Bulletin: MD2015008

Dear Associates:

This Bulletin amends and supplements Bulletin MD2012004 dated May 24, 2012.

Effective July 1, 2013, indemnity mortgages or deeds of trust (IDOTs) that secure a guarantee of repayment of a loan or a series of loans that are part of a transaction for less than $3,000,000 are exempt from recordation taxes. MD Tax-Property §12–105(f)(1) and MD Tax-Property §12–105(f)(7)(iii)(2).

http://mgaleg.maryland.gov/webmga/frmStatutesText.aspx?article=gtp§ion=12-105&ext=html&session=2015RS&tab=subject5

Although the taxation of IDOTs seems relatively straightforward as a result of this statute, be advised that Maryland counties often interpret tax statutes on a jurisdiction-by-jurisdiction basis. Some counties have a particular dislike for granting tax exemptions of any dollar amount where individuals create IDOTs with entities that they own a part of, either as borrowers or as guarantors.  

Note also that certain counties require that an IDOT be accompanied by a county affidavit attesting to the structure of the transaction. Some counties may also collect state and county transfer taxes on IDOTs.

For all of the reasons above, questions regarding the taxation of IDOT transactions require you to contact the county clerk or finance office prior to closing to determine the proper amount of tax to be collected.  

Please contact a Maryland underwriter if you have any questions about taxation of IDOTs.  

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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