A purchase and sales agreement in New Hampshire is signed for a property that includes 8 acres of land currently enrolled in the NH Current Use program under RSA 79-A. The agreement states the purchase price is $320,000 and makes no mention of the Current Use status or the land use change tax. At closing, the town assessor notifies the parties that removing the land from Current Use for the buyer's planned residential development will trigger a land use change tax of 10% of the land's full market value, assessed at $80,000 for the 8 acres. The buyer refuses to pay the land use change tax and demands the seller pay it. Which statement most accurately describes the legal outcome?
Correct Answer
D) The party responsible for the land use change tax is determined by the terms of the purchase agreement; since the agreement is silent, the outcome depends on negotiation or a court's interpretation of the contract.
Under RSA 79-A, the land use change tax is assessed when land is removed from Current Use. The party liable for this tax is not automatically determined by statute in the context of a sale — it depends on the terms of the purchase agreement. Since this agreement is silent on Current Use status and the land use change tax, there is no contractual allocation. In practice, this creates a dispute that may require negotiation or legal resolution. This is why NH real estate professionals must always address Current Use status and land use change tax allocation expressly in purchase agreements involving enrolled land. The agent's failure to address this in the contract is a significant professional error.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
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