

"Value" means, in the case of any document granting, bargaining, selling or otherwise conveying any real estate or interest or leasehold interest therein, the amount of the actual consideration thereof, including liens or other encumbrances thereon and ground, rents, or a commensurate part of the liens or other encumbrances thereon and ground rents where such liens or other encumbrances and ground rents also encumber or are charged against other lands, tenements or hereditaments, provided that where such documents shall set forth a small or nominal consideration, the "value" thereof shall be determined from the price set forth in, or actual consideration for, the contract of sale or lease, or, in the case of a gift or any other document without consideration, from the actual monetary worth of the property granted, bargained, sold or otherwise conveyed, which, in either event, shall not be less than the amount of the highest assessment of such lands, tenements or hereditaments for local tax purposes.

The term "document" defined in Subsection A of this section shall include the following:

(1)

Any writing purporting to transfer a title interest or possessory interest for a term of more than five years in a condominium unit or any unit properties subject to the Unit Property Act (25 Del. C. § 2201 et seq.).

(2)

Any writing purporting to transfer a title interest or possessory interest of any lessee or other person in possession of real estate owned by the state or other political subdivision thereof.

(3)

Any writing purporting to assign or transfer a leasehold interest or possessory interest in residential property under a lease for a term of more than five years. For this purpose, the term "residential property" means any structure or part of structure which is intended for residential use, and excluding any commercial unit subject to tax under 30 Del. C. § 2301(a)(88), relating to commercial lessors.

In determining the term of a lease under Subsection D above, it shall be presumed for the purpose of computing the lease term that any rights or options to renew or extend will be exercised.

For purposes of Subsection C, in the case of a document described in Subsection D under which the consideration is based in whole or in part on a percentage of the income or receipts to be received in the future, actual consideration shall include the amounts actually received under such percentage of income or receipts provision; provided, however, and notwithstanding any other provisions of this article, that the tax imposed by this article shall be due and payable to the Department of Finance within 30 days after the date such amounts become due and payable under the agreement.

Conveyance of interest.

(1)

Except as provided in Subsection G(1) and (2), where beneficial ownership in real estate is transferred through a conveyance or series of conveyances of intangible interests in a corporation, partnership or trust, such conveyance shall be taxable under this article as if such property were conveyed through a duly recorded "document," as defined in Subsection A of this section, and subject to the exemptions contained therein, except those exemptions contained in Subsection A(10) and (14) of this section.

(2)

No bona fide pledge of stock or partnership interests as loan collateral nor any transfer of publicly traded stock or publicly traded partnership interest shall be deemed subject to taxation under this subdivision.

(3)

Where the beneficial owners of real property prior to the conveyance or series of conveyances referred to in this subsection own 80% or more of the beneficial interest in the real estate following said conveyance or conveyances, such transfers shall not be subject to tax under this subsection; where the beneficial owners of real property prior to the conveyance or series of conveyances referred to in this subsection own less than 80% of the beneficial interest in the real estate following said conveyance or conveyances, such transfers shall not be subject to tax under this subsection unless, under regulations promulgated by the Secretary of Finance of the State of Delaware, such transfer or transfers are properly characterized as a sale of real property. Such characterization shall take into account the timing of the transaction, beneficial ownership prior to and subsequent to the conveyance or conveyances; the business purpose of the corporation, partnership or trust; and such other factors as may be relevant.

"First-time home buyer" means a natural person who, individually or as a co-tenant, has at no time held any interest in residential real estate, wherever located and which has been occupied as their principal residence, and who intends to occupy the property being conveyed as his or her principal residence within 90 days following recordation.

Documents; issuance of building permits and certificates of occupancy; building.

[Added 12-2-2008 by Ord. No. 2007]

(1)

Notwithstanding the foregoing provisions of this section, there shall be included in the definition of "document" for the purposes of this article any contract or other agreement or undertaking for the construction of all or a part of a building, all or a portion of which contract, agreement or undertaking (or any amendment to the foregoing) is entered into, where labor or materials are supplied, either prior to the date of the transfer of the land on which the building is to be constructed or within one year from the date of the transfer of the land to the grantee.

(2)

The County shall not issue a building permit for any such building unless and until the person or persons (including corporations, other associations or entities) requesting such permit shall demonstrate in whatever form may be specified and required by the County Director of Finance, including at the Director's discretion, a form of affidavit certifying that:

(a)

No transfer as described in this section has occurred within the preceding year; or

(b)

No portion of the contract for construction for which the permit is being requested was entered into and no materials or labor with respect to the building have been provided within one year of the date on which the land was transferred; or

(c)

The required amount of the County realty transfer tax on the document, as defined in this article, has been paid.

(3)

In addition, the County shall not issue a certificate of occupancy relative to any building on which the transfer taxes provided or required to be paid by this article unless and until the owner recertifies the actual cost of the building and improvements to the real estate and pays any additional tax due thereon as a result of such recertification.

(4)

"A building" for the purposes of this article shall mean any structure having a roof supported by columns or walls which structure is intended for supporting or sheltering any use or occupancy and shall not include any alteration of or addition to any existing building where the cost of said alteration or addition is less than 50% of the value of the land transferred.

§ 103-19 Rate of tax; when payable; exception.

Every person who makes, executes, delivers, accepts or presents for recording any document, except as defined or described in § 103-18D herein, or in whose behalf any document is made, executed, delivered, accepted or presented for recording, shall be subject to pay for and in respect to the transaction, or any part thereof, a realty transfer tax at the rate of 1 1/2% of the value of the property represented by such document, which tax shall be payable at the time of making execution, delivery, acceptance or presenting of such document for recording. In the absence of any agreement to the contrary, the burden for paying the tax shall be apportioned equally between the grantor and the grantee.

[Amended 7-1-1998 by Ord. No. 1247]

No tax shall be imposed on conveyances when the actual value of the property being transferred is less than $100.

Every person who makes, executes, delivers, accepts or presents for recording any document defined or described in § 103-18D herein, or in whose behalf any such document is made, executed, delivered, accepted or presented for recording, shall be subject to pay for and in respect to the transaction, or any part thereof, a realty transfer tax at the rate of 1 1/2% of the value of the property represented by such document, which tax shall be payable as follows:

[Amended 7-1-1998 by Ord. No. 1247]

(1)

The tax on the consideration attributed to the first year of the term shall be payable at the time of making, execution, delivery, acceptance or presenting of such document for recording.

(2)

The tax on the consideration attributed to each successive year of the term thereafter shall be paid annually to the Department of Finance.

On transfers where all grantees qualify as first-time home buyers, no transfer tax shall be imposed on the grantee's portion of any transfer tax as defined in § 103-19A hereof. For purposes of this article, "first-time home buyer" shall have that meaning given in § 103-18H. The first-time home buyer exception shall apply only to the grantee's portion of the transfer tax as defined in § 103-19A hereof and shall not relieve the grantor from payment of the grantor's portion of the transfer tax as defined in § 103-19A hereof. For purposes of the first-time home buyer exception, the grantor and grantee shall be prohibited from contractually modifying the apportionment of the transfer tax as set forth in § 103-19A to decrease the grantor's portion of the transfer tax. This provision shall apply to all contracts entered into as of July 1, 2017, the effective date hereof.

[Amended 6-13-2017 by Ord. No. 2500]

§ 103-20 Transfer by broker.

Where there is a transfer of a residential property by a licensed real estate broker, which property was transferred to him within the preceding year as part of the consideration for the purchase of other residential property, a credit for the amount of the tax paid at the time of the transfer to him shall be given to him toward the amount of the tax due upon the transfer. If the tax due upon the transfer from the licensed real estate broker is greater than the credit given for the prior transfer, the difference shall be paid, and if the credit allowed is greater than the amount of the tax due, no refund shall be allowed.

§ 103-21 Payment from proceeds of judicial sale.

The tax imposed by this article shall be paid from the proceeds of any judicial sale of real estate as part of the costs of such sale and of the writ upon which the sale is made before any such proceeds are applied toward any obligation, claim, lien, judgment or estate, unless such transfer is exempt pursuant to the provisions of § 103-18A(16) herein.

§ 103-22 Affixing of notation of payment.

The payment of the tax imposed by this article shall be evidenced by a notation of payment on the document. The collector shall note on the document the payment of the tax, the amount of payment, the date of payment and the initials of the person receiving payment and his office. Such notation shall be conclusive evidence of payment as to any subsequent purchaser relying thereon.

§ 103-23 Collector of tax.

The Recorder of Deeds in and for Sussex County shall be the collector of the tax imposed by this article. The Recorder of Deeds shall be provided with an official stamp to be used to indicate on the document the tax paid.

§ 103-24 Payment of tax prerequisite to recording of document.

No document upon which a tax is imposed by this article shall be recorded in the office of the Recorder of Deeds in and for Sussex County unless proof of the payment of the transfer tax appears on the document.

§ 103-25 Statement of value required for recording.

Every document, when lodged with or presented to the Recorder of Deeds, in and for Sussex County, for recording shall set forth therein as part of such document the true, full and complete value thereof or shall be accompanied by an affidavit executed by a responsible person connected with a transaction showing such connection and setting forth the true, full and complete value thereof or the reason, if any, why such document is not subject to tax under this article.

§ 103-26 Unlawful acts, violations and penalties.

It shall be unlawful for any person to:

(1)

Make, execute, deliver, accept or present for recording or cause to be made, executed, delivered, accepted or presented for recording any document without the full amount of tax thereon being duly paid.

(2)

Fraudulently affix to any document upon which tax is imposed by this article any evidence of payment of the realty transfer tax, when the full amount of tax thereon has not been duly paid.

Any person who violates this section shall be deemed to be guilty of a misdemeanor and, upon conviction in a court of competent jurisdiction, shall be fined not more than $500 and imprisoned for not more than one year, or both, and in addition shall be required to pay to Sussex County any unpaid transfer tax.

§ 103-27 Failure to pay tax determination; redetermination; review, interest.

If any person shall fail to pay any realty transfer tax imposed by this article for which he is liable, the Director of Finance may make a determination of additional tax and interest due by such person, based upon information within his possession or that shall come into his possession. All such determination shall be made so that notice thereof shall reach the party or parties against whom it is made within three years after the recording of the document.

Promptly after the date of such determination, the Director of Finance shall send, by registered mail, with return receipt requested with postage prepaid, a copy thereof to the person against whom it is made.

Within 90 days after the date upon which the copy of any such determination of additional tax was mailed, such person may file with the Director of Finance a petition for redetermination of such tax. Every petition for redetermination shall state specifically the reason or reasons which petitioner believes entitles him to such redetermination, and it shall be supported by affirmation that it is not for the purpose for delay and that the facts set forth therein are true and correct.

It shall be the duty of the Director of Finance, within six months after the date of any determination, to dispose of any petition for redetermination. Notice of the action taken upon any petition for redetermination shall be given to the petitioner promptly after the date of redetermination by the Director of Finance.

Any person shall have the right to review, by a court of competent jurisdiction, any determination made by the Director of Finance pursuant to this section.

Interest shall be added to any determination of additional tax and shall be computed at the statutory rate from the date any transfer tax shall have been paid to the date paid.

§ 103-28 Refunds.

Upon determination that any tax collected pursuant to this article has been collected improperly, the Director of Finance shall refund to the taxpayer the sum so paid with interest from the date of payment at the statutory rate.

When the Director of Finance disallows a claim for refund in whole or in part, the disallowance shall become final 90 days from the date when notice of disallowance is mailed to the taxpayer, unless within the period the taxpayer files a written protest with the County Administrator in which he shall set forth the grounds on which the protest is based. If a protest is filed, the County Administrator shall reconsider the disallowance. Notice of the County Administrator's determination shall be mailed to the taxpayer by registered or certified mail. The action of the County Administrator on the taxpayer's protest is final upon the expiration of 30 days from the date when he mails notice of his action to the taxpayer, unless within this period he seeks review of the County Administrator's determination.

§ 103-29 Use of funds by Sussex County.

[Amended 7-1-1998 by Ord. No. 1247]

Funds realized by Sussex County pursuant to this article shall be segregated from the county's general fund, and the funds and all interest thereon shall be expended solely for the capital and operating costs of public safety services, economic development programs, public works services, capital projects and improvements, infrastructure projects and improvements and debt reduction.

§ 103-29.1 Transfer of funds to municipalities.

[Added 7-1-1998 by Ord. No. 1247; amended 6-13-2017 by Ord. No. 2501]

Any incorporated municipality within Sussex County which does not collect a realty transfer tax or which collects a realty transfer tax but which, during its fiscal year, receives less than $20,000 in revenue from its realty transfer tax shall receive a distribution from the County from the County's realty transfer tax receipts. The County distribution to any qualifying municipality shall be equal to the difference between the total realty transfer tax revenue collected by the municipality during any given fiscal year and $20,000, provided that the City of Milford shall receive a fixed distribution of $10,000. Each qualifying municipality shall submit written verification to the County, in a form acceptable to the County, of realty transfer tax revenue no later than 60 days from the end of its fiscal year. Use of such distribution shall be limited to those uses of realty transfer tax revenue as provided in Title 22 of the Delaware Code.