Real estate attorneys are urging legislators at the State House (above) to reject a plan to increase fees for documents recorded at registries of deeds in Massachusetts.
Real estate attorneys are pressing legislators to reject a proposal to increase fees for documents recorded at the state’s registries of deeds.
The House is expected to vote on the measure, proposed as an outside section of the House budget, this week.
Under the proposal, the commissioner of revenue would be able to increase recording fees, including a surcharge that helps pay for affordable housing, open space and historic preservation. The commission would be able to increase the surcharge up to $70 per document, a 250 percent hike in most cases.
The current fee to record a deed is $125, with a $20 surcharge going into a fund for the Community Preservation Act, or CPA. The act, passed in 2000, enables communities to add up to a 3 percent surcharge on property taxes to pay for affordable housing, open space and historic preservation projects. Communities can get a state match for all funds they raise through the tax surcharge.
State matching money comes from a fund that draws from fees attached to real estate transactions recorded at the registries of deeds.
Real estate attorneys think it’s unfair to boost the fees that all consumers must pay when recording documents because only communities that have passed the act benefit.
“The Legislature should be making these determinations, not an administrative agency, particularly in a down market in real estate,” said Edward Smith, legislative counsel for the Real Estate Bar Association. “The few transactions that take place are the ones that are going to shoulder more of the burden for CPA.”
With home sales and refinancing activity booming in recent years, the fund has been flush with cash, and communities with the CPA have received a dollar-for-dollar state match. But with the real estate market softening and as more communities approve the CPA, supporters fear the state match will shrink. Only a 5 percent state match is guaranteed under current law. CPA advocates want the state to guarantee up to a 75 percent match, and to do so they’ve suggested raising recording fees.
Smith sent a letter to Rep. Robert A. DeLeo, chairman of the House Ways and Means Committee, in opposition to the proposal.
“The dramatic downturn in real estate transactions has illustrated how ill-advised was the policy of relying on an unpredictable, indeed unstable, funding source for community preservation,” Smith wrote.
The Community Preservation Coalition, a group of housing advocates and preservationists, was behind a bill filed last year by Sen. Cynthia Creem that would guarantee the bigger state match for CPA. Supporters say the CPA has helped create hundreds of affordable units and save thousands of acres of green space.
But coalition members say they do not support the budget amendment, and would prefer to have public hearings on Creem’s bill.
“This is a legislative issue. This is not a budget issue. It’s an amendment to an existing law. We think it should be done through Â… passage of legislation, not through an outside section of the budget,” said Thomas Callahan, executive director of the Massachusetts Affordable Housing Alliance, which is part of the Community Preservation Coalition.
Creem’s bill is being studied by the Joint Committee on Community Development and Small Business.
Callahan said one way for the Legislature to act quickly on Creem’s bill is by folding it into a proposed municipal relief act.
“This would be, from our point of view, a good addition to that legislation,” Callahan said.
A total of 130 communities have approved the CPA. In prior years, the state has provided an 100 percent match. The state match has dropped to 65 percent this and is likely to be down to 30 percent next year, according to the coalition.
A smaller state match will make the CPA less desirable to communities, they say.
If the act isn’t amended, the “state match will dwindle down to close to nothing,” said Callahan.
