Virginia Recording and Title Provisions Amended
By Paul McSheffrey, J.D.
Tenancy by the Entireties
The Virginia legislature has recently adopted changes to statutes regarding tenants by the entireties. Under 55-20.2(B) property held by a husband and wife as tenants by the entireties and conveyed to their revocable or irrevocable trusts shall have the same immunity from the claims of their separate creditors as if the property remained a tenancy by the entirety. The new amendment adds that any proceeds of the sale or disposition of such property are also protected from the claims of their creditors.
However, in order for such immunity to be effective, the property must continue to be the property of the husband and wife. This includes where both spouses are current beneficiaries of one trust that holds the entire property, or when each spouse is a current beneficiary of a separate trust and the two separate trusts together hold the entire property. The immunity from claims may be waived by the trustee with written consent of the husband and wife or if the trust includes a provision allowing the trustee to make the waiver.
These amendments are effective for any property held by a husband and wife as tenants by the entirety and conveyed to their revocable or irrevocable trusts, regardless of when the property was conveyed to the trust.
Security Instruments and the Maximum Recordation Tax
The state of Virginia has recently made changes regarding security instruments and the maximum applicable recordation taxes. The maximum recordation tax for deeds of trust or mortgages is found under 58.1-803(A)(1). The tax is imposed at a rate of 25 cents for every $100 of the amount of the obligations secured. For transactions involving an open, credit line, or revolving deed of trust, the amount of the obligation is the maximum amount that may be outstanding. This is regardless of the amount owed or outstanding at the time the instrument is recorded.
For deeds of trust, mortgages, or other instruments that modify the terms of an existing deed of trust or mortgage on which the tax has already been paid, the recordation tax is only calculated based upon the amount of the obligation in addition to the original obligation. Section 58.1-803(F) provides the rate schedule used to calculate the maximum tax in such transactions. For refinancing of an existing debt, section 58.1-803(E)(1) provides the rate schedule.
The full details of the changes can be read in Virginia Senate Bill 999. These changes are effective for transactions on or after July 1, 2015.
Paul McSheffrey, J.D. is Regulatory Compliance Consultant at Bankers Advisory. He is a graduate of Northeastern University and earned his Juris Doctor at the New England School of Law. Paul is admitted to the Bar in Massachusetts and New York. He can be reached at Paul@bankersadvisory.com
Paul McSheffrey, JD, is a senior regulatory compliance consultant with CLA. He is a graduate of Northeastern University and earned his juris doctor at the New England School of Law. He is admitted to the Bar in both Massachusetts and New York.
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