Request By:
Mr. Jerry A. Burns
Harlin, Parker & Rudloff
P.O. Box 239
519 East Tenth Street
Bowling Green, Kentucky 42101
Opinion
Opinion By: Steven L. Beshear, Attorney General; By Alex W. Rose, Assistant Attorney General
In your letter of March 23, 1982, you stated that you represent a corporate client who is the owner and holder of many notes secured by mortgages on single-family dwellings located within the Commonwealth of Kentucky. Your client intends to sell the notes to a national bank. You also stated that your client and the proposed purchaser are both non-residents of Kentucky. Specifically, you have asked if there would be any documentary stamp taxes, intangible taxes or similar fees payable upon recording the sale agreement or the assignment of the secured notes.
When recording the transfer of the secured notes, the county clerk must collect a state tax of $1.00 on each note effectively transferred pursuant to the provisions of KRS 142.010(1)(b). That statute provides, in pertinent part, as follows:
"(1) The following taxes shall be paid:
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(b) A tax of one dollar ($1.00) on each power of attorney to convey real or personal property; on each mortgage, financing statement, security agreement or conveyance of real or personal property, and on each lien or conveyance of coal, oil, gas or other mineral right or privilege." (Emphasis added)
The tax imposed in the above-quoted statute is applicable to the transfer of secured notes as such transfers constitute conveyances of personal property. See Button v. Drake, 302 Ky. 517, 195 S.W.2d 66 (1946). See also OAG 76-447, copy attached.
The county clerk is entitled to a fee for recording the deed of assignment of the real estate mortgages. KRS 64.012 provides, in pertinent part, as follows:
"The county clerk shall receive for the following services the following fees:
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Recording deed of assignment of real estate mortgage . . . $5.00"
The $5.00 fee is payable for each assigned mortgage regardless of whether the mortgage assignments are contained in one document or in separate documents. See OAG 76-447.
The county clerk is also entitled to a fee for noting the assignment on the real estate mortgages presently on file in his office. KRS 382.290 provides, in pertinent part, as follows:
"(2) When any note named in any deed or mortgage is assigned to any other person, the assignor may, over his own hand, attested by the clerk, note such assignment in the blank space, and when any one or more of the notes named in any deed or mortgage is paid, or otherwise released or satisfied, the holder of the note, and who appears from the record to be such holder, may release the lien, so far as such note is concerned, by release, over his own hand, attested by the clerk.
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(4) For each assignment and release so made and attested by the clerk, he may charge a fee pursuant to KRS 64.012 to be paid by the person executing the release or noting the assignment." (Emphasis added)
Presently the fee provided in KRS 64.012 for such notation is $1.50 for each assigned mortgage. However, during the 1982 Session of the General Assembly KRS 64.012 was amended to increase the fee for marginal notation to $2.50. The effective date of this increase is July 15, 1982.
Since neither corporation is a resident of Kentucky the secured notes are not subject to state or local ad valorem taxation. KRS 132.190(4) provides, in pertinent part, as follows:
"The situs of intangible personal property for purposes of taxation shall be at the residence of the real or beneficial owner, and not at the residence of the fiduciary or agent having custody or possession."
This office is without sufficient information to make a determination regarding the taxability of the sale of the secured notes for corporation income tax purposes. However, if your client is not exempt from the Kentucky corporation income tax as provided in KRS 141.040(1)(a) through (h), the transaction must be included as a factor in computing its income tax liability. See KRS 141.120.