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searches except in smaller and rural counties. The customary time period of ownership that is searched in Pennsylvania is 60 years. The Buyer customarily has the title search performed and pays for the title insurance.

4. What assurances of ownership are available to purchasers of real property (e.g., title insurance or title opinions)? What is the cost of obtaining such assurances?

Title insurance is available in Pennsylvania and is commonly obtained by real estate purchasers and mortgage lenders. Title opinions are rarely provided by attorneys. Title insurance is regulated by the Title Insurance Rating Bureau of Pennsylvania and rates are set by that body.

5. What are the most common forms of investment vehicles? What are the most common entities employed to own investment real estate in a tax efficient manner?

The most common investment vehicle for real estate in Pennsylvania is a limited partnership having as its general partner a corporation or a limited liability company. Limited liability companies are not commonly used to own investment real estate in Pennsylvania the way they are in other jurisdictions. That is because limited liability companies are taxed as corporations, not partnerships, for purposes of Pennsylvania’s Capital Stock Tax, regardless of the entity’s classification for purposes of Federal income taxes. While the Capital Stock Tax is being phased out over time, the “phase out” is not yet complete. Until the “phase out” is complete, the practice of using a limited partnership as the vehicle of choice will probably continue. Typically a limited liability company or corporation will be formed to serve as the general partner of the limited partnership and will be assigned a nominal (e.g. 1%) partnership interest. The rest of the ownership interests will then reside in the limited partners. While the general partner will still be subjected to the Pennsylvania capital stock tax, due to the small percentage of ownership, the impact will be greatly diluted.

6. Has this jurisdiction adopted, or is it considering, legislation permitting the creation of real estate investment trusts or similar entities?

Although there is no specific REIT statute in Pennsylvania, several Pennsylvania entities may be used to form a REIT, such as a Pennsylvania statutory business trust, a Pennsylvania limited liability company, a Pennsylvania corporation or a Pennsylvania limited partnership.

7. What state or local transfer, stamp or similar taxes are levied generally on sellers or buyers upon the direct transfer of real estate?

There is a state and a local transfer tax imposed on any document that transfers an interest in Pennsylvania real estate. The Pennsylvania Realty Transfer Tax statute (72 P.S. §8101-C et seq) imposes a tax based on 1% of the value of the real estate. The grantor and grantee are jointly liable for the transfer tax but they may allocate the tax between them as they see fit. It is customary for the tax to be split equally by the grantor and the grantee. The Pennsylvania Realty Transfer Tax statute provides a number of exemptions to transfer tax liability. Most


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