What background knowledge is needed for this Practice Of Real Estate question?

The allocation of the land use change tax became a significant transactional issue in New Hampshire as land values rose dramatically in the 1980s and 1990s, making the 10% tax on full market value a potentially enormous sum. The legislature designed the tax to be assessed against 'the owner' at the time of the change, but did not specify that this obligation was non-transferable by contract. Over time, standard NH purchase and sale agreements evolved to include explicit provisions addressing who bears the land use change tax, and the New Hampshire Association of Realtors developed standard form language to address this allocation, reflecting its importance in rural transactions.

What is a good way to remember the answer to this Practice Of Real Estate question?

Think of the land use change tax like a restaurant check that arrives at the table: the law says the person sitting in the chair when the bill arrives must pay it, but two friends can always agree in advance to split the check or have one person cover the other. The 'chair' is ownership at the time of the change, but the 'agreement' is the purchase contract. Remembering that statute determines assessment but contract determines allocation will keep these two concepts cleanly separated in your mind.

What exam tip applies to this Practice Of Real Estate question?

Questions involving the land use change tax and contractual allocation are testing your ability to distinguish between statutory default rules and private contractual freedom. When you see answer choices that say 'always' or 'never,' treat them with immediate suspicion — RSA 79-A does not use absolute language about who must ultimately bear the tax cost, and the word 'always' in choices A and C should be a red flag. Focus on the word 'contractually' in the correct answer, which signals that the parties have flexibility beyond the statutory default.

How does this Practice Of Real Estate concept apply in real world practice?

Imagine a seller, Robert, who owns a 300-acre Current Use parcel worth $1.5 million at full market value. A developer offers to purchase the land for $1.2 million but insists that Robert absorb the $150,000 land use change tax as part of the deal, effectively reducing Robert's net proceeds to approximately $1,050,000. Robert's attorney negotiates a counteroffer where the parties split the tax, and this allocation is written into the purchase and sale agreement. Both parties honor the contract at closing, demonstrating that while the state assesses the tax against the owner of record, the contractual allocation between buyer and seller is entirely permissible and enforceable.

Practice Of Real EstateState SpecificMEDIUM

Patricia is a New Hampshire listing agent representing the seller of a 300-acre parcel enrolled in Current Use. The buyer's offer includes a contingency stating that the seller will be responsible for any land use change tax triggered by the sale. The seller asks Patricia whether this is typical. Which response best reflects the legal and practical reality in New Hampshire?

Correct Answer

A) The land use change tax is assessed against the owner at the time of the change, but the parties may contractually agree on who bears the cost

Under RSA Chapter 79-A, the land use change tax is assessed against the current owner of the land at the time the change in use occurs — in most sale scenarios, this is the seller. However, NH law does not prohibit the parties from contractually allocating this tax obligation differently. It is common practice in NH transactions for purchase agreements to specify who is responsible for the land use change tax, and the contingency described is legally permissible and enforceable between the parties.

Answer Options

The land use change tax is assessed against the owner at the time of the change, but the parties may contractually agree on who bears the cost

The land use change tax is always the buyer's legal obligation under RSA 79-A, so the contingency is legally unenforceable

The land use change tax is always split equally between buyer and seller by statute, so the contingency is unnecessary

The land use change tax does not apply when the land is sold to a buyer who intends to keep it in Current Use

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