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Court rejects BIAW’s appeal in document fee challenge

March 19, 2024

In early March, the Washington State Court of Appeals, Division II, rejected BIAW’s appeal in its document fee challenge.

The court issued a published opinion upholding a Thurston County trial court’s ruling that the new document surcharge on common real estate filings is constitutional. The opinion comes nearly six months after former BIAW General Counsel Jackson Maynard argued the case before the court.

BIAW’s document fee challenge

BIAW and Soundbuilt Homes LLC challenged the constitutionality of the $183 document filing fee on Nov. 2, 2021. During the 2021 legislative session, legislators approved House Bill 1277. The bill added a $100 surcharge onto the existing fees charged by county auditors to file legal recording documents, including the transfer or sale of real property. The surcharge funds subsidized housing and other projects.

BIAW challenged the constitutionality of the surcharge because rather than offsetting the cost of processing and archiving the documents, as required by the Washington State Constitution, it funded subsidized housing and other projects. Used in this way, BIAW argued that the document fee surcharge was actually a nonuniform property tax.

An excise tax, not a property tax

Division II agreed with BIAW in holding that the document recording surcharge is indeed a tax subject to Article VII, section 1 of the Washington Constitution. But the court ruled the surcharge was an excise tax, not a property tax. Division II relied heavily on the Washington State Supreme Court’s decision in Quinn v. State in making the determination that the document recording surcharge is an excise tax.

Washington law defines a property tax as “a tax on the mere ownership of property.” An excise tax “applies to the exercise of rights in and to property or the exercise of a privilege.” The court ruled the document recording surcharge is tethered to a specific activity or transaction – recording documents – not just the mere ownership of property.

BIAW will not be appealing Division II’s ruling.

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