Is a deed conveying standing timber subject to South Carolina's documentary (deed-recording) tax, even when the price is set per board foot or cord cut rather than by the acre?

Plain-English summary

South Carolina charges a documentary tax (a deed-recording or "deed stamp" tax) on instruments that convey real estate. Revenue Ruling 88-6 decides whether a timber deed — a deed selling standing timber — owes that tax, and answers yes when the buyer will do the cutting, regardless of how the price is set.

The issue was a pricing distinction the Commission wanted to end. Deeds selling standing timber by the acre were already being taxed as realty conveyances under § 12-21-380. But deeds pricing the timber by a fee per board foot or cord cut had been treated as mere "written obligations to pay money" taxed under the lower-rate § 12-21-360 — a section that was repealed effective July 1, 1987. With that section gone, the question was whether the per-board-foot deeds were taxable as realty deeds too.

The Commission said they are, because standing timber is an interest in real estate under settled South Carolina law. It marshaled the authorities: Milwaukee Land Co. v. Poe (9th Cir. 1929) (standing timber is ordinarily real estate, and a deed transferring it is subject to the documentary tax); Alexander v. Herndon (S.C. 1909) ("growing timber is a part of the land"); Hamilton Ridge Lumber (1921) (a sale of standing timber carries an interest in real estate); a 1979 Attorney General opinion; and Graham v. Prince (S.C. Ct. App. 1987) (growing timber is an interest in land subject to the Statute of Frauds).

There is one important dividing line, drawn from the Uniform Commercial Code (§ 36-2-107). If the seller is to sever the timber, the deal is a sale of goods, not a conveyance of land. But if the buyer is to sever it, the contract affects land — and the deed is a taxable realty conveyance. Conclusion: timber deeds conveying standing timber to be severed by the buyer are subject to the documentary tax under § 12-21-380, no matter how the consideration is calculated.

What this means for you

Timber buyers, sellers, and closing agents

If a deed conveys standing timber that the buyer will cut, treat it as a realty conveyance and expect the documentary (deed-recording) tax under § 12-21-380 — computed on the consideration, whether the price is stated by the acre or as a fee per board foot or cord. Don't assume a per-board-foot price makes it a tax-free "obligation to pay money"; the section that supported that treatment (§ 12-21-360) was repealed in 1987.

The seller-severs exception

Who does the cutting changes the character of the deal. If the seller severs the timber and delivers logs, the UCC treats it as a sale of goods rather than a conveyance of land — a different tax analysis. Structure and document the transaction with that distinction in mind, because it drives whether the documentary tax applies.

A note on current law

This 1988 ruling construes the deed-documentary tax as it stood then. The tax was later recodified and its rate and mechanics have changed. Rely on the durable principle — standing timber sold for the buyer to cut is a conveyance of a real-property interest — but confirm the current deed-recording tax rate and rules for any actual closing.

Common questions

Q: Is a timber deed priced per board foot subject to the documentary tax?
A: Yes, if the buyer is to cut the timber. Standing timber is an interest in real estate, so the deed is a realty conveyance taxed under § 12-21-380 regardless of how the price is calculated.

Q: Weren't per-board-foot timber contracts treated as untaxed 'obligations to pay money'?
A: They were, under the old § 12-21-360 — but that section was repealed effective July 1, 1987, so that treatment no longer applies.

Q: Does it matter who cuts the timber?
A: Yes. If the seller severs the timber, the UCC treats it as a sale of goods rather than a land conveyance. If the buyer severs it, the contract affects land and the deed is taxable.

Citations and references

Statutes:

• S.C. Code Ann. § 12-21-380 (Supp. 1987) — documentary tax on instruments conveying realty; exemption for conveyances to the State for public purposes
• S.C. Code Ann. § 12-21-360 — repealed July 1, 1987; formerly taxed notes and written obligations to pay money at a lower rate
• S.C. Code Ann. § 36-2-107 — UCC: sale of timber is a sale of goods if severed by the seller; if the buyer severs, the contract affects land

Case law:

• Milwaukee Land Co. v. Poe, 31 F.2d 733 (9th Cir. 1929) — standing timber is ordinarily real estate; a deed transferring it is subject to the documentary tax
• Alexander v. Herndon, 84 S.C. 181, 65 S.E. 1048 (1909) — growing timber is part of the land
• Hamilton Ridge Lumber Corp. v. Southern Cotton Oil Co., 271 F. 934 (1921) — a sale of standing timber carries an interest in real estate
• Graham v. Prince, 293 S.C. 77, 358 S.E.2d 714 (1987) — growing timber is an interest in land subject to the Statute of Frauds

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR88-6.pdf

Original ruling text

SC REVENUE RULING #88-6

SUBJECT:

Timber Deeds
(Documentary Tax)

EFFECTIVE DATE:

July 1, 1988

REFERENCE:

S.C. Code Ann. Section 12-31-360 (1976)
S.C. Code Ann. Section 12-21-380 (Supp. 1987)
S.C. Code Ann. Section 36-2-107 (1976)

AUTHORITY:

S.C. Code Ann. Section 12-3-170 (1976)
SC Revenue Procedure #87-3

SCOPE:

A Revenue Ruling is the Commission's official interpretation of
how tax law is to be applied to a specific set of facts. A Revenue
Ruling is public information and remains a permanent document
until superseded by a Regulation or is rescinded by a subsequent
Revenue Ruling.

Question:
Are timber deeds, which convey standing timber for a fee per board foot or cord cut, subject to
the documentary tax pursuant to S.C. Code Section 12-21-380?
Facts:
Deeds which convey standing timber based on acreage are being taxed as deeds pursuant to
Section 12-21-380. Deeds which convey standing timber based on a fee per board foot or cord
cut are not presently subject to the state's documentary tax. Such instruments have been
considered to be written obligations to pay money under now repealed Section 12-21-360.
Code Section 12-21-380 reads:
A deed, instrument, or writing whereby any lands, tenements, or other realty sold is
granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser or
any other person by his direction hen the consideration or value of the interest or property
conveyed exclusive of the value of any lien or encumbrance remaining thereon at the
time of sale exceeds one hundred dollars and does not exceed five hundred dollars must

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be taxed one dollar and ten cents and for each additional five hundred dollars, or
fractional part thereof, one dollar and ten cents. Ten cents of the tax on those sales over
one hundred dollars but not exceeding five hundred dollars and ten cents of the tax on
each additional increment of $500 must be paid to the Heritage Land Trust Fund. Any
deed, instrument, or writing whereby any lands, tenements, or other realty is granted,
assigned, transferred, or otherwise conveyed to, or vested in, the state of South Carolina,
or any of its political subdivisions and departments, for highway or other public purposes
is exempted from the documentary tax requirements of this section, and any clerk of
court or register of mesne conveyances may record these deeds or other instruments
without revenue stamps affixed and without penalty.
Code Section 12-21-360, repealed July 1, 1987, previously taxed notes, written obligations to
pay money, mortgages, etc. at a lower rate than deeds.
Discussion:
The case of Milwaukee Land Co. v. Poe, 31 F.2d 733 (1929), concerned a now repealed federal
documentary tax statute on deeds. That statute was almost identical to South Carolina Code
Section 12-21-380. In that case, the Ninth Circuit Court of Appeals cited an Internal Revenue
regulation which provided that "what constitutes lands, tenements or realty `is determinable by
the law of the state in which the property is situated. Standing timber is ordinarily held to be real
estate, and where so held the deed transferring it is subject to the tax'."
In Alexander v. Herndon, 84 SC 181, 65 SE 1048 (1909), the South Carolina Supreme Court
held that "[g]rowing timber is a part of the land." In Hamilton Ridge Lumber Corporation v.
Southern Cotton Oil Co., 271 F. 934 (1921) it was held that:
A contract by which in terms defendant sold to complainant all its timber of certain kinds
situate in South Carolina, to be cut and delivered by defendant at complainant's mill, the
purchase price to be measured by the logs, which were to be measured and paid for as
delivered, held one for the sale of standing timber, which, under the laws of South
Carolina, carries a interest in real estate, and a breach of which by defendant may be
enjoined. (Emphasis added.)
Opinion of the Attorney General, P-OAG-214, dated May 17, 1979 cited the above quote in
holding that a sale of standing timber carries an interest in realty. Recently, the South Carolina
Court of Appeals cited Alexander v. Herndon, supra, in the case of Graham v. Prince, 293 S.C.
77, 358 S.E.2d 714 (1987). The court noted that "growing timber is an interest in land subject to
the Statute of Frauds."
South Carolina Code Section 36-2-107(1) of the Uniform Commercial Code provides that the
sale of timber, minerals and the like when severed by the seller from the realty is a contract for
the sale of goods.

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With respect to the same code section, the official comment reads, in part:
Subsection (1). Notice that the subsection applies only if the timber, minerals or
structures `are to be severed by the seller.' If the buyer is to sever such transactions are
considered contracts affecting land and all problems of the Statute of Frauds and of the
recording of land rights apply to them.
The South Carolina Reporter's comment reads, in part, that "[i]f the severance is to be made by
the buy, the contract is for the sale of land...."
Conclusion:
Timber deeds which convey standing timber to be severed by the buyer, no matter how the
consideration is calculated, are subject to the state's documentary tax pursuant to Section 12-21380. (May 11, 1988)

SOUTH CAROLINA TAX COMMISSION

s/S. Hunter Howard Jr.
S. Hunter Howard, Jr., Chairman

s/A. Crawford Clarkson Jr.
A. Crawford Clarkson, Jr., Commissioner
Columbia, South Carolina
, 1988
May 11,

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