tag:blogger.com,1999:blog-130405395152054347.post4785849736381982759..comments2023-08-22T04:19:16.802-05:00Comments on Maryland Courts Watcher: Montgomery County v. Wildwood Medical Center, L.L.C. (Ct. of Special Appeals)Stuart Levinehttp://www.blogger.com/profile/04917401637732122101noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-130405395152054347.post-69368477128178295942007-03-12T16:19:00.000-05:002007-03-12T16:19:00.000-05:00I don't generally make it a practice to comment on...I don't generally make it a practice to comment on my own posts, but this case just cried out for commentary, which I did not feel comfortable placing in the case post itself (we at le3ast <I>try</I> to stay neutral!). With that said:<BR/><BR/>I have strong disagreements with both the majority opinion and dissent. I agree with the dissent (written by a good personal friend and top-notch legal scholar, BTW and IMHO respectively!) that the distinction between "title" and ownership" cited in the majority opinion is overly formalistic and needlessly arcane. What I think the majority was really reaching for is the relatively commonplace distinction between "bare legal title" (such as is held by a contract vendor after the contract is executed but before settlement) and "equitable or beneficial title" (such as that held by the contract purchaser prior to settlement). That would IMHO more easily explain the distinction between the record title holder and the party (in this case, the family general partnership) for whose benefit the record title holder holds title.<BR/><BR/>Moreover, I think the majority, even given their distinction, was just flat wrong in saying that the deed did not convey <I>title</I> to the property. Although not entirely transparent in the opinion, I strongly suspect that the deed was in fact signed by the record title owners, additionally reciting their roles as the members of the family general partnership. If so, they almost certainly would have effectively conveyed full title, bare legal and beneficial/equitable, to the LLC with the deed, and the majority's rationale for imposing taxation falls apart.<BR/><BR/>On the other hand, I do not agree with the dissent that the exemptions should apply in this case. This case is IMHO distinguishable from the earlier cases like Vlamis v. DeWeese where the transfer of the property was contemporaneous with creation of the partnership, and therefore the "individual" ownership was from the very beginning merely a means and form of holding the real property as partnership property. Here, by contrast, the partnership was at best a concept that evolved over the years, the partnership agreement being memorialized in writing only the day before the deed was executed, while the individual interests had been conveyed as individual in a gradual process that began sometime after 1962, when the first members of the family acquired title and thereafter conveyed apparently *individual* interests to their children and grandchildren.<BR/><BR/>As such, there was in fact a post-acquisition "transfer" from the individual and trust owners to the partnership. Though I agree that this off-record rolling transfer of the beneficial/equitable ownership of the property was not taxable as such (since no "instrument of writing" was required or required to be recorded), it could not serve as the basis of an exemption, since the transfer to the "prior entity" had neither been memorialized nor taxed. Looked at in a different fashion, the off-record "transfer" to the partnership *became* taxable when the acknowledgment of that transfer (in the recitations in the proffered deed) was recorded, much the way an unrecorded lease may become taxable when a memorandum of that lease is recorded. Note that this result would *not* apply if the record owners had originally taken title as holders for the benefit of a partnership or other entity, existing or to be formed (since there was no later conversion or transfer of that interest to entity form), or if the property had been transferred without reference to the beneficial ownership, but only where, as here, there was an off-record transfer of an interest that would have been taxable if on the record, upon the recording of an instrument effecting a public acknowledgment of that earlier (off-record) transfer.<BR/><BR/>But, they haven't asked me to be a judge yet, so what do I know? ;-)Steven G. Tylerhttps://www.blogger.com/profile/11333294784505800688noreply@blogger.com