New Tax Law Causes Rush to Recorder’s

A clerk had just pulled the curtain shut on 1986, and Assistant County Recorder Ella Smith was on the phone with a title company officer, explaining why an $875,000 trust deed brought in by a company messenger could not be recorded.

“The pages are super-fuzzy, and your copier spilled toner halfway down the sheets,” Smith said into the phone. “The only thing you can do is retype the whole page. And (the messenger) says he can’t type.”

Smith hung up the phone. The deal was off--not just for 1986, but for good. “The escrow company said that if it didn’t record today, it won’t record at all,” Smith said.

The reason? Tax law changes, effective today, Jan. 1, 1987. Profits on land sales and depreciation on property bought after today will be calculated in ways and at rates that will often result in tax bills thousands of dollars higher than under the previous law.

To beat the deadline, escrow officers, real estate agents and title companies have rushed through thousands of property transactions in the last week. Some have been rejected because the documents were incomplete--an improper legal description, a blurred notary seal, a tax lien discovered at the last minute.

“They’re under a lot of pressure, so they make more mistakes” said County Recorder Lee Branch.

Still, about 7,500 property documents were recorded Wednesday--a record number for Orange County in a single day. The old record, 5,319, was set Tuesday. A normal day’s total is about 2,200. Transfer taxes and fees Wednesday totaled nearly $600,000--also a record.

Title company messengers lined up at the recorder’s office with bundles of documents as early as 5 a.m. Wednesday. While busy county workers kept lines short most of the day, a uniformed sheriff’s deputy was on hand just in case there were any incidents at closing time. It is the only day of the year that such precautions are taken, Branch explained.

“In past years we’ve had very emotional people,” he said. “They’ve busted the doors twice after we’d closed them.”

To make sure that wouldn’t be necessary for his client, Capistrano Beach realtor Daryl Lucarelli paid a visit to Continental Land Title Co. in Mission Viejo on Wednesday morning. Officers there assured him that the sale of his client’s seven-acre property in San Juan Capistrano would be recorded that afternoon.

“It’ll cost him about $18,000 more in taxes if it’s not recorded today,” Lucarelli said. The sale would still go through if it was delayed a few days, but several others he handled earlier in the week would not have, Lucarelli said.

“I came down to make sure that I had done everything I could to close this,” he said.

Jack Harris, Continental’s manager in Santa Ana, said the title company had recorded about 300 deeds Wednesday. Employees would be finishing up paper work until 2 or 3 a.m., he said.

“This will be a tough New Year’s Eve for title insurance people,” Harris said.