Case Development - Realty Transfer Fees

     On October 30, 2009, the Tax Court of New Jersey decided Mack-Cali Realty, LP, et al. v. Clerk of Bergen County, et al. which presented the question of whether the exemption from the realty transfer fee allowed by N.J.S.A. 46:15-10(a) where consideration is less than $100.00 is applicable from two conveyances from Mack-Cali to other limited liability companies which it was the sole member. While the decision will likely be appealed to the Appellate Division, the decision currently stands for the proposition that a deed between commonly-owned entities that transfers unencumbered real estate and for which no other consideration passed from grantee other than the amount set forth in the deed, then that transfer is likely exempt from the realty transfer fee requirements.

     The Tax Court construed the definition of "consideration" is stated in terms of “the actual amount of money and the monetary value of any other thing of value constituting the entire compensation paid or to be paid for the transfer of title to the lands, …” (emphasis added).   As such, while the definition includes the amount of any mortgage to which the transferred property is subject, it does not otherwise include any element not paid by the grantee to the grantor. Therefore, it does not include an indirect benefit of the kind imputed by the New Jersey Division of Taxation in affirming the County Clerk's determination that a realty transfer fee be imposed.  Accordingly, the Tax Court held that the consideration for each transfer was $10.00 as stated in the deed and the transactions are exempt from the realty transfer fee.