Va. Code Ann. § 58.1-803(D) (West 2013) states the following:
“On deeds of trust or mortgages, the purpose of which is to refinance an existing debt, which debt is secured by a deed of trust or mortgage on which the tax imposed hereunder has been paid, the tax shall be paid only on that portion of the amount of the bond or other obligation secured thereby determined in accordance with the following schedule . . .
The instrument shall certify the deed book and page number of the recorded instrument on which the tax for the original debt was paid. For purposes of this subsection, the term ‘value’ means the portion of the amount of the bond or other obligation secured by the property conveyed by the deed of trust.”
This section, therefore, allows for a partial exemption to a recording tax in connection with refinance loans. However, in order to qualify for the exemption, the recording information of the loan being refinanced must be listed in the security instrument.
In addition, Ibid. § 17.1-223(A)(iii) (West 2013) practically requires “the Code section under which any exemption from recordation taxes is claimed” to be “clearly stated on the face of the writing,” in order for the instrument to be recorded.
We have been providing this “recording tax exemption notice” on our standard Virginia closed-end security instruments (Cx354, Cx407, and Cx512) when the loan is refinancing a loan from the same creditor. However, after reviewing the language and the legal requirements, we have decided to modify it to update the format of the citation as well as to specify that the partial exemption applies to all refinance loans. The notice will now be in the following format and print for all refinance transactions:
“The purpose of this Deed of Trust is to refinance the terms of an existing debt, making this Deed of Trust partially exempt from recordation tax pursuant to Va. Code Ann. § 58.1-803(D). The original Deed of Trust being refinanced is recorded in Book [Field 623], Page [Field 625], or Instrument No. [Field 624].”
This change will take effect on October 4, 2013. If you have any questions or concerns about this change, please contact Client Support at 1.800.497.3584.
September 27, 2013
These are the names of the fields printing in this section of text:
- Field 623 “Derivation Recording Book Number”
- Field 625 “Derivation Recording Page Number”
- Field 624 “Derivation Recording Instrument Number”
There are now global optional field prompts in place in ConformX to prompt for these three fields in Closing packages for all Virginia closed-end refinances if the fields are not already set.
February 4, 2014