from Local Attorney, Michael H. Wasserman

Thursday, December 29, 2011


A recently amended municipal ordinance that becomes effective on January 1st is likely  to cause some headaches for unsuspecting  real estate practitioners and will definitely increase fees that some of our clients are going to have to pay to effect property transfers

The City of Chicago has long required that real estate sellers obtain a water department "full payment certificate (FPC)" before a sale transaction is completed.  The Chicago Department of Revenue will not seller property transfer tax stamps without the full payment certification, and the Cook County Recorder of Deeds will not accept a deed without the transfer tax stamps.

Certain classes of transactions are exempt from having to pay transfer taxes and have been historically also exempt from the requirement of obtaining / presenting a full payment certification. These include transfers to add a spouse (or other party) onto a title; transfer to change the form  of ownership of a property, and transfers that are gifts. This includes transfers that are made for estate planning purposes, and transfers between current owners of the property among themselves.

Effective January 1, 2012, all transfers of property will require a FPC, including previously exempt transaction.

Does the City of Chicago really expect to recoup enough money in delinquent or unpaid water bills from "exempt" transactions to cover the extra cost of labor to process all the additional paperwork?

I do not know, but I do see a couple of issues for consumers and attorneys.

Additional Cost to the Consumer:
The City charges a $50 fee to issue out a full payment certification. Most law firms rely on clerking services to procure the FPC paperwork - who charge an additional  fee to do so. Thus in a typical sales transaction, the seller will pay both an FPC fee and clerking service fee.

However, transactions exempt from transfer taxes will also be exempt from paying the City's $50 FPC fee. Most lawyers will still employ clerking services to procure the paperwork - or charge clients their hourly rates to do so themselves. (consumers will not be "exempt" from paying the "new" clerking fees or additional legal fees).

Aggravation and More Work for Unwary Attorneys:
I predict that more than a few hapless attorneys will try to record quit claim deeds in the coming weeks, unaware of this new policy. They will waste time (and perhaps charge clients) for their resulting additional efforts.

Unfortunately for all of us, the City did not do much of anything to announce this change. I only learned of this yesterday, having run into a learned colleague while we were both in line at City Hall to purchase FPCs for purchase/sale clients (thanks Bob!) and later confirmed by a call over to the Water Department.