Pub. 2 2013 Issue 9

December 2013 7 l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s MAKING THE CASE FOR ELIMINATION OF THE KANSAS MORTGAGE REGISTRATION FEE continued on page 8 K ANSAS IS ONE OF ONLY NINE STATES plus the District of Columbia that currently impose a mortgage fee on purchasers of real property, who finance their purchase and give a mortgage in the property as security for the loan (See K.S.A. 79-3101 et. seq.). The current fee is set at $0.26 per $100 of indebtedness. All but $0.01 per $100 of this fee goes directly to the general fund of the county in which the property is located. The Kansas Heritage Trust Fund receives the $0.01 per $100 to help fund state grants for historic preservation. The state statute provides that the registration fee shall be paid to the register of deeds before any mortgage of real property is filed for record. While Kansas law does not require every mortgage to be filed for record, the law does provide that the proper method of perfecting a mortgage is to record it with the register of deeds in the county where the property is located (See K.S.A. 58-2222). In addition to the mortgage registration fee, a recording fee is also collected (currently, $8.00 for the first page, $4.00 for additional pages). Imposing a mortgage registration fee only on those who have to borrow money to help finance real property purchases singles out a small segment of the Kansas population for unfair tax treatment. Why target indebtedness as a revenue source for the county? Those who do not need financing for property purchases are not subject to the same financial burden as those who do. If the mortgage registration fee’s purpose is to help fund the budgetary needs of each county, we believe the burden should be spread out evenly among the citizens of each county. Because the registration fee is based on the amount of each mortgage filed, it is a relatively unstable source of funding. It is dependent solely on loan demand in each county. There is evidence to show that in this last economic recession, revenue dipped as borrowers hunkered down to weather the storm. 2013 showed some recovery, but many counties experienced an unusual boon in registration fee revenue due to one-time wind farm registrations, and unusual oil and gas lease revenue. Wouldn’t each county prefer a more stable source of revenue? In addition, as one of the few states that have this tax, it serves as a disincentive to purchase property in Kansas. There is no better example than our neighbors to the east: Missouri does not have such a tax. If a Kansas City home owner or business owner is deciding whether to purchase property and build a home or business in Kansas or Missouri, 26 basis points can be the deciding factor.