Although the snow is lingering longer then we expected this year, spring is just around the corner, and with the warm weather many in the community start planning the annual exodus to the Jersey Shore. Some already own homes, some rent, and others decide to look for a permanent place. Whatever category you are in, you should be aware of these recent changes in New Jersey law.
The Mansion Tax
Everyone know that the value of real estate has been appreciating at a rapid rate in New Jersey, especially in the Deal area. Now it seems this news has reached the New Jersey legislature.
This past summer a new law, dubbed the ‘Mansion Tax’, took effect as of August 1, 2004. It requires the buyer of a residential property for a consideration (price) in excess of one million dollars to pay a fee of one percent of the total purchase price. This means that a buyer of a million dollar home must pay a minimum of ten thousand dollars extra for the purchase. This fee goes directly to the State, and must be paid to the county clerk or the deed will not be recorded. For years sellers of property in New Jersey have had to pay an ever escalating realty transfer fee that was also based on the purchase price, but now the buyer must pay also. Also, unlike in New York State, for years New Jersey has required that the consideration (purchase price) be recited on the face of the deed, and it will not be recorded unless the seller certifies in a notarized statement in the deed that it is the full price paid for the property.
The One C.O. Rule
A second home on the Jersey shore has long been considered a wise investment. It can be used by the owners, and/or it can be rented out, either for the winter, the summer, or year-round. A recent ordinance passed by several towns seeks to impact this freedom. The issue arose due to some absentee and unresponsive landlords who owned rental property around Monmouth College and who rent to students. These students created tremendous friction with their year-round neighbors with constant noise, garbage, overcrowding, parties, drinking, trespassing and other undesirable behavior. Unfortunately, even though these landlords were notified and filed continuously, this did nothing to alleviate the yearly problems. The locals appealed to their town governments, who responded by passing what is know as the ‘one c.o. rule’. This means that each municipality will only issue one c.o. (certificate of occupancy) per property, per year. In simple terms, you can no longer legally rent for both the summer and winter. The towns involved are Ocean Township, Deal, and Long Branch. Some argue that this will do nothing to solve the underlying problem, since landlords can still rent to college students in the winter, and use the property themselves in the summer. Others have organized to overturn it on constitutional grounds.
The $250.00 Surcharge
The legislators have not ignored the common occurrence in municipal court, when a defendant plea bargains a ‘point’ ticket down to a ‘no-point’ ticket. While this is entirely legal, the State of New Jersey has decided to turn it into yet another revenue producing transaction. Previously, the fines collected in municipal court went to the municipality. If you appeared in court and were fined, you also had a modest ‘court costs’ fee added to the fine. Now, as of July 1, 2004, any case that is pleaded down to no points is subject to a mandatory surcharge of $250.00 that is collected by the local court and sent to the State of New Jersey. This is in addition to the fines and court courts you are assessed for the underlying ticket. Now when you receive a traffic ticket in New Jersey, you must factor this surcharge in against any increased automobile insurance costs to decide whether to pay the lower fine and take the points and possible additional insurance costs, or try to plead down yet pay increased fines and the surcharge.
Homeowners, renters, and visitors to the Jersey shore need to be aware of these new developments so they can plan their transactions accordingly.