Transfer of Ownership Guidelines
In accordance with the Michigan Constitution as amended by Proposal A of 1994 and Michigan statutes
Property Transfer Affidavits
What is a Property Transfer Affidavit?
Michigan statutes require that the buyer, grantee, or transferee of a property notify the local assessing office when a transfer of ownership occurs. The Property Transfer Affidavit, form 2766, (formerly L-4260) is available on the STC website at www.michigan.gov/statetaxcommission.
Is there a deadline for filing the Property Transfer Affidavit?
Yes. The law requires that the Property Transfer Affidavit shall be filed with the local assessing office for the local unit of government in which the property is located within 45 days of a transfer of ownership.
Is there a penalty for failure to file a Property Transfer Affidavit?
Yes. Michigan law provides a penalty of $5.00 per day for each separate failure to file a Property Transfer Affidavit up to a maximum of $200.00. This penalty begins to accrue after the 45-day filing deadline has passed. However, the governing body of a local unit of government may adopt a resolution waiving this penalty.
Who receives the $5.00 per day/$200.00 maximum penalty?
This penalty is distributed to the local tax collecting unit.
Does the $5.00 per day/$200.00 maximum penalty become a lien on the property?
No. Because it is not a lien on the property, penalties for failure to file a property transfer affidavit will not cause a parcel to go to tax sale.
If a Property Transfer Affidavit does not contain all required information or contains incorrect information, has the Property Transfer Affidavit been timely filed? If not, can the $5.00 per day/$200.00 maximum penalty be levied?
It is a statutory requirement that certain information (e.g., the parties to the transfer, the date of the transfer, the actual consideration for the transfer, parcel identification number or legal description) be reported to the local assessor when reporting a transfer of ownership. If information is missing from these required sections or if these required sections do not contain correct information, the Property Transfer Affidavit has not been properly filed. If a Property Transfer Affidavit has not been properly filed, the $5.00 per day/$200.00 maximum penalty is to be levied unless waived by local unit resolution.
The State Tax Commission expects that assessors will make reasonable efforts to work with property owners to correct inadequate filings of Property Transfer Affidavits. However, the ultimate responsibility for filing a properly completed Property Transfer Affidavit rests with the purchaser.
Is the Property Transfer Affidavit (or any of the information provided on the Property Transfer Affidavit) confidential?
Who is required to file the Property Transfer Affidavit?
Michigan law specifies two possibilities for the party responsible for filing the Property Transfer Affidavit.
-Under a transfer of more than a 50 percent ownership interest in a legal entity (such as a corporation, partnership, etc.) which owns property, the Property Transfer Affidavit must be timely filed by either that legal entity or by the buyer, grantee, or other transferee of the property.
-In all other transfer of ownership situations, Michigan law specifies that the buyer, grantee, or other transferee of the property must timely file the Property Transfer Affidavit.
Must a Property Transfer Affidavit be filed when a transfer of property (or ownership interest) is not a transfer of ownership?
No. A Property Transfer Affidavit must only be filed when a transfer of property (or ownership interest) is a transfer of ownership. However, the Property Transfer Affidavit was designed to be filed even in situations where no transfer of ownership has occurred. The form was designed to allow parties involved in transactions which were not transfers of ownership but which may appear to have been transfers of ownership to alert the local assessor that the transactions were not transfers of ownership (and should not result in taxable value uncappings). Property owners are therefore encouraged to submit Property Transfer Affidavits even in situations where no transfer of ownership has occurred in order to avoid an incorrect taxable value uncappings.
Can notification of a transfer of ownership be made by means other than a Property Transfer Affidavit?
Under the law, a transfer of ownership must be reported using a Property Transfer Affidavit. No substitute reporting means is permitted. However, it is permissible to submit additional documentation, along with a Property Transfer Affidavit. Property owners are encouraged to submit additional documentation as needed to inform local assessors of relevant circumstances associated with transfers of property (or ownership interests).
Can a local assessor require documentation in addition to a Property Transfer Affidavit to make a decision whether a transfer of property (or ownership interest) was a transfer of ownership?
Local assessors have the responsibility to determine whether transfers of property (or ownership interests) are transfers of ownership under the law. To make this determination, local assessors will sometimes need more information than is contained on the Property Transfer Affidavit. Although a local assessor cannot require documentation in addition to a Property Transfer Affidavit, a local assessor can request that additional documentation (e.g., copies of trust instruments, partnership agreements, articles of incorporation, limited liability company operating agreements, etc.) be submitted.
Often the documentation needed by an assessor to make a transfer of ownership determination is sensitive in nature. Assessors are advised to treat sensitive documents which come into their possession with discretion, even if the documents could be considered to be public records.
Read more here:
Transfer of Ownership Guidelines
Transfer of Ownership Exemptions
Partial Uncapping Situations
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Dan A. Penning
The Penning Group Contact Information:
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Novi, Michigan 48375
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Grand Rapids, MI 49503
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Suttons Bay, MI 49682
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