What is the Connecticut Real Estate Conveyance Tax?

What is a real estate conveyance tax?

A real estate conveyance tax is a tax paid by the “Transferor” in a real estate transaction, typically this is a Seller. However, there are some clever Sellers that put the burden of paying the conveyance tax on the Buyer in the real estate purchase and sale contract. The conveyance tax is paid BOTH to the State of Connecticut as well as to the municipality in which the property is located. The real estate conveyance tax MUST be paid to the Town Clerk (note: not the tax collector) at the time that the Deed transferring title is recorded on the land records. You must also present a completed  and signed OP-236 – Connecticut Real Estate Conveyance Tax Return. A fillable online version is available here.

How much is the real estate conveyance tax in Connecticut?

The amount of the conveyance tax is dependent on the value of the real estate property being conveyed. In Connecticut, the real estate conveyance tax is .0075 of every dollar to the State (thts 3/4 of 1%) and .0050 of every dollar to the local municipality (that’s 1/2 of 1%).

If a home sells for $200,000.00, the Seller will have to pay $1,500.00 to the State of Connecticut, and $1,000.00 to the Town.

Are there any exceptions to the Connecticut Real Estate Conveyance Tax?

There are 22 exceptions that are noted on the back of the instructions to the return. The most commonly used are conveyances between spouses, conveyance due to foreclosure, and conveyance for little or no consideration.

foreclosure defense attorney

Right to Foreclosure Mediation Extended to Divorcees and Surviving Spouses – Connecticut Public Act No. 15-124

Right to Foreclosure Mediation for Divorcees and Surviving Spouses

Connecticut Public Act 15-124 – An Act Extending The Foreclosure Mediation Program

One of the benefits of being in a multi-partner law firm is the overlap between our different practice areas, allowing us to better help our clients in difficult situations. Since our firm represents divorce clients, probate clients, and foreclosure clients, Connecticut Public Act no. 15-124 is going to allow us to help clients better solve their foreclosure issues when relating to residential real estate property that was part of divorce or probate proceedings.

The Problem Was Standing

Perhaps you are a divorcee. You just finished the long and stressful process of divorce. Part of the Court ordered Divorce Decree is that your ex-spouse execute a quitclaim deed transferring a house or condominium to your ownership. The deed is drafted and recorded on the land records and as far as you are concerned the property is now yours.

Perhaps your spouse recently passed away. You just finished the extremely complicated probate process. In their will your spouse left you residential real estate property. The Executor of your spouse’s estate drafted an Executor’s Deed, which was approved by the probate court and recorded on the land records, transferring title in the property to you.

In either case, let’s assume there was a mortgage on the property. Either your ex-spouse had not been making payments or the probate estate had not been making payments and the mortgage is in default. Or, even if the payments are current, the mortgage has a “due on transfer” clause, which states that if the property is ever transferred from the ownership of the borrower under the mortgage, the entire outstanding amount is due and payable in full. As is common, the collateral on the mortgage is the property itselfThe bank is now foreclosing on the property.

As the new owner, you want to enter foreclosure mediation so that you can find a way to keep your family home; through mortgage modification or refinance. Until October 1, 2015, YOU COULDN’T!

The issue was standing! Since you were not a party to the mortgage, you had no “privity of contract”, and therefore no standing to challenge the foreclosure in court. The foreclosure would proceed and the bank would be allowed to either repossess or sell your property to pay off the money owed to them.

The Connecticut Legislature Solves The Problem

The Connecticut Legislature saw the issue of removing spouses from the family home without letting them be heard when a court order had given them possession of the residential real estate property. After all, how is it fair to completely stonewall the new owner of the property from mediating a solution to the foreclosure?

Therefore, Public Act No. 15-142 has extended the foreclosure mediation process to include spouses who became “successors in interest” due to divorce, separation, or death of the other spouse.

What this means for our clients

The new law allows the divorcee or decedent’s spouse to stand in the shoes of the previous owner, at least as far as defending against foreclosure of the property is concerned. This means that we can now offer assistance to our foreclosure clients who became owners through divorce or death of their spouse. Previously, we would have had to turn these people away as there was no legal procedure available for us to resolve their problem. It is not guaranteed that the successor-in-interest spouse will be allowed to keep the property, but at least now they have a fighting chance.