ARKADELPHIA -- An Arkadelphia lawyer argued Monday that several national banks and other mortgage companies have failed for years to pay the recording fees required for mortgage transfers in Arkansas' 75 counties.
In 2012, Clark County circuit clerk Martha Smith sued JPMorgan Chase & Co., Wells Fargo and Deutsche Bank National Trust Co., as well as Wilson & Associates of Little Rock, legal professionals for real estate and mortgage banking, and others.
The case was delayed when it was moved to federal court and then returned to Clark County circuit court, said Todd Turner, an Arkadelphia attorney representing Smith.
Arkansas law imposes a tax on the transfer of property ownership. Documentary stamps must be purchased and affixed to deeds when property is sold.
But Smith claimed that in many instances involving the defendants, no transfer taxes are paid.
Ten attorneys representing the defendants filled a courtroom Monday, with seven forced to sit in the jury box because of lack of space. There were about 20 circuit clerks or their representatives from counties around the state, as well as a representative of the Association of Arkansas Counties, also in attendance at the hearing.
Kenneth Kliebard, a Chicago attorney representing JPMorgan, argued before Clark County circuit Judge Ted Capeheart that the case should be dismissed. The case was assigned to Capeheart, a retired judge, after two other judges recused earlier this year.
Arkansas' general assembly has placed exclusive authority for enforcing the Arkansas real transfer tax with the director of the state's Department of Finance and Administration, Kliebard said. Since the department is not a party in Smith's lawsuit, the county clerks have no right to sue, "because the plaintiff is not the recipient of the taxes," Kliebard said.
In seeking a declaratory judgment against the defendants, Turner told Capeheart that the Department of Finance and Administration does not give legal advice to the circuit clerks.
"So [clerks] can't look [to the department for] any help on recording official instruments," Turner said. "So the question needs to be resolved in a court of law whether these taxes are applicable or not. We think clearly they are applicable. This is about the filing of defective instruments in the property records all over the state of Arkansas."
If the clerks chose not to file the documents because no transfer tax is included with them, the defendants would sue the clerks, Turner said.
"Because [the defendants] want their deeds filed on the property they foreclosed on," Turner said. "This question can't be answered by [the Department of Finance and Administration] and the clerks are the proper ones to raise that question. All 75 clerks [in Arkansas] are getting these deeds."
Bobbie Jo Green, circuit clerk in Howard County, attended the hearing Monday.
Many times, residents in the county who are interested in bidding on the purchase of foreclosed property are kept from bidding by the mortgage owners who repeatedly postpone the auction, Green said in an interview after the hearing.
Capeheart asked the attorneys for each side to prepare documents in the next 10 days supporting their arguments.
Business on 08/19/2014