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Court to hear BIAW’s appeal in unconstitutional document surcharge case

September 11, 2023

BIAW General Counsel Jackson Maynard will argue on behalf of Washington builders that a lower court got it wrong in a decision regarding the constitutionality of a new document surcharge on common real estate filings.

The Division II Court of Appeals will hear the appeal on Thursday afternoon in the case BIAW et al. vs. State of Washington et al. TVW will air the arguments live.

When: 1:30 pm on Thursday, Sept. 14

Where: TVW

Challenging an unconstitutional tax

BIAW and its member, Soundbuilt Homes, LLC, initially filed a lawsuit in Thurston County Superior Court. The suit asked the court to stop collecting the new surcharge that adds more than $185 per document to the cost of recording legal documents commonly used in the homebuilding industry to fund programs unrelated to the fee.

“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. “While those programs may be important, the Legislature should use a different funding source because this fee is unconstitutional.”

Improper use of document surcharge

House Bill 1277 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. 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.

The association argues the fees are, in fact, nonuniform property taxes. The trial court ruled they are not because recording such documents is “voluntary.”

Lower court erred

Maynard will be challenging the trial court ruling, demonstrating that document filings are indeed required, and homebuilders must pay them in the course of building new homes.

Increasing costs of home ownership

“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.

“Ironically, the homebuilders working to alleviate the affordable housing supply shortage are footing the bill for the state of the housing market.”

Homes in Washington average $635,131—more than $200,000 higher than the national average of $425,786. At that price, roughly 81% of Washington can’t afford a new home. Every $1,000 in added costs denies another 1,737 more families the chance to own a home.

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