STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

February 18, 1969

Lee A. Tappe
State's Attorney, Charles Mix County
Platte, South Dakota 57369

OFFICIAL OPINION NO. 69-15

Real Estate Transfer Fee provided by Ch. 27, Session Laws of 1968. Roll of Register of Deeds in reference thereto

Dear Mr. Tappe:

You have requested my official opinion in answer to this question:

"Does the transfer fee, provided by Chapter 27 of the Session Laws of 1968, apply to a deed bearing a date and acknowledgment prior to July 1, 1968, but offered for recordation after July 1, 1969?"

July 1, 1968 is the date that Chapter 27 becomes effective.

Before considering the question you have raised, because of numerous inquiries to my office, it may be well to discuss generally the roll of the register of deeds in enforcing the provisions of the statute.

Initially (Section 2), the responsibility to pay such transfer fee rests upon the grantor in the instrument, subject to such fee, which is offered for recordation. Section 3 of the Act makes it clear that it is the duty of such grantor, or his agent presenting such instrument for recordation to make a claim that such instrument is exempt from the fee.

When any instrument presented for recordation to a register of deeds, does not, in pursuance to Section 3 of the Act, have stated thereon "exempt from transfer fee," the register of deeds has a duty to inquire as to the value of the transferred real estate for the purpose of such fee and to collect the fee measured by the declared value before recording such instrument. To make such provisions effective and not to place an undue burden upon the register of deeds, such valuation must be made by the person presenting the same for recording, and once a value is placed thereon the register of deeds after computing the required fee. cannot refuse to accept tender of such fee and recordation of such instrument upon either the ground that the person presenting such instrument for record is not the grantor in such instrument, or on the sole ground that in the opinion of the register of deeds, the declared value is too low.

I have reached the last conclusions for these reasons: First, it would seem that it is the duty of the register of deeds to collect such transfer fee as a condition precedent to recording such instrument, and the register of deeds can presume the person so presenting the instrument for record, and declaring value, is authorized to act for the grantor. A s to the valuation placed upon such transfer, Section 5 of the Act provides a criminal penalty for willfully falsifying the value of transferred real estate resulting in an insufficient fee being paid on the transfer. This provision, in my mind, provides the exclusive remedy for punishing a willful falsification of value. In considering the question you have presented. it is my opinion that if the presented deed does not bear the statement "exempt from transfer fee" thereon, your question could not arise. In such instance, irrespective of the date of execution or acknowledgment as shown on the instrument, the register of deeds has no alternative but to secure a declaration of value, compute the proper fee, and require its payment as a condition to recording such instrument.

It is only when a deed, or other instrument transferring or conveying title, bearing a date, and acknowledged prior to July 1, 1968 wherein it is stated "exempt from transfer fee," is offered for recordation that your question can arise. Likewise, such question can only arise on the assumption that under the Act in question, the register of deeds has the authority to question such claim of exemption or any claim of exemption placed upon an instrument offered for recordation. Whether or not such register of deeds has in fact any authority to question a claim of exemption will not be determined in this opinion.

There seems little doubt that the Act in question was enacted because the United States Congress repealed the Federal tax on recorded instruments.

However, because of the differences in the statutes themselves (see Section 4361 of Title 26 of the United States Code for the Federal statute) any interpretation of the Federal statute is not helpful in interpreting the South Dakota statute. The Federal statute imposed a tax upon the instruments itself. The South Dakota statute, by Section 2 provides:

"A fee is hereby imposed . . . upon the privilege of transferring title to real property in the state of South Dakota, which fee shall be paid by the grantor.

"At the time any deed evidencing a transfer of title subject to the fee herein imposed is offered for recordation, the Register shall collect the amount of the fee due thereon. . ."

The fee imposed by the South Dakota Act is not imposed upon the instrument, nor upon the right to record the instrument, but rather such fee is imposed upon the privilege of transferring title to real property. For convenience in collecting such fee, at the time such instrument is offered for recordation, as a condition precedent to such recording, the fee must be computed and collected.

Certain elementary principles of Real Estate Law must be considered in order to properly interpret our statute. It is elementary that recordation of an instrument affecting real property has nothing to do, either with the conveyance or transfer of title, or the claim of any interest in real property. 'Without engaging a long discussion of the intricacies of the law of real property, it is a valid instrument with proper parties, together with a delivery of such instrument and acceptance of title by the grantee that conveys title to real property in this state.

That title conveyed must be accepted by the grantee is required. See Birchard v. Simons (1932) 59 SD 422, 240 NW 490. It was settled in Churchill & Alden Co. v. Ramsey (1925) 48 SD 237, 203 NW 502 (affirmed on Rehearing (1926) 50 SD 73, 208 NW 406) that the recordation of an acknowledged deed without an intent to deliver such instrument to the grantee does not operate as a delivery of or transfer of title to real property to the grantee. Likewise, it is settled that under certain circumstances an instrument denominated as and containing the essential statements of a deed, may in fact be a mortgage. (See Mustar v. McComb (1918) 40 SD 205, 167 NW 232.)

SDC 51.1622 provides: "An unrecorded instrument is valid as between the parties thereto and those who have notice thereof."

The only purpose of recording an instrument affecting real property-be such a transfer of title in fee simple, an instrument creating a lien, or an easement or other servitude or the like upon land, or however it may affect real property, save and except for the provisions of SDC 51.1620, as amended, is to give constructive notice to the entire world that there is a claim of interest in such real property made on behalf of the grantee named in such instrument.

Thus, when a deed bearing a date and acknowledged prior to July 1, 1968 is offered to a register of deeds, and such offer is made for or on behalf of the grantee named therein, and such deed bears the statement "exempt from transfer fee," the ordinary presumptions in law, binding upon all parties, which includes the register of deeds, presumes that title to such property was transferred or conveyed to the grantee therein named, by a delivery of such instrument to the grantee, and the acceptance of such title by such grantee. The presumption is that such title was so conveyed and accepted upon the date of such deed and acknowledgment, which was prior to the effective date of such Act, imposing a transfer fee upon the privilege of transferring title to real property in the State of South Dakota.

Without evidence to show that there was an alteration in dates of such instrument and its acknowledgment, that there was no transfer of title, or other proper evidence to overcome the presumptions surrounding the deed, it is my opinion that such title was transferred prior to the effective date of the imposition of such transfer fee, and that such conveyance is not subject to the fee notwithstanding that such was offered for recordation subsequent to the effective date of Chapter 27 of the Session Laws of 1968. Subject to the limitations as above set forth, it is my opinion your question must be answered NO.

Respectfully submitted,

Gordon Mydland
Attorney General