Tax Type
Recordation Tax
Description
Multi-functional Document
Topic
Documents Subject to Tax
Date Issued
04-03-1985
[Opinion - Virginia Attorney General: 1985 at 381]
REQUEST BY: Honorable Ronald P. Livingston Clerk, Circuit Court of Chesterfield County
OPINION BY: Gerald L. Baliles, Attorney General
OPINION:
You have asked for my opinion concerning the application of the grantee's and grantor's taxes imposed by §§ 58.1-801 and 58.1-802 of the Code of Virginia and the exemptions provided in § 58.1-809 to a deed of foreclosure containing an assignment within the same deed.
The instrument presented to you involves three parties, and acts both as a deed of conveyance from the first party to the third party and an assignment by the second party to the third party of all interest in the property described by the deed. The first party is a trustee holding legal title under a deed of trust pursuant to a foreclosure sale on the realty. The second party is both the purchaser at the foreclosure sale and holder of the note secured by the original deed of trust on which the foreclosure was taken. The third party is the Administrator of Veterans Affairs. The note was guaranteed by the Veterans Administration and, upon default, the second party noteholder was made whole by the Veterans Administration.
Previous Opinions of this Office have held that when a single document performs more than one function, which would each be subject to recordation tax if presented in separate documents, then each of the functions performed by the single document is subject to recordation tax. See Reports of the Attorney General: 1984-1985 at 378 (conveyance and lease assignment); 1978-1979 at 285 ( deed of trust and subordination agreement); 1972-1973 at 435 (sales contract and lease); 1969-1970 at 283 (deed of trust and assignment), 280 (deed and assignment); and 1963-1964 at 295 (deed of trust and assignment).
It is clear from the prior Opinions that the deed of foreclosure presented to you for recordation is separately taxable under §§ 58.1-801 and 58.1-802 as to the deed1 of conveyance from the trustee to the Administrator of Veterans Affairs and as to the assignment from the buyer to the Administrator. I concur in the prior Opinions.
Section 58.1-802 imposes the grantor's tax "[i]n addition to any other tax . . . on each deed, instrument, or writing by which lands, tenements, or other realty sold is granted, assigned, transferred, or otherwise conveyed to, or vested in the purchaser, or any other person, by such purchaser's direction." Inasmuch as the deed and the assignment are writings "by which lands . . . sold [are] granted [or] assigned," both are subject to the grantor's tax provisions.
It should be noted, however, that although a writing may be determined to be subject to the grantor's tax provisions, it may escape taxation if it qualifies as a supplemental writing under § 58.1-809. That section provides, in part, that no tax is imposed upon the recordation of instruments which are supplemental to prior taxed and recorded instruments "when the sole purpose and effect . . . is to . . . modify the . . . parties . . . of such prior instruments . . . ."
In the situation which you present, the effect and purpose of the assignment is to substitute the Administrator of Veterans Affairs for the original noteholder in the deed of trust. An Opinion to the Honorable V. Elwood Mason, Clerk, Circuit Court of King George County, dated September 24, 1984, held an assignment to the exempt from taxation where its sole effect was to modify the parties to a deed of trust upon which recordation tax had been paid. See also 1981-1982 Report of the Attorney General at 366. It is my opinion that the same exemption would apply to the assignment included in the deed of foreclosure presented to you, so long as the proper recordation tax was paid on the original deed of trust.
Section 58.1-801 imposes the grantee's tax "[o]n every deed admitted to record, except a deed exempt from taxation by law . . . ." (Emphasis added.) The grantee of the deed of foreclosure is the Administrator of Veterans Affairs. The Supreme Court of Virginia held in Federal Land Bank v. Hubard, 163 Va. 860, 178 S.E. 16 (1935), that a State recordation tax may not be collected on the recordation of deeds to the federal government or to federal instrumentalities, unless such a tax is allowed by federal law. There being no statute authorizing states to impose such a tax,2 the Administrator of Veterans Affairs is exempt from the imposition of the grantee's tax.
In summary, although both functions of the document, i.e., the deed and the assignment, are subject to recordation taxes, the assignment is a supplemental writing exempted from any tax by § 58.1-809, and the federal instrumentality is exempt from the grantee's tax on the deed. The grantor's tax, however, would apply to the deed.
1 Previous Opinions of this Office have held that in such three-party conveyances, there is only one deed admitted to record, that from the first party to the third party. See 1954-1955 Report of the Attorney General at 236.
2 Although 38 U.S.C. § 1820(a)(6) makes property held by the Veterans Administration subject to real property taxes, the power to tax the real property does not include the power to tax the recordation of the deed to that property. See Federal Land Bank, supra, 163 Va. at 864.
Attorney General's Opinion