According to a Liff, Walsh & Simmons publication, an Indemnity Deed of Trust (IDOT) is “a deed of trust granted by one or more of the guarantors of a loan who are pledging their real property as collateral, rather than the borrower doing so as [one would] see in traditional loan structures.” The guarantor’s deed of trust is an “indemnity” deed of trust because it secures a contingent liability of the guarantor.

Baker Donelson reports that the Maryland General Assembly, in its 2023 session, increased the threshold for IDOT recordation tax deferral from $3,000,000 to $12,500,000, effective July 1, 2024. In other words, the new law limits the recordation tax deferral for IDOTs to transactions where the IDOT secures a guarantee of repayment of a loan amount of less than $12,500,000. The new deferral threshold will apply to a loan or a series of loans that are part of the same transaction, according to the legislation.

According to Baker Donelson, the new law also requires the designated collector of recordation tax in each county to provide an annual report to the Senate Budget and Taxation Committee and the House Ways and Means Committee including: 1.) the total number of indemnity mortgages recorded that received recordation tax deferral under the new law; 2.) the amount of debt secured by each IDOT for which recordation taxes were deferred; and 3.) the amount of recordation tax revenue forgone due to the IDOT recordation tax deferral.

Last Updated on June 13, 2023 by Ramin Seddiq