New Penalties Possible for Mortgage Lenders and a Clarification on the Taxation of Ground Leases

Every year, the New Hampshire legislature makes numerous changes to state law. This is a brief roundup of some of the changes which could impact home buyers, sellers, or other property owners in Nashua, Milford, Merrimack, and elsewhere around Southern New Hampshire.

Real Estate Transfer Tax and “Ground Leases”

In 2014, there was disagreement between the State of New Hampshire and the real estate industry about whether or not “ground leases” are subject to the Real Estate Transfer Tax imposed on most real estate transactions in the state. Ground leases are long-term leases of property (generally between 50 and 99 years) which allow commercial developers or other tenants to erect buildings and make other improvements to the land.

RSA 78-B was amended in July 2015 to clarify that ground leases of 99 years or less are not subject to the real estate transfer tax.

New Penalties for Lenders Failing to Discharge a Mortgage

New Hampshire state law RSA 479 governs real estate mortgages, and lays out requirements for how to discharge them.

In a situation where a property owner pays off their mortgage but the lender (mortgagee) fails to discharge the mortgage within 60 days of the payoff, the RSA 479:7-a provides for a “Discharge by Affidavit.”

This allows the property owner, after following specific procedures, to record an affidavit in the registry of deeds swearing that the mortgage was paid off. A properly recorded affidavit will serve to discharge the mortgage.

House Bill 230, which goes into effect January 1, 2016, makes two noteworthy changes to the mortgage statute.

First, the previous version of the bill required an attorney to execute the affidavit for discharge. The amendment allows the mortgagor (homeowner) themselves to execute the affidavit.

Secondly, the law now specifies the penalty lenders have to pay if they fail to discharge a mortgage within 60 days of payoff. The penalty provides for damages to the property owner of $200/week after the 60 day deadline, up to a maximum of $2,500, or “in an amount equal to the loss sustained as a result of the failure of the mortgagee to execute and deliver a release, whichever is greater.” The statute also requires the lender to pay reasonable costs and attorney’s fees as a penalty.

If you have questions about changes to New Hampshire real estate law or another question about residential or commercial real estate or land use, contact the attorneys at Welts, White & Fontaine at (603) 883-0797, or use the form at the very bottom of this page. Information from www.nhar.org was used as a reference for this article.

This blog is intended for informational use only. The information contained herein should not be construed as offering legal advice or a legal opinion.