Request By:
Mr. Robert E. Gillum
Attorney at Law
P.O. Box 1147
117 North Main Street
Somerset, Kentucky 42501
Opinion
Opinion By: David L. Armstrong, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
As Master Commissioner for Pulaski County, you raise questions, for our opinion, concerning the real estate transfer tax dealt with in KRS 142.050.
Your specific questions read:
"(1) Under the provisions of KRS 142.050(8)(j) does a mortgage holder have to pay a transfer tax when recording a deed from the Master Commissioner to the lending institution?
"(2) Under the provisions of KRS 142.050(8)(j) does a third party who purchases a property in a foreclosure sale have to pay any transfer tax? "
Subsection (8) of KRS 142.050 relates to exceptions to the tax. One of the exceptions is subsection (8)(j), covering transfers of title to real estate under a foreclosure proceeding.
Belcher v. Hunt, Ky., 248 S.W.2d 717 (1952).
Where, in a foreclosure of a mortgage proceeding, the title to the real estate is transferred, the literal language of the statute exempts the transaction from the imposition of the tax. Under such factual circumstances, the exemption applies, regardless of who is grantee in the deed. In a foreclosure sale proceeding in circuit court, the property is being forcibly transferred from the holder of legal title to another.
Watts' Adm'r v. Smith, 250 Ky. 617, 63 S.W.2d 796 (1933). The statute exempts, in such cases, the transaction from the tax regardless of who the grantee is. This answers your second question.
It must be noted that the tax, where applicable, is upon the grantor named in the deed, not the grantee. KRS 142.050(2).