Sec. 44-81. - Definitions.

As used in this article, except where the context clearly indicates a different meaning:

(1)

Document means any deed, instrument or writing whereby any real estate within the city, or any interest therein, shall be quitclaimed, granted, bargained, sold or otherwise conveyed to the grantee, but shall not include the following:

a.

Any will;

b.

Any lease other than those described or defined in subsection (4) below;

c.

Any mortgage;

d.

Any conveyance between corporations operating housing projects pursuant to chapter 45 Del. C. of title 31 and the shareholders thereof;

e.

Any conveyance between nonprofit and industrial development agencies and industrial corporations purchasing from them;

f.

Any conveyance to nonprofit industrial development agencies;

g.

Any conveyance between husband and wife;

h.

Any conveyance between persons who were previously husband and wife, but who have since been divorced; provided such conveyance is made after the granting of the final decree in divorce and the real estate or interest therein subject to such conveyance was acquired by the husband and wife, or husband or wife, prior to the granting of the final decree in divorce;

i.

Any conveyance between parent and child or the spouse of such a child or any conveyance between siblings, half-siblings, or step siblings; (see, 30 Del.C. §§ 5401(1)(i), (w).);

j.

Any conveyance:

(i)

To a trustee, nominee or straw party for the grantor as beneficial owner;

(ii)

For the beneficial ownership of a person other than the grantor where, if such person were the grantee, no tax would be imposed upon the conveyance pursuant to this chapter; or

(iii)

From a trustee, nominee or straw party to the beneficial owner;

k.

Any conveyance between a parent corporation and a wholly-owned subsidiary corporation; provided such conveyance is without actual consideration;

l.

Correctional deeds without actual consideration;

m.

Any conveyance to or from the United States or the state or to or from any of their instrumentalities, agencies or political subdivisions and the University of Delaware;

n.

Any conveyance to or from a corporation, or a partnership, where the grantor or grantee owns stock of the corporation or an interest in the partnership in the same proportion as the grantor's or grantee's interest in, or ownership of, the real estate being conveyed; provided, however, that this paragraph shall not apply to any distribution in liquidation or other conveyance resulting from the partial or complete liquidation of a corporation, unless the stock of the corporation being liquidated has been held by the grantor or grantee for more than three years; provided, further, this paragraph shall not apply to any conveyance from a partnership to its partners unless the partners' interest in the partnership has been held for more than three years;

o.

Any conveyance by the owner of previously occupied residential premises to a builder of new residential premises when such previously occupied residential premises are taken in trade by such builder as a part of the consideration from the purchaser of new, previously unoccupied premises;

p.

Any conveyance to the lender holding a bona fide mortgage which is genuinely in default, either by a sheriff conducting a foreclosure sale or by the mortgagor in lieu of foreclosure;

q.

Any conveyance to a religious organization or other body or person holding title to real estate for a religious organization, if such real estate will not be used following such transfer by the grantee or by any privy of the grantee, for any commercial purpose; provided however, that only that portion of the tax which is attributable to and payable by the religious organization or other body or person holding title to real estate for a religious organization under section 44-82 shall be exempt;

r.

Any conveyance to or from a volunteer fire company, organized under the laws of the state; provided, however, that only that portion of the tax which is attributable to and payable by the volunteer fire company under section 44-82 of this article shall be exempt;

s.

Any conveyance of a "mobile home" as defined in section 7003 of title 25, of the state code, provided that the tax on said conveyance has been paid under section 3002 of title 30 of the state code and provided, further, that a "mobile home" is otherwise lawful in the city;

t.

Any conveyance without consideration to an organization exempt from tax under section 501(c)(3) of the Federal Internal Revenue Code (26 U.S.C. § 501(c)(3));

u.

Any conveyance to a nonprofit conservation organization when the property is purchased for open space preservation purposes;

v.

Any conveyance to or from a non-profit corporation of real estate acquired for the purpose of rehabilitation and resale without profit.

w.

Any transfer of any single-family residential dwelling intended for owner-occupancy, that is not otherwise included in subparagraphs (a) through (v) of this section, during such period of time not to exceed 42 consecutive calendar days, as determined by the directors of real estate and housing and of finance once per fiscal year, and if more than once, only by resolution approved by a majority of all members of council, such approval to be not less than 30 days prior to the first day of eligibility of agreements of sale and in any case, providing for the dates of eligibility between which an agreement of sale is executed and for which a closing settlement is held, not later than 90 days after the last day of the said eligibility period, including any closing settlement for land and construction thereon of the subject dwelling; further provided that the grantor and the grantee shall comply with all requirements of the city in its administration of this subsection. Whenever such eligibility periods are established, whether by the said directors or by resolution of council, the director of real estate and housing and the director of finance shall be and they are hereby authorized to take all necessary actions to coordinate the administration of the provisions of this subsection and programs established hereunder with the county recorder of deeds. In addition to the provisions of this section, for the period commencing on April 1, 1997, for agreements of sale signed on or after that date and extending indefinitely into the future until and unless further amended by ordinance of council, the buyer's one-half share of the city's realty transfer tax, otherwise payable, shall be waived for any transfer of any single-family residential dwelling, including the land and dwelling thereon and not vacant land, that is intended for owner-occupancy where the buyer is a first-time home buyer in the city; provided that the buyer, not later than the time of settlement of the subject transfer, executes an affidavit under penalties of filing a false written statement that the buyer or buyers, constitute, in fact, a first-time home buyer of a single-family dwelling in the city, but previous ownership of an interest in real estate outside of the boundaries of the city shall not be a disqualification, and further subject to such other verification requirements or other rules or regulations as may be promulgated by the departments of real estate and housing and finance, consistent with the provisions of this subsection and subject to the approval of the administrative board, in furtherance of this authorization. A "first-time home buyer" means:

1.

A natural person who has at no time held any legal interest, exclusive of any interest as a stockholder or partner in a corporation or limited partnership or as a trustee for another person in residential real estate within the boundaries of the city during the three years prior to the date of settlement of the subject transfer of real property, or has not held an interest in law in an any residential real estate within the boundaries of the city during the one year prior to the date of settlement of the subject transfer having been a resident who was displaced as a direct result of a divorce or legal separation;

2.

The unit of husband and wife purchasing as joint tenants or tenants by the entirety, when neither the husband nor the wife has ever held any legal interest, exclusive of any interest as a stockholder or partner in a corporation or limited partnership or as a trustee for another person, in residential real estate within the boundaries of the city during the three years prior to the date of settlement of the subject transfer of real property.

3.

Individuals purchasing as joint tenants or co-tenants when none of the individuals has ever held any legal interest, exclusive of any interest as a stockholder or partner in a corporation or limited partnership or as a trustee for another person, in residential real estate within the boundaries of the city during the three years prior to the date of settlement of the subject transfer of real property.

(2)

Transaction means the making, executing, delivering, accepting or presenting for recording of a document.

(3)

Value means, in the case of any document granting, bargaining, selling or otherwise conveying any real estate or interest or leasehold interest therein, the amount of the actual consideration thereof, including liens or other encumbrances thereon and ground rents, or a commensurate part of the liens or other encumbrances and ground rents which encumber the interest in real estate and any other interest in real estate conveyed; provided, that in the case of a transfer for an amount less than the highest appraised full value of said property for local real property tax purposes, "value" shall mean the highest such appraised value unless the parties or one of them can demonstrate that fair market value is less than the highest appraised value, in which case "value" shall mean fair market value, or actual consideration, whichever is greater. A demonstration that the transaction was at arm's length between unrelated parties shall be sufficient to demonstrate that the transaction was at fair market value.

(4)

The term "document" defined in subsection (1) of this section shall include the following:

a.

Any writing purporting to transfer a title interest or possessory interest for a term of more than five years in a condominium unit or any unit properties subject to the Unit Property Act of the state code;

b.

Any writing purporting to transfer a title interest or possessory interest of any lessee or other person in possession of real estate owned by the state of other political subdivision thereof;

c.

Any writing purporting to assign or transfer a leasehold interest or possessory interest in residential property under a lease for a term of more than five years. For this purpose, the term "residential property" means any structure or part of a structure which is intended for residential use, and excluding any commercial unit subject to tax under paragraph (88) of subsection (6) of 3 0 Del. C. § 2301, relating to commercial lessors.

(5)

In determining the term of a lease under subsection (4) above, it shall be presumed for the purpose of computing the lease term that any rights or options to renew or extend will be exercised.

(6)

For purposes of subsection (3), in the case of a document described in subsection (4) under which the consideration is based in whole or in part on a percentage of the income or receipts to be received in the future, actual consideration shall include the amounts actually received under such percentage of income or receipts to be received in the future, actual consideration shall include the amounts actually received under such percentage of income or receipts provision; provided, however, and notwithstanding any other provisions of this chapter, that the tax imposed by this chapter shall be due and payable to the finance department within 30 days after the date such amounts become due and payable under the agreement.

(7)

a.

Except as provided in paragraphs b. and c. of this subsection, where beneficial ownership in real estate is transferred through a conveyance or series of conveyances of intangible interests, including mergers and all other indirect exchanges, in a corporation, limited liability company, partnership, trust, pass-through entity or other entity, such conveyance shall be taxable under this chapter as if such property were conveyed through a duly recorded "document" as defined in subsection (1) of this section, and subject to the exemptions contained therein, except those exemptions contained in paragraphs j. and n. of subsection (1) of this section.

b.

No bona fide pledge of stock or partnership interests as loan collateral nor any transfer of publicly traded stock or publicly traded partnership interest shall be deemed subject to taxation under this subsection.

c.

Where the beneficial owners of real property prior to the conveyance or series of conveyances referred to in this subsection own 80 percent or more of the beneficial interest in the real estate following said conveyance or conveyances, such transfers shall not be subject to tax under this subsection. Where the beneficial owners of real property prior to the conveyance or series of conveyances referred to in this subsection own less than 80 percent of the beneficial interest in the real estate following said conveyance or conveyances, such transfers shall not be subject to tax under this subsection unless, under 30 Del. C. § 5401(7)(c), as amended, such transfer or transfers are properly characterized as a sale of real property.

d.

Section 44-81(7) of the City Code shall be liberally construed to effectuate its remedial purpose of limiting avoidance of the tax through dealings in intangible interests rather than deeds to transfer the beneficial ownership of real estate.

(8)

a.

Notwithstanding subsection (1) of this section, there shall be included in the definition of "document" for purposes of this chapter any contract or other agreement or undertaking for the construction of all or a part of any building all or a portion of which contract, agreement or undertaking (or any amendment to the foregoing) is entered into, or labor or materials are supplied, either prior to the date of the transfer of the land on which the building is to be constructed or within one year from the date of the transfer to the grantee.

b.

The city shall not issue a building permit for any such building unless and until the person or persons (including corporations or other associations) requesting such permit shall demonstrate in whatever form may be specified by the director of finance, including at the director's discretion, a form of affidavit that:

(i)

No transfer as described in this section has occurred within the preceding year;

(ii)

No portion of the contract for construction for which the permit is being requested was entered into and no materials or labor with respect to the building have been provided within one year of the date on which the property was transferred; or

(iii)

There has been paid a realty transfer tax on the document as defined in this subsection.

c.

In addition, the city shall not issue a certificate of occupancy relative to any building on which a tax is provided by this subsection unless and until the owner recertifies the actual cost of the building and pays any additional tax due as a result of such recertification.

d.

A "building" for purposes of this subsection shall mean any structure having a roof supported by columns or walls which structure is intended for supporting or sheltering any use or occupancy but shall not include any alteration of or addition to an existing building where the cost of said alteration or addition is less than 50 percent of the value of the property transferred.

e.

A "transfer" for purposes of this subsection shall include any transfer made by a "document" as described in this section, other than this subsection, and shall not include any transaction excluded from the definition of "document" under the provisions of paragraphs enumerated in subsection (1) of this section.

(Code 1968, § 30-3; Ord. No. 95-064(sub 1), §§ 1, 3, 10-19-95; Ord. No. 96-032(sub 1), § 1, 4-19-96; Ord. No. 96-067, §§ 1, 2, 11-7-96; Ord. No. 96-076, § 1, 12-5-96; Ord. No. 97-010(sub 1), § 1, 3-20-97; Ord. No. 97-035, § 1, 6-26-97; Ord. No. 99-043(sub 1), § 1, 5-20-99; Ord. No. 99-076, § 1, 8-12-99; Ord. No. 99-136, § 1, 1-6-00; Ord. No. 00-100, § 1, 8-24-00; Ord. No. 00-118, § 1, 10-19-00; Ord. No. 06-029, § 1, 5-4-06)

Cross reference— Definitions and rules of construction generally, § 1-2.

Sec. 44-82. - Levy of tax; exemptions.

(a)

Every person who makes, executes, issues or delivers any document, or in whose behalf any document is made, executed, issued or delivered, shall pay therefor and in respect thereof, or for and in respect of the vellum, parchment or paper upon which such document is written or printed, a tax at the rate of one and one-half percent of the value of the property represented by such document, which tax shall be payable at the time of the making, execution, issuance or delivery of such document; provided, however, no more than one and one-half percent tax shall be levied on any single transfer of property.

(b)

Where a person acquires title to any lands, tenements or hereditaments as a nominee or as a straw party for the real grantee or purchaser, the transfer of such title by such nominee or straw party to the real grantee or purchaser shall be exempt from this tax.

(c)

Where a person acquires title to any lands, tenements or hereditaments for the purpose of holding same as a nominee or as a straw party for the grantor, such transfer of title to the nominee or straw party shall be exempt from this tax.

(d)

Any funds realized pursuant to the provisions of this article of this chapter shall be segregated from the city's general fund and the funds, and all interest thereon, shall be expended solely for the capital and operating costs of public safety services, economic development programs, public works services, capital projects and improvements, infrastructure projects and improvements, and debt reduction.

(Code 1968, § 30-4; Ord. No. 98-075, § 1, 7-30-98)

Sec. 44-83. - Payment of tax generally; documentary stamps generally.

(a)

The payment of the tax imposed by this article shall be evidenced by the affixing of one or more documentary stamps to every document by the person making, executing, issuing or delivering such document regardless of the situs of the actual making, executing, issuing or delivering of such document.

(b)

Such stamps shall be affixed in such manner that their removal will require the continued application of steam or water, and the person using or affixing such stamps shall cause such stamps to be canceled in such manner that they may not be used again, either:

(1)

By writing or stamping or by causing to be written or stamped thereon the initials of his name and the date upon which such stamps are affixed or used; or

(2)

By complying with such other method of cancellation as the department may prescribe.

(c)

The tax imposed by this article shall be fully paid and have priority out of the proceeds of any judicial sale of real estate before any other obligation, claim, lien, judgment, estate or costs of the sale, and of the writ upon which the sale is made, and the sheriff or other officer conducting such sale shall pay the tax herein imposed out of the first moneys paid to him in connection therewith, unless previously paid by any party; provided, however, that any tax imposed by the state shall have priority over the tax imposed under this article.

(d)

The value for determining the tax shall be the highest of the following:

(1)

The bid price.

(2)

The amount of the mortgage not in excess of the fair value of the real estate.

(3)

The estimated full value.

(Code 1968, § 30-5)

Sec. 44-84. - Liability for payment of tax as between parties.

As between the parties to any transaction which is subject to the real estate transfer tax imposed by this article, in the absence of an agreement to the contrary, the burden for paying such tax shall be on the grantor.

(Code 1968, § 30-6)

Sec. 44-85. - Recordation of documents.

(a)

No document shall be recorded in the office of the recorder of deeds unless one or more documentary stamps shall have been affixed thereto as provided in this article.

(b)

The affixation of stamps to a document upon which a tax is imposed by this article when lodged with or presented to the recorder of deeds shall be an affirmation on the part of the transferor that the true, full and complete value of the transaction is fully reflected in the amount of the stamps affixed thereto.

(c)

Every document when lodged with or presented to the recorder of deeds shall set forth therein and as a part of such document the true, full and complete value thereof, or shall be accompanied by an affidavit executed by a responsible person connected with the transaction showing such connection and setting forth the true, full and complete value thereof or the reason, if any, why such document is not subject to tax under this article.

(Code 1968, § 30-7)

Sec. 44-86. - Functions of department of finance.

In addition to the other duties of the department of finance:

(1)

Such department shall prepare and furnish adhesive stamps of such denominations and in such quantities as may be necessary for the payment of the tax imposed by this article, and shall make provisions for the sale of such stamps in such places as it may deem necessary.

(2)

The department may by regulation provide for the evidence of the payment of the tax to be shown on the document by means other than the affixing of documentary stamps.

(3)

The department is charged with the enforcement of this article and is authorized and empowered to prescribe, adopt, promulgate and enforce regulations relating to:

a.

The method to be used in affixing or cancelling of stamps in substitution for, or in addition to, the method and means provided in this article.

b.

The denominations and sale of stamps.

c.

Any other matter or thing pertaining to the administration and enforcement of this article.

(Code 1968, § 30-8)

Sec. 44-87. - Prohibited acts enumerated.

No person shall:

(1)

Make, execute, issue, deliver or accept, or cause to be made, executed, issued, delivered or accepted, any document without the full amount of tax due thereon under the provisions of this article being duly paid;

(2)

Make use of any documentary stamp to denote payment of any tax imposed by this article without cancelling such stamp as provided in section 44-83(b);

(3)

Fail, neglect, or refuse to comply with, or otherwise violate, the regulations prescribed, adopted, and promulgated by the department under the provisions of this article;

(4)

Fraudulently cut, tear, or remove from a document any documentary stamp;

(5)

Fraudulently affix to any document upon which a tax is imposed by this article any documentary stamp which has been cut, torn, or removed from any other document upon which a tax is imposed by this article or any documentary stamp of insufficient value, or any forged or counterfeited stamp, or any impression of any forged or counterfeited stamp, die, plate or other article;

(6)

Willfully remove or alter the cancellation marks of any documentary stamp, or restore any such documentary stamp with intent to use or to cause the same to be used after it has already been used, or knowingly buy, sell, offer for sale or give away any such altered or restored stamp to any person for use, or knowingly use the same;

(7)

Knowingly have in his possession any altered or restored documentary stamp which has been removed from any document upon which tax is imposed by this article, and the possession of such stamp shall be prima facie evidence of an intent to violate this clause;

(8)

Knowingly or willfully prepare, keep, sell, offer for sale or have in his possession any forged or counterfeited documentary stamps; or

(9)

Accept for recording in the office of any recorder of deeds any document upon which the realty transfer tax is imposed by this article without the proper documentary stamp or other evidence of payment of the tax affixed thereto as required by this article as is indicated in such document or accompanying affidavit.

(Code 1968, § 30-9)

Sec. 44-88. - Penalty for violations.

Any person guilty of conduct prohibited in section 44-87 shall be guilty of a misdemeanor, and upon conviction any person violating the provisions of section 44-87 shall be punished by imposition of a fine of not more than $500.00 or by imprisonment not to exceed six months, or both such fine and imprisonment in the discretion of the court.

(Code 1968, § 30-10)

Secs. 44-89—44-105. - Reserved.