Relating to the effect of a tax certificate accompanying a transfer of certain property.

Contracts

Purchase and Sale Agreements (PSAs) for residential assets must be amended immediately:

• Representations: Sellers must explicitly represent that no homestead exemption has been erroneously claimed in the past 5 years.
• Indemnity: Expand indemnity clauses to specifically cover "taxes, penalties, and interest arising from the cancellation of a homestead exemption," explicitly stating this survives closing regardless of the Tax Certificate’s content.
• Survival: Ensure these specific indemnities survive for the duration of the statute of limitations for omitted property (typically 5 years).

Hiring/Training

• Closing Teams: Train staff to identify "related parties" (1st-degree relatives, employer/employee, parent/subsidiary, trust/beneficiary).
• Due Diligence Officers: Staff must move beyond the Tax Certificate. For related-party transfers, they must now audit the validity of the seller's homestead exemption status prior to closing.

Reporting & Record-Keeping

• Affidavits of Non-Relation: Create and require a sworn affidavit at closing for arm's-length transactions that might *appear* related (e.g., same surnames, similar corporate entity names) to defend against future CAD challenges.
• Corporate Structure Charts: Maintain precise ownership records at the time of transfer to prove/disprove "subsidiary" status if a lien is later asserted.

Fees & Costs

• Liability Exposure: While filing fees remain unchanged, the cost of non-compliance is the full amount of back taxes, penalties (often substantial), and interest previously thought extinguished.
• Insurance Premiums: Anticipate Title Insurance exceptions or increased premiums for related-party transfers, as underwriters adjust to the inability to rely on tax certificates.