If a buyer and seller record a 'notice of contract for deed' (not the full contract) with the South Dakota register of deeds to keep the purchase price private, does the register still have to certify the transfer to the secretary of revenue, and does the recording have to include a certificate of value form?
Plain-English summary
A workshop for South Dakota registers of deeds had surfaced a practical problem. When a buyer and seller signed a contract for deed (an installment sale where the seller keeps legal title until the buyer finishes paying), they sometimes did not want to file the full contract with the register of deeds. The contract was long, or it had terms (purchase price, payment schedule, interest rate, etc.) the parties did not want to make public. Instead, they would file a "notice of contract" or a "memorandum of contract for deed." That document said a contract had been signed between named parties for described real estate, but it did not disclose the price or terms.
Registers of deeds were handling these notices inconsistently. Some treated the notice like a full contract, recording it in the deed book, completing the SDCL 7-9-10 transfer-reporting form, and requiring a certificate of value. Others recorded the notice as a miscellaneous document and did neither. The state office overseeing the registers wanted a uniform answer.
The AG gave two yeses.
On SDCL 7-9-10 (monthly transfer reporting), the AG read the statute broadly. The register of deeds has to certify, on the last working day of each month, a list of transfers to the secretary of revenue, county auditor, and director of equalization. The statute did not limit which kinds of transfers had to be reported. The notice of contract was not itself a transfer (it was just notice that a transfer had occurred), but SDCL 7-9-10 was not limited to transfers where the underlying transfer document was recorded. So once the register of deeds received a notice of contract, the monthly certification had to include it.
On SDCL 7-9-7(4) (certificate of value requirement), the AG analyzed whether a notice of contract was either a "deed" or a "contract for deed" for purposes of the recording-acceptance rule. It was not a deed (SDCL 43-4-20(1) defines a deed as "any instrument for the purposes of transferring or conveying the fee title to real property," and a notice did not transfer fee title). But it was effectively a contract for deed. The AG explained that a notice of contract, a memorandum of contract, an addendum, and an assignment of contract for deed all stand in the same legal position when recorded: none passes legal title; all signal that an equitable interest has passed; all give notice to third parties of the contract. So the notice falls within the contract-for-deed family and triggers the SDCL 7-9-7(4) certificate-of-value requirement.
The bottom line for parties trying to use a notice of contract to avoid the disclosure: the workaround does not work. The certificate of value still has to accompany the filing, and the register of deeds will still certify the transfer to the secretary of revenue, county auditor, and director of equalization. Privacy through filing-form selection is not available.
Currency note
This opinion was issued in 1993. 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 current law before relying on any specific rule, deadline, or remedy mentioned here. SDCL chapter 7-9 and the certificate-of-value provisions have been amended over the decades. Current parties recording a notice of contract or memorandum of contract for deed should consult the current SDCL and the South Dakota Department of Revenue's certificate-of-value guidance.
What the opinion meant at the time
For registers of deeds across the 66 counties, the opinion ended the inconsistency. The standard practice was now: accept the notice of contract for recording only if accompanied by a certificate of real estate value; record the transfer in the deed book; include the transfer in the monthly certification to the secretary of revenue, county auditor, and director of equalization.
For real estate buyers and sellers using contracts for deed, the opinion meant that switching to a notice format would not hide the price. The certificate of value would still have to include the purchase price, terms of payment, and the parties' relationship. The disclosure obligation was independent of which document the parties chose to record.
For real estate attorneys drafting filings, the opinion confirmed that the family of contract-for-deed documents all received the same treatment for SDCL 7-9-7(4) and SDCL 7-9-10 purposes: notices, memoranda, addenda, and assignments. There was no document-selection arbitrage.
For directors of equalization (the county officials responsible for property valuation), the opinion preserved their data pipeline. They would continue to receive transfer reports for notice-of-contract filings, with the certificate of value attached, so they could assess current market values across the county.
For title companies and closing offices, the opinion meant that the certificate of value had to be prepared even when the parties were filing a notice rather than the full contract. The closing checklist did not get shorter for notice-style filings.
Common questions
Q: Can I keep the purchase price private by filing a notice of contract instead of the full contract for deed?
A: No. SDCL 7-9-7(4) requires a certificate of value to accompany the notice, and the certificate must include the actual consideration. The price ends up disclosed in the certificate even if not in the recorded notice itself.
Q: Are there other public records that show the purchase price?
A: Yes. The certificate of value form goes to the director of equalization, who uses it for valuation. SDCL 7-9-10 transfer certifications go to the secretary of revenue and county auditor. The information appears in those records.
Q: What if I want to keep certain terms private (interest rate, default provisions, etc.)?
A: The certificate of value requires the purchase price, terms of payment if other than payment in full at sale, and the parties' relationship. Other contract terms (default remedies, forfeiture procedures, etc.) can stay in the unrecorded full contract.
Q: Does the analysis change for a memorandum of contract for deed?
A: No. The AG treated notices, memoranda, addenda, and assignments all the same. They are all instruments within the contract-for-deed family for SDCL 7-9-7(4) and SDCL 7-9-10 purposes.
Q: What is the certificate of value form?
A: A form required by SDCL 7-9-7(4) for deeds and contracts for deed dated after July 1, 1988. It must include the name and address of the buyer and seller, legal description of the property, the actual consideration exchanged, the parties' relationship if any, and the terms of payment if other than payment in full at sale.
Q: Can a register of deeds accept the notice for filing without a certificate of value?
A: SDCL 7-9-7(4) says "No register of deeds may accept for record in his office" the document without the certificate. So the certificate is mandatory before the register can accept the recording.
Q: What about deeds that are exempt from the certificate-of-value requirement (gifts, between-spouse transfers, etc.)?
A: The opinion did not address exempt categories. Statutory exemptions in SDCL chapter 7-9 still apply to qualifying transactions. For non-exempt sales, the certificate is required regardless of recording-document format.
Q: Does the certificate of value become a public record?
A: The opinion does not directly address public-record status. The certificate is filed with the recording and supplied to the director of equalization. Practice on public access to certificates of value varies and would depend on current SDCL provisions and county practice.
Background and statutory framework
South Dakota's recording statutes balance several interests. Recording protects buyers and lenders by giving public notice of their interest. The monthly transfer reporting under SDCL 7-9-10 supports state revenue administration and county property tax administration. The certificate of value requirement under SDCL 7-9-7(4) (added in 1988) gives directors of equalization data for fair-value assessments across the county.
A contract for deed is a familiar South Dakota real estate instrument: an installment sale where the seller retains legal title until the buyer finishes paying. The buyer immediately has equitable title and possession; legal title passes only on payment. Recording protects both parties, but the parties sometimes prefer not to record the full contract because of length or sensitivity.
The notice-of-contract or memorandum-of-contract device is the workaround. It records the existence of the contract and identifies the parties and property without disclosing the financial terms. The 1993 AG concluded that recording the notice does not let the parties escape the certificate-of-value requirement or the SDCL 7-9-10 transfer-reporting requirement, because the notice stands in the same legal position as the full contract for those purposes.
The structural argument turned on what each document does. A deed transfers fee title. A contract for deed transfers equitable title with legal title held back. A notice or memorandum signals that an equitable interest has passed. None of the contract-for-deed family transfers fee title, but all three signal the transfer of equitable interest. For SDCL 7-9-10's "transfer" language, that signal was enough to trigger the reporting duty. For SDCL 7-9-7(4)'s "deed or contract for deed" language, the AG read the family inclusively to capture the notice and memorandum variants.
Citations and references
Statutes:
- SDCL 7-9-10 (register of deeds duty to certify monthly transfers)
- SDCL 7-9-7(4) (certificate of value required for deed or contract for deed after July 1, 1988)
- SDCL 43-4-20(1) (definition of "deed")
Source
Original opinion text
OFFICIAL OPINION NO. 93-12
Notices of Contract for Deed
Dear Mr. Peterson:
You have requested an official opinion regarding the following factual situation:
FACTS:
At a recent workshop attended by registers of deeds, there was considerable discussion pertaining to notices of contract. The effect of a notice of contract is interpreted differently by the various registers of deeds. Typically, a notice of contract is brought to the register of deeds office to be recorded. This document states that a contract for deed has been entered into between the two parties involved, the buyer and seller. The legal description of the property involved also is included. Some registers of deeds treat the document similarly to a contract for deed, record it in the deed book in the register of deeds' office and complete a transfer form pursuant to SDCL 7-9-10 notifying the Secretary of Revenue, county auditor and director of equalization that a transfer took place requiring the document to be accompanied by a certificate of value form. Others record it as a miscellaneous record and do not require that the document be accompanied by a certificate of value form. Apparently the buyer and seller are recording the notice of contract instead of a contract for deed in an attempt to avoid revealing the purchase price and other conditions.
Concerning these facts, you have asked the following questions:
QUESTIONS:
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What obligation does SDCL 7-9-10 impose with regard to the notice of contract?
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Does a certificate of value form need to accompany the notice?
IN RE QUESTION NO. 1:
SDCL 7-9-10 provides:
"It shall be the duty of the register of deeds in each county to keep in his office and to enter therein the name of the grantor and the grantee and a sufficient description of the real estate in each transfer to perfectly identify the same and, on the last working day of each calendar month, he shall certify to the secretary of revenue, county auditor and director of equalization a list of transfers for the current month." (Emphasis added.)
The type of transfer contemplated is not limited or restricted by qualifiers in the statute. Without express limitations in the statute, I am of the opinion that the transfer of any interest in real estate must be reported pursuant to SDCL 7-9-10. However, the notice of contract is not itself a transfer; it merely provides notice that a transfer has taken place. Nonetheless, SDCL 7-9-10 is not limited to transfers for which the transfer document has been recorded. Therefore, I am of the opinion that upon receipt of a notice of contract under the circumstances you describe, SDCL 7-9-10 obligates a register of deeds to certify the specified information to the secretary of revenue, county auditor and director of equalization.
IN RE QUESTION NO. 2:
The requirement to file a certificate of value form stems from SDCL § 7-9-7(4), which provides:
"No register of deeds may accept for record in his office:
"(4) any deed or contract for deed dated after July 1, 1988, used in the purchase, exchange, transfer or assignment of interest in real property which is not accompanied by a certificate of value containing, the name and address of the buyer and seller, the legal description of the real property, the actual consideration exchanged for the real property, the relationship of the seller and buyer, if any, and the terms of payment if other than payment in full at the time of sale."
The language of SDCL 7-9-8(4) thus requires a determination of whether a notice of contract constitutes a deed or a contract for deed. I note that the purpose of the certificate of real estate value and its connection with a deed or a contract for deed is, quite simply, to provide information to the director of equalization regarding the valuation of real property within the county.
A "deed" is defined as "any instrument for the purposes of transferring or conveying the fee title to real property." SDCL 43-4-20(1). A notice of contract for deed clearly does not transfer a fee title to real property. Therefore, we must examine the "contract for deed" portion of SDCL 7-9-7(4).
A notice of contract for deed or a memorandum of contract for deed typically are used when parties to the contract wish to protect themselves by a recording in the office of the register of deeds, but do not wish to record the full contract, for whatever reason. The full contract may be lengthy or may contain provisions that the parties necessarily do not want to make public. In any event, the notice of contract for deed or the memorandum of contract for deed nonetheless stand in exactly the same position as a contract for deed when it comes to recording the instrument. None of the three instruments passes legal title to the purchaser. All three instruments note that an equitable interest has passed to the purchaser and that the legal interest eventually will pass to the purchaser when certain contingencies have been met. For all intents and purposes, a notice of contract for deed or a memorandum of contract for deed have the same legal effect as a contract for deed when they are recorded in a register of deed's office. They put all of those on notice that a contract for sale of the real property is in place.
Notices of contract for deed, memoranda of contract for deed, addenda to contracts for deed and assignments of contract for deed are all instruments necessarily within the subset of the family of contracts for deed. Therefore, I am of the opinion that a certificate of real estate value must accompany the filing of a notice of contract for deed or a memorandum of contract for deed.
MB:DDW:mas