BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 1888 HEARING: 5/14/14
AUTHOR: Ting FISCAL: No
VERSION: 3/27/14 TAX LEVY: No
CONSULTANT: Weinberger
COUNTY RECORDERS AND DOCUMENTARY TRANSFER TAXES
Deletes the requirement that county recorders must, upon
request, show the amount of documentary transfer tax due on
a paper separate from the document subject to the tax.
Background and Existing Law
The Documentary Transfer Tax Act allows counties to levy a
tax upon the recording of documents that transfer interests
in real property. All 58 counties impose a documentary
transfer tax (DTT), which is levied at a rate of 55 cents
per $500 (or 0.11%) of the value of the real property or
interest being transferred. The Act allows a city within a
county that has adopted a DTT to impose a DTT at one-half
of the county rate. The amount of tax paid to a city is a
credit against the amount of the tax owed to a county.
More than 450 cities levy a DTT pursuant to the Act. Under
the "municipal affairs" doctrine established by Article XI,
Section 5 of the California Constitution, some charter
cities tax the transfer of ownership of real estate at
rates that exceed the statutory limit on the DTT.
County recorders administer documentary transfer taxes.
State law prohibits a recorder from recording a document
subject to the DTT unless the tax is paid at the time of
recording. Generally, every document subject to the DTT,
when it is submitted for recordation, must show on its face
the amount of tax due. However, upon the request of the
party submitting a document, the amount of tax due must be
shown on a separate paper, which is not recorded but is
affixed to the document after the recorder makes the
permanent record. If the amount of tax paid is shown on a
page that is separate from the recorded document, nobody
can find out how much tax was paid simply by looking at the
recorded copy of the document. However, a 2007 Attorney
General's opinion noted that a county recorder will still
AB 1888 -- 3/27/14 -- Page 2
have evidence of the amount of tax paid in his or her
accounting records. The AG's opinion concluded that those
records are subject to inspection pursuant to the
California Public Records Act, which generally requires
that government records must be provided to the public upon
request, unless there is a reason specified in state law to
withhold a record.
An informal survey of county recorders indicates that
recorders are interpreting state law and the Attorney
General's opinion in a variety of ways, creating
disparities from county to county in how information about
DTTs can be obtained. In some counties, the recorder's
office will disclose the amount of a DTT to anyone who
requests that information for a specifically-identified
recorded document. In other counties, a Public Records Act
request must be filed to learn the amount of DTT paid on a
recorded document. In at least one county, the amount of
tax paid may not be provided even in response to a Public
Records Act request.
To address the lack of uniformity created by ambiguity in
current law, real estate appraisal professionals and county
officials want the Legislature to repeal the statutory
language that allows documents that are subject to the
documentary transfer tax to be recorded without showing the
amount of tax due.
Proposed Law
Assembly Bill 1888 repeals the requirement that a county
recorder, upon the request of a party submitting a document
for recordation, must show the amount of documentary
transfer tax due on a separate paper which must be affixed
to the document by the recorder after the permanent record
is made and before the original is returned.
AB 1888 makes additional technical and conforming changes
to state law.
State Revenue Impact
No estimate.
AB 1888 -- 3/27/14 -- Page 3
Comments
1. Purpose of the bill . AB 1888 eliminates a statutory
requirement that, in some counties, impedes public access
to information about DTT amounts paid by taxpayers. By
ensuring that this information will be easily available on
copies of all recorded documents that are subject to the
DTT, AB 1888 generates several public benefits. Interested
parties will no longer have to obtain DTT information
through Public Records Act requests, which can be
needlessly time-consuming and costly both for requestors
and for the local governments that fulfill the requests.
The manner in which county recorders administer the tax
will become more uniform and transparent, which will foster
confidence in the fair administration of the tax laws.
Additionally, real estate appraisers use DTT amounts to
more accurately determine property values. By granting
appraisers more reliable and complete access to information
about DTT amounts, AB 1888 will help real estate
professionals, and consumers, make more informed real
estate decisions.
2. More public, or more private ? The Documentary Transfer
Tax Act's language allowing recorders to show the amount of
DTT paid on a page that is separate from a recorded
document was likely enacted to protect property owners'
privacy. Purchasers of highly valuable properties or
property investors with extensive real estate holdings may
prefer not to publicly disclose the amounts that they pay
for real estate. By ensuring that the amount of DTT paid
will always be publicly available on copies of the recorded
documents that are subject to the tax, AB 1888 eliminates
any opportunity for property owners to shield significant
information about their real estate transactions from
public scrutiny. As an alternative approach, which would
maintain property owners' privacy, the Legislature could
prohibit the release of taxpayers' DTT payment information
pursuant to requests under the California Public Records
Act.
Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Floor: 75-0
AB 1888 -- 3/27/14 -- Page 4
Support and Opposition (5/8/14)
Support : California Government Relations Subcommittee of
the Appraisal Institute; California Newspaper Publishers
Association; County Recorders' Association of California.
Opposition : Unknown.