(a) Definitions. In this section, the following words have the meanings indicated.
(1) "Consideration" means everything of value included in the actual price of real property conveyed, including: cash; bonds; stock; documents evidencing monetary value; choses in action; property, either real or personal; payment by way of fees, labor, or services; instruments of credit, including notes, notes secured by deeds of trust or mortgages; and assumption of liability for debt incurred by another, but not for current property taxes, or County or municipal charges.
(2) "Estate" means every kind of interest in real property including fee simple estate, leasehold estate, limited estate, and legal and equitable interests in real property.
(3) "Mortgage" includes a deed of trust made to secure the repayment of indebtedness.
(b) Exemptions. In addition to the exemptions provided by State law, the tax levied by this section does not apply to:
(1) a transfer by or to the United States, the State, any political subdivision of the State, or any agency or instrumentality of the United States, the State, or a political subdivision;
(2) a transfer by lease for a term of not more than seven years that is not perpetually renewable;
(3) a transfer by mortgage, conditional sales contract, land installment contract, or other device, the purpose of which is to afford a security in real property rather than convey title to the property, except that the amount of the secured debt may be calculated as part of the consideration for a transfer by other instrument, such as a deed, where the security instrument secures part of the consideration;
(4) a transfer by bona fide gift or without consideration;
(5) a transfer under the last will and testament of a decedent or to the heirs or next of kin of a decedent under the laws of descent and distribution; or
(6) a transfer of property partly within and partly without the County, to the extent of the property that is outside the County.
(c) Amount of tax.
(1) Except as provided in paragraph (2), a tax is levied on each transfer recorded among the land records in the County at a rate of one percent of the consideration paid or to be paid for the transfer.
(2) (i) A tax is levied on each transfer recorded among the land records in the County for which the total consideration is $1,000,000 or more at a rate of one and one-half percent of the consideration paid or to be paid for the transfer.
(ii) A transfer of an interest in real property that provides affordable housing for moderate- or low-income households in the County, including in the City of Annapolis, is not subject to the tax rate levied under subparagraph (i).
(d) Collection by Controller. The Controller shall collect the tax from the person offering the instrument for record. Payment of the tax shall be evidenced by the affixing to or stamping on the instrument offered for recordation a legend stating that the tax has been paid and the amount of payment. An instrument so executed shall be prima facie evidence that the tax has been paid.
(e) Who is responsible for payment; sanctions for failure to pay. The tax levied by this section together with interest and penalties is from the time due and payable jointly and severally the debt of the legal and equitable transferor and transferee of the property. If a written instrument intending to effect a transfer subject to the tax levied by this section is recorded without the tax having been paid, the Controller shall assess the person liable for the payment for the amount of the tax due, plus interest at the rate of one percent for each month, or fractional part of a month, from the date when the written instrument was received for recordation, plus a civil penalty of 10% of the tax due. All taxes, interest, and penalties shall be paid to the Controller.
(f) Certain leases. Whenever a lease required by law to be recorded evidences a transfer on which a tax would be levied by this section if the lease were offered for record and recorded, but the lease has not been recorded, an attornment agreement, memorandum of lease, assignment of lease, or other instrument giving or intended to give actual or constructive notice of the unrecorded lease, whether or not actually giving constructive notice in point of law, may not be received for recording until the original lease has been exhibited to the Controller and a tax paid in the same amount as would be payable on recording of the lease, together with whatever tax may be payable on the other instrument under this section. The tax applicable to a lease in accordance with this subsection is chargeable to the lessee. If it is required to be advanced by the party offering for record the other instrument referred to in this subsection due to the failure or refusal of the lessee to pay the amount due to the Controller on demand by that party, the amount due plus interest from the date of payment shall be recoverable by that party from the lessee in an action at law.
(g) Ground rents. The consideration for a perpetually renewable ground rent is the sum of the capitalization at six percent of annual ground rent and the actual consideration, other than the capitalization of the ground rent, paid or to be paid.
(h) Lease for a term of years. The consideration for a lease for a term of years that is not perpetually renewable is the sum of the capitalization at 10% of the average annual rental over the entire term of the lease, including any renewable term, and the actual consideration other than rent paid or to be paid. If the average annual rental cannot be determined, the consideration shall be the greater of: (1) the capitalization at 10% of the sum of the minimum average annual rental ascertainable from the terms of the lease and 5% of the minimum average rental, plus the actual consideration other than rent paid or to be paid; or (2) the assessed value of the property covered by the lease multiplied by one and one-half.
(i) Property as consideration. If all or part of the consideration for a transfer consists of other property, real or personal, the consideration represented by the other property is the value of the property, determined as follows:
(1) the consideration represented by a full interest in property is the true, full value of the property;
(2) the consideration represented by a life estate is the value of the life estate as determined in accordance with the regulations for federal estate tax adopted by the Internal Revenue Service; or
(3) the consideration represented by a remainder or reversion after one or more life estates is the value remaining after determining the value of the whole and deducting from the whole the value of the preceding estates.
(j) Powers of Clerk. To carry out and enforce this section and to collect the tax levied by this section, with the concurrence of the Controller, the Clerk may:
(1) adopt rules and regulations consistent with this section to carry out and enforce this section, to collect fully the tax levied by this section, or to define or define further or construe this section;
(2) compromise disputed claims in connection with the tax imposed by this section;
(3) for good and sufficient cause, abate or remit interest and penalties; and
(4) rebate and refund any taxes erroneously or improperly paid.
(k) Prohibition. A person may not:
(1) willfully obtain, or attempt to obtain the recording of a conveyance effecting a transfer taxable under this section without first having paid the tax;
(2) knowingly make a false statement as to the amount or value of consideration;
(3) willfully affix or attempt to affix to any document a forged or counterfeit legend indicating that the tax levied by this section has been paid;
(4) willfully violate any of the provisions of this section or the rules or regulations, adopted under this section; or
(5) willfully participate or aid in any manner in the evasion of the tax imposed by this section.
(1985 Code, Art. 6, § 7-101) (Bill No. 29-12; Bill No. 40-23)
State Code reference – Local Government Article, §§ 10-313 and 10-314; Tax-Property Article, §§ 13-401 et seq.