Opinion ID: 1539570
Heading Depth: 1
Heading Rank: 3

Heading: failure to pay transfer tax

Text: When Davis and his wife purchased their home on Red Oak Road in 2005, they were also selling another home, and buying and selling the lot next to their new home. Davis described it as a very difficult and complicated transaction, [1] for which he hired an independent contractor paralegal to prepare the paperwork. After the closing, Davis testified that there were some out of balance entries, but that [a]t no time ... did [he] receive funds that should have been allocated to somebody else or allocated to the state. And that is ... why ... [he] did not realize that the taxes had not been paid until this proceeding commenced. [2] Although it is true that Davis did not receive a check from the seller, Davis did receive a $48,000 reduction in the amount he paid to purchase the property. That reduction included $24,000 that the seller had allocated to transfer taxes. On a revised, unsigned settlement sheet, the parties' transfer taxes were listed as zero, and a $24,000 repair credit was listed as a reduction in the amount due the seller. That revised settlement sheet was the one designed to address the out of balance entries. Davis suggested at one point that the transfer tax checks were cut and that somehow they were never paid. When a Board member asked him where the missing $48,000 went, Davis admitted that the money was not missing; it was used to reduce his payment to the seller. The ODC and the Board apparently accepted Davis's claim that he never realized that the taxes had not been paid, and that he did not benefit from the non-payment. Interestingly, if the falsely notarized Affidavit of Exemption had not misstated the property that was subject to the exemption, the unpaid transfer taxes would have come to light immediately because the deed to the property would not have been accepted for filing. So, the record facts are that a real estate attorney who was purchasing a $1.1 million home for himself did not review the settlement sheet, the deed, or the Affidavit of Exemption carefully enough to see any errors, and those errors allowed the transaction to be completed without discovery of the missing tax payments. Davis's explanation was that he made a mistake in relying on the outsourced paralegal to draft all of the paperwork. After he left Ward and Taylor, LLC, however, Davis hired her to work in his solo practice.