Request By:
Mr. Ed W. Hancock
Deputy Secretary for
Legal Affairs
Department of Transportation
State Office Building
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
In OAG 70-489 it was held that the real estate transfer tax imposed by KRS 142.050 applied to a deed made by the master commissioner to a governmental unit in a condemnation case.
In OAG 71-211 the opposite was decided on the basis that the master commissioner is a public official acting as an agent of the court and therefore the transfer to the United States of America, this state, any city or county within this state, or any instrumentality, agency, or subdivision is exempt from the real estate transfer tax. You suggest that the most recent opinion is in error since the transfer of title in a master commissioner's deed is still from the property owner, even though the deed is signed by the master commissioner and approved by the court. Therefore, you say, when property is conveyed to the Commonwealth of Kentucky by master commissioner's deed in a condemnation case, the Commonwealth should be liable for the real estate transfer tax.
You request our opinion by way of clarification of the two aforementioned opinions as to whether the real estate transfer tax applies when the property is conveyed to the Commonwealth in a condemnation case through a master commissioner under court order.
KRS 142.050 provides for a real estate transfer tax relating to conveyances of real property. Subsection (2) of that statute provides that a tax upon the "grantor named in the deed" is imposed at the rate of fifty cents (50 ) for each five hundred dollars ($500) of value or fraction thereof, which value is declared in the deed upon the privilege of transferring title to real property. (Emphasis added).
Subsection (8) of the statute contains exceptions to the imposition of the tax. Among the exceptions we find this one:
"The tax imposed by this section shall not apply to a transfer of title:
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"(b) To (in the event of a deed of gift or deed with nominal consideration) or from the United States of America, this state, any city or county within this state, or any instrumentality, agency, or subdivision hereof;" (Emphasis added).
Actually, in connection with a master commissioner's deed, the master commissioner is merely an agent of the court in conveying the title of those persons who have an interest in the title. Of course in a condemnation case there is a substantial consideration involved in the payment by the Commonwealth made into the court on behalf of the title owners. You are speaking specifically of a master commissioner's deed in a condemnation case to the Commonwealth of Kentucky. Under the explicit provisions of KRS 142.050(8)(b), and since the consideration is not a nominal one and since the deed does not involve a gift, the transaction is subject to the tax. It does not qualify as an exception for the reason given.
The amendment of this statute which ushered in the parenthetical expression that a deed to the Commonwealth would qualify as an exception only if the deed were a deed of gift or a deed with nominal consideration, was enacted in 1974. The parenthetical expression modifies only the last antecedent.
Winokur v. Michigan State Board of Denistry, 366 Mich. 261, 114 N.W.2d 233 (1962) 235.
We think OAG 70-489 was correct since the exception to the tax, at that time [1970 amendment], applied to transfers by a governmental unit, and since the tax is imposed on the real grantors.
In OAG 71-211 we ruled that the tax did not apply where the federal government received title through a foreclosure procedure and a master commissioner's deed. This was in error since the exception at the time applied only to conveyances by, not to, the federal government. The opinion should have read: "the transfer tax is collectible." The exception relating to a foreclosure proceeding was passed by amendment in 1972. OAG 71-211 is modified accordingly.