Local transfer tax in Maryland is generally calculated either as a percentage on the consideration stated in the deed or a percentage of the assessed value of the property. Baltimore City is considering a significant change in the City transfer tax. Ordinance 20-0530 or the “Post-COVID-19 Foreclosure Disincentive Act of 2020″ sets the City transfer tax in foreclosures at 100% of the assessed value of the property and not as a percentage of the value.
An example of the Ordinance would be if a property was assessed at $1,000,000, then the City transfer tax on the deed in foreclosure would also be $1,000,000. Although the Ordinance has a termination date of one year following the expiration of the health emergency declared by the Governor on March 5, 2020, the Ordinance effectively creates a moratorium on foreclosures until the Ordinance expires.
It is uncertain what effect this Ordinance will have on lending in the City. Lenders may decide that without the foreclosure tool, it is not practical to make loans in Baltimore City. New borrowers will find funding being chocked off by the existence of the Ordinance. The Ordinance has not been passed yet and its path through the legislative process should be tracked carefully by anyone who is lending in the City.
Earl E. Wise III discussing The Post Covid19 Foreclosure Disincentive Act of 2020.