Why Should Delaware Care?
Reporting “nominal” sale prices for properties has been a common practice in Delaware for decades, with some arguing it protected their private information. But that practice could soon come to an end after New Castle County officials requested that lawmakers prohibit it.
A longstanding practice of buyers of properties intentionally listing inaccurately low sale prices – such as $1 or $10 – might end soon for Delaware’s real estate market.
During a legislative committee meeting to examine Delaware’s recent property reassessments last week, New Castle County officials asked lawmakers to pass a law prohibiting the practice of listing “nominal” sale prices, saying it added a layer of difficulty to accurately reassessing property values.
New Castle County attorney Aaron Goldstein called his requested legislation “low-hanging fruit” for the General Assembly.
While no lawmaker immediately committed to endorsing such a bill, Delaware Senate Democrats spokeswoman Sarah Fulton later said that members of the caucus are “definitely looking into [prohibiting nominal sale prices] as one of many potential legislative solutions.”
Why are these values legal?
When real estate is sold, the new owner listed on a deed must be recorded with the county where the sale took place.
The new record must also include what is known as “consideration,” or something of value that is promised, given, or performed to make the contract enforceable. For many homeowners, that consideration is the actual price they paid for their home.
But for many high-end homes or commercial properties, the value is often publicly recorded as $1 or $10 – or what is known as nominal value. A sale contract will list that value along with “other consideration” in order to keep the true sale price private.
The county still records the true sale price in order to assess the property transfer taxes, but that amount is not immediately transparent to the public.
One high-profile example occurred in 2020 when Amtrak purchased a downtown Wilmington office building for what it listed as $1. And because Amtrak, as a government-owned entity, didn’t pay tax on the sale, the public could not even unwind the true price based on the amount of tax that would have otherwise been paid. A year after the sale , the rail company revealed the true purchase price as $41 million.
Eleven states don’t require any public transparency in the sale of property, while a handful more put limits on who and what can be seen. But Delaware falls into the vast majority of states where disclosure is required.
Even so, many use the nominal value approach to obscure sales to the public.
Assessors need accurate info
During the legislative hearing on property reassessments last week, Rep. Eric Morrison (D-Glasgow) asked why the nominal sale prices negatively affected the property reassessment process. In response, Goldstein said property assessors “must draw from a lot of different sources of information.”
“So if one of those sources of information is not accurately reflecting the actual sale price, it matters to the ultimate calculation,” he said.
Goldstein’s comments were in reference to Delaware’s recent statewide property reassessment — an effort to update land values that hadn’t been reviewed in decades.
It followed a 2018 lawsuit brought by the NAACP and education advocates who argued that outdated valuations created inequities among schools that rely on property taxes for funding.
All three counties separately awarded their contracts to carry out the process to the Texas-based company Tyler Technologies. After the assessment was complete, many homeowners argued their homes were overvalued, resulting in higher tax bills.