STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

 January 12, 1972

Richard Bogue
State's Attorney, Lincoln County
Canton, South Dakota 57013

OFFICIAL OPINION NO. 72-01

Fee on real estate transfer does not apply to any gift of realty by deed, irrespective of who may be the donor and donee. SDCL 43-4-20 through 43-4-26

Dear Mr. Bogue:

You have asked for an opinion as to whether or not a gift of real property between persons other than a husband or wife, or parent and child, is subject to the fee on real estate transfers, promulgated by Chapter 27, Laws of 1968, and compiled as SDCL 43-4-20 through 43-4-25, inclusive.

As you have pointed out, this question is raised because of the peculiar language used in the quoted enactment.

SDCL 43-4-21 provides that a fee is imposed at the rate of fifty cents for each five hundred dollars of value, or fraction thereof, upon the privilege of transferring title to real property in South Dakota.

SDCL 43-4-22 provides that the fee imposed by 43-4-21 shall not apply to the transfer of title:

(5) between husband and wife, or parent and child with only nominal actual consideration therefor.

SDCL 43-4-20 (3) defines value as follows:

'value' shall mean, in the case of any deed not a gift, the amount of the full consideration therefor paid, or to be paid, less the amount of any lien or liens assumed thereon.

SDCL 43-26-1 defines a gift as follows:

A gift is a transfer of personal property, made voluntarily and without consideration.

This definition, of course, is of no assistance, as such statute limits gifts to gifts of personalty. It may be thought that our court has considered gifts of realty, but the cases cited, namely, KARLSSON v ODLAND, 46 SD 350, 192 NW 758, and HANSON v FIESLER, 49 SD 442, 207 NW 449, when examined deal with the transfer of real estate in the first case when the son agreed to construct a home upon the real estate, pay a percentage of the proceeds from the sales of the crops from the premises to the donor, and also reimburse the donor a designated amount of money for the premises. In the second case, the conveyance of real property was made on an agreement that the "donee" would furnish a home, subsistence and lodging to his father and mother during the rest of their natural life. Neither of these examples can be truly considered as a "gift" of real property.

On the assumption that it is stating the common law rule in regard to a parol gift of real property, your attention is called toREINHARDT v FLEMING (1943) 18 Wash (2) 637, 140 P(2) 504.155 ALR 73, wherein it is stated:

There are four requirements necessary to sustain a parol gift of real estate: First, it must be a gift in praesenti, that is an absolute, present gift, not a promise, nor the expectation of some future act; second, possession must be given in furtherance of the gift; third, permanent and valuable improvements must be made which cannot be compensated for in damages; and, fourth, the donee must have changed his condition or circumstances or been induced to forego some benefit or assume some liability upon the strength of the gift.

In the case of parol gifts of realty, your attention is called to the annotation 155 ALR 76. A review of the decisions shows that except for certain cases which provide that a parol gift of realty is invalid, that the big problems raised is the effect of the Statutes of Fraud upon such transfer of real estate.

In your example, however, we most undoubtedly are considering a conveyance of title to real estate under SDCL 43-25, which it is claimed amounts to conveyance of such real estate as a "gift".

A study of the law as it has developed in regard to gifts is that every "gift of property" must be made without consideration. If there is a consideration, the experts state that the transfer of title, even to real property, is not a gift.

It is my opinion that real estate in South Dakota may be the subject of a gift, and such gifts are not limited to transfers between husband and wife or parent and child.

The South Dakota fee that is enacted for the privilege of transferring title to real property in this state is measured by the "value" of such property, and in the definition "value" as used in such statutes, such is the "amount of the full consideration therefor paid or to be paid ... "

There is no consideration in a "gift of real property". Therefore there is no consideration passing from the vendee to the vendor of such real ty. There is no "value" for the purpose of exacting the fee for the recordation of such instrument.

If you will review, SDCL 43-4-22(5), you will notice that this subsection setting forth an "exempt" transfer, is not concerned with gifts of real property, as it is based upon the premise that there is a "nominal actual consideration" for such real estate transfer.

It is my opinion that instruments, such as you have described, should be declared to have no "consideration" or "value", and therefore are en titled to recordation without the payment of any fee. As such transfer is not subject to the fee as provided in SDCL 43-4-21, it should have the words "exempt from transfer fee", as required by SDCL 43-4-23 stated thereon.

Respectfully submitted,

Gordon Mydland
Attorney General