Court hears BIAW’s argument on unconstitutional tax on document filing
October 7, 2022
Thurston County Superior Court Judge Carol Murphy will hear arguments in BIAW’s challenge to the state’s unconstitutional tax on document filing at 9 am. Friday.
When: 9 am on Friday, Oct. 14.
Meeting number: 758 8979 0163 #
Please remember to edit your name in Zoom to identify yourselves as “Observers.”
Challenging an unconstitutional tax
Concerned about added costs for homebuyers in today’s real estate market and a lack of public transparency in new taxes, the Building Industry Association of Washington filed a lawsuit in Thurston County Superior Court. The association asks the court to stop collecting a new surcharge that adds nearly $200 per document to the cost of common real estate filings.
“The Washington State Constitution restricts the use of fees to only fund services directly provided by the fee,” said Jackson Maynard, BIAW’s General Counsel. “This document recording fee should be limited to paying for the cost of processing and archiving of documents.
“Instead, the Legislature is hiding a new tax from taxpayers by trying to utilize this fee to fund other programs,” he said. “Those programs are vital, but the Legislature should use a different funding source because this fee is unconstitutional.”
Improper use of document filing surcharge
House Bill 1277 added the surcharge onto the existing fees charged by county auditors to file legal recording documents, including the transfer or sale of real property. BIAW argues the new fee is unconstitutional because the state will use it to fund subsidized housing and other projects rather than offsetting the cost of processing and archiving the documents, as required by the state constitution.
“BIAW supports the effort to address homelessness and fund public housing, but the state constitution requires those programs be funded either through existing funding sources within the state’s operating budget or new taxes,” Maynard said. “The constitution prohibits funding them through surcharges tacked onto document filing fees.”
BIAW argues the measure violates two other provisions of the state constitution aimed at ensuring transparency in legislation. The bill violates the single subject requirement because the title’s narrow focus is on increasing revenues, but some provisions of the bill do the opposite. The suit also contends that the Legislature failed to include all provisions of the law they changed – a violation of Article II, Sec. 37.
Increasing costs of home ownership
“These surcharges are not only illegal but also bad policy. One builder recently informed me this could add $20,000 to his business’s cost of building homes – which affects the price for homebuyers,” Maynard said. “This will make the record-high cost of homes in our state worse.”
Already the average price of a new home in Washington is $565,000. According to a recent study by the National Association of Home Builders, at that price point, three-quarters of Washington families cannot afford to buy a new home. Every $1,000 in added costs denies another roughly 2,200 more families the chance to own a home.
The Building Industry Association of Washington is the voice of the housing industry as the state’s largest trade association with nearly 8,000 member companies. The association is dedicated to ensuring and enhancing the vitality of the building industry so more Washington families can enjoy the American Dream of owning a home.