Vol. 5, No. 6, Pg. 28. Documentary Stamps and Transfer Fees Who Pays What to Whom?.

• Author: Benton D. Williamson

South Carolina Lawyer

1994.

Vol. 5, No. 6, Pg. 28.

Documentary Stamps and Transfer Fees Who Pays What to Whom?

28Documentary Stamps and Transfer Fees Who Pays What to Whom?Benton D. WilliamsonRecording a deed used to be simple. Documentary stamps and recording fees were of interest only to the recording offices and the South Carolina Tax Commission (now the Department of Revenue). Except for some peculiar transactions, the major concern was to make certain the seller of property appeared with a recordable deed and stamps were either affixed or deducted from the sales proceeds.

With the rise in property values in the 1980s and the increasing complexity of land transactions, documentary stamps became sizeable sums worthy of close attention by closing attorneys. Other developments in the last two years also have changed the landscape and made the recording of a deed a more complex matter. This article discusses the enactment of ordinances by counties and municipalities so as to levy local transfer fees on deeds, as well as a recent South Carolina Supreme Court opinion on who is responsible for paying the documentary stamp tax applicable to a deed.

Because the language used in the South Carolina Code and local ordinances differs, the following terms are used to avoid confusion:

* Stamp Tax refers only to the documentary stamp tax imposed by the South Carolina Code.

* Local Transfer Fee refers to county or municipal mandated transfer fees.

* Local Transfer Fee and StampBy Benton D. Williamson Tax are collectively referred to as a Deed Tax.

local Transfer Fees

"Although the identity of the party responsible for a Deed Tax has been established, the amount of that tax or fee is becoming increasingly uncertain as counties and municipalities seek to impose their own Local Transfer Fees on real property conveyances. Real estate practitioners and buyers should be aware of these developments. The doctrine of caveat emptor has now spread to encompass the simple task of recording a deed."

Recently several political subdivisions have enacted Local Transfer Fees by ordinance. The Town of Hilton Head Island was the first to enact a Local Transfer Fee of $2.50 per $1,000 of consideration, effective January 1, 1991. The Town's ordinance is a complete set of legislation with definitions and exemptions. Being the first such ordinance, it was challenged in Court by aggrieved property owners. The Supreme Court upheld the validity of the fee, based on the 1973 "Home Rule" legislation. Williams v. Town ofHilton Head Island, South Carolina, 429 S.E.2d 429 (S.C. 1993).

Not to be outdone by their Hilton Head Island neighbors, other political subdivisions in Beaufort County took similar action and imposed their own Local Transfer Fees. The Town of Port Royal adopted an ordinance, effective July 1, 1993, that imposed a Local Transfer Fee of $5 per $1,000 of consideration. The Port Royal ordinance follows the Town of Hilton Head Island's format.

The City of Beaufort enacted an ordinance, effective August 1, 1993, imposing a fee of $2.50 per $1,000 of the purchase price. Finally, the Beaufort County Council adopted an ordinance, effective August 1, 1993, imposing a fee of $2.50 per $1,000 of consideration on all property conveyances not within a municipality.

In contrast to...