Agents for:
First American Title Insurance Co. of New York


Fidelity National Title Insurance Co. of New York

123 Maple Avenue

Riverhead, New York 11901-4674

Telephone: (631) 369-0200 – Facsimile (631) 369-0199

www.aquebogueabstract.com

Date: April 19, 1999

RE: Peconic Bay Region Community Preservation Fund (Suffolk County Transfer Tax)

Effective March 1, 1999 a new transfer tax of 2% will be due, on transfers of real property in the Town of Southold. The first $150,000.00, of consideration is exempt for improved property and the first $75,000.00, for unimproved property.

This tax becomes effective April 1, 1999 in the other four (4) Peconic Bay Region Towns: Riverhead, Southampton, East Hampton, and Shelter Island. The deductible in Riverhead, is the same as Southold. Whereas, Southampton, East Hampton and Shelter Island have exempted the first $250,000.00, on improved property and the first $100,000.00, for unimproved property.

The necessary tax form (CPF) is attached for your review. This supplemental form (CPF) is required to accompany all deeds, (along with both the TP-584 and the RP-5217) conveying property in the five East End towns. (EAST HAMPTON, RIVERHEAD, SHELTER ISLAND, SOUTHAMPTON & SOUTHOLD.)

Please note that the following may also be required:

1. The reverse side of the CPF tax form contains a partial list of exemptions claimed by the taxpayer. Items (J) and (M) will require the signature of the Town Attorney for programs established or primarily administered by the Town and the signature of the Suffolk County Attorney for programs primarilary administered by the County. These signatures will have to be obtained prior to the closing.
2. The grandfather clause in the penalties and interest section calls for the signature of both buyer and seller. We have been informed by the County Clerk that they will also require a notarized copy of the contract (notarized prior to the effective date of the tax) be submitted or consideration to prove grandfathering. In the alternative, they will accept an unnotarized copy together with a copy of the negotiated deposit check (the check must be dated and negotiated prior to the effective date of the tax.)
3. The CPF form will require that all social security numbers by submitted even if all parties have not signed. Additional Sheets may be attached if necessary.

For your convenience, we will be adding additional information regarding this new 2% tax to our website in the next couple of weeks, please browse same and / or contact us directly with questions.
 

SECTION 100.4: GRANDFATHERED CONVEYANCES


1. A conveyance of real property occurring on or after April 1, 1999, is subject to the tax imposed pursuant to Article 31-D of the Tax Law and Local Law of 1998, unless the conveyance was made pursuant to a binding written contract entered into before April 1, 1999. The date of execution of the contract must be confirmed by independent evidence such as the recording of the contract, payment of a deposit, a notarized contract, or the taxpayer has engaged in other actions such as seeking a zoning approval or obtaining an environmental impact statement, or such other facts and circumstances as may be determined by the Treasurer.
2. Where a contract for the conveyance of real property was entered into before April 1, 1999, and is later amended, the conveyance is still considered to be made pursuant to a contract entered into before April 1, 1999, so long as the amendment to the contract is of a nonsubstantial nature. The determination of what constitutes a nonsubstantial change will be made on a case by case basis. However, any changes in the amount of consideration for the real property will be considered a substantial change to the contract and thus such conveyance is taxable.
3. Where the closing date provided for in a grandfathered contract is postponed, with additional payments by the grantee, the conveyance will be considered to be made pursuant to a contract entered into before April 1, 1999, if it is shown that the additional payments do not constitute additional consideration.

When a grantee agrees to extend the closing date of the contract in return for an additional sum of money, the additional sum of money is included as consideration unless the following criteria are met:
 

1. The agreement between the grantor and grantee must state that the payment is for the time delay.
2. The amount of money must be reasonable for the length of the delay.

EXAMPLE 1: A, the owner of real property, executed a binding written contract of February 1, 1999, to lease the property with an option to purchase to B, for $1,000.00, a month for the (10) years. B, paid the $1,000.00, as a deposit on the lease on that date. The final closing of the transaction occurred on July 10, 1999. The creation of the lease with the option to purchase is a grandfathered conveyance which is not subject to tax since it was made pursuant to a binding written contract entered into before April 1, 1999, and the date of the execution of the contract was confirmed by the independent evidence (payment of the deposit by B.)

EXAMPLE 2: Same facts as in example 1, except that on May 1, 1999, the contract was amended to provide that B would pay $500.00 semi-monthly, instead of $1,000.00, monthly. This amendment is considered to be of a nonsubstantial nature and, therefore, the conveyance is still considered to be a grandfathered conveyance not subject to tax.

EXAMPLE 3: Same facts as in example 1, except that on June 11, 1999, the contract was amended to provide that B would pay $1,200.00 each month instead of $1,000.00. This is a change in the amount of consideration for an interest in real property. Therefore, the conveyance is subject to tax since it no longer qualifies as a grandfathered conveyance.

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  SECTION 100.8: EXEMPTIONS AND NON-TAXABLE TRANSACTIONS
   

  1. The following shall be exempt from the payment of the real estate transfer tax:
  1. The state of New York, on any of its agencies, instrumentalities, political subdivisions, or public corporations (including corporation created pursuant to an agreement or compact with another state of Dominion of Canada.
  2. The United Nations, the United States of America or and of its agencies or instrumentalities.
  1. The tax shall not apply to any of the following conveyances:
  1. Instrumentalities, agencies or political subdivisions (or any public corporation, including a public corporation created pursuant to agreement or compact with another state or the Dominion of Canada.);
     
  2. Conveyances which are or were used to secure debt or other obligation;
     
  3. Conveyances which, without additional considerations confirm, correct, modify or supplement a deed previously recorded;
     
  4. Conveyances of real property without consideration and otherwise that in connection with a sale, including deeds conveying realty as bona fide gifts;
     
  5. Conveyances given in connection with a sales tax;
     
  6. Conveyances to effectuate a mere change of identity or form of ownership or organization where there is no change in beneficial ownership, other than conveyance to a cooperative housing corporation of the real property comprising the cooperative dwelling or dwellings;
     
  7. Conveyances consisting of a deed of partition;
     
  8. Conveyances given pursuant to the federal bankruptcy act;
     
  9. Conveyances of real property which consists of the execution of a contract to sell real property without the use of occupancy of such real property or the granting of an option to purchase real property without the use or occupancy of such property.
     
  10. Conveyances of real property, where the entire parcel of real property to be conveyed is the subject of one or more of the following developmental restrictions conveyed to the State of New York, a Town, a Village, a County, or a not-for-profit tax exempt organization operated for conservation, environmental or historic preservation purposes, and where the Town Attorney or other official designated by the Town Board has determined that the restrictions imposed prohibit the use of the property for any purposes except agriculture, recreation or conservation in order to comply with this paragraph:
  1. agricultural, conservation, scenic or an open space easement;
  2. covenants or restrictions prohibiting development;
  3. a purchase of development rights agreement;
  4. a transfer of development rights agreement, where the property being conveyed has had its development rights removed;
  5. said real property is subject to the development restriction of an agricultural district or individual commitment, pursuant to article 25AA of the agricultural and markets law;
  6. real property subject to any town adopted land preservation agreement

  11. Conveyances of real property, where the property is viable agricultural land, and the entire property to be conveyed is to be made subject to one of the development restrictions provided for in subparagraph tow (2) of paragraph ten(10) of this subdivision provided that said development restriction precludes the conversion of the property to a non-agricultural use for at least three years form the fate of transfer, and said development restriction is evidenced by an easement, agreement, or other suitable instrument which is to be conveyed to the town simultaneously with the conveyance other real property; or

  12. Conveyances of real property for open space, parks or historic preservation purposes to any not-for-profit tax-exempt corporation operated for the conservation, environmental or historic preservation purposes.

  (c) Allowance:

  East Hampton $ 250,000.00 Improved $ 100,000.00 Vacant Land (Unimproved) Shelter Island $ 250,000.00 Improved $ 100,000.00 Vacant Land (Unimproved) Southampton $ 250,000.00 Improved $ 100,000.00 Vacant Land (Unimproved)

  Riverhead $ 150,000.00 Improved $ 75,000.00 Vacant Land (Unimproved) Southold $ 150,000.00 Improved $ 75,000.00 Vacant Land (Unimproved)

  (d) EXAMPLES:

  Example 1: A, sells 100 acres of farmland to B. Said farmland is subject to a perpetual agricultural easement. This transaction is not taxable under section 100.8 (b) 10 i.

  Example 2: A, sells his house and a two (2) acre lot to B. The lot had a one hundred (100) foot buffer scenic easement along the street frontage. This transaction is taxable since the easement covers only a portion of and not the entire property.

  Example 3: A, conveys a fifty (50) acre parcel located in an agricultural district under Article 25-AA of the Agricultural and Markets Law, The transaction is not subject to tax, under Section 100.8 (b) 10 v.

  Example 4: A, conveys viable agricultural land to B. Said land is fully developable. However B, files a term conservation easement of five (5) years, precluding development at the same time as he files the deed for the agricultural land. The transaction is not taxable under Section 100.8 (b) 11, since a development restriction has been filed which is three (3) years or greater.

  Example 5: A, conveys a thousand (1,000) acres of land to the Nature Conservancy for open space purposes. The transaction is not taxable under Section 100.8 (b) 12.

  Example 6: A, sells his home in the Town of East Hampton to B for $ 500,000.00. Under Section 100.8 (c), the first $ 250,000.00, is exempt from consideration. Thus, the tax paid at a rate of 2% of the remaining $250,000.00, of consideration is $ 5,000.00.

  Example 7: Same as Example 6, except the consideration is $ 150,000.00. No tax is due, since the exemption exceeds the consideration.

  Example 8: A, sells his vacant lot, in the Town of East Hampton to B, for $ 125,000.00. The first $100,000.00 of consideration is exempt under Section 100.8 (c). Thus, the tax paid at a rate of 2% on the remaining $25,000.00 of consideration is $500.00.

  Example 9: Same as Example 8, except the consideration is $ 75,000.00. No tax is due since the exemption exceeds the consideration.

  Example 10: Same as Example 8, with consideration of $250,000.00, except the land is improved by a shed and a fence. The transaction is taxable, since neither a shed or a fence is a principal building or use.

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