Town of Millsboro, DE Taxation

Includes any structure having a roof supported by columns or walls, which structure is for supporting or sheltering any use or occupancy, but shall not include any alteration of or addition to an existing building where the cost of said alteration or addition is less than 50% of the value of the property transferred.

DEED

Includes any instrument or writing pursuant to which title or possession of any real estate within the corporate limits of the town shall be quitclaimed, granted, bargained, sold, conveyed or transferred to any purchaser, buyer, vendee, grantee, assignee or transferee, except as provided in § 183-2 of this article.

DOCUMENT

Any deed, lease, instrument or writing whereby any real estate within the corporate limits of the town, or any interest therein, shall be quitclaimed, bargained, sold, leased or otherwise conveyed to the grantee; also includes any contract or other agreement or undertaking for the construction of all or part of any building, all or a portion of which contract, agreement or undertaking (or any amendment to the foregoing) is entered into, or 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 to the grantee.

There shall be included in this definition any contract or other agreement or undertaking for the construction of all or a part of any building, all or a portion of which contract, agreement or undertaking (or any amendment to the foregoing) is entered into, or 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 to the grantee.

[Added 8-3-1998]

(1)

No building permit shall be issued for any such building unless and until the person or persons (including corporations or other associations) requesting such permit shall demonstrate in whatever form may be specified by the Mayor and Council a form of affidavit that:

(a)

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

(b)

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

(c)

There has been paid a realty transfer tax on the document as defined in this chapter.

(2)

In addition no certificate of occupancy shall be issued relative to any building on which a tax was provided by this chapter unless and until the owner recertifies the actual cost of the building and pays an additional tax due as a result of such recertification.

(3)

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

(4)

A "transfer" for purposes of this subsection shall include any transfer made by a deed as described in this chapter, other than this subsection, and shall not include any transaction excluded from the definition of "deed" under the provisions of § 183-2.

LEASE

Includes any document, in writing, transferring or purporting to transfer a title or possessory interest by a seller, vendor, lessor, assignor or transferor to any purchaser, buyer, vendee, lessee, assignee or transferee in or to any of the following:

A condominium unit or any property or properties subject to the Unit Property Act (25 Del. C. § 2201 et seq.) for a determinable term of five years or more.

An interest in land owned by another or improvements owned by another located on land owned by another, or both, for a determinable term of five years or more.

The exercise of any right or option to renew or extend the title or possessory interest in an existing document or instrument in writing where such renewal or extension is for a period of five years or more.

TRANSACTION

Includes the making, executing, delivering, accepting or presenting for recording of a deed or lease as defined herein.

VALUE

In the case of any document granting, bargaining, selling or otherwise conveying any real estate or interest or leasehold interest therein, the amount of actual consideration thereof, including liens or other encumbrances thereon and ground rents, or a commensurate part of the liens or other encumbrances and ground rents which encumber the interest in real estate and any other interest in real estate conveyed, provided that in the case of a transfer for an amount less than the highest appraised full value of said property for local real property tax purposes, "value" shall mean the highest such appraised value unless the parties or one of them can demonstrate that fair market value is less than the highest appraised value, in which case "value" shall mean fair market value, or actual consideration, whichever is greater. A demonstration that the transaction was at arm's length between unrelated parties shall be sufficient to demonstrate that the transaction was at fair market value.

Except as provided in Subsections B and C of this section, 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.

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.

Where the beneficial owners of real property prior to the conveyance or series of conveyances referred to in this subdivision 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 subdivision. Where the beneficial owners of real property prior to the conveyance or a series of conveyances referred to in this subdivision 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 subdivision, unless under regulations promulgated by the Secretary of Finance, pursuant to 30 Del. C. § 5401, 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.

§ 183-2 Certain deeds and leases exempted.

As used in this article, "deed" and "lease" shall not include any of the following:

Any conveyance by will.

Any lease other than those described or defined in § 183-1 of this article.

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

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

Any conveyance to nonprofit industrial development agencies.

Any conveyance between husband and wife.

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 a final decree in the divorce and the real estate or interest therein subject to such conveyance was required by the husband and wife, or husband or wife, prior to the granting of the final decree of divorce.

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

Any conveyance:

(1)

To a trustee, nominee or straw party for the grantor as a beneficial owner.

(2)

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 article.

(3)

From a trustee, nominee or straw party to the beneficial owner.

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

Correctional deeds without actual consideration.

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

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 corporation in the same proportion as his interest in, or ownership of, the real estate being conveyed; provided, however, that this subsection shall not be applicable to any distribution and 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, and provided, further, that this exemption 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.

Any conveyance by the owner of previously occupied residential premises to a builder of new residential premises when 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.

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.

Any conveyance to a religious corporation 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 corporation or other body or person holding title to real estate for a religious corporation under § 183-3 of this article shall be exempt.

Any conveyance made by or to any organization exempt from ad valorem real estate taxes.

Any mortgage.

Any conveyance without consideration to an organization exempt from tax under § 501(c)(3) of the Federal Internal Revenue Code [26 U.S.C. § 501(c)(3)].

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

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 § 183-3 shall be exempt.

[Added 8-3-1998]

Any conveyance of a "mobile home," defined as a manufactured home, transportable in one or more sections, which, in the traveling mode, is 8 body feet or more in width and 40 body feet or more in length or, when erected on site, is 320 or more square feet; it is built on a permanent chassis, designed to be used as a year-round dwelling with or without a permanent foundation when connected to the required utilities and, if manufactured since June 15, 1976, has been built in accordance with the National Manufactured Home Construction and Safety Standards (as found in 25 Del. C. § 7003), provided that tax on said conveyance has been paid under 30 Del. C. § 3002.

[Added 8-3-1998]

Any conveyance between siblings, half-siblings or step-siblings.

[Added 7-2-2001]

§ 183-3 Tax levied; amount; apportioning of tax; exempt property.

Every person who makes, executes, delivers, accepts or presents for recording any document, deed or lease, except as provided in § 183-2, or in whose behalf any document, deed or lease 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%, 1% of which shall be pursuant to the Charter of the Town of Millsboro and 1/2% pursuant to 22 Del. C. Ch. 16, of the value of the property represented by such document, deed or lease. Such tax shall be payable at the time of making, execution, delivery, acceptance or presenting of such deed for recording.

[Amended 8-3-1998[1]]

[1]

Editor's Note: This ordinance further provided as follows: "Notwithstanding the effective date of the ordinance, the transfer of any real property within the town pursuant to a valid written contract entered into prior to the effective date of this ordinance (August 3, 1998) shall be exempt from the provisions of this ordinance which impose the additional one-half-percent tax."

The transfer tax shall be paid by the purchasers in the transaction in the absence of an agreement to the contrary.

No tax shall be imposed on any conveyance where 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, deed or lease defined or described in this article or in whose behalf any such document, deed or lease is made, executed, delivered, accepted or presented for recording shall be subject to pay for and in respect to the transaction a realty transfer tax at the rate of 1 1/2%, 1% of which shall be pursuant to the Charter of the Town of Millsboro and 1/2% pursuant to 22 Del. C. Ch. 16, of the value of the property represented by such document, deed or lease which tax shall be payable as follows:

[Amended 8-3-1998[2]]

(1)

The tax on the consideration attributable 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 attributable to each successive year of the term thereafter shall be paid annually to the Town Clerk.

[2]

There shall be no tax imposed on any document, deed or lease presented for recording pursuant to a contract executed prior August 5, 1996.

[Amended 8-5-1996]

§ 183-4 Credit for property transferred by real estate brokers.

Where there is a transfer of residential property by a licensed real estate broker, which property was transferred to him within 12 months next preceding the transfer by him 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 the licensed real estate broker shall be given 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. If the credit allowed is greater than the amount of the tax due, no refund shall be allowed.

§ 183-5 Judicial sales; payment of tax.

The realty transfer 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 before any such proceeds are applied toward any obligation, claim, lien, judgment or estate and of the writ upon which such sale is made, unless such transfer is exempt pursuant to the provisions of § 183-2O.

§ 183-6 Documentary stamps.

The payment of the tax imposed by this article shall be evidenced by the affixing of a documentary stamp to every document, deed or lease by the person making, executing, delivering or presenting such document, deed or lease for recording. Such stamp shall be affixed in such manner that its removal will require the continued application of steam or water, and the person using or affixing such stamp shall write, stamp or cause to be written or stamped thereon the initials of his name and the date upon which such stamp is affixed or used so that such stamp may not again be used, provided that any other method of cancellation may be used if it is deemed expedient by the Town Clerk. The Town Clerk may provide for the evidence of payment of the tax to be shown on the document, deed or lease by means other than the affixing of documentary stamps.

§ 183-7 Preparation and availability of stamps.

The Town Clerk shall prescribe, prepare and furnish stamps of such denominations and quantities as may be necessary for the payment of the tax imposed and assessed by this article. The Town Clerk shall make provision for the sale of such stamps in such places as may be deemed necessary.

§ 183-8 Appointment of sales agents; commission.

The Town Clerk may appoint the Recorder of Deeds, in and for Sussex County, the Wilmington Trust Company, or such other person or persons within or without the county as agents for the sale of stamps as used for payment of the tax imposed by this article.

A commission shall be allowed by the Town Clerk to such agents of 2% of the face value of the stamps.

§ 183-9 Payment of tax prerequisite to recording document, deed or lease.

No document, deed or lease upon which a transfer 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.

§ 183-10 Statement of value required when recording.

Every document, deed or lease 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, deed or lease the true, full and complete value thereof or shall be accompanied by an affidavit executed by a responsible person connected with the transaction showing such connection and setting forth the true, full and complete value thereof or the reason, if any, why such document, deed or lease is not subject to tax under this article.

§ 183-11 Prohibited acts.

No person shall commit any of the following acts:

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

Make use of any documentary stamps to denote payment of the realty transfer tax without canceling stamp as required by this article.

Fraudulently cut, tear or remove from a document, deed or lease any documentary stamp or other evidence of payment of the transfer tax.

Fraudulently affix to any document, deed or lease upon which tax is imposed by this article any documentary stamp or other evidence of payment of the transfer tax which has been removed from any other document, any documentary stamp or other evidence of payment of the transfer tax if insufficient value, any forged or counterfeit stamp or other evidence of payment of the realty transfer tax or any impression, forged or counterfeited stamp, dye, plate or other articles.

Willfully remove or alter the cancellation marks of any documentary stamp or restore any such documentary stamp within intent to use or cause the stamp to be used after it has already been used or knowingly buy, sell, offer for sale, give away or use any such altered or restored stamp to any person for use.

Knowingly have in his possession any altered or restored documentary stamp which has been removed from any document, deed or lease upon which the realty transfer tax is imposed by this article, provided that the possession of such stamp shall be prima facie evidence of an intent to violate the provisions of this article.

Knowingly or willfully prepare, keep, sell, offer for sale or have in his possession any forged or counterfeit documentary stamp.

Accept for recording in the office of the Recorder of Deeds, in and for Sussex County, any document, deed or lease upon which the transfer tax is imposed without the proper documentary stamp or other evidence of payment of the transfer tax required by this article and as indicated in such document, deed or lease or accompanying affidavit.

§ 183-12 Additional tax; notice; redetermination; appeals.

If any person shall fail to pay any transfer tax imposed by this article for which he is liable, the Town Clerk may make a determination of additional tax and interest due by such person, based upon information within his knowledge or learned by him. All such determinations 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, deed or lease.

Promptly after the date of such determination, the Town Clerk shall send by certified or 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 determination of additional tax was mailed, such person may file with the Town Clerk a petition for redetermination of such tax. Every petition for redetermination shall state specifically the reason or reasons which the petitioner believes entitles him to such redetermination and shall be supported by affirmation that it is not for the purpose of delay, and that the facts set forth therein are true and correct.

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

Any person shall have the right to review by a court of competent jurisdiction any determination made by the Town Clerk 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.[1]

[1]

Editor's Note: Former Section 13, Refunds, which immediately followed this section, was deleted 7-6-1998.

§ 183-13 Violations and penalties.

[Amended 7-6-1998; 10-5-1998]

Any person who violates any of the provisions of this article 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 or be imprisoned for a term not to exceed one year, or both, and shall pay the costs of prosecution.

The amount due shall bear interest at the legal rate established by Delaware law, commencing with the date that such document is duly recorded in the Sussex County Recorder of Deeds office, and the transferee in such transaction shall be personally liable for the full amount of such tax, plus all accrued interest to date of payment.

The amount of such tax, together with the accrued interest thereon, shall constitute a charge or assessment against the property so transferred and shall be a lien against the property so transferred in accordance with the procedures set forth in the Charter of the town and/or in accordance with the procedures set forth in the general statutes of the state regarding municipal liens. If suit should be brought by the town to collect such delinquent tax, then the town shall be entitled, in addition to the principal amount owed plus accrued interest, to be reimbursed for its reasonable attorneys' fees and court costs.

Where any document involved in a transaction subject to the tax imposed by this article is recorded without payment thereof, such recording shall constitute a violation, and the grantee shall, upon conviction before any court of competent jurisdiction, pay a fine of $1,000, plus any applicable court costs and assessments.