November 12, 1998
Official Opinion 98-19
- To
- Commissioner
Georgia Department of Revenue - Re
- Georgias real estate transfer tax applies to easements acquired by public utilities through condemnation.
This office has been asked whether Georgia’s real estate transfer tax, O.C.G.A. §§ 48-6-1 to -10, applies to easements acquired by public utilities through condemnation. For the reasons discussed below, it is my official opinion that such transactions are subject to the tax.
Georgia’s real estate transfer tax statutes provide in pertinent part as follows:
there is imposed a tax . . . on each deed, instrument, or other writing by which any lands, tenements, or other realty sold is granted, assigned, transferred, or otherwise conveyed to or vested in the purchaser or purchasers, or any other person or persons by his or their direction, when the consideration or value of the interest or property conveyed (exclusive of the value of any lien or encumbrance existing prior to the sale and not removed by the sale) exceeds $100.00.
O.C.G.A. § 48-6-1. there are parties whose transactions are exempt from the tax. For example, Code Section 48-6-2(a)(3) provides that the tax does not apply to “[a]ny deed, instrument, or other writing to which . . . any public authority” is a party. Since there is no similar provision covering public utilities, sales of “lands, tenements, or other realty” to public utilities normally will be subject to the tax.
the next question is whether “lands, tenements, or other realty” acquired through condemnation has been “sold,” within the meaning of Code Section 48-6-1. Georgia’s tax was patterned after the federal documentary stamp tax, 26 U.S.C. § 4361 (Supp. V 1965-1969). 1983 Op. Att’y Gen. 83-81. Consequently, court cases and administrative regulations interpreting the federal law, although not controlling, may be looked to as guides in construing Georgia’s law. Superior Pine Products Co. v. Williams, 214 Ga. 485, 491 (1958); Blackmon v. Mazo, 125 Ga. App. 193, 196 (1971). See also 1983 Op. Att’y Gen. 83-81; 1969 Op. Att’y Gen. U69-515; 1968 Op. Att’y Gen. U68-203 (looking to federal documentary stamp tax regulations). Decisions from other states regarding similar statutes may also constitute persuasive authority. Tamiami Trail Tours, Inc. v. Georgia Pub. Serv. Comm’n, 213 Ga. 418, 423-24 (1957).
the Treasury regulations regarding the former federal documentary stamp tax provided that the transactions subject to the tax included “[a] conveyance of realty by a judgment or decree in a condemnation proceeding under the power of eminent domain.” 26 C.F.R. § 47.4361-2(a)(5) (1971). the California Court of Appeals has also held that the documentary transfer tax in that state, which was adopted essentially verbatim from the federal statute and is in all pertinent respects identical to Georgia’s law, encompasses transfers of property by eminent domain. People ex rel. Dep’t of Pub. Works v. County of Santa Clara, 79 Cal. Rptr. 787, 790 (Cal. Ct. App. 1969). See also Vournas v. Montgomery County, Maryland, 452 A.2d 1263, 1269 (Md. Ct. Spec. App. 1982), aff’d, 476 A.2d 705 (Md. 1984) ([F]or purposes of Maryland real estate transfer tax, “[t]he exercise of the right of condemnation . . . results in a sale of the owner’s interest in the property, albeit, a forced sale.”). Courts have held in various other legal contexts that condemnation proceedings constitute “sales,” although involuntary. See United States v. 27,223.21 Acres of Land, 589 F. Supp. 1121, 1124 (D. Colo. 1984) (so holding and citing similar decisions from other jurisdictions). Hence, it is my opinion that Georgia’s real estate transfer tax is applicable to transfers of “lands, tenements, or other realty” pursuant to condemnation.
the final question is whether an easement constitutes “lands, tenements, or other realty,” within the meaning of Code Section 48-6-1. Under the regulations applicable to the former federal documentary stamp tax, the term “realty” was defined to include:
(a) Those interests in real property which endure for a period of time, the termination of which is not fixed or ascertained by a specific number of years, such as an estate in fee simple, life estate, perpetual easement, etc., and
(b) Those interests enduring for a fixed period of years but which, either by reason of the length of the term or the grant of a right to extend the term by renewal or otherwise, consist of a bundle of rights approximating those of the class of interests mentioned in (a) of this subdivision.
26 C.F.R. § 47.4361-1(a)(4)(i) (1971) (emphasis added). Based on this regulation, the California Attorney General concluded that California’s documentary transfer tax act was intended to reach those easements that “potentially may endure for a substantial period of time, such as perpetual easements, easements for life, and easements for a fixed period of years that can be renewed by the easement holders or are of sufficient length so as to approximate perpetual easements or easements for life.” Cal. Op. Att’y Gen. CV 78-132. See generally Thrifty Corp. v. County of Los Angeles, 258 Cal. Rptr. 585, 587 (Cal. Ct. App. 1989) (looking to federal regulation in holding that 20-year lease with option to renew for an additional 10 years was not “realty sold” for California transfer tax purposes). It is my opinion that easements of this type, which may in fact constitute the majority of easements acquired through condemnation by public utilities in Georgia, fall within the scope of Georgia’s real estate transfer tax as well. However, I am also of the opinion that Georgia’s real estate transfer tax applies more broadly and reaches all easements, not simply those of a certain duration.
the terms “realty” and “real estate” are defined in Title 44 of the Official Code of Georgia Annotated, which relates to property generally, to include “[a]ny interest existing in, issuing out of, or dependent upon land or the buildings thereon.” O.C.G.A. § 44-1-2(a)(3). In Georgia, “[a]n easement . . . is an interest in land owned and possessed by another, permitting its limited use or enjoyment without actual occupancy.” 1 George A. Pindar & Georgine S. Pindar, Georgia Real Estate Law and Procedure § 8-1, at 406 (4th ed. 1993) (footnotes omitted). See also Smith v. Gwinnett County, 248 Ga. 882, 884 (1982) (describing particular easement as “an irrevocable property right”); Lee v. City of Atlanta, 219 Ga. App. 264, 265 (1995) (“An easement is an interest which one person has in the land of another,” quoting Restatement of the Law of Property (1944), p. 2902, § 450); Stephens County Soil & Water Conservation Dist. v. Wright Brothers Constr. Co., 215 Ga. App. 352, 353 (1994) (“An easement created by agreement constitutes a property interest in the land”); Barton v. Gammell, 143 Ga. App. 291, 293 (1977) (“An easement always implies an interest in the land in and over which it is to be enjoyed,” quoting 25 Am. Jur. 2d 419, Easements & Licenses, § 3). It has been expressly held that easements in Georgia for telephone poles and wires, for example, constitute “realty.” In re Brinn, 262 F. 527, 530 (N.D. Ga. 1919) (applying earlier version of current Code Section 44-1-2(a)(3)). Hence, I see no basis in Georgia law for concluding that an easement is “realty” for purposes of the real estate transfer tax only if the easement is “perpetual” or of some other sufficiently lengthy duration. Cf. 1968 Op. Att’y Gen. U68-474 (holding that 15-year lease conveying estate for years was “lands, tenements, or other realty” within meaning of real estate transfer tax).
Moreover, I do not believe that Treasury Regulation § 47.4361-1(a)(4)(i) warrants a different result. This regulation “was adopted in an attempt to achieve uniformity as the laws of the several states vary greatly as to just what is or is not real estate.” 1968 Op. Att’y Gen. U68-474, p. 691-92. See also Phillips Petroleum Co. v. Jones, 176 F.2d 737, 741 (10th Cir. 1949) (“[I]n the absence of express language to the contrary, the Act is to be interpreted to give uniform application to a nation-wide scheme of taxation.”). See generally 26 C.F.R. § 47.4361-1(a)(3) (1971) (“For purposes of the [federal documentary stamp] tax . . . , the determination of what constitutes ‘realty’ is not controlled by the definition or scope of that term under State law.”). In at least this respect, then, the Treasury regulations evince uniquely “federal” concerns which the Georgia General Assembly would not have shared in enacting this state’s real estate transfer tax. Cf. O.C.G.A. § 11-1-102(1)(c) (Uniform Commercial Code shall be construed “[t]o make uniform the law among the various jurisdictions.”).
For the reasons above, it is my official opinion that Georgia’s real estate transfer tax applies to easements acquired by public utilities through condemnation. To the extent inconsistent with this opinion, 1968 Op. Att’y Gen. U68-78, which concluded that sales of burial easements were not subject to real estate transfer tax, is hereby withdrawn.
Prepared by:
WARREN R. CALVERT
Senior Assistant Attorney General