April 17, 1981
Mr. Dennis J. Batteen
Faulk County State's Attorney
Faulkton, South Dakota 57438
Official Opinion No. 81-12
Real Estate Transfer Fee
Dear Mr. Batteen:
You have requested an official opinion from this office in regard to the following factual situation:
FACTS:
'A' a farmer and 'B' his sister, who resides in California, each own a quarter section of land in Faulk County, South Dakota. Said real estate is located in adjoining sections. A and B would like to exchange quarters to facilitate A's farming operation.
Based on the above factual situation, you have asked the following question:
QUESTION:
Is the exchange of an equal amount of farm land between brother and sister without any actual consideration subject to the real estate transfer fee imposed by SDCL 43-4-21?
SDCL 43-4-20 provides:
As used in § § 43-4-20 to 43-4-26, inclusive, unless the context otherwise requires:
(1) 'Deed' shall mean any instrument for the purpose of transferring or conveying the fee title to real property;
(2) 'Register' shall mean the register of deeds of any county in the state of South Dakota, and,
(3) '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. (Emphasis added.)
SDCL 43-4-21 provides:
A fee is hereby 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 the state of South Dakota, which fee shall be paid by the grantor.
SDCL 43-4-22 provides:
The fee imposed by § 43-4-21 shall not apply to the transfer of title:
(1) Recorded prior to July 1, 1968;
(2) By the United States of America, this state, or any instrumentality, agency, or political subdivision of either;
(3) Solely in order to provide for or to release security for a debt or obligation;
(4) Which confirms or corrects a deed previously executed and recorded;
(5) Between husband and wife, or parent and child with only nominal actual consideration therefor;
(6) On sale for delinquent taxes or assessments;
(7) On partition;
(8) Pursuant to any mergers or consolidations of corporation or plans of reorganization by which substantially all of the assets of corporations are transferred;
(9) By a subsidiary corporation to its parent corporation for no consideration, nominal consideration, or in sole consideration of the cancellation or surrender of the subsidiary's stock;
(10) Pursuant to decrees of distribution entered in any decedent's estate;
(11) Between an individual grantor, or grantors, and a corporation, where such grantor or grantors and the owner of the majority of the capital stock of such corporation are one and the same person;
(12) Between any corporation and its stockholders or creditors, when to effectuate a dissolution of such corporation it is necessary to transfer the title of real property from such corporate entity to the stockholders or creditors;
(13) On cemetery lots and grave sites;
(14) Between an individual grantor, or grantors, and a limited or general partnership where such grantor or grantors and the owner of the majority interest in the limited or general partnership are one and the same person. (Emphasis added.)
In view of the foregoing statutes, it is my opinion that the real estate transfer fee imposed by SDCL 43-4-21 must be paid in the present case. The central question is whether this transaction is a gift or a transfer for value. The difference, of course, between these two categories is whether or not the transfer was made for valuable consideration. In my view, each quarter section of land was consideration for the other. See Official Opinion 70-27. Therefore, the transfer was for value, and the fee prescribed by § 43-4-21 must be paid.
I would further note that SDCL § 43-4-22(5) only exempts transfer between husband and wife or parent and child and is, therefore, irrelevant to the present factual situation.
Respectfully submitted,
Mark V. Meierhenry
Attorney General
