After the 1990 Legislature added SDCL 43-4-22(18), which exempts transfers 'for which no consideration was given' from the real estate transfer fee, is an exchange of one parcel of land for another parcel of land still subject to the transfer fee, or is it now exempt?
Apply this to your situation
This page answers the general question as of 1990. Ask about yours and see what current South Dakota law means for your facts, with citations you can check.
Plain-English summary
South Dakota imposes a real estate transfer fee under SDCL 43-4-21, payable when a deed is recorded. SDCL 43-4-22 lists exemptions, including transfers to or from the federal government.
The 1990 Legislature added a new exemption at SDCL 43-4-22(18): "For which no consideration was given." The opinion asked whether a land-for-land exchange fit that language.
A county official asked AG Roger Tellinghuisen whether the new exemption covered exchanges of land between parties. People seeking to record deeds argued that exchanging land meant no consideration was given. The county attorney advised collecting a transfer fee based on the value of the land being transferred.
No, Tellinghuisen ruled that the exemption did not apply. The 1990 amendment did not change the meaning of "consideration" in contract law. Consideration is not limited to cash. The American Heritage Dictionary defines consideration as "[s]omething promised, given, or done that has the effect of making an agreement a legally enforceable contract." Black's Law Dictionary defines it as "[s]ome right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility, given, suffered, or undertaken by the other." Even the criminal statute SDCL 22-1-2(7) defines consideration broadly: "any type of property or thing of legal value . . . [a]ny amount, advantage or inconvenience, no matter how trifling, is sufficient."
A land exchange has consideration in every reasonable sense: each parcel is the consideration for the other. Owner A receives Parcel Y in return for transferring Parcel X. The fact that the consideration is real estate rather than cash does not eliminate it; it just changes the form.
The request referred to two prior AG opinions, 70-27 and 81-12, that had treated land exchanges as subject to the fee. Tellinghuisen concluded that the new no-consideration exemption did not apply to the exchange described.
The opinion agreed with the county attorney that the value of the land being transferred determines the fee amount. It did not give a separate valuation formula for unequal parcels.
The opinion also flagged a parallel exemption: the requesting official had noted that the U.S. Forest Service might be involved in some of these transactions, and the AG pointed out that SDCL 43-4-22(2) already exempts transfers to or from the federal government, independent of the SDCL 43-4-22(18) analysis.
Currency note
This opinion was issued in 1990. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify the current text of SDCL chapter 43-4 before applying the fee or an exemption today.
What the opinion meant at the time
For county recording officials, the opinion said to treat a land-for-land exchange as a transfer with consideration under SDCL 43-4-22(18). Tellinghuisen agreed that the value of the land being transferred determines the fee.
For real estate attorneys advising clients on land swaps, the opinion meant the no-consideration exemption did not apply merely because the parties exchanged land rather than cash. Check any other exemption that may apply to the transaction.
For landowners swapping parcels, the opinion treated the land received as consideration. It did not discuss allocation of the fee between parties or the application of other exemptions besides the federal-government provision.
For officials calculating the fee, Tellinghuisen agreed with using the value of the land being transferred. He did not address how to value each parcel in an unequal exchange.
For exchanges involving the U.S. Forest Service, the opinion was a reminder that transfers to or from the federal government remained exempt under SDCL 43-4-22(2), independent of the SDCL 43-4-22(18) consideration analysis.
Common questions
Q: What if the parcels have equal value? Is there still consideration?
A: Yes. Equality of value is not relevant to whether consideration exists. The exchange of one thing for another is consideration regardless of whether the values match. Even where parcels are equal in value, each is the consideration for the other.
Q: How is the fee computed on an exchange?
A: The opinion adopted the county state's attorney's position that the value of the land being transferred is the value used to determine the fee. Beyond confirming that valuation standard, the opinion did not lay out a detailed formula for exchanges of unequal parcels.
Q: What is the "no consideration" exemption actually for?
A: The statute quoted in the opinion exempts transfers "for which no consideration was given." Tellinghuisen did not analyze particular gift, charity, or estate transfers. He held that trading one parcel for another does involve consideration.
Q: Does the U.S. Forest Service exemption work in both directions?
A: Tellinghuisen noted that SDCL 43-4-22(2) exempted transactions involving the U.S. Forest Service. The opinion did not analyze particular transactions in either direction.
Background and statutory framework
SDCL 43-4-21 imposed the real estate transfer fee, while SDCL 43-4-22 listed exemptions. The question was whether the new subsection (18) exemption for transfers without consideration reached a land-for-land exchange.
The 1990 amendment added the words "for which no consideration was given." People seeking to record deeds argued that exchanging land involved no consideration, and Ms. Hallett asked whether the new language exempted those transfers.
Tellinghuisen's opinion applied a standard rule of statutory construction: give words their plain meaning. He cited the South Dakota Supreme Court's Famous Brands decision for the proposition that "one of the primary rules of statutory and constitutional construction is to give words and phrases their plain meaning and effect." The plain meaning of "consideration" includes non-cash exchanges.
The request identified AG Opinions 70-27 and 81-12 as having treated exchanges as subject to the fee before the amendment. Tellinghuisen's answer likewise treated a parcel exchanged for another parcel as consideration under subsection (18).
Source
Original opinion text
OFFICIAL OPINION NO. 90-39
Definition of the Consideration for SDCL 43-4-22(18)
Dear Ms. Hallett:
You have requested an official opinion from this Office concerning the following factual situation:
FACTS:
The 1990 Legislature amended SDCL 43-4-22 to include a new subsection found at SDCL 43-4-22(18). That provision now provides, in pertinent part:
The fee imposed by Section 43-4-21 does not apply to any transfer of title:
(18) For which no consideration was given.
The situation has arisen in our County where there are exchanges of land between parties and they are claiming that these transfers are exempt pursuant to SDCL 43-4-22(18). You had previously issued opinions on the question of whether an exchange of land between parties was subject to the transfer fee imposed by SDCL 43-4-21 and you have held that the transfer fee was applicable. AG Opinion Nos. 70-27, 81-12. The party seeking to record the deeds presently claim that as a result of the Legislative Amendment
SDCL 43-4-22, there is no consideration being exchanged since it merely involves an exchange of land. Our County Attorney has advised me to collect a transfer fee pursuant to SDCL 43-4-21 and that the value of the land being transferred is the value to determine what amount of fee to impose upon the transaction.
Based on the above facts, you have asked the following question:
QUESTION:
Whether SDCL 43-4-22(18) makes an exchange of land between parties exempt from the transfer fee imposed by SDCL 43-4-21?
IN RE QUESTION:
SDCL 43-4-22 was amended by the 1990 Legislature. 1990 S.D. Sess.Laws Ch. 346. The pertinent part of that statute now reads as follows:
SDCL 43-4-22. The fee imposed by 43-4-21 does not apply to any transfer of title:
(18) For which no consideration was given.
The question presented essentially asked whether the "consideration" of SDCL 43-4-22(18) is present when one parcel of land is traded for another parcel.
"One of the primary rules of statutory and constitutional construction is to give words and phrases their plain meaning and effect," In Re Petition of Famous Brands, Inc., 347 N.W.2d 882, 885 (S.D. 1984). Consideration has been defined as "[s]omething promised, given, or done that has the effect of making an agreement a legally enforceable contract." American Heritage Dictionary 284 (New College Ed. 1982). Consideration has also been defined as "[s]ome right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility, given, suffered, or undertaken by the other." Black's Law Dictionary 277 (5th Ed. 1979). In a criminal context, consideration has been defined as follows:
SDCL 22-1-2. ...
(7) "Consideration," any type of property or thing of legal value, whether delivered in the past, present or to be delivered in the future. The term includes an unfulfilled promise to deliver. The term may include an advantage or benefit to the promisor or a loss or detriment to the promisee. Any amount, advantage or inconvenience, no matter how trifling, is sufficient to constitute consideration....
Under the facts presented, one party is exchanging one parcel for another parcel of property. I am of the opinion that trading one parcel for another parcel is a transaction in which there is consideration present, and therefore the exemption of SDCL 43-4-22(18) does not apply. Further, I am in agreement with your local State's Attorney that the value of the land being transferred is the value to determine the amount of fee to impose upon the transaction.
I did note that, in your letter to me, you indicated that the U.S. Forest Service is or may be involved in some of these transactions. I am sure you are aware that SDCL 43-4-22(2) exempts these transactions from the fee.
Sincerely,
ROGER A. TELLINGHUISEN
ATTORNEY GENERAL
RAT:ss
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