Alabama Advisory Opinions June 05, 2018: AGO 2018-034 (June 05, 2018)

Advisory Opinion Text

Honorable John E. Enslen

Probate Judge of Elmore County

Post Office Box 10

Wetumpka, Alabama 36092

Probate Judges - Deed Tax - Fair Market Value - Recordation of Instruments - Elmore County

Absent official knowledge regarding the fair market value of a subject property, a probate judge shall accept the valuation provided on the Real Estate Sales Validation Form.

If, after receiving a conveyance document for recording, the probate judge has such knowledge of a subject property establishing that a misrepresentation was made in bad faith on the form, then the judge may collect the correct amount of tax and applicable penalty in section 40-22-1(h) of the Code of Alabama.

Dear Judge Enslen:

This opinion of the Attorney General is issued in response to your request.

QUESTION

(1) After accepting the conveyance document for recording based on the information in the RT-1 form, does the probate judge have authority to conduct his own independent investigation into the fair market value of the subject real property?

FACTS AND ANALYSIS

Recordation tax is imposed on instruments offered for recording that convey an interest in property under section 40-22-1 of the Code of Alabama. Ala. Code § 40-22-1 (Supp. 2016). The statute merely provides that the tax is based on the "value" of the property conveyed. Ala. Code § 40-22-l(c) (Supp. 2015). This Office has long stated that "value" means fair market value. Opinion to Honorable Frank H. Riddick, Probate Judge of Madison County, dated August 1, 1991, A.G. No. 91-00346.

In 2012, the Legislature amended section 40-22-1. The requirement of a form to furnish certain proof to be used in calculating the tax was added as subsection (c) as follows:

(c) . . . [A]ny instrument presented for record pursuant to this section shall be accompanied by proof of the actual purchase price paid for the property or if the property has not been sold, proof of the actual value of the real or personal property which is the subject of the instrument being recorded. The Department of Revenue shall develop a form which shall be used for attesting to the actual value or actual purchase price of the property, which form shall include only information related to the actual value or actual purchase price of the property. Any person utilizing the form developed by the department pursuant to this section shall attest to the accuracy of the information being provided on the form, but shall not be required to provide any further documentation or proof of the actual purchase price or actual value of the property.

Ala. Code § 40-22-l(c) (Supp. 2016) (emphasis added).

Furthermore, language specifically providing for how to calculate the tax was added as subsection (d) as follows:

(d) Upon the presentation of any instrument for record, the judge of probate shall calculate the amount of tax due based upon the actual purchase price paid or the actual value of the property as required in subsection (c). If no proof is provided at the time the instrument is presented for recording, the amount of the tax due shall be based upon the value of the property as determined by the most recent assessment of property conducted pursuant to Title 40, Chapter 7, and the judge of probate shall assess penalties as set out in subsection (h) to be paid in addition to the tax due.

Ala. Code § 40-22-1(d) (Supp. 2015) (emphasis added).

The proof provided for in section 40-22-1(c) is limited to two alternate types, purchase price, in the case of the property being sold, and actual value, if the property has not been sold. Section 40-22-1(d) plainly states that the probate judge shall calculate the tax based on either form of proof submitted on the form developed by the Alabama Department of Revenue ("Revenue") for this purpose. Consistent with this authority, Revenue has promulgated a Real Estate Sales Validation Form which requires the listing of the "Total Purchase Price," or, in the alternative, "Actual Value." Alabama Department of Revenue Form RT-1.

You ask this Office to assume that the documents to be recorded are accepted by the probate court and that the value is based on information provided in the form. You question whether a probate judge can independently investigate the fair market value of real property when it is suspected that an applicant has misrepresented, in bad faith, the fair market value of the real property to be recorded in the form.

The determination of the amount of tax due on an instrument for recording is "a ministerial act." Ala. Code § 40-22-l(e) (Supp. 2016). A ministerial act "is one that is clearly defined and involves no exercise of judgment and discretion." Opinion to Honorable Jim Bennett, Secretary of State and Honorable David Parsons, Commissioner of Insurance, dated December 20, 2001, A.G. No. 2002-098. This Office has previously opined that a probate judge, in carrying out a ministerial act, is merely attesting to the applicant's representation, and not making a finding of fact. Opinion to Don Davis, Mobile County Probate Judge, dated March 14, 2005, A.G. No. 2005-090 (a probate judge is not required to file an Alabama Department of Revenue Form MV-T 5-36 when a person seeks an exemption from the certificate-of-title requirement for a new manufactured home under section 32-8-31(10) of the Code of Alabama).

"[N]either the probate judge nor the probate court can have any greater authority than that conferred by statute." Broadfoot v. City of Florence, 45 So. 2d 311, 313 (Ala. 1950). Although a probate judge is not authorized to independently investigate whether the value listed on the Real Estate Sales Validation Form is misrepresented in bad faith, there may be occasions when a probate judge has official knowledge regarding the fair market value of the subject property. A similar issue was addressed when the Secretary of State questioned whether he had an obligation to evaluate the qualifications of the nominees of political parties and independent candidates prior to certifying such nominees to the probate judge. Opinion to Honorable Jim Bennett, Secretary of State, dated August 12, 1998, A.G. No. 98-00200. Although the Secretary of State is not required to determine whether each nominee meets all the qualifications for his or her particular office, this Office opined that "[i]f the Secretary of State has official knowledge that a candidate has not met a certifying qualification, the Secretary of State should not certify the candidate." Id. at 3. Official knowledge is "knowledge gained from an official source arising from the performance of duties prescribed by law." Id. Likewise, if a probate judge has official knowledge that the fair market value of a subject property is misrepresented in bad faith on the Real Estate Sales Validation Form, the probate judge should not accept that document for recording.

CONCLUSION

Absent official knowledge regarding the fair market value of a subject property, a probate judge shall accept the valuation provided on the Real Estate Sales Validation Form.

QUESTION

(2) If the probate judge conducts such an investigation and discovers clear and convincing evidence that the actual fair market value of the subject property has been grossly understated by the person who signs the RT-1 form, does the judge have the authority to present his findings to the person and request payment of the correct amount of tax? May the judge also request payment of the penalty prescribed in the statute?

FACTS, ANALYSIS. AND CONCLUSION

Because Question 1 was answered in the negative, Question 2 is moot.

QUESTION

(3) If not, what is the appropriate method for enforcing the collection of the correct amount of tax and penalty where a person in bad faith has recorded a conveyance by attesting to a fair market value that is grossly inadequate?

FACTS AND ANALYSIS

Section 40-22-1(h) of the Code of Alabama provides as follows:

(h) Any person who submits an instrument for recording pursuant to this section and intentionally fails to submit proof of the value of the property or the actual purchase price paid for the property as required in subsection (c) following a specific request for such proof from the probate office or who presents false proof of same, in addition to payment of the tax due as calculated on the actual value of the property, shall pay a penalty of one hundred dollars ($100) or 25 percent of the privilege or license tax actually due, whichever is greater. No person submitting the form required under subsection (c) above shall be deemed to have presented false proof or be otherwise subject to liability where such form was submitted and attested in good faith.

Ala. Code § 40-22-l(h) (Supp. 2016) (emphasis added). This section specifically provides for collection of the correct amount of tax and a penalty of the greater of $100 or 25 percent of the tax in the case of false proof on the Real Estate Sales Validation Form.

Accordingly, if, after receiving a conveyance document for recording, a probate judge has official knowledge regarding the fair market value of a subject property establishing that a misrepresentation was made in bad faith on the form regarding the property, then the judge may collect the correct amount of tax and applicable penalty in section 40-22-l(h).

CONCLUSION

If, after receiving a conveyance document for recording, a probate judge has official knowledge regarding the fair market value of a subject property establishing that a misrepresentation was made in bad faith on the Real Estate Sales Validation Form, then the judge may collect the correct amount of tax and applicable penalty in section 40-22-l(h).

I hope this opinion answers your questions. If this Office can be of further assistance, please contact Wes Shaw of my staff.

Sincerely,

STEVE MARSHALL, Attorney General.

G. WARD BEESON, III Chief, Opinions Division.