Massachusetts 2023-2024 Regular Session

Massachusetts Senate Bill S1786 Compare Versions

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2	2	SENATE DOCKET, NO. 2058 FILED ON: 1/20/2023
3	3	SENATE . . . . . . . . . . . . . . No. 1786
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Julian Cyr
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act relative to a local option real estate transfer fee to create and preserve housing.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :Julian CyrCape and Islands 1 of 13
16	16	SENATE DOCKET, NO. 2058 FILED ON: 1/20/2023
17	17	SENATE . . . . . . . . . . . . . . No. 1786
18	18	By Mr. Cyr, a petition (accompanied by bill, Senate, No. 1786) of Julian Cyr for legislation
19	19	relative to a local option real estate transfer fee to create and preserve housing. Revenue.
20	20	The Commonwealth of Massachusetts
21	21	_______________
22	22	In the One Hundred and Ninety-Third General Court
23	23	(2023-2024)
24	24	_______________
25	25	An Act relative to a local option real estate transfer fee to create and preserve housing.
26	26	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
27	27	of the same, as follows:
28	28	1 SECTION 1. Section 55C of Chapter 44 of the General Laws is hereby amended, in
29	29	2subsection (c), by inserting, in line 8, after the figure “44B” the following words: - “and section
30	30	355D of chapter 44”.
31	31	4 SECTION 2. Said section 55C of Chapter 44 of the General Laws is hereby amended by
32	32	5inserting, in line 45, after the word “revenue” the following words: - “provided further, that any
33	33	6such money received from section 55D shall be used exclusively for adaptive reuse, production
34	34	7or preservation of affordable housing or affordable housing purposes as that term is defined in
35	35	8section 55D”.
36	36	9 SECTION 3. Said section 55C of Chapter 44 of the General Laws is hereby amended, in
37	37	10subsection (d), in line 99, by inserting after the word “fee” the following words: - “, transfer fee”.
38	38	11 SECTION 4. Chapter 44 of the General Laws is hereby amended by inserting after
39	39	12section 55C the following section:   2 of 13
40	40	13 Section 55D. (a) Definitions: For purposes of this section, the following terms shall,
41	41	14unless the context clearly requires otherwise, have the following meanings:
42	42	15 “Affidavit of transfer fee”, an affidavit signed under the pains and penalties of perjury by
43	43	16the settlement agent that attests to (a) the true and complete purchase or sale price of the transfer
44	44	17of the real property interest; (b) the amount of the fee owed or the basis, if any, upon which the
45	45	18transfer is exempt from the fee imposed by said transfer; (c) the amount that the purchaser and
46	46	19seller are responsible for paying as required by the bylaw, ordinance or regulation allocating the
47	47	20transfer fee in accordance with this section; and (d) the obligation of the settlement agent to
48	48	21make payment of the transfer fee to the city, town or regional affordable housing commission.
49	49	22 “Affordable housing purposes” uses allowed by the municipal affordable housing trust
50	50	23fund or regional affordable housing commission fund into which funds are deposited hereunder.
51	51	24 “Affordable housing restriction", a recorded instrument held by a qualified holder which
52	52	25encumbers or restricts a real property interest so that the real property interest is perpetually
53	53	26or for a term of at least thirty years limited to use as a residence occupied by a low or moderate
54	54	27income household which earns less than a specified income level, the upper limit of which may
55	55	28not exceed 240 per cent of the applicable household area median income in that city or town as
56	56	29determined by the federal Department of Housing and Urban Development, or such lower limit
57	57	30to which the applicable municipal affordable housing trust fund or regional affordable housing
58	58	31commission fund is subject. A “qualified holder” is a governmental body or charitable
59	59	32corporation or trust which qualifies under the terms of chapter 184 to hold an affordable housing
60	60	33restriction.   3 of 13
61	61	34 “Member cities and towns”, cities or towns that are members of a regional affordable
62	62	35housing commission.
63	63	36 “Multi-family housing”, a building with 3 or more residential dwelling units or 2 or more
64	64	37buildings on the same lot with more than 1 residential dwelling unit in each building.
65	65	38 “Municipal affordable housing trust fund”, a municipal affordable housing trust fund
66	66	39established pursuant to Section 55C of this chapter, or any other municipal trust fund established
67	67	40pursuant to a law of the commonwealth providing for the creation and preservation of affordable
68	68	41housing in a particular city or town.
69	69	42 "Purchaser", the transferee, grantee, or recipient of any real property interest.
70	70	43 "Purchase price" or “sale price,” all consideration paid or transferred by or on behalf of a
71	71	44purchaser to a seller or the seller’s nominee, or for the seller’s benefit, for the transfer of any
72	72	45real property interest, and shall include, but not be limited to: (i) all cash or its equivalent so paid
73	73	46or transferred; (ii) all cash or other property paid or transferred by or on behalf of the purchaser
74	74	47to discharge or reduce any obligation of the seller; (iii) the principal amount of all notes or their
75	75	48equivalent, or other deferred payments, given or promised to be given by or on behalf of the
76	76	49purchaser to the seller or the seller’s nominee; (iv) the outstanding balance of all obligations of
77	77	50the seller which are assumed by the purchaser or to which the real property interest transferred
78	78	51remains subject after the transfer, determined at the time of transfer, but excluding real
79	79	52estate taxes and other municipal liens or assessments which are not overdue at the time of
80	80	53transfer; (v) the fair market value, at the time of transfer, of any other consideration or thing of
81	81	54value paid or transferred by or on behalf of the purchaser, including, but not limited to, any 4 of 13
82	82	55property, goods or services paid, transferred or rendered in exchange for such real property
83	83	56interest.
84	84	57 "Real property interest", any present or future legal or equitable interest in or to real
85	85	58property, and any beneficial interest therein, including the interest of any beneficiary in a trust
86	86	59which holds any legal or equitable interest in real property, the interest of a partner or member
87	87	60in a partnership or limited liability company, the interest of a stockholder in a corporation,
88	88	61the interest of a holder of an option to purchase real property, the interest of a purchaser or
89	89	62seller under a contract for purchase and sale of real property, and the transferable development
90	90	63rights created under chapter 183A; but shall not include any interest which is limited to any of
91	91	64the following: the dominant estate in any easement or right of way; the right to enforce
92	92	65any restriction; any estate at will or at sufferance; any estate for years having a term of less than
93	93	6630 years; any reversionary right, condition, or right of entry for condition broken; and the interest
94	94	67of  a mortgagee or other secured party in any mortgage or security agreement.
95	95	68 “Regional affordable housing commission”, a regional trust, bank, board or like entity
96	96	69created pursuant to general or special law for the creation and preservation of affordable housing
97	97	70as described in the general or special law establishing such entity, and whose membership
98	98	71includes two or more cities or towns. If a city or town is a member of a regional affordable
99	99	72housing commission, any authority granted to a city, town, or regional affordable housing
100	100	73commission pursuant to this Section shall be exercised solely by the regional affordable housing
101	101	74commission. 5 of 13
102	102	75 “Regional affordable housing commission fund” a fund established by general or special
103	103	76law for the use of a regional affordable housing commission for the creation and preservation of
104	104	77affordable housing as defined in the general or special law establishing such fund.
105	105	78 "Seller", the transferor, grantor, or immediate former owner of any real property interest.
106	106	79 “Settlement Agent”, an escrow agent, real estate attorney, or representative of a lender or
107	107	80title company that conducts the closing or settlement of the sale or transfer of a real property
108	108	81interest including the coordination of the attendance and document signing for all the parties,
109	109	82verification that each party to the transfer has performed their required responsibilities as
110	110	83outlined in the contract and the disbursement of all funds, along with the title and deed, to the
111	111	84appropriate parties after checking that all conditions are met at the close of the transfer
112	112	85transaction.
113	113	86 "Time of transfer", of any real property interest, shall mean the time at which such
114	114	87transfer is legally effective as between the parties thereto, and, in any event, with respect to a
115	115	88transfer evidenced by an instrument recorded with the appropriate registry of deeds or filed with
116	116	89the assistant recorder of the appropriate registry district, not later than the time of such recording
117	117	90or filing.
118	118	91 (b) Establishment and Requirements of a Transfer Fee. A city or town that has
119	119	92established a municipal affordable housing trust fund pursuant to section 55C or any other
120	120	93municipal affordable housing trust fund established by a law of the commonwealth providing for
121	121	94the creation and preservation of affordable housing in municipalities for the benefit of low and
122	122	95moderate income households or for the funding of community housing, as defined in and in
123	123	96accordance with chapter 44B, or a regional affordable housing commission, as applicable, may 6 of 13
124	124	97impose a fee upon the transfer of any real property interest in any real property situated in the
125	125	98city or town, or member cities and towns, as described and as subject to conditions and
126	126	99exemptions described herein.
127	127	100 (i) In order to enact a transfer fee, a city, town, or regional affordable housing
128	128	101commission, as applicable, shall demonstrate compliance with not less than 4 of the 7 provisions
129	129	102herein. A city, town, or regional affordable housing commission, as applicable, shall:
130	130	103 Demonstrate a commitment for the creation and preservation of affordable housing
131	131	104production prior to enactment of a transfer fee.
132	132	105 Demonstrate an average distribution of at least 50 per cent of Community Preservation
133	133	106Act funds, a dedicated to housing creation and preservation in the two years prior to enactment.
134	134	107To be eligible for this provision, a city, town, or regional affordable housing commission must
135	135	108levy a 3 per cent surcharge on property taxes dedicated to Community Preservation Act funds.
136	136	109 Dedicate at least 50 per cent of all room occupancy tax receipts collected from a Local
137	137	110Room Occupancy Tax, if so enacted by the city, town, or regional affordable housing
138	138	111commission, to wastewater, housing, or municipal infrastructure projects that advance affordable
139	139	112housing development.
140	140	113 A city, town or regional housing commission with a population of 2,500 residents or
141	141	114more shall designate a minimum of 5 percent of the residential zoned area as multi-family.
142	142	115 Limit .5 acre or greater single family residential zoning to not more than half of a city,
143	143	116town, or regional affordable housing commission’s residential zoned area. 7 of 13
144	144	117 Enact an accessory dwelling unit bylaw that is compliant with the definition of accessory
145	145	118dwelling unit in accordance with chapter 40A(1a).
146	146	119 Enact an approved smart growth zoning district, as defined in section 3 of chapter 40R.
147	147	120 (ii) A city, town, or regional affordable housing commission, as applicable, may establish
148	148	121different transfer fees for categories of properties, defined by the tax classification and the value
149	149	122of a property; provided, however, that the fee shall be no less than .5 per cent and no more than 3
150	150	123per cent of the purchase price of such real property interest.
151	151	124 (iii) The city or town or regional affordable housing commission, as applicable, shall
152	152	125have the authority to designate whether the transfer fee shall be borne by the purchaser, the seller
153	153	126or how it will be allocated between the two.
154	154	127 (iv) A purchaser, seller, or settlement agent in advance of the time of transfer shall
155	155	128request and the city or town or regional affordable housing commission, as applicable, shall
156	156	129provide to a purchaser, seller or settlement agent in advance of the time of transfer a certificate
157	157	130indicating the dollar amount of the transfer fee owed based on the agreed upon purchase price as
158	158	131evidenced by an executed purchase and sale agreement, contract for sale or other document
159	159	132evidencing the agreed upon purchase price or that the transfer is exempt from the transfer fee,
160	160	133stating the basis for the exemption.
161	161	134 (v) Whenever the transfer of a real property interest will occur at or about the same time
162	162	135as a conveyance of personalty related thereto, the allocations of payments between real estate
163	163	136and personalty agreed to by the purchaser and seller shall not determine the calculation of the
164	164	137transfer fee due pursuant to this section; instead, the calculation of the fee with respect to such 8 of 13
165	165	138transfer shall be determined by the city, town, or regional affordable housing commission, as
166	166	139applicable.
167	167	140 (vi) The transfer fee shall be paid within seven days of the time of transfer by the
168	168	141settlement agent to the city or town, or its designee, or to the regional affordable housing
169	169	142commission or its designee, as applicable, and shall be accompanied by a copy of the deed or
170	170	143other instrument recorded or registered with the registry of deeds for the county in which the real
171	171	144property interest is located, or the assistant recorder for the registry district of the county in
172	172	145which the real property interest is located, and a copy of the affidavit of transfer fee. The city or
173	173	146town, or its designee, or the regional affordable housing commission, or its designee, as
174	174	147applicable, shall promptly thereafter execute and issue a certificate indicating that the appropriate
175	175	148fee has been paid.
176	176	149 (vii) Upon receipt of a transfer fee by a city or town, the treasurer of the city or town shall
177	177	150deposit the transfer fee in the city or town’s municipal affordable housing trust fund established
178	178	151pursuant to section 55C or any other municipal affordable housing trust fund established by a
179	179	152law of the commonwealth providing for the creation and preservation of affordable housing in
180	180	153municipalities for the benefit of low and moderate income households or for the funding of
181	181	154community housing, as defined in and in accordance with chapter 44B. Upon receipt of a transfer
182	182	155fee by a regional affordable housing commission, the regional affordable housing commission
183	183	156shall deposit the transfer fee into the regional affordable housing commission fund.
184	184	157 (c) Exemptions: The following transfers of real property interests shall be exempt from
185	185	158the fees established by this section; provided, however, that any city, town or regional affordable
186	186	159housing commission, as applicable, may adopt further exemptions in addition to those provided 9 of 13
187	187	160herein; provided, further, that except as otherwise required, the seller or purchaser or both
188	188	161parties, who are required to pay the transfer fee as specified in the bylaw or ordinance
189	189	162establishing a transfer fee pursuant to this Section, or, with respect to the member cities and
190	190	163towns of a regional affordable housing commission, regulations adopted by such regional
191	191	164affordable housing commission, shall have the burden of proving that any transfer is exempt; and
192	192	165provided, further, that any otherwise exempt transfer shall not be exempt in the event that such
193	193	166transfer, by itself or as part of a series of transfers, was made for the primary purpose of evading
194	194	167the fee established pursuant to this section.
195	195	168 (i) Transfers for less than 200 per cent of the county median sale price of a single family
196	196	169home shall be exempt in their entirety; provided, however, that the amount of this threshold for
197	197	170imposing a transfer fee may be increased by the bylaw or ordinance establishing a transfer fee
198	198	171pursuant to this Section or, with respect to the member cities and towns of a regional affordable
199	199	172housing commission, a regulation adopted by the regional affordable housing commission;
200	200	173 (ii) Transfers made as gifts with consideration less than $100; provided, however, that in
201	201	174any proceedings to determine the amount of any fee due hereunder, it shall be presumed that any
202	202	175transfer for consideration of less than fair market value of the real property interest transferred
203	203	176was made as a gift without consideration to the extent of the difference between the fair market
204	204	177value of the real property interest transferred and the amount of consideration claimed by the
205	205	178purchaser to have been paid or transferred, if the seller shall have been at the time of transfer the
206	206	179spouse, the lineal descendant, or the lineal ancestor of the purchaser, by blood or adoption, and
207	207	180otherwise it shall be presumed that consideration was paid in an amount equal to the fair market
208	208	181value of the real property interest transferred, at the time of transfer;   10 of 13
209	209	182 (iii) Transfers to the government of the United States, the Commonwealth and any of
210	210	183their instrumentalities, agencies or subdivisions, including but not limited to transfers to the city,
211	211	184town, or regional affordable housing commission, to the extent that the city, town or regional
212	212	185affordable housing commission has designated that the transfer fee shall be borne by the
213	213	186purchaser;
214	214	187 (iv) Transfers from the government of the United States, the Commonwealth and any of
215	215	188their instrumentalities, agencies, or subdivisions, including but not limited to transfers from the
216	216	189city, town or regional affordable housing commission, to the extent that the city, town or regional
217	217	190affordable housing commission has designated that the transfer fee shall be borne by the seller;
218	218	191 (v) Distributions by the trustees of a trust to the beneficiaries of such trust;
219	219	192 (vi) Transfers to the trustees of a trust in exchange for a beneficial interest received by the
220	220	193seller in such trust;
221	221	194 (vii) Transfers between family members as defined by bylaw or ordinance or regulations
222	222	195adopted by a regional affordable housing commission;
223	223	196 (viii) Transfers to first-time homebuyers as defined by bylaw or ordinance or regulations
224	224	197adopted by a regional affordable housing commission;
225	225	198 (ix) Transfers which, without additional consideration, confirm, correct, modify, or
226	226	199supplement a transfer previously made;
227	227	200 (x) Transfers by operation of law without actual consideration, including but not limited
228	228	201to transfers occurring by virtue of the death or bankruptcy of the owner of a real property
229	229	202interest;   11 of 13
230	230	203 (xi) Transfers made in partition of land and improvements thereto, under chapter 241;
231	231	204 (xii) Transfers to any charitable organization, as defined in clause Third of section 5 of
232	232	205chapter 59, or any religious organization; provided, however, that the real property interest so
233	233	206transferred will be held by the charitable or religious organization solely for affordable housing-
234	234	207related uses that are consistent with the uses allowed by the regional affordable housing
235	235	208commission fund, if one exists, or the municipality’s affordable housing trust fund; and provided,
236	236	209further, that such uses must be available to the general public;
237	237	210 (xiii) Transfers to a mortgagee in foreclosure of the mortgage held by such mortgagee,
238	238	211and transfers of the property subject to a mortgage to the mortgagee in consideration of the
239	239	212forbearance of the mortgagee from foreclosing said mortgage;
240	240	213 (xiv) Transfers consisting of the division of marital assets under the provisions of section
241	241	21434 of chapter 208 or other provisions of law; and
242	242	215 (xv) Transfers of a real property interest that include one or more residential units
243	243	216governed by affordable housing restrictions; provided, however, that the fee imposed under the
244	244	217provisions of this Section shall be proportionately reduced based on the assessed value of
245	245	218residential units subject to affordable housing restrictions as compared to the total assessed value
246	246	219of the property, or the percentage of residential units subject to affordable housing restrictions, as
247	247	220compared to the total number of units located on that property, or such other method as may be
248	248	221required by the bylaw, ordinance, warrant article or other local law establishing a transfer fee
249	249	222pursuant to this section or, with respect to member cities and towns of a regional affordable
250	250	223housing omission, a regulation adopted by the regional affordable housing commission. 12 of 13
251	251	224 (xvi) The first transfer of real property is exempt if built in accordance with an
252	252	225inclusionary zoning bylaw or in compliance with provisions established in chapter 40B
253	253	226 (d) Accounting: The city or town’s treasurer shall keep a full and accurate account
254	254	227stating when, from or to whom, and on what account money has been paid or received relative to
255	255	228the activities of the municipal affordable housing trust fund.  With respect to a regional
256	256	229affordable housing commission, the regional affordable housing commission’s treasurer or such
257	257	230other person as may be designated in the law establishing the regional affordable housing
258	258	231commission, shall keep a full and accurate account stating when, from or to whom, and on what
259	259	232account money has been paid or received relating to the regional affordable housing commission
260	260	233fund.
261	261	234 (e) Implementation and Enforcement: (i) The establishment of a transfer fee pursuant to
262	262	235this section, the determination of the fee amount, the determination as to whether the bylaw,
263	263	236ordinance or law establishing the transfer fee shall have a time-limited sunset provision, and the
264	264	237adoption of any non-mandatory exemptions shall be determined by a majority vote by the city or
265	265	238town’s legislative body or, with respect to a regional affordable housing commission, by the
266	266	239terms of or in accordance with the procedures established by the general or special law creating
267	267	240such commission.
268	268	241 (ii) A city or town that establishes a transfer fee pursuant to this Section, or a regional
269	269	242affordable housing commission that receives funds hereunder may provide for the collection and
270	270	243liening of any outstanding transfer fee. Such city, town or regional affordable housing
271	271	244commission shall have the same remedies to collect said amount as provided by law with respect
272	272	245to the collection of real property taxes.   13 of 13
273	273	246 (iii) A city or town enacting a real estate transfer fee pursuant to this Section, or a
274	274	247regional affordable housing commission that receives funds hereunder, is authorized to issue
275	275	248rules, policies, and procedures to effectuate its terms.
276	276	249 (iv) A city or town that adopts this Section, or a regional affordable housing commission
277	277	250that receives funds hereunder shall provide to the Regional Planning Office publicly available
278	278	251reports on the total fees collected and disbursed in accordance with this Section.