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The Capital ‘S’ in ‘State’ Makes all the Difference; Or Was It the Word ‘the’?

As set forth in Gateway Terry, LLC v. Prince George’s County, 253 Md.App. 457 (2022), Gateway Terry, LLC is wholly owned by the Los Angeles County Employees Retirement Association, a public pension fund for employees of a local government in California.

Gateway Terry bought residential condominiums in College Park for $186 million and claimed an exemption from recordation and transfer taxes, which totaled more than $3.5 million, as “an agency of the State.” The Clerk of the Circuit Court for Prince George’s County required that the taxes be paid before Gateway Terry’s instruments could be recorded.

Gateway Terry paid the recordation and transfer taxes and applied for a refund based on the exemptions of Tax-Property Article (TP) §§12-108(a) and 13-207(a)(1) and Prince George’s County Code §10-187(a)(1) that extend to instruments of writing that grant property to “the State, an agency of the State, or a political subdivision of the State.” The County and the State denied Gateway Terry’s request, as did the Tax Court, the Circuit Court for Prince George’s County, and the Court of Special Appeals (CSA).

The controversy started to focus on whether the word “State” means the State of Maryland or any state of the United States. General Provisions Article §1-115 defines “state” with a lower case “s” to be any state, but “State” with a capital “S” to be Maryland. In contrast, TP §1-101 defines “State” with a capital “S” to be any state. But then the CSA ruled that the critical point in deciding the application of the exemption was that in the applicable statutes providing the exemption the word “State” was preceded by word “the” rather than the word “a.” Therefore, in the view of the CSA, the word “State,” which is proceeded by definite article “the,” refers to the particular State of Maryland, rather than to any other state.

The CSA looked at the legislative history of TP §12-108(a) — or, as the CSA called it, the statutory history, which consists of statutes repealed or amended by the subject law — and found that the term “the State” replaced “this State” with no intended change in meaning. Because in the legacy law “this State” referred only to Maryland, now “the State” means only Maryland, in the opinion of the CSA.

The CSA had an easier time finding the exemption under the Prince George’s County transfer tax did not apply. The Prince George’s County Code defines “State” to mean “the State of Maryland.”

For more information, contact Edward J. Levin.


Ed Levin
410-576-1900 •


May 03, 2022




Levin, Edward J.


Real Estate