Real Estate Transfer Fee Common Questions

Chapter 128 - Receivership Sale

  1. Is the sale from a Chapter 128 (Wis. Stats.) receiver exempt from transfer fee?
  2. If an improper exemption from transfer fee is claimed or the value subject to transfer fee is under reported, is the Chapter 128 receiver liable for a Real Estate Transfer Fee assessment?

Condos (Condominiums, Dockominiums, Garageominiums)

  1. Does a condo declaration amendment that relocates the boundaries between adjoining units require a transfer return?
  2. If a condominium sells its units as "life estates" for $100,000 and at the time of sale they also sign a "Repurchase Agreement" whereby the condominium will purchase the "life estate" back for 90% of the $100,000. What transfer fees are due and at what values?
  3. A condominium is selling its units as a 75 year lease for $100,000. Is a transfer return and fee due?

Confidentiality

  1. What precautions are taken by the Wisconsin Department of Revenue to ensure the confidentiality of transfer returns when authorized individuals inspect them?

Conversions

  1. Explain the filing requirements for mergers or conversions pursuant to sec. 73.14, Wis. Stats.
  2. Delaware corporation registered to do business in Wisconsin converts to a Delaware LLC. Since Wisconsin corporate law doesn't recognize a foreign conversion, the Delaware corporation will have to withdraw from doing business in Wisconsin and the converted entity (LLC) will have to register to do business in Wisconsin. Is the LLC required to file a MC-500 pursuant to sec. 73.14, Wis. Stats.?

Corporations

  1. Does the exemption in sec. 77.25(7), Wis. Stats., apply to a transfer by a subsidiary corporation to its parent when its parent is a limited liability company?
  2. Explain the 3 year requirement for the exemption in sec. 77.25(15), Wis. Stats., for corporations.
  3. If a corporation deeds its property to the corporation's president for no consideration will a transfer fee apply?

Corrections (prior to eRETR being recorded by Register of Deeds)

  1. Can you describe the RETR correction procedure:?
  2. How do I file an Amended Real Estate Transfer Return (PE-500x) when I do not have a document number?

Corrections (after eRETR being recorded by Register of Deeds)

  1. How should a transfer return be completed when a deed is recorded correcting or reforming a previously recorded deed?
  2. How do you correct a transfer return after it is recorded by the Register of Deeds?

Correction Instrument/Affidavit of Correction

  1. When recording the Correction Instrument/Affidavit of Correction in lieu of re-recording a previously recorded deed, do you need to file a transfer return?

Chapter 128 - Receivership Sale

  1. Is the sale from a Chapter 128 (Wis. Stats.) receiver exempt from transfer fee?

    If the sale is to a:

    • Mortgage holder of record, then exemption 14 applies
    • Third-party with no prior interest in the mortgage, then a transfer fee is due on the sale price. If the sale is nominal, the fee is due on the real estate's fair market value.
  2. If an improper exemption from transfer fee is claimed or the value subject to transfer fee is under reported, is the Chapter 128 receiver liable for a Real Estate Transfer Fee assessment?

    Yes. Under state law (sec. 128.19(1), Wis. Stats.), the "receiver" is vested by operation of law with the title of the debtor. Therefore the receiver is the grantor of the real estate. Under state law (sec. 77.22(1), Wis. Stats.), a transfer fee is imposed upon the grantor of real estate.

Condos (Condominiums, Dockominiums, Garageominiums)

  1. Does a condo declaration amendment that relocates the boundaries between adjoining units require a transfer return?

    A deed and an eRETR must be completed to convey title to real estate. There is no exemption for this conveyance. A transfer fee is due on ½ of the total value of the real estate conveyed.

  2. If a condominium sells its units as "life estates" for $100,000 and at the time of sale they also sign a "Repurchase Agreement" whereby the condominium will purchase the "life estates" back for 90% of the $100,000. What transfer fees are due and at what values?

    Upon recording the life estate, a transfer fee is due on the $100,000. A life estate is a conveyance of real property interest. Additionally, the "repurchase" will be subject to fee on the amount paid to buy back the life estate when the instrument terminating the life estate is recorded. The value of the "repurchase" is determined by sec. 77.21(3)(a), Wis. Stats., as "the amount of the full actual consideration paid therefore or to be paid, including the amount of any lien or liens thereon."

  3. A condominium is selling its units as a 75 year lease for $100,000. Is a transfer return and fee due?
  4. No. A lease less than 99 years is not a conveyance of real property per sec. 77.21(1), Wis. Stats. The document recorded should have a statement included on its face stating that "this is a lease less than 99 years and. Thus, therefore is not a conveyance as defined by sec. 77.21(1), Wis. Stats. This lease is exempt from return and fee imposed under sec. 77.22(1), Wis. Stats." The filer, not the Register of Deeds, must exempt the document.

Confidentiality

  1. What precautions are taken by the Wisconsin Department of Revenue to ensure the confidentiality of transfer returns when authorized individuals inspect them?

    Pursuant to sec. 77.265, Wis. Stats., transfer returns and the information contained in the returns can be disclosed to:

    • Local assessors, their agents or employees.
    • County property lister, treasurer and register of deeds.
    • Employees of governmental agencies acquiring real property for public purposes.
    • The Department of Workforce Development pursuant to sec. 106.50, Wis. Stats.
    • Property owners or their agents in condemnation proceedings or in appeals of their property tax assessment.
    • A county may use the returns to develop a tract index if the county does not reveal the Social Security Numbers of the buyers and sellers.

    The Department of Revenue may make available to the public all information obtained from transfer returns except social security numbers and telephone numbers:

    • If you visit a property tax district offices to view a transfer return you must provide proof of identity.  If a governmental agency is requesting to view a transfer return, the agency must present an agency authorization in the form of a letter.

    In cases of a condemnation proceeding or an appeal of an assessment:

    • If an agent, make a copy of the agreement appointing the agents.
    • If an assessment appeal, request a copy of the objection form. Call the clerk of the taxing district where the objection form has been filed.
    • Record all forms that have been photocopied on Form 709, "Request to Examine Real Estate Transfer Returns," listing county document numbers, volume and page.
    • Persons obtaining photocopies of transfers shall write their name and date on the bottom of each copy.
    • A subpoena to view or copy a transfer must be authorized by a judge.
    • Persons requesting copies of their own returns through an agent must provide the agent with a limited power of attorney.

Conversions

  1. Explain the filing requirements for mergers or conversions pursuant to sec. 73.14, Wis. Stats.?

    If an acquired business entity in a merger or the converted business entity in a conversion had a fee simple ownership interest in any Wisconsin real estate immediately prior to the merger or conversion, the surviving business must submit an MC-500 Report to the Department of Revenue no later than 60 days after the effective date of the merger or conversion. Failure to file the report within the time frame or to specify the municipalities affected will result in penalties per sec. 73.14(2)(a), Wis. Stats. It is optional to record deeds changing title to the property with the county Register of Deeds. The primary purpose of the MC-500 Report is to give notice of where future real estate tax bills are to be sent and does not convey or change title to real estate. The MC-500 Report can be found on the Department of Revenue's website at: https://ww2.revenue.wi.gov/Internet/merger.html.

  2. Delaware corporation registered to do business in Wisconsin converts to a Delaware LLC. Since Wisconsin corporate law doesn't recognize a foreign conversion, the Delaware corporation will have to withdraw from doing business in Wisconsin and the converted entity (LLC) will have to register to do business in Wisconsin. Is the LLC required to file a MC-500 pursuant to sec. 73.14, Wis. Stats.?

    Even though you are not filing this as a "conversion" with the Wisconsin Department of Financial Institutions, it is a "conversion." The statute is makes no distinction between "domestic" or "foreign" entities. It merely states that if the non-survivor owned a fee simple interest in any Wisconsin real estate the report is required to be filed. Therefore the "survivor" is required to file the MC-500 Merger/Conversion Report.

Corporations

  1. Does the exemption in sec. 77.25(7), Wis. Stats., apply to a transfer by a subsidiary corporation to its parent when its parent is a limited liability company?

    If the subsidiary corporation is conveying its real estate assets "to its parent for no consideration, nominal consideration or in sole consideration of cancellation, surrender or transfer of capital stock between parent and subsidiary corporation," then the transfer will be exempt from fee. Since section 77.25(7) uses the words "subsidiary corporation" and "parent" without reference to the parent's entity type, the parent could be a corporation or LLC. However, pursuant to Gottfried, Inc. v. Wisconsin Department of Revenue, 145 Wis.2d 715 (Ct. App. 1988), a "parent" cannot be an individual but must be a business entity.

  2. Explain the 3 year requirement for the exemption in sec. 77.25(15), Wis. Stats., for corporations.

    This requirement only applies to conveyances FROM the corporation. To qualify for the exemption in sec. 77.25(15), Wis. Stats., the corporation must have had title to the property for 3 or more years prior to the conveyance, in addition to the other stated requirements. The holding period requirement does not apply for conveyances TO the corporation.

  3. If a corporation deeds its property to the corporation's president for no consideration will a transfer fee apply?

    Yes, unless one of the exceptions in sec. 77.25, Wis. Stats., can be applied. The only exemption that could be applied to a conveyance between a corporation and an individual is sec. 77.25(15), Wis. Stats. In order for sec. 77.25(15) to apply, all three of the following requirements must be met:

    • The president is a shareholder AND all of the shareholders are related as required by the exemption;
    • The conveyance is for no consideration other than surrender of stock and/or the assumption of debt; AND
    • The corporation has owned the property 3 years or more prior to the conveyance.

Corrections (prior to eRETR being recorded by Register of Deeds)

  1. The following describes the RETR correction procedure: If an error is discovered on a real estate transfer before the Register of Deeds records the transfer, the Register of Deeds will call the preparer at the number listed on the bottom of the receipt and notify him of the errors. After being notified by the Register of Deeds, the preparer needs to:
    • Return to the eRETR website. "Restore" the saved file and make the necessary corrections.
    • Once all corrections have been made, select "Submit" and print the new receipt, which will have a different receipt number.

      Note: Each selection of the "Submit" button will create a new receipt number. As such, please make all necessary corrections prior to hitting "Submit". The preparer should save a copy of the corrected file.

    • Once the corrections have been resubmitted, the preparer should send or deliver the new receipt to the Register of Deeds.
    • The Register of Deeds will then enter the new receipt number. Once the Register of Deeds receives the receipt for the corrected return, the receipt for the original, incorrect return may be discarded.
    • The complete "Register of Deeds Criteria for an Electronic Real Estate Transfer Return (eRETR)" can be viewed and printed at: http://www.revenue.wi.gov/pubs/slf/pe100e.html.
  2. How do I file an Amended Real Estate Transfer Return (PE-500x) when I do not have a document number?

    A document number is generated once a deed has been recorded. Thus,an Amended Real Estate Transfer Return (PE-500x) is only used AFTER a deed has been recorded and an error is discovered.

    If you discover an error BEFORE you receive a document number, the error can be corrected in one of three ways:
    • If while filling out the eRETR online an error is noted on the Summary page, go back to the section containing the error and make the correction prior to hitting "Submit".
    • If you have saved your return and an error is discovered after clicking the green Submit button, return to the eRETR home page and restore the saved file. Hit "Start" and then "Restore Saved Information" (located on the right underneath the "Remaining time" counter).  Locate the file on your computer using the "Browse" function and then select "Upload File.  "Make correction and save, then click green Submit button. You will get a receipt with a new receipt number to send in with document. Toss the "old" receipt out. (Note: If the file was not saved you must complete a new eRETR.)
    • If the return was not saved, you must re-do the return.
    • If the deed has already been recorded by the Register of Deeds, you must file an Amended Real Estate Transfer Return (PE-500x) to correct the error.

    Note: If you need to re-record a deed or record an affidavit of correction you will need to file another Electronic Real Estate Transfer Return (eRETR).  You may not use an amended real estate transfer return (PE-500x) for this purpose. The PE-500x can only be used after a deed is recorded.

Corrections (after eRETR being recorded by Register of Deeds)

  1. How should a transfer return be completed when a deed is recorded correcting or reforming a previously recorded deed?

    Fill out the return the same as the original, except for the following:

    • Correct the items that need changing (i.e., name of grantor, grantee, legal description)
    • Under "Type of Transfer" - check "other" and explain what you are correcting/reforming
    • List the value of the real estate to be transferred as zero (0)
    • Cite state law (sec. 77.25(3), Wis. Stats.), to exempt the deed from the real estate transfer fee and enter the document number for the document being corrected
  2. How do you correct a transfer return after it is recorded by the Register of Deeds?
    • If the deed (instrument of conveyance) is correct but a mistake is discovered on the return after the Register of Deeds records it, you may file an amended Real Estate Transfer Return (PE-500x). Note: It is not necessary to file an amended Real Estate Transfer Return for minor errors (i.e., missing middle initials or minor misspellings of names).
    • If the original eRETR has numerous errors, you may want to consider re-recording your deed with a new eRETR (with all the mistakes corrected). This re-recording with a new eRETR would be exempt from a transfer fee under state law (sec. 77.25(3), Wis. Stats.).

Correction Instrument/Affidavit of Correction

  1. When recording the Correction Instrument/Affidavit of Correction in lieu of re-recording a previously recorded deed, do you need to file a transfer return?
    • Yes. Any deed, Correction Instrument or Affidavit of Correction presented for recording, requires a transfer return (eRETR) under state law (sec. 77.22(1), Wis. Stats.). A corrective instrument is exempt from a transfer fee under state law (sec. 77.25(3), Wis. Stats.).
    • Note: State law (sec. 77.25(3), Wis. Stats.), was created with the original enactment of Ch. 77, Sub-Chapter II for Real Estate Transfer Fee in 1968. The legislature created an exemption from transfer fee for correction instruments.

FOR MORE INFORMATION CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Equalization Bureau
P.O. Box 8971 MS 6-97
Madison, WI 53708-8971
Phone: (608) 264-6885 or (608) 266-1594
Fax: (608) 264-6897
E-Mail Additional Questions to eretr@revenue.wi.gov

March 21, 2014