Articles of Transfer: The Arcana of Maryland Corporate Realty Transfers

Written by Kevin L. Shepherd*


Rascal Enterprises, Inc., a fictional Maryland corporation, owns an office building complex in Los Angeles, California.  Rascal was incorporated in Maryland because its principal shareholder lives in Annapolis and is familiar with corporate law requirements in Maryland.  Rascal is now selling its Los Angeles property, which is its sole asset, to an investment company based in Seattle.  Rascal and the buyer enter into a typical purchase and sale agreement governed by California law, and Rascal agrees to convey the property to the buyer’s newly formed Delaware limited liability company by means of a customary grant deed that will be recorded among the local land records office in Los Angeles.  Rascal also adds a provision to the purchase agreement that it will execute and deliver at closing, along with the deed, articles of transfer that will be filed with the Maryland State Department of Assessments and Taxation (“SDAT”).  

The buyer’s lawyer, based in Los Angeles, crosses out the provision in the purchase agreement requiring the parties to execute and deliver the articles of transfer.  The buyer’s lawyer contends that the property is located in California, California law governs the purchase agreement, the buyer entity is a Delaware limited liability company, and that Maryland law cannot conceivably have anything to do with a transaction on the Pacific coast.  She also expresses astonishment with the contractual provision stating that the buyer will need to have a resident agent appointed in Maryland in connection with the filing of the articles of transfer.  The buyer’s Los Angeles-based title company also expresses suspicion about this requirement and is nonetheless prepared to issue an owner’s policy of title insurance without any requirement that articles of transfer be filed with SDAT.  Rascal’s lawyer calmly explains that, under Maryland law, it will be necessary to file articles of transfer with SDAT and for buyer to engage a resident agent for purposes of this filing.

Who’s right?  This fact pattern highlights a seemingly arcane aspect of Maryland law that often triggers research and local counsel engagement by the non-Maryland lawyer.  But Rascal’s lawyer is correct.  This article will focus on the transfer of non-Maryland property that represents all or substantially all of the assets of a Maryland corporation.  Rarely will non-Maryland lawyers representing buyers of this property know and appreciate that importance of complying with Maryland law for the transfer of those assets.  To ensure a smooth closing, lawyers and title insurance companies must thus be attuned to the need to file articles of transfer with SDAT in these types of transactions.  Transfers of Maryland property by means of articles of transfer have their own specific requirements, including the filing of a certificate of conveyance and, where appropriate, the recording of a confirmatory deed among the land records.

Under Maryland law, a Maryland corporation that transfers “all or substantially all” of its real property assets must transfer them by means of filing articles of transfer with SDAT.  Sections 1-101(y) and 3-109 of the Corporations & Associations Article of the Annotated Code of Maryland (“CA Article”).  It does not matter whether the real property is located in Maryland or outside of Maryland.  This statutory requirement does not apply, however, to non-corporate entities formed under Maryland law that may own as its sole asset real property located in other jurisdictions, such as limited liability companies, limited liability partnerships, limited partnerships, or general partnerships.  This is a requirement specific to Maryland corporations when they transfer all or substantially all of their assets.  For non-Maryland transactions, deeds of conveyance will still be recorded in the local jurisdiction.

In the transaction described above, it is generally preferable for the purchase agreement to attach the form of articles of transfer as an exhibit so that the parties are in agreement as to its form and substance.  The following will discuss the requirements for articles of transfer.  Section 3-109 of the CA Article sets forth the provisions that articles of transfer must contain.  For example, the articles of transfer must contain a statement that the transferor agrees to sell, lease, exchange or transfer all or substantially all of its property and assets.  The articles of transfer must also contain the amount of consideration to be paid, transferred, or issued for the assets of the transferor or a statement of the method by which the consideration is to be determined.


Non-Maryland Properties

Articles of transfer that transfer the non-Maryland real estate assets of a Maryland corporation are not subject to the imposition of Maryland recordation and transfer taxes.  Obviously, no deed will be recorded in the Maryland land records for extraterritorial real property, nor will a certificate of conveyance need to accompany the articles of transfer.


Appointment of Resident Agent

An area that confounds buyer’s counsel is the requirement that buyer engage a resident agent for purposes of filing the articles of transfer with SDAT.  Maryland law mandates that a non-corporate transferee that is a nonresident of Maryland identify its resident agent in the articles of transfer, even though the buyer may have no contact—before or after closing—with Maryland except for buying the real property from a Maryland corporation.  CA Article § 3-109(e)(2).  Under Maryland law, a resident agent is an individual residing in Maryland or a Maryland corporation or limited liability company whose name, address, and designation as a resident agent are filed or recorded with SDAT in accordance with the CA Article.  The cost of engaging a resident agent in the context of a multi-million dollar real estate transaction is nominal, but the requirement is often viewed as an irritant by buyer’s counsel.  Parties can certainly allocate this cost as part of the negotiations.  Note there is no requirement that the resident agent continue to serve in that capacity after closing for any specific period of time.  Buyer is thus not required under Maryland law to have the resident agent serve as such for a specific period of time post-closing.


Impact of Non-Compliance?

Suppose the deed from the Maryland corporation, which is recorded in another state, contains a certification to the effect that the grant is not part of a transaction in which there is a sale or other transfer of all or substantially all of the property and assets of the Maryland corporation.  Under Section 14-113 of the Real Property Articles of the Annotated Code of Maryland, that deed is still considered valid and effective regardless of whether there has been compliance with the articles of transfer provisions under Title 3, Subtitle 1 of the CA Article despite the fact the grant is in fact part of a transaction in which there is a sale or other transfer of all or substantially all of the property and assets of the Maryland corporation.  Parties may want to consider the impact of Section 14-113 in determining what exposure, if any, the person who executes the deed may have in making a false certification.


Title Insurance

A title insurer should include a requirement in its commitment for an owner’s title insurance policy that the seller file the articles of transfer with SDAT.  Absent such filing, the property will not be transferred in accordance with Maryland law, and the title insurer will be unable to insure good and marketable title to the property.


Pre-Clearance with SDAT

Prudent parties should seek to have the form of articles of transfer submitted to SDAT in advance of closing to have them informally “pre-cleared.”  SDAT will identify any shortcomings in the form, thereby minimizing the likelihood that SDAT will not accept the articles of transfer when actually filed.  The parties should submit the articles of transfer for pre-clearance several days before closing to afford adequate time for SDAT to review the submission.



Articles of transfer are an often over-looked element of a transfer of all or substantially all of the assets of a Maryland corporation, especially when that corporation’s sole asset is real property located outside of Maryland.  Counsel should recognize the need to file articles of transfer with SDAT in these types of transactions, and take the steps necessary to ensure an uneventful closing.


*Kevin L. Shepherd is a partner in the Real Estate Practice Group at Venable LLP in Baltimore Maryland.  He is the Managing Director—Finance at Venable and is a member of the Management Committee.  Mr. Shepherd is a past president of the American College of Real Estate Lawyers and is a past chair of the ABA Section of Real Property, Trust and Estate Law.  He currently chairs the ABA Task Force on Gatekeeper Regulation and the Profession and is a member of the ABA House of Delegates.  Mr. Shepherd may be reached at  ©  All rights reserved.

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