| Question: |
I am buying my first home. Do I need a lawyer or can my Realtor take care of
everything? |
| Answer: |
Purchasing a home is often the
single largest purchase in a person's life.
There are many issues to consider before signing
an agreement of sale to ensure that you obtain
clear title to the home, among other things.
Remember, in most cases, the Realtor is the
representative of the seller and does not
represent the buyer. Therefore, it is very
important to consult with an attorney before you
sign an agreement of sale to purchase a home to
make sure your interests are protected |
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| Question: |
We have fallen behind in our mortgage
payments and now the Bank is threatening
foreclosure. Is there any way out of this short
of losing the property? |
| Answer: |
Yes. There are many actions that can be
taken to protect your property. These include
entering into negotiations with the foreclosing
creditor, defending a foreclosure action that is
instituted by the mortgage company and,
possibly, filing a bankruptcy to get you the
time you need to save your home. We have
attorneys experienced in all these areas who
would be able to help you. |
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| Question: |
What does
“Assessed Value” of real estate mean? How is
real estate tax due on a particular parcel of
real estate calculated? |
| Answer: |
Assessed Value is the value set
by the County Tax Assessment Office for each
parcel of real estate in the county as a basis
for levying taxes. In Berks County, assessments
were originally set at 100 percent of market
value, as part of a county-wide reassessment
which occurred in 1992. In order to determine
the amount of tax due on a particular parcel of
real estate, it is necessary to know the
“millage” imposed by (i) the county; (ii) the
municipality (township, borough or city); and
(iii) the school district in which the parcel is
located. One mil equals 1/10 of 1% (0.1%). If
the total millage (county, municipality and
school district) on a particular parcel of real
estate in Berks County is 30 mills, and if the
assessment of that parcel is $100,000.00, the
total real estate tax due on that property would
be $3,000.00 each year (.01% x 30 = 3%; 3% of
$100,000.00 = $3,000.00). |
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| Question: |
How and when do
Assessments on Parcels of Real Estate Change? |
| Answer: |
Generally assessments remain the same unless
and until there is a county-wide reassessment.
However, parcels may be reassessed if special
circumstances exist. Circumstances which might
result in an assessment change would be new
construction on a parcel previously assessed as
a vacant lot, or the substantial destruction of
improvements on real estate because of a
catastrophic event such as a fire. Generally, in
order to obtain an assessment reduction, the
person owning the property must request such a
change by appealing the assessment. Contact your
lawyer if you believe the assessment on your
property is too high for any reason. Assessments
can be made by the county based on improvements
to a property. The Berks County Tax Assessment
Office is made aware of construction of
improvements, additions, etc. by obtaining
copies of building and construction permits
issued in the county. |
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| Question: |
What is the Fiscal
Year for Real Estate Taxes Imposed by
Municipalities, the County and School Districts? |
| Answer: |
In Berks County, the fiscal year for real
estate taxes is the calendar year for county tax
and for all municipalities in Berks County,
which includes all townships, boroughs and the
City of Reading. For all school districts in
Berks County, the fiscal year for purposes of
real estate tax is July 1 through June 30 of the
following year. |
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| Question: |
What is transfer tax? |
| Answer: |
Transfer tax, more correctly known as
Pennsylvania Realty Transfer Tax and sometimes
known as "real property transfer tax", is tax
imposed on sales of real estate, and also upon
sum gifts and other transfers of real estate.
Transfer tax must be paid before the Berks
County Recorder of Deeds will record a deed or
other instrument by which ownership of a parcel
of real estate is transferred or sold, except in
certain limited exceptions. |
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| Question: |
Who pays the transfer
tax? |
| Answer: |
In situations involving negotiated sales of
real estate between a seller and a buyer, the
agreement of sale controls as to which party is
responsible for payment of transfer tax. As a
general rule, agreements of sale for real estate
in Berks County, Pennsylvania provide that the
responsibility for transfer tax shall be shared
equally between the seller and buyer. However,
it is important to realize that the equal
sharing of transfer tax is subject to
negotiation in any particular agreement of sale.
In certain situations where real estate is
transferred without “fair consideration”,
meaning without payment of fair market value,
real estate transfer tax must be paid on the
imputed fair market value. See the question
below. |
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| Question: |
What are the transfer
tax rates in Berks County, Pennsylvania? |
| Answer: |
There is a Pennsylvania State Tax on real
estate transfers equal to 1% of the value of the
property or interest being conveyed. In Berks
County, each municipality has also enacted a
transfer tax, and the rate in all municipalities
in Berks County, Pennsylvania is 1% of the value
of the property or the interest being conveyed,
except in the City of Reading. In the City of
Reading, the municipal transfer tax rate is 4%
of the value of the property or interest being
conveyed. Therefore, in Berks County,
Pennsylvania, the combined real estate transfer
tax rate is 2% of the value of the property
conveyed, except within the city limits of the
City of Reading. In the City of Reading, the
combined real estate transfer tax rate is 5%.
Note that the value of the property or interest
being conveyed is presumptively the purchase
price, but this is not always true. Pennsylvania
has adopted complex rules which address exempt
conveyances of real estate, meaning transfers
for which no transfer tax is payable in order
for a deed to be recorded. |
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| Question: |
Is transfer between
ex-spouses exempt from Pennsylvania Realty
Transfer Tax? |
| Answer: |
A deed between ex-spouses IS exempt from the
Pennsylvania Realty Transfer Tax |
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| Question: |
What other transfers
of real estate are exempt from Pennsylvania
Realty Transfer Tax? |
| Answer: |
Conveyances between husband and wife, parent
and child, grandparent and grandchild and
brothers and sisters are exempt. There are also
other exemptions that are allowed in certain
situations. It is best to consult your attorney
for a clear understanding of exemptions which
may apply in a particular situation. IMPORTANT:
Non-Profit Corporations are NOT Exempt from
Pennsylvania Realty Transfer Tax. |
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| Question: |
What is the imputed
fair market value of a parcel of real estate,
why is it important, and how is it determined? |
| Answer: |
Some conveyances of real estate are transfer
taxable, but involve no “consideration” or
purchase price from which the transfer tax can
be calculated.
For example, if a person wishes to make a gift
of real estate to a life-long friend, the law
allows the transfer to take place without the
grantee named in the deed making any payment to
the person making the gift. However, the
transfer remains taxable for real estate
transfer tax purposes.
How much tax is paid? The
law provides a mechanism for establishing the
“imputed” fair market value of a parcel of real
estate. If all assessment figures for all
parcels of real estate were current (as would be
the case immediately following a county-wide
reassessment) the assessment figure would be the
imputed fair market value for purposes of
calculating transfer tax on taxable transfers
where “fair consideration” is not paid. However,
the law recognizes that assessments do not
remain current (in the sense of approximating
fair market value) because real estate typically
appreciates in value over time. The Pennsylvania
Department of Revenue has established a Board,
known as the State Tax Equalization Board, which
tracks the sale of properties in each county of
Pennsylvania to determine how closely the stated
purchase prices match the assessed values of the
parcels being sold in that county. The
comparison between the two figures is called the
Common Level Ratio. Pennsylvania law requires
the County Board of Assessment Appeals to take
the ratio into account when the State Tax
Equalization Board determines that assessments
on properties being sold are typically less than
85% of the stated purchase prices.
Interestingly, Pennsylvania law does not include
any provision requiring counties to perform
county-wide reassessments of properties,
although a new county-wide reassessment in Berks
County, Pennsylvania has been discussed.
After the Common Level Ratio is determined, a
“multiplier” is mathematically derived as
follows: If a property with a county assessment
of $70,000.00 typically has a fair market value
of $100,000.00, the Common Level Ratio would be
established as .70 ($70,000.00 ÷ $100,000.00).
The multiplier would be the “inverse” of that
ratio, or $100,000.00 ÷ $70,000.00, which equals
1.43 (rounded). In determining the imputed
value, the assessment of a parcel would then be
multiplied by 1.43 to determine the imputed
value for purposes of calculating transfer tax.
As of May 2007, the “multiplier” in force in
Berks County, Pennsylvania, is 1.33. |
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| Question: |
What is the difference
between the Appraised Value and the Assessed
Value of a parcel of real estate? |
| Answer: |
Appraised Value refers to a property's fair
market value as determined by a qualified
appraiser. Fair market value in turn is often,
expressed as what a ready, willing and able
buyer would pay to a ready, willing and able
seller for a particular parcel, without either
party being subject to any unusual pressure to
either buy or sell. Appraisal standards and
methods can be complicated, but generally an
appraiser would look at sales of properties
which are comparable to the property in
question. An appraiser may also look at the cost
of replacement of the particular property, as
well as the rental or other income which could
be expected from the property All of these
factors may be considered in arriving at an
opinion of value.. Assessed Value refers to the
figure placed on a parcel of property by the
Berks County Tax Assessment Office for purposes
of real estate taxation. While assessments in
Berks County were originally based on an
estimate of market value at the time of the 1992
county-wide reassessment, assessments are now
typically lower than fair market value. |
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| Question: |
My deed includes the
clause “running with the land”. What does that
mean?
Example Deed Language: “Said restrictions shall
be covenants running with the land and in any
deed of conveyance of said premises or any part
thereof to any person or persons, said
restrictions and conditions and it shall be
incorporated by reference as the same are herein
contained”.
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| Answer: |
In the above example, the term running with
the land means that the restrictions and
covenants (promises) in the deed shall continue
to be in effect with regard to the real estate
no matter who owns it. Those covenants will
never cease to exist and they are part of the
title to the real estate. |
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| Question: |
When a spouse dies, it
is necessary to delete his/her name from the
deed? |
| Answer: |
Generally, no. Almost all deeds to spouses
provide, either expressly or by operation of
law, that the surviving spouse owns the property
immediately and automatically upon the death of
the first spouse to die. It is usually not
necessary to record a deed clarifying that one
of the original grantees has died. Special
circumstances may arise in which it would be
preferable to cause such a deed to be recorded,
although those situations would be rare. |
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| Question: |
If the original deed
or mortgage is misplaced, how can I get a copy? |
| Answer: |
Copies of all recorded documents pertaining
to real estate can be made at the Berks County
Recorder of Deeds Office located in the Berks
County Services Center, 633 Court Street,
Reading, PA. In order to make a copy, you will
need to know the recording information, meaning
the record book volume and page number at which
the document is recorded. This information may
be obtain from indexes available at the Berks
County Services Center. |
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| Question: |
If a woman owns real
estate, gets married and changes her last name,
does she have to change her name on the deed to
the real estate? |
| Answer: |
No, but when the real estate is sold, at
settlement, the attorney or individual preparing
the deed will require her to sign her name both
as it appears on the deed and using her current
name. Depending on the details of the particular
situation, it might be desirable to consult with
your attorney. |
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| Question: |
Can anyone look up
information on my Berks County property? |
| Answer: |
Generally, yes. The Berks County Recorder of
Deeds Office is open to the public and anyone
can access real estate records, such as who owns
a parcel of property, the date of the deed, the
recording information including the record book
volume and page information, the purchase price
for the parcel, the assessed value, the acreage
of the property and whether there are any
mortgages or liens against the property. The
Berks County Recorder of Deeds will help in
making copies, but they are not lawyers and do
not provide legal advice and will not provide
assistance if you attempt to perform a title
search on a particular parcel of real estate. |
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| Question: |
I noticed a property l
am interested in purchasing on the Berks County
Sheriff’s Sale List. How do I find out if there
are any mortgages, tax liens, or other liens
filed against that property? |
| Answer: |
If you purchase a property at a Sheriff’s
Sale, you purchase the property “as is”, both
with respect to condition and with respect to
the state of title. The Sheriff’s Office does
not have any information on liens or taxes due
on the real estate except the information
provided by the lender forcing the sale. If you
are thinking of purchasing a property at
Sheriff’s Sale, it would be advisable to have an
attorney or title company perform a title search
on that property to make sure there are no liens
or taxes due against the property other than the
lien of the lienholder which instituted the
foreclosure action, or that all other liens will
be “divested” or removed by the sale..
A purchaser at a Sheriff’s Sale of real estate
receives absolutely no guarantees, warranties or
assurances concerning the condition of the
property, or any improvements on the property.
If the property is vacant, you may contact the
Plaintiff (or lienholder who instituted the
foreclosure) to inspect the property to see if
you are still interested, but normally you will
not be permitted access to the interior before
Sheriff Sale. Generally, if you are serious
about potentially bidding at a Sheriff’s Sale of
real estate, you should contact a lawyer. |
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| Question: |
How can I find out who
owned my property before the people I bought it
from? |
| Answer: |
The last paragraph of many deeds includes a
clause referred to as a “recital”. The recital
generally indicates the name of the owner who
conveyed the property to the grantor in the
deed. Not all deeds include recitals, however.
Title information for all parcels of real estate
is available at the Berks County Recorder of
Deeds Office in the Berks County Services
Center. |
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| Question: |
I paid off my
mortgage. How do I get the mortgage off the
public record? |
| Answer: |
Upon making your final payment, contact your
lender to determine how the satisfaction of the
mortgage will be handled. The lender may send
you a Mortgage Satisfaction Piece. The Mortgage
Satisfaction Piece and the original mortgage,
along with the proper recording fee, should be
hand delivered to the Berks County Recorder of
Deeds Office in order to record the Mortgage
Satisfaction Piece. If the original mortgage was
lost or destroyed, the mortgage may be satisfied
using a certified copy of the mortgage prepared
in the Berks County Recorder of Deeds Office. It
might be best to contact a lawyer to assure this
process is handled correctly, since it is very
important that mortgages which have been paid in
full are properly removed from the public
record. |
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| Question: |
What are the forms of
ownership of real estate and how does the form
of ownership affect transferability? |
| Answer: |
(a) Sole Owner: This is the simplest way to
hold title. One person is the sole owner of the
property, and may sell or transfer it freely
during his or her lifetime. Upon the owner's
death, probate proceedings in the jurisdiction
where the deceased resided must be instituted.
The property will then be transferred under the
terms of the Last Will and Testament. If an
owner dies without a Will, laws called
“Intestate” laws generally determine who will
receive ownership of the property.
(b) Tenants
in Common: Tenancy in common is co-ownership
between two or more individuals, where each
owner owns a separate and undivided interest in
the property. In a co-tenant situation, each
co-owner can (theoretically) sell or transfer
his or her fractional interest any time.
Marketable is severely limited by non-exclusive
ownership. When one tenant dies, his or her
interest in the real estate does not pass
automatically to the other tenant or tenants,
that is, there is no “right of survivorship”.
Issues involved with tenancy in common can be
complex. If you are involved in a co-tenant
situation and a problem arises, consult an
attorney.
(c) Joint Tenancy with Right of
Survivorship: Joint Tenancy involves
co-ownership of property among two or more
persons where each tenant has a “right of
survivorship” with respect to the rights of the
other tenants. Transfer of one joint tenant’s
interest without the joinder of all joint
tenants is theoretically possible, but again,
practically difficult. When one joint tenant
dies, his or her interest in the real estate
immediately passes to the surviving tenant or
tenants. Real estate held under joint tenancy
does not pass as part of the estate of the first
tenant to die.
(d) Tenants by the Entireties:
Tenancy by entireties is similar to joint
tenancy, but is restricted to ownership by
husband and wife. Neither spouse can transfer or
convey his or her interest to a third party
without the other spouse joining in the
transfer. Upon the death of a spouse, title to
the property passes to the surviving spouse by
right of survivorship. Real estate may also be
held in trust, including a trust established for
estate planning purposes. Consult a lawyer for
additional details. |
