Are Land Use Fees the Solution to Long Island’s Fiscal Challenges? – Part 3
August 21, 2017
In this post, which is the third and final segment of a three-part series, we look at real property recording and related fees, which have increased significantly in Nassau and Suffolk Counties in recent years. Like illegal impact fees and excessive administrative review fees, fees related to the recording of legal instruments are being used by both Nassau and Suffolk Counties as another revenue-generating measure to help balance their budgets. Since many of these ever-increasing fees appear to have no correlation to the cost of the services being performed to record the documents, they are viewed by many as being tantamount to another unauthorized and illegal tax.
Document Recording Process
Documents that relate to interests in real property in New York, such as deeds, leases, easements, restrictive covenants, mortgages and subdivision plats, are typically recorded in order to provide the public with constructive notice of these interests and to assist in determining ownership rights and other claims. In most cases, these documents are recorded in the county where the property is located and maintained by the county clerk.
Prior to recording, each document is generally proofread to ensure that the important details of the instrument are correct. Each document is then given book and page numbers, or in the case of subdivision plats a map number, which are useful to individuals who want to look up or research the recorded documents. Thereafter, each document is electronically imaged and the original is returned to the party indicated on the document.
Document Recording and Related Fees
The document recording process is an important county clerk function requiring a large staff and equipment that are not without cost. To offset the cost of the document recording process, county clerks typically charge a base fee for the recording service, as well as a per page fee to record a particular document. In recent years, the total cost to record a document has increased dramatically, while the process for doing so has remained largely static.
For instance, a person wishing to record a real estate document in Suffolk County must first now pay a Real Property Tax Service Verification Fee of $200 for each tax lot that the instrument is to be recorded against, plus a $20 handling fee, a $5 per page fee, a $5 Commissioner of Education Fee and a $15 Cultural Education Fund fee. Effective January 1, 2017, persons wishing to record a mortgage in Suffolk County must also pay a $300 Mortgage Verification Fee.
In Nassau County, in order to a record a real estate document, a person must pay a $300 block recording fee, a base recording fee of $40, and a $5 per page fee. In 2009, the block recording fee was just $10. However, within just one year the block recording fee was increased by 1,400% to $150. It doubled again in 2015 to its current amount. In Nassau County these same fees apply to a person who wishes to record a satisfaction of mortgage. In addition to these fees, the Nassau County Department of Assessment implemented a Tax Map Certification requirement in 2015 for all deeds, mortgages, satisfactions, assignments and consolidations. This process requires that each document have its Nassau County Tax Map Number verified with the Department of Assessment before it can be presented for recording in the Clerk’s office. Documents presented without the Department of Assessment certification page cannot be accepted for recording. The charge for this service was originally $75, but within just a few short years was increased by nearly 400% to the current fee of $355 per tax map verification letter (“TMVL”).
According to a Newsday report written at about the same time when the new real estate fees and fee increases went into effect, these fees were estimated to generate $35.6 million in revenue for the County government, but will make Nassau’s closing costs among the highest in the State. These new and increased fees often add thousands of dollars to the cost of buying and selling a property in Nassau County, particularly where a mortgage is involved. And, if there are any errors in the recorded documents that need to be corrected, the County requires payment of recording fee for a second time.
Nassau County Legislator Howard Kopel, a critic of the fee increases, and the only legislator to vote against the increases, argued that they were not justified because fees are supposed to correlate to the County’s cost to provide the service. Some lawmakers who voted in favor of the increases shifted the blame for the increased fees to the Nassau County Interim Finance Authority (NIFA), which allegedly demanded that the County budget include additional revenue.
Since the law does not require a deed or other instrument to be recorded, those who cannot afford the exorbitant recording fees may be forced to forego the recording process altogether. They may also choose not to take action to correct known defects or errors in recorded documents. The failure to record original and corrected documents will compromise the integrity of the county recording systems by making the information they maintain less reliable. This will undoubtedly lead to disputes over property ownership and other interests in real property and cause rightful owners to lose their property interests to bona fide purchasers who did not have constructive notice of the rightful owner’s interest. Thus, the excessive recording fees being charged may actually lead to the very problems that our recording systems are designed to avoid.
Regardless of who is responsible for the increased real estate fees, the steep trajectory of the increases makes it highly unlikely that the recording fees being charged in both Nassau and Suffolk counties are commensurate with the actual cost of recording a document. Moreover, because the recording fees are actually generating revenue in both counties, those who claim such fees are actually an illegal tax appear to be justified in their position.