By Richard Roberts
Governor Lamont’s Executive Order 9R issued on December 16, 2020 renews certain property tax relief provisions that were originally promulgated under his Executive Order 7S issued on April 1, 2020. The deferment program and the low interest rate program contained in Executive Order 7S that were applied to property tax and similar payments due on July 1, 2020 are once again being made available for the January 1, 2021 installments. As you may recall, the earlier order mandated that municipalities offer one or both of those property tax relief options to qualified taxpayers and the same is true for the January 1, 2021 payments. The newly issued order provides that, unless the municipality affirmatively decides to change the program(s) that it wishes to offer to its taxpayers, the same election that was made for the July 1, 2020 payments will be applicable to the January 1, 2021 payments. It is only necessary for the municipality to take action before December 30, 2020 if it wishes to switch or add relief programs from what had been adopted in the spring.
The following is a summary of the Deferment and Low Interest Programs. Although they are substantially the same as those authorized under Executive Order 7S, there are some minor differences. The Office of Policy and Management has been directed to issue updated guidance within five days of the date of the order.
Deferment Program
This program allows eligible taxpayers to have a deferment of ninety (90) days of any real estate taxes, personal property or motor vehicle taxes, or municipal water, sewer, electric rates, charges or assessments. The deferment begins on the date on which such tax or charge becomes due and payable. It applies to any tax or charge that becomes due and payable on January 1, 2021, including the January 1, 2021 tax bills issued on the grand list of October 1, 2019.
Eligibility for such a deferment is limited to taxpayers, businesses, nonprofits or residents that attest to or document significant economic impact from COVID-19, and/or those that document that they are providing relief to those significantly affected by the COVID-19 pandemic.
In order for a landlord, or any taxpayer that rents or leases to commercial, residential, or institutional tenant or lessee, to be eligible for the deferment program, that landlord would have to provide documentation to the municipality indicating that the property has or will suffer a significant income decline or that similar deferments or forbearance have been offered to tenants or lessees.
Low Interest Rate Program
This program provides that the interest rate on delinquent payments of the principal of any real estate taxes, personal property or motor vehicle taxes, or municipal water, sewer, electric rates, charges or assessments that become due on January 1, 2021 shall be three percent (3%) per annum, instead of the existing rate which is generally eighteen percent (18%), for the period through and including March 31, 2021. There are no eligibility criteria for this program and it applies to all taxpayers.
Following the expiration of this ninety (90) day period, the ordinary delinquency interest rates and penalties would once again be applicable. Any tax or charge that was already delinquent prior to January 1, 2021 shall not be subject to the lower interest rate and the ordinary delinquency interest rates and penalties would continue to apply, as would any payments remaining delinquent on or after April 1, 2021.
In order for a landlord, or any taxpayer that rents or leases to commercial, residential, or institutional tenant or lessee, to be eligible for the low interest program, that landlord would have to provide documentation to the municipality indicating that similar deferments or forbearance has been offered to tenants or lessees upon their request.
Escrow Payments
Financial institutions and mortgage servicers holding property tax escrows on behalf of borrowers shall be required to continue to make property tax payments to the municipality as long as the borrower is either current on their mortgage or is in a forbearance or deferment program with the mortgage lender. This requirement is effective regardless of whether the property owner is eligible for or participating in either the deferment program or the low interest rate program established under EO 9R.
Validity of Tax Liens
Any tax liens which have been or will be filed, recorded, continued or released shall remain valid, as such tax obligations may be affected by EO 9R.
Please contact a member of our municipal group if you have any questions.