USA – NEW YORK Law and Practice Contributed by: Lindsey E. Haubenreich, Joseph P. Heins, Timothy P. Moriarty and Kimberly R. Nason, Phillips Lytle LLP
The condemning party is required to pay just compensation (defined as the fair market value of the property) to the former owner of the prop - erty that was acquired through condemnation. 2.10 Taxes Applicable to a Transaction For the transfer of real estate, a transfer tax is due to the New York State Department of Taxa - tion and Finance, and is paid to the applicable county clerk upon recordation of a deed. In order to record a deed, a transfer tax return (form TP-584) must be presented to the county clerk. The state transfer tax is USD2 for every USD500 of consideration paid or the fair market value of the real property. Local municipalities may also impose a separate transfer tax, which varies by county. Transfer tax and the cost of filing a form TP-584 are customarily seller expenses, although this can be negotiated. Additionally, the “Mansion Tax” imposed on the conveyance of residential real property where the consideration is USD1 million or more – has a tax rate of 1% of the consideration paid, customarily paid by the pur - chaser. Transfers of real property in New York City may be subject to additional taxes. A transaction of shares in a property-owning company also triggers a transfer tax obligation if the grantee, or a group of grantees acting in concert, acquires a controlling interest (50% or greater) from one or more grantors. There are certain standard exemptions, includ - ing conveyances: • to the federal or state government, or their agencies or political subdivisions; • to secure a debt or other obligation; • to confirm, correct, modify, or supplement a prior conveyance;
• made as gifts; • that are only intended as a change of identity; • given in connection with a tax sale; • by deed of partition; • made pursuant to the federal Bankruptcy Act; • that only consist of certain contracts to sell, or options to purchase, real property; or • not deemed a conveyance within the meaning of New York Tax Law. 2.11 Legal Restrictions on Foreign Investors Regulations issued since passage of the Foreign Investment Risk Review Modernization Act of 2018 expose even noncontrolling foreign invest - ments to potential CFIUS review if the invest - ment conveys certain minimal rights in property within one of the listed proximities to specified national security installations or infrastructure. In view of the substantial penalties should CFIUS later determine a filing should have been made, as well as CFIUS’ authority to block an invest - ment or even order divestiture, filing for such review by simple declaration or more detailed notice, if applicable, would seem advisable. Investors from “excepted investor states” (cur - rently Australia, Canada, New Zealand, and the United Kingdom) are exempt from filing for noncontrolling investments provided the inves - tor meets the detailed criteria of relationship to the “excepted” state outlined in the regulations. Even for these states, however, the usual rules apply for acquisition of controlling interests.
3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
Commercial real estate acquisitions are typically financed through commercial real estate loans
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