Shelter Senior Living IV, LLC v. Baltimore County Maryland, et al., No. 1276, September 

Term 2019, Argued: October 2, 2020. 

TAXATION — PROPERTY TAX — MARYLAND RECORDATION TAX —

CALCULATION — RELEVANT CONSIDERATION 

In a transfer of a business through a sale of business assets that includes real property in 

addition to other kinds of property, the state recordation tax may only be imposed on the 

consideration exchanged for the real property. The state recordation tax may not be 

imposed on consideration exchanged for other kinds of assets, such as intangible personal 

property, which are transferred together with real property. 

TAXATION — PROPERTY TAX — MARYLAND TRANSFER TAX —

CALCULATION — RELEVANT CONSIDERATION 

In a transfer of a business through a sale of business assets that includes real property in 

addition to other kinds of property, the state transfer tax may only be imposed on the 

consideration exchanged for the real property. The state transfer tax may not be imposed 

on consideration exchanged for other kinds of assets, such as intangible personal property, 

which are transferred together with real property. 

TAXATION — PROPERTY TAX — BALTIMORE COUNTY TRANSFER TAX —

CALCULATION — RELEVANT CONSIDERATION 

In a transfer of a business through a sale of business assets that includes real property in 

addition to other kinds of property, Baltimore County’s transfer tax may only be imposed 

on the consideration exchanged for the real property. Baltimore County’s transfer tax may 

not be imposed on consideration exchanged for other kinds of assets, such as intangible 

personal property, which are transferred together with real property. 

TAXATION — PROPERTY TAX — MONTGOMERY COUNTY TRANSFER 

TAX — CALCULATION — RELEVANT CONSIDERATION 

In a transfer of a business through a sale of business assets that includes real property in 

addition to other kinds of property, Montgomery County’s transfer tax may only be 

imposed on the consideration exchanged for the real property. Montgomery County’s 

transfer tax may not be imposed on consideration exchanged for other kinds of assets, 

such as intangible personal property, which are transferred together with real property.

 
Circuit Court for Baltimore County

Case Nos. 03-C-18-009042; 03-C-18-012380

REPORTED

IN THE COURT OF SPECIAL APPEALS

OF MARYLAND

No. 1276

September Term, 2019

______________________________________

SHELTER SENIOR LIVING IV, LLC,

v.

BALTIMORE COUNTY MARYLAND, 

ET AL.

______________________________________

Reed,

Friedman,

Gould,

 

JJ.

______________________________________

Opinion by Gould, J.

______________________________________

Filed: July 1, 2021
The General Assembly has enacted a statute imposing recordation and transfer taxes 

on the transfer of real property. The General Assembly has also delegated to certain 

counties—including the two involved here, Montgomery and Baltimore Counties—the 

authority to impose transfer taxes on the sale of real property. Neither the General 

Assembly nor the county legislative bodies have, however, imposed a tax on the transfer 

of intangible property.

This case comes to us in the context of the sale of three senior living facilities. To 

accomplish the transaction, the sellers conveyed to the buyers the real property where the 

centers operate, as well as specified items of both tangible and intangible property. In each 

of the three transactions, the total purchase price was agreed up front in the contracts, and 

then prior to closing, the parties were required to agree on an allocation of the purchase 

price across the various asset classes, which they did. 

The question before us is whether the consideration attributed to the intangible 

property may factor into the calculation of the state and county transfer and recordation 

taxes—both of which are determined as a percentage of the consideration paid. Here, given 

the difficulty associated with valuing intangible property, the tax collectors concluded that 

such consideration could not be unbundled from the consideration attributed to the real 

property. Thus, they calculated the taxes based on the consideration allocated to both the 

real property and intangible property. Although sellers disagreed with the calculation, to 

complete the transactions and record the deeds of conveyance, they paid the taxes as 

required by the taxing authorities, and then pursued their right to request a refund, which 
2

was denied. The Tax Court upheld the denial of the refund, and the Circuit Court of 

Baltimore County affirmed the Tax Court on the sellers’ petitions for judicial review. 

We shall reverse. The transfer of intangible property is not taxable under the 

relevant statutes and county codes. The occasion of a business transaction involving the 

sale of both real property and intangible property does not permit the tax imposed on the 

transfer of real property to serve as a Trojan horse for taxing the transfer of intangible 

property. Accordingly, for the reasons explained below, we disagree with the Tax Court 

and hold that consideration properly attributable to intangible property is not included in 

the calculation of the recordation and transfer taxes.

BACKGROUND

In July of 2014, Brightview Rockville, LLC (“Brightview Rockville”), Brightview 

Towson, LLC (“Brightview Towson”), and Brightview White Marsh, LLC (“Brightview 

White Marsh”) (collectively “Sellers” or the “Brightview LLCs”)1contracted to sell three 

senior living facilities located in Montgomery and Baltimore Counties. The buyer of the 

three facilities was SHP, IV, LLC (“Buyer”). 

The three transactions were governed by separate contracts. The purchase price for 

each transaction was broken down into three asset categories: real property, tangible 

personal property, and intangible personal property. The real property was transferred 

through deeds, the tangible personal property was transferred through bills of sale, and the 

intangible personal property was transferred through written assignments.

1 After the Brightview LLCs filed their petitions for judicial review of the Tax 

Court’s decisions, they assigned their claims to Shelter Senior Living IV, LLC (“Shelter”). 
3

The purchase prices and allocations across the three asset categories for each of the 

three transactions were as follows: 

Brightview 

Rockville

Brightview 

Towson

Brightview 

White Marsh

Total

Real property & improvements $14,519,800 $14,486,000 $11,136,400 $40,142,200

Tangible personal property $1,587,643 $997,127 $558,809 $3,143,579

Intangible personal property $13,392,557 $16,516,873 $20,204,791 $50,114,221

Total $29,500,000 $32,000,000 $31,900,000 $93,400,000

Consistent with the above allocations, the consideration reflected in each of the three 

deeds was based on the value attributed to the real property and improvements, as follows:

Brightview Rockville: $14,519,800;

Brightview Towson: $14,486,000; and

Brightview White Marsh: $11,136,400.

Sellers presented the deeds to appellees Baltimore County, Montgomery County, 

and the Clerks of Court for Baltimore County and Montgomery County (collectively, the 

“Taxing Authorities”) for recording. The Taxing Authorities refused to record the deeds 

based on the consideration stated therein. Instead, they insisted that the transfer and 

recording taxes needed to be calculated based on the consideration allocated to both the 

real and intangible property.2

2 A separate sales tax is imposed on transfers of tangible personal property at a 

higher rate. Md. Code Ann., Tax-Gen. §§ 11-102(a), 11-204(a)(2) (1988, 2016 Repl. Vol.).

The Taxing Authorities did not attempt to impose transfer or recordation taxes on 

consideration exchanged for tangible personal property, nor did they argue, either at the 

Tax Court, the circuit court, or here, that they were entitled to do so. 
4

Because Sellers couldn’t get the deeds recorded unless they paid the full amount of 

taxes assessed, they paid the taxes and then filed refund requests with the Directors of 

Finance for both Baltimore and Montgomery Counties, seeking reimbursement for the 

recordation and transfer taxes paid on the consideration exchanged for the intangible 

personal property. The requests for reimbursement were denied, and the Sellers

subsequently appealed to the Maryland Tax Court. 

The Tax Court bifurcated the proceedings into two phases, described as follows:

First, there will be a discovery phase and evidentiary hearing on the issue of 

whether, for the transfer of a senior living community, transfer and 

recordation taxes may be charged on the value of the intangible assets of the 

going concern. If the Court finds in favor of [Sellers], there will be a second 

phase of discovery followed by an evidentiary hearing on the issues of the 

value of the intangible assets in transactions that are the subjects of this 

appeal and what refund and interest if any, are owed to [Sellers]. 

The Tax Court resolved the appeal by denying Sellers’ refund request in the first 

phase, holding that “State law and the relevant county codes permit the State and local tax 

collectors to impose transfer and recordation tax based on the total amount of consideration 

paid, including any consideration paid for assets categorized by the buyer or seller as 

intangible property.” 

Sellers sought judicial review of the Tax Court’s decision in the Circuit Court for 

Baltimore County.3 The circuit court affirmed the Tax Court’s decision, and Shelter filed 

a timely notice of appeal. 

3 Because there were three sellers, three separate appeals to the Tax Court were filed. 

The Tax Court, however, adjudicated the three cases in a consolidated manner. When the 

Tax Court ruled against them, Brightview Rockville filed a petition for review in the Circuit 
5

Shelter now presents us with the following question: 

Did the Tax Court err in ruling that where an operating senior living business 

is transferred, and the transfer includes both real property transferred by deed 

to be recorded in the land records as well as intangible business assets (i.e., 

intangible personal property) transferred by assignment, state and county 

transfer taxes and state recordation taxes are imposed based on the total 

consideration paid for both the real property and intangible business assets, 

given that only the real property is or can be transferred by an “instrument of 

writing” under the relevant statutes? 

We answer that question in the affirmative and reverse.

DISCUSSION

I.

STANDARD OF REVIEW

“On appeal, we review the decision of the Tax Court, rather than the circuit court.” 

Blue Buffalo Co., Ltd. v. Comptroller of Treasury, 243 Md. App. 693, 701 (2019). “The 

Maryland Tax Court is an adjudicatory administrative agency[,]” and as such, it “receive[s] 

the same judicial review as other administrative agencies.” Gore Enter. Holdings, Inc. v. 

Comptroller of Treasury, 437 Md. 492, 503 (2014) (cleaned up). We look through the 

circuit court’s decision and concentrate our attention on the Tax Court’s decision. Id. As 

the scope of our review is cabined to the Tax Court’s analysis, we “cannot uphold the Tax 

Court for Montgomery County, and Brightview Towson and Brightview White Marsh filed 

separate petitions for review in the Circuit Court for Baltimore County. The parties to the 

Montgomery County action jointly moved to transfer the matter to the Circuit Court for 

Baltimore County, which was granted. After the transfer was completed, the parties moved 

to consolidate the three cases, which was also granted. Somewhere along the line, the 

Sellers assigned their refund claims to Shelter.
6

Court’s decision on grounds other than the findings and reasons set forth by [the Tax 

Court].” Id. (internal quotations omitted).

The standard of review we apply turns on whether the Tax Court’s decision was a 

question of fact, law, or mixture of both. Id. at 504-05. Here, the Tax Court’s decision 

rested entirely on its interpretation of provisions of the Tax-Property Article of the 

Maryland Annotated Code. Generally, we will afford “great weight” to the Tax Court’s 

legal conclusions regarding the statutes that it administers. Id. at 505. But, as recently 

explained by the Court of Appeals, “[t]hat degree of deference . . . is not determinative; ‘a 

reviewing court is under no statutory constraints in reversing a Tax Court order which is 

premised solely upon an erroneous conclusion of law.’” Travelocity.com n/k/a TVL LP v. 

Comptroller of Maryland, No. 14, Sept. Term 2020, slip op. at 8 (Md. April 30, 2021). 

Here, the Tax Court’s decision was predicated on statutes that it administers, but it did not 

concern a matter that required expertise in tax matters. Rather, the interpretation of the 

statutes we adopt here rests on our plain language review of the relevant provisions that, 

on their face, do not involve complicated concepts in the law of taxation. Accordingly, we 

shall review the Tax Court’s legal conclusion without deference. Id. at 9.

II.

ANALYSIS

There are four taxes at issue in this case: the Maryland recordation tax, the Maryland 

transfer tax, the Baltimore County transfer tax, and the Montgomery County transfer tax. 

Although the relevant statutes imposing these taxes differ in some respects, the question of 

statutory interpretation is virtually the same for each, namely, whether the recordation and 
7

transfer taxes incurred in the sale of a business are properly calculated against the value of 

both the intangible assets and the real property conveyed in the transaction. 

Our journey into the weeds of the relevant statutory provisions will be easier if we 

first gain an understanding of what is meant by the term “intangible” assets. The Court of 

Appeals has explained:

Intangible property is property which has no intrinsic and marketable value, 

but is merely the representative or evidence of value, such as certificates of 

stock, bonds, promissory notes, and franchises. Intangible property is quite

different in nature from corporeal property, and there is an obvious 

distinction between tangible and intangible property. Intangible property is 

held secretly; that is, it cannot be readily located, and there is no method by 

which its existence or ownership can be ascertained in the state of its situs 

except, perhaps, in the case of mortgages or shares of stock. The value of 

intangible property is not easily ascertained . . . Things are either tangible or 

intangible. A tangible thing is one which has physical substance. All other 

things are intangible.

Neuman v. Travelers Indem. Co., 271 Md. 636, 642-43 (1974) (cleaned up). 

In this case, the intangible assets conveyed in the three transactions included: 1) the 

goodwill and licensing rights of the property and facility; 2) all trademarked and 

copyrighted materials connected with the business, including trade names, logos, and signs, 

and all original artistic materials;4 3) all advertising and promotional materials; 4) all 

advance rental, security, and other deposits; 5) all up-to-date business records including 

mailing lists, tenant and supplier lists and correspondence, accounting records and 

operating technology, and employee and management records, manuals, schedules, wage 

information, and job descriptions; 6) all contact media, including telephone and fax 

4 Except that Seller was permitted to continue to use the “Brightview” name in 

connection with other senior living facilities it continued to own and/or operate. 
8

numbers, email addresses, websites, domain names and URLs connected to the business; 

7) all transferable government licenses, permits, zoning rights, and rights-of-way; 8) all 

employment and franchise agreements, patents, licenses, and contract rights connected 

with the business, its improvements, and its electronic media; and 9) “Service Mark” 

registrations. 

With this understanding in mind, we now turn to the principles that guide our 

analysis of the relevant statutes. Our objective in statutory interpretation is to understand 

and implement the intent of the General Assembly. Bartenfelder v. Bartenfelder, 248 Md. 

App. 213, 235 (2020). In doing so, “[w]e start with the statute’s plain language which, if 

clear and unambiguous, will be enforced as written. We pay attention to the statute’s 

grammar and sentence structure” and avoid constructions that are “illogical, unreasonable, 

and inconsistent with common sense.” Id. (internal citations omitted). Further:

We do not read a statutory provision in isolation. Instead, we consider its 

purpose, goal, and context as a whole. Examining the context of the statute 

includes construing provisions within the same section harmoniously, if 

possible. If the words of the statute are ambiguous, we look at its structure 

(including its caption), context, relationship with other laws, and legislative 

history, among other indicia of intent. Even if the words are unambiguous, 

a review of the legislative history may, in certain contexts, be useful to 

confirm its interpretation or to rule out “another version of legislative intent 

alleged to be latent in the language.”

Id. at 235-36. (internal citations omitted)

Armed with a working definition of “intangible” assets and mindful of the principles 

of statutory construction that inform our analysis, we turn to the statutory provisions at 

issue here.
9

A.

MARYLAND RECORDATION AND TRANSFER TAXES

State recordation and transfer taxes are set forth in Titles 12 and 13, respectively, of 

the Tax-Property Article. We will first address the provisions regarding the recordation 

tax. 

1.

Maryland Recordation Tax

The efficacy of certain types of instruments depends on whether they have been 

recorded. For example, legal title to real property does not transfer until the deed is 

properly executed and recorded in the land records maintained on a county-wide basis by 

the clerks of their respective circuit courts. Md. Code Ann., Real Property Article (“RP”) 

§ 3-101(a) (1974, 2015 Repl. Vol.); RP §§ 3-301 to 3-303 (setting forth the requirements 

for county clerks keeping land record books and indexes); see also Kingsley v. Makay, 253 

Md. 24, 27 (1969). It is also permissible to record other types of instruments creating 

interests in real property, such as mortgages. RP § 3-102. While recording such 

instruments is not mandatory, see Kingsley, 253 Md. at 27-28, it certainly has its 

advantages. Namely, the recording process provides third parties with constructive notice 

of the security interest in the property and establishes priority of such interests based on 

the date of recordation. RP §§ 3-201, 3-203; see also In re Levitsky, 401 B.R. 695, 720 

(Bankr. D. Md. 2008) (explaining that Maryland is a race-notice jurisdiction, meaning that 

if a grantor conveys the same interest to two separate bona fide purchasers, the interest 

recorded first takes priority). 
10

An instrument granting an interest in real property is recorded in the circuit court of 

the county where the property is located. RP § 3-103. The party presenting the instrument 

for recording must include an intake sheet which discloses, among other things, “the 

amount of consideration payable, including the amount of any mortgage or deed of trust 

indebtedness assumed, or the principal amount of debt secured[.]”5 RP § 3-104(g)(3)(iv). 

The party must also include a certification from the county tax collector that all taxes 

currently due or owed on the property, including transfer and recordation taxes, have been 

properly paid. RP § 3-104(a)(1)(i), (b). If a party fails to demonstrate that all taxes have 

been paid, the county clerk is not permitted to record the instrument. RP § 3-104(b). Thus, 

in Maryland, “[t]he recordation tax is, inter alia, an excise on the privilege of using the 

recording offices of the clerks of the circuit courts” for recording conveyances of real 

property and for perfecting security interests in personal property.6 Prince George's Cnty. 

v. Brown, 334 Md. 650, 662 (1994). 

5

In the alternative, the party may include an endorsement from the assessment office 

for the county. See RP § 3-104(a)(1)(ii), (g)(8). 

6 Though not addressed above, a security interest in personal property may also be 

recorded to perfect the interest. See Md. Code Ann., Commercial Law Article (“CL”) §§ 9-

310, 9-501.1 (1975, 2013 Repl. Vol). This is done by filing a financing statement with the 

State Department of Assessments and Taxation (“SDAT”). CL § 9-501(a). The rules for 

filing such instruments vary based on the type of personal property securing the underlying 

obligation, but they generally serve the same purpose of providing notice and establishing 

priority of the interest. See generally CL §§ 9-301 to 9-342. 
11

Under the Tax-Property Article, the recordation tax “is imposed on an instrument 

of writing.” Md. Code Ann., Tax-Prop. (“TP”) § 12-102 (1986, 2019 Repl. Vol.).7 As 

discussed above, the types of instruments that get recorded are those that convey an interest 

in real property, or instruments that convey a security interest in real or personal property. 

In alignment with this reality, an “instrument of writing” is defined as a written instrument 

that either “(i) conveys title to or creates or gives notice of a security interest in real 

property; or (ii) creates or gives notice of a security interest in personal property.” TP § 

12-101(j)(1). Moreover, the phrase “real property” is defined as “land or any

improvements to land.” TP § 1-101(gg)(1). Here, we are concerned with the recordation 

taxes imposed on the deeds conveying the real property where the senior living facilities 

operate. Thus, for our purpose, the relevant type of “instrument of writing” is one that 

“conveys title to . . . real property,” i.e. title to the land and the improvements on the land. 

See TP § 12-101(j)(1). Conveyances of intangible property do not figure into the equation.

The next step is to determine how the recordation tax is calculated. The answer is 

found in TP § 12-103, which states that when real property is conveyed, the recordation 

tax is calculated as a percentage of the “consideration payable . . . for an instrument of 

writing.” TP § 12-103(a)(1). The recordation tax on an instrument of writing that conveys 

a security interest, however, is not based on the “consideration payable,” but instead is 

calculated as a percentage of “the principal amount of the debt secured[.]” Id. Building 

7 TP §12-102 states in full: “[e]xcept as otherwise provided in this title, recordation 

tax is imposed on an instrument of writing: (1) recorded with the clerk of the circuit court 

for a county; or (2) filed with the Department and described in § 12-103(d) of this title.”
12

upon our understanding of an “instrument of writing” gained in the previous paragraphs, 

the recordation tax on a deed conveying real property is calculated as a percentage of the 

“consideration payable” for the land and the improvements thereon. We must next 

determine what “consideration payable” means.

Fortunately, the answer lies in the statute as well. Under TP § 12-103(a)(2), 

“consideration” is defined to include “the amount of any mortgage or deed of trust assumed 

by the grantee,” but otherwise “includes only the amount paid or delivered in return for the 

sale of the property[.]” TP § 12-103(a) (emphasis added). Leaving nothing to chance, the 

statute tells us that the “consideration payable” will be found in one of two places: “(1) the 

recitals or the acknowledgement of the instrument of writing; or (2) an affidavit under oath 

that accompanies the instrument of writing” signed by a party to the instrument of writing 

or the party’s agent. TP § 12-104(a). 

Applying these provisions to the facts of this case is straightforward. The 

instruments of writing at issue here are the three deeds pursuant to which title to the real 

property was conveyed, and thus, the recordation tax should have been calculated as a 

percentage of the consideration stated in each of the three deeds. 

The Taxing Authorities contend that the clause in TP § 12-103(a)(2)(ii)—stating 

that consideration “includes only the amount paid or delivered in return for the sale of the 

property”—doesn’t distinguish between real or personal property. The Taxing Authorities

point out that under TP § 1-101(cc), “property” is defined to include both “real property 

and personal property.” Thus, their argument goes, because intangible property is a form 
13

of personal property, it may be properly included in the calculation of the recordation tax. 

We are not convinced. 

It is, of course, true that throughout the Tax-Property Article, the word “property” 

can refer to both “real” and “personal” property. Whether any particular use of the word 

“property” refers to one or both types of property, however, depends on the context. In 

TP § 12-103(a)(2)(ii), the word “property” is used in connection with determining the 

“consideration payable” for an “instrument of writing.” Again, the type of “instrument of 

writing” relevant here is a deed transferring title to the real property. As observed above, 

“consideration payable” is a concept used only when calculating the recordation tax on an 

instrument of writing that conveys title to real property.8 See TP § 12-103(a)(1). Thus, the 

word “property” as used in TP § 12-103(a)(2)(ii) refers only to real property. We therefore 

disagree with the Taxing Authorities’ assertion that the text of the statute allows for the 

inclusion of intangible property when calculating the recordation tax on the transfer of real 

property.9

8

In contrast, to calculate the recordation tax on an instrument of writing that grants 

a security interest (in either real or personal property), the relevant figure is the “principal 

amount of the debt secured.” TP § 12-103(a)(1). 

9 We have our doubts that the Taxing Authorities’ interpretation would withstand a 

challenge under Article 14 of the Maryland Declaration of Rights, which states “[t]hat no 

aid, charge, tax, burthen or fees ought to be rated or levied, under any pretense, without the 

consent of the Legislature.” The parties did not raise this issue, and because we resolve 

this case on other grounds, we shall not address it. See Sumpter v. Sumpter, 427 Md. 668, 

684 n.10 (2012) (citations omitted) (noting that the doctrine of “[c]onstitutional avoidance” 

mandates that a court “will not reach a constitutional argument when an issue may be 

decided on a non-constitutional basis”).
14

Our conclusion is bolstered when considered in conjunction with the General 

Assembly’s relatively recent amendments to the recordation and transfer tax provisions. A 

loophole once existed that allowed buyers and sellers of real property to avoid recordation 

and transfer taxes. See Fiscal Note, 1st Spec. Sess., S. B. 2 (Md. 2007). Instead of 

transferring title to the property, the parties would transfer the ownership interests of the 

entity that owned the property. Id. For example, let’s assume that the real property is 

owned by a corporation, and that 100% of the shares of the corporation are owned by one 

person. Before the loophole was closed, the recordation and transfer taxes could be 

avoided by transferring the stock instead of the property. 

In 2008, the General Assembly closed the loophole by imposing recordation and 

transfer taxes on such transactions. See TP §§ 12-117, 13-103; see also Fiscal Note, 1st 

Spec. Sess., S. B. 2 (Md. 2007). To do so, the General Assembly had to take into 

consideration certain realities that differentiate the purchase of the real property from the 

purchase of the stock. The one most relevant here is the fact that a business entity, such as 

a corporation, may own other assets in addition to the real estate, and the extent of the 

business’s value attributable to its real property varies from one business to the next. For 

one business, the real property may represent a small part of the company’s overall value, 

and in another, it could represent nearly all of its value. The less the real property 

contributes to the company’s value, the less the transaction would resemble a ploy to avoid 

recordation 
15

and transfer taxes. The General Assembly had to draw the line somewhere, and did so by 

defining the term “real property entity” as:

a corporation, partnership, association, limited liability company, limited 

liability partnership, other unincorporated form of doing business, or trust 

that directly or beneficially owns real property that:

1. constitutes at least 80% of the value of its assets; and

2. A. has an aggregate value of at least $1,000,000; or

B. is the product of an untaxed conversion from a sole 

proprietorship effected under the exemption provided under § 12-

108(y) of this title.

TP § 12-117(a)(6).10

In addition, the General Assembly had to decide whether the recordation and 

transfer taxes would be charged against the entire consideration the purchaser paid for the 

stock, or whether to adjust for the value of the other assets owned by the corporation. The 

General Assembly’s resolution of this issue is reflected in TP § 12-117(b), which, in 

relevant part, states:

(b)(1) The recordation tax is imposed on the transfer of a controlling interest 

in a real property entity as if the real property, directly or beneficially 

owned by the real property entity, was conveyed by an instrument of 

writing that is recorded with the clerk of the circuit court for a county or filed 

with the Department under § 12-102 of this title.

10 The form of business entity we use in our example is a corporation, but it would 

work just the same if we had used another business form such as a limited liability company 

(“LLC”) or partnership. If the entity is an LLC, the change of control is effectuated through 

the sale of membership interests in the LLC. Similarly, the change of control of a 

partnership is effectuated through a sale of the partnership interests. For our discussion, 

we are using the example of a stock sale, but the analysis holds for each type of “real 

property entity.”
16

(2)(i) The recordation tax is imposed on the consideration payable for 

the transfer of the controlling interest in the real property entity.

(ii) The consideration to which the recordation tax applies includes 

the amount of:

1. any mortgage, deed of trust, or other lien on or security 

interest in the real property directly or beneficially owned by 

the real property entity; and

2. any other debt or encumbrance of the real property entity.

(iii) The consideration to which the recordation tax applies is 

reduced by the amount allocable to the assets of the real property 

entity other than real property.

(iv) The real property entity has the burden of establishing to the 

satisfaction of the Department the consideration referred to in 

subparagraph (i) of this paragraph and the amount of any 

consideration allocable to assets other than real property referred to in 

subparagraph (iii) of this paragraph.

(v) If the real property entity fails to establish the amount of 

consideration referred to in subparagraph (i) of this paragraph, the 

recordation tax is imposed on the value of the real property, directly 

or beneficially owned by the real property entity, determined by the 

Department at the date of finality immediately before the date of the 

final transfer.

(Emphasis added).11

As Shelter points out, subsection (b)(2)(iii) expressly excludes from the calculation 

all assets except real property. Shelter contends that this shows that the General Assembly 

11 To close the loophole in the transfer tax context, the General Assembly amended 

the transfer tax provisions in the same fashion. See TP §§ 13-103(a) (incorporating the 

definition in TP § 12-117 of “real property entity”), 13-103(b)(1) (imposing the transfer 

tax using the same words used in TP §§ 12-117(b)(1)), and 13-103(b)(2) (incorporating 

provisions of TP § 12-117(b)(2)). Thus, although our analysis is framed in terms of the 

recordation tax, it applies to the transfer tax as well.
17

never intended to apply the recordation tax to the conveyance of any asset other than real 

property. 

The Taxing Authorities look at the same provision and draw the opposite 

conclusion. They argue:

Section 12-117 shows that the General Assembly knows how to exempt nonreal-property assets from taxation when it wants to. The tax statutes that 

apply to recorded deeds do not contain a similar exemption for non-realproperty assets. See generally [TP] § 12-108 (listing exemptions). The 

General Assembly even amended [TP] § 12-103 (the law that governs this 

case) after it created [TP] § 12-117 (the inapplicable law) but did not add the 

language Shelter now seeks to insert. Under the “long accepted” doctrine of 

“expressio unius est exclusio alterius,” the Legislature’s choice to pare down 

taxes for control transfers suggests that the [L]egislature chose not to pare 

down taxes on recorded instruments.

(Footnotes omitted).

The Taxing Authorities offer possible reasons why the General Assembly excluded 

any property other than real property in TP § 12-117. For example, they posit that the 

General Assembly wanted “to make corporate-ownership interests easier to alienate; that 

the deduction would not affect much intangible property” and that the “SDAT is better 

positioned” than county clerks to scrutinize the values assigned to the assets owned by a 

real estate entity. We disagree.

The General Assembly telegraphed its intent in the opening words of TP § 12-

117(b)(1), which state that the “recordation tax is imposed on the transfer of a controlling 

interest in a real property entity as if the real property. . . was conveyed by an instrument 

of writing that is recorded” with the county clerks. (Emphasis added). In other words, the 

General Assembly wanted as little daylight as possible between the taxes imposed on a 
18

stock sale and the tax imposed on a deed of conveyance. To achieve this goal, the General 

Assembly determined that in the entity sale, only the real property mattered, and all other 

assets were expressly excluded. No such adjustment is necessary if the real property is 

conveyed by an instrument of writing, even if the conveyance of the real property is part 

of a transaction in which the entire business is sold. And there is a reason for that.

As explained above, and as was the case here, in the sale of a business, the transfer 

of different types of assets is accomplished through different types of instruments. When 

title to real property is transferred, the county taxing authorities are presented with a very 

specific type of instrument of writing—a deed—that conveys title to a very specific type 

of asset—real property. As shown above, the “consideration payable” for the deed is, by 

statute, limited to the amount paid for the real property and its improvements. In other 

words, the consideration paid for the intangible property was never included in the deed in 

the first place. Thus, unlike the statutory provisions relating to the stock sale, no express 

exclusion of other types of assets was necessary.

2.

Maryland Transfer Tax

Our analysis of the parallel provisions in the transfer tax statute produces the same 

result. As is the case in the recordation tax statute, the transfer tax is imposed on an 

“instrument of writing” that is “[r]ecorded with the clerk of the circuit court for a 
19

county[.]”12 TP § 13-202. The statute’s definition of an “instrument of writing” is virtually 

identical to its counterpart for recordation taxes, although it has some differences worth 

noting here. As will be recalled from the discussion above, the priority of a security interest 

in real or personal property depends on when notice of the security interest was recorded. 

Thus, in the recordation tax statute, an “instrument of writing” includes instruments that 

grant or give notice of security interests in real or personal property. See TP § 12-101(j). 

In contrast, the transfer tax statute does not apply to transfers of personal property or 

security interests in either real or personal property. TP § 13-101(e). Thus, in the transfer 

tax statute, an “instrument of writing” is limited to “a written instrument that conveys title 

to, or a leasehold interest in, real property.” TP § 13-101(e)(1). 

The rest of the analysis of the transfer tax statute tracks the analysis of the 

recordation tax statute. The transfer tax is based on a percentage of the “consideration 

payable for the instrument of writing.” TP § 13-203(a)(1). For our purposes here, 

“consideration includes . . . only the amount paid or delivered in return for the sale of the 

property[.]” TP § 13-203(a)(2)(ii). The consideration payable is set forth in “the recitals 

or the acknowledgement of the instrument of writing” or in a statement under oath 

accompanying the instrument of writing signed by a party to the instrument or the party’s 

agent. TP § 13-204. Thus, as with the recordation tax, the consideration stated in the deed 

12 TP § 13-202 states in full: “[e]xcept as otherwise provided in this subtitle, a 

transfer tax is imposed on an instrument of writing: (1) recorded with the clerk of the circuit 

court for a county; or (2) filed with the Department and described in § 12-103(d) of this 

article.”
20

is the relevant number for calculating the transfer tax, and the value of the intangible 

property conveyed in the underlying transaction is not part of the equation.

3.

County Transfer Taxes

We reach the same result in our analysis of the relevant provisions of the Baltimore 

and Montgomery County codes. Baltimore County imposes a transfer tax on “instruments 

of writing,” Baltimore County Code (“Balt. Cnty. Code”) § 11-3-203(a), defined as 

“written instrument[s] that convey[] title to, or a leasehold interest in, real property.” Balt. 

Cnty. Code § 11-3-201(1). The transfer tax is calculated as a percentage of the 

“consideration paid or to be paid by the transferee in exchange for the conveyance 

evidenced by the instrument of writing[.]” Balt. Cnty. Code § 11-3-203(b). Similarly, the 

Montgomery County Code imposes a transfer tax on “each transfer in the County of a fee 

simple interest in real property,” which is to be “computed on the value of the full 

consideration for each transfer[.]” Montgomery County Code (“Mont. Cnty. Code”) § 52-

31.13 

As was the case with Maryland’s recordation and transfer statutes, a plain-language 

interpretation of the code provisions from both counties limits the taxes to consideration 

13 Montgomery County also imposes a transfer tax on “the initial transfer of stock 

or other evidence of ownership in a cooperative housing corporation or similar entity” and 

“each transfer of a leasehold interest in real property where the lease or instrument by 

which a leasehold interest is transferred contains a covenant for perpetual renewal[.]” 

Mont. Cnty. Code § 52-31. 
21

paid for the real property. Consideration exchanged for intangible personal property is not 

included in these definitions and thus, is not taxable.14

B.

THE RELEVANCE OF THE PARTIES’

ALLOCATION OF THE PURCHASE PRICE

The Taxing Authorities contend that the price allocations by the parties were suspect 

and that the Tax Court properly focused on the total consideration paid in the overall 

transaction (less the value of the tangible property). In that regard, the Taxing Authorities 

maintain that the recordation and transfer taxes are imposed against the “‘actual 

consideration’ and direct[ed] tax collectors to tax the entire payment for the elder-care 

centers, not just the portion of the payment that Shelter allocated to real property.” As the 

Taxing Authorities put it:

The parties to the sale here agreed on one price, then allocated portions of 

that price to different assets for income tax purposes. They did not separately 

bargain for the sale of real property to reach an arm’s-length deal for only 

the land and its improvements. The parties’ after-the-fact effort to clarify 

and limit their federal income-tax exposure should not affect their transfer 

and recordation-tax exposure.

(Internal citations omitted). 

The Taxing Authorities also contend that our interpretation would produce the 

unwelcome result of allowing parties to the sale of a business to engage in “tax avoidance 

ploy[s]” when allocating purchase price to various assets. They argue that unscrupulous 

14 Further bolstering this interpretation is the fact that both county codes expressly 

prohibit imposing any tax on intangible personal property. See Balt. Cnty. Code § 11-1-

102(c)(1)(ii); Mont. Cnty. Code § 52-17(b). 
22

parties would strive to minimize the recordation and transfer taxes through contrived 

allocations of the purchase price, and that the county clerks would lack the resources and 

expertise to prevent such mischief because valuing intangible personal property is often 

“difficult, and potentially arbitrary.” 

Although we agree that an examination of the underlying economics of the 

transaction is appropriate to ensure that the parties aren’t engaging in a ploy to reduce 

recordation and transfer taxes, the Taxing Authorities’ characterization of the transaction 

as a retroactive and self-serving exercise cannot be squared with what the limited record 

shows about these transactions.15 It appears that, contrary to the Taxing Authorities’ 

assertion, the parties did, in fact, “separately bargain” for the sale of the various assets 

conveyed in the transactions. For example, in the Rockville Contract, the section covering 

the purchase price stated as follows:

At least ten (10) days prior to Closing, Seller shall prepare and submit to 

Buyer for its review, comment, and approval an allocation of the Purchase 

Price (and all other capitalized costs) among the various assets which 

constitute the Property in accordance with Code § 1060 and the treasury 

regulations thereunder (and any similar provisions of state and local law, as 

appropriate). Seller and Buyer shall work together, in good faith, to reach a 

final agreement on such allocation and shall report, act and file Tax Returns 

(including, but not limited to, Internal Revenue Service Form 8594) in all 

respects and for all purposes consistent with such final allocation agreed 

upon by Buyer and Seller. Neither Buyer nor Seller shall take any position 

15 The Tax Court record does not include each of the three contracts for the 

transactions at issue here. The three transactions were part of a larger transaction in which 

ten nursing homes were purchased and sold by the same or affiliated buyers and sellers. 

The record includes only the contract from the sale of Brightview Rockville’s facility (the 

“Rockville Contract”) and the sixth amendment to the Rockville Contract, which amended 

not only the Rockville Contract, but also the contracts for each of the other transactions. 

Included within the sixth amendment are the agreed-upon purchase price allocations for 

each of the ten transactions. 
23

(whether in audits, tax returns or otherwise) that is inconsistent with such 

final, agreed allocation unless required to do so by applicable law. 

Notwithstanding any provision to the contrary in this Agreement, Closing 

shall not occur under this Agreement or any of the Completed Project 

Agreements or Development Project Agreements, as applicable, until Buyer 

and Seller have agreed upon the allocation of the Purchase Price. 

As this section makes clear, the allocation of the purchase price across the three 

types of assets was a material term of the contract; indeed, under the last sentence of this 

provision, an agreement on the allocation was a condition precedent to closing. Notably, 

the record shows that several months after the parties executed the contract and just days 

before closing, they entered into a sixth amendment to the contract which, among other 

things, established the parties’ agreed-upon allocations for all of the subject facilities, 

including the three at issue here. 

There was a reason, grounded in federal tax law, that the contracts required the 

parties to agree upon the allocation of the purchase price before closing. Under 26 U.S.C. 

§ 1060,

16 which was referenced in the above section of the contract, and its corresponding 

regulations, parties to the sale of a business through an asset sale are required to file a form 

with the Internal Revenue Service—Form 8594—setting forth the allocation of the sales 

price among the various types of assets. 26 C.F.R § 1.1060-1(e)(1)(ii). This is required 

because the tax ramifications of an asset sale may depend on the type of asset and the 

16 26 U.S.C. § 1060 is a statute in the United States Internal Revenue Code 

establishing “[s]pecial allocation rules for certain asset acquisitions.” 
24

seller’s cost basis in the asset.17 For example, gains on some assets are taxed at the ordinary 

income tax rate, and gains on other assets are taxed at the capital gains tax rate. See 1 

ALAN S. GUTTERMAN, LEGAL COMPLIANCE CHECKUPS § 6:13. Tax matters—

Classification of Assets for Tax Purposes (Jan. 2021 update). 

In an asset sale, from a tax standpoint, the interests of the seller and buyer are not 

necessarily aligned, and in fact are often adverse. See, e.g., 6A MICH. LEGAL FORMS

§ 25:21. Federal Taxes — Sale of Business Property (Aug. 2020 update) (explaining that 

“the seller’s and buyer’s [tax] interests are usually adverse”); Langdon v. Comm'r of 

Internal Revenue, 59 F. App’x 168, 170 (8th Cir. 2003) (stating that when parties have 

competing tax interests, the courts give greater deference to their allocation of the purchase 

price). For example, depending on the nature of the asset, a buyer may favor allocating as 

much of the purchase price as possible to depreciable assets with short lives such as 

covenants not to compete, whereas the seller may push to allocate as little as possible to 

the same asset. See 6A MICH. LEGAL FORMS § 25:21. The more the parties’ interests 

diverge, the more likely the resulting allocation reflects an arms-length negotiation. In 

fact, when the Internal Revenue Service contests the allocations made by the parties, the 

level of scrutiny that federal courts give to the parties’ allocation depends on whether the 

parties’ tax interests are adverse or aligned. See Langdon, 59 F. App’x at 170-71. 

17 A cost basis is the original price of the property adjusted over time to account for 

improvement or depreciation of the property. See 26 U.S.C. §§ 1011-12. The gain or loss 

from selling the property is calculated for tax purposes by subtracting this adjusted cost 

basis from the sales price. 26 U.S.C. § 1001(a).
25

Here, whether the parties’ interests were aligned cannot be ascertained on this 

record, but right now, that is beside the point. The possibility (indeed, likelihood) their 

interests were adverse allows for the possibility that their allocations were the product of 

good faith, arms-length negotiations over the true value of the various assets. On remand, 

as the parties move into the second phase of the bifurcated proceedings, this issue may be 

explored. 

Although we don’t take lightly the possibility that the allocation process could be 

used to understate the value of the real property as a tax avoidance ploy, our holding—that 

the value attributed to the intangible assets is not considered in the calculation of the 

recordation and transfer taxes—does not mean that the county clerks must blindly accept 

the parties’ allocation of the purchase price. To the contrary, the clerks may look through 

the stated consideration on the deed to the facts and circumstances of the underlying 

transaction to ascertain the actual consideration paid for the real property. See, e.g., Dean 

v. Pinder, 312 Md. 154, 162 (1988); Pritchett v. Kidwell, 55 Md. App. 206, 213-14 (1983) 

(in determining consideration relevant for calculating recordation and transfer taxes, “we 

must give regard to the reasonable expectations of the parties: tax avoidance ploys aside, 

what did they consider the bargain to be?”).18 

18 The Taxing Authorities contend that these cases support their position because 

they both confirmed the county clerks’ authority to examine a transaction to determine the 

actual consideration paid for the real property beyond the amount stated by the parties on 

the instrument of writing. We agree with that general proposition. But these cases do not 

stand for the proposition that the clerks can include in their calculations the consideration 

exchanged for other assets. 
26

Whether county clerks have the expertise or resources to scrutinize a transaction to 

weed out the value of the intangible property is beyond our purview, although we hasten 

to point out that they are empowered by their respective county codes to inquire into the 

parties’ valuations. If they have reason to second-guess the consideration stated in the 

deed, they also may calculate the recordation and transfer taxes on the fair market value of 

the property.

19

 See Balt. Cnty. Code § 11-3-207(d) (“If a taxpayer . . . is unable to show 

affirmatively to the Director [of Finance] what the consideration paid or to be paid for the 

property is, the Director may base the transfer tax on the market value of the property 

transferred.”); Mont. Cnty. Code § 52-36(b) (permitting that “[w]here the director of 

finance has reason to believe that the consideration for property or valuation of property is 

understated . . . [the director] may request the supervisor of assessments for the county or

a professional real estate appraiser to make an appraisal of the property,” and may consider 

such an appraisal when making the ultimate determination of taxes due). These options, 

we must presume, reflect a belief by the county legislative bodies that the clerks have the 

requisite knowledge and resources to make sure the actual consideration exchanged for the 

real property serves as the basis on which the recordation taxes are imposed.

20 In any event, 

if resources or expertise are lacking, that is a matter for the legislative bodies to address.

19 Maryland state recordation and transfer taxes are collected by the clerks of county 

circuit courts alongside the county transfer taxes. See TP §§ 12-110(a), 13-208(a).

20 In addition, as discussed above, the parties are required under federal tax law to 

allocate the purchase price across the various asset classes. See 26 U.S.C. § 1060(a); 26 

C.F.R. §1.1060–1. A fraudulent allocation carries serious consequences under federal law. 

See 26 U.S.C. § 6721(e) (describing penalties imposed for cases of intentional disregard 
27

CONCLUSION

The Tax Court made a legal error in its determination that “State and local tax 

collectors” are permitted “to impose transfer and recordation tax based on the total amount 

of consideration paid, including any consideration paid for assets that are categorized by 

the buyer or seller as intangible property.” We hold that in determining the “total amount 

of consideration paid,” the tax collectors must calculate the tax on the consideration paid 

only for the subject real property and must exclude consideration paid for other types of 

assets, such as intangible property, that are not subject to such taxes. As noted above, in 

so holding, we do not suggest or imply that the tax collectors must blindly accept the 

consideration stated by the parties. Rather, tax collectors are permitted to look through the 

stated consideration to the underlying bargain to ascertain what the parties actually 

“consider[ed] the bargain to be.” Pritchett, 55 Md. App. at 214. 

JUDGMENT OF THE CIRCUIT COURT 

FOR BALTIMORE COUNTY REVERSED; 

CASE REMANDED TO CIRCUIT COURT 

WITH INSTRUCTIONS TO REMAND TO 

TAX COURT FOR FURTHER 

PROCEEDINGS CONSISTENT WITH 

THIS OPINION. COSTS TO BE PAID BY 

APPELLEES.

for asset allocation reporting requirements, including a fine of up to ten percent of the 

aggregate amount of the items required to be reported). In addition, the risk of criminal 

penalties associated with fraudulent tax filings provides a check against the impulses some 

may have to engage in such mischief. See, e.g., 26 U.S.C. § 7206.