Claiming to be engaged in a “business”

Article 5.

Sales and Use Tax.

§ 105-164.3.  Definitions.

The following definitions apply in this Article:

(1k) Business. – An activity a person engages in or causes another to engage in with the object of gain, profit, benefit, or advantage, either direct or indirect. The term does not include an occasional and isolated sale or transaction by a person who does not claim to be engaged in business.”


What does this tell us about CLAIMING to be in business? You could have an occasional isolated sale, claim it was made in the course of business, and owe a sales/use tax on the sale?


At first reading, this seems a needless definition for me to point out– but the tax man says that you may be required to list. I believe this is another part of the presumption that your property is being used for a business purpose.

“Listing. Real estate. An agreement between an owner of real property and a real estate agent, whereby the agent agrees to secure a buyer or tenant for specific property at a certain price” and terms in return for a fee or commission.    The various types of real estate listings are as follows:
An open or general listing is the right to sell that may be given to more than one agent at a time.    An exclusive agency listing is the right of one agent to be the only one other than the owner who may sell the property during a period of time.    An exclusive authorization to sell listing is a written contract that gives one agent the sole right to sell the property during a time period.    This means that even if the owner finds the buyer, the agent will get a commission. Multiple listing occurs when an agent with an exclusive listing shares information about the property sale with many members of a real estate association and shares the sale commission with an agent who finds the buyer.    A net listing is an arrangement in which the seller sets a minimum price he or she will take for the property and the agent’s commission is the amount the property sells for over that minimum selling price.”

Outline of the Torrens Act

The following is from  American Bar dot Org.

Outline of the Torrens Act
By Shaun Watchie Perry  

  • History of Torrens Act (Registered Land)
    • Modeled in 1858 by Sir Robert Torrens after a method for recording ownership interest in ships that Torrens encountered in his work as an Australian customs administrator.
    • Torrens is a system that was originally a ship registry system whereby each ship owner was assigned a Certificate that included certain information. When a vessel was sold, the seller surrendered the Certificate for cancellation and a new Certificate was given to the new owner.
    • Torrens system ultimately spread to many English speaking countries, including England and Canada.
    • Since late 1800’s as many as 21 states in United States had enacted Torrens legislation. 1
    • With an “abstract system” of title, an abstract is evidence of title. In the Torrens system, the Certificate of Title IS the title.
    • The Torrens system differs from traditional recording systems in that it establishes a legal procedure whereby the state guarantees the owner’s title.
      • Process begins with Court proceedings that involve Court approval of the examination of the history of title by the “Examiner of Title”.
      • Differences between “Examiner of Title” and the “Registrar of Title”: The “Examiner of Title” is an attorney, appointed by Court who reviews the title and must sign off on court orders approving transferring of title certificates. The “Registrar of Title” maintains the Torrens system property records and is responsible for registering title by filing certificates of title.
      • The Court ultimately issues a Certificate of Title to the owner that establishes legal ownership against any claims that remain undeclared or unrecorded at time of registration. 2
      • Once the property is registered in the Torrens system, subsequent voluntary (as opposed to involuntary) transfer does not require such an extensive procedure. A purchaser need only examine the Certificate of Title to verify ownership and learn of any valid claims.
      • Ease of transfer following the registration represents an important benefit because under the recording system a full title search must be done in connection with each transfer.
      • Differences between the Torrens system and the Recording system:
        • Under Recording system, a good faith purchaser bears the risk of losing his interest in the land if a claimant later appears.
        • Under the Torrens system, the owner’s certificate of title defeats any competing claims not declared at the initial proceedings.
        • Under Torrens system, the possessor of the land retains the land and the claimant retains monetary compensation, whereas under the recording system (with title insurance) the claimant gets the land and the possessor is compensated.
        • Torrens Indemnity Fund financed by registration fees ( e.g., in Washington State, upon registration owner pays to the Registrar of Titles 1/40 of 1% of the assessed value of the real estate based on the last tax assessment).
  • Torrens VS Recording


  • Torrens system purportedly offered advantages over the Recording system because it cleared clouded titles thereby promoting land marketability and development.
  • Much of the early motivation for Torrens registration in the United States was to promote land development during periods of rapid urbanization, e.g., used extensively after the great Chicago Fire of 1871 when the public land records were destroyed.
  • Land registration has been used to clarify boundaries when early property lines became blurred or historical surveying techniques were found to be unreliable.
  • The Torrens system protects absentee owners against loss of their land to “squatters” under adverse possession statutes.
  • The Torrens system is arguably efficiency enhancing.


  • Despite the above referenced advantages, Torrens has been put to fairly limited use in our country. This lack of success suggests that the system disadvantages outweigh the advantages in most jurisdictions.
  • The principal disadvantage is the cost of registering a parcel which involves filing a summons and petition in court and paying an application fee as well as court filing fees. 3 Additionally, there are the additional attorney’s fees and court cost involved with involuntary transfers.
  • Even though there is an insurance fund, it is extremely under-funded and most purchasers of registered land (and their lenders) still require title insurance which is an additional cost.
  • Process is antiquated and very cumbersome particularly with involuntary transfers (described below).
  • Owners of registered land buy private insurance and lenders often require it because certification of ownership under Torrens system admits several exceptions that pose threats of loss. 4
  • There is resistance to the Torrens system by parties, especially lawyers and private title insurers.
  • Involuntary Transfers 5
    • Under the Torrens system, the owners of registered land may voluntarily convey, mortgage, lease, charge or otherwise encumber the property as if it had not been registered. In this regard, owners may use forms of deeds, trust deeds, mortgages and leases or other voluntary instruments. However, no voluntary instrument of conveyance shall take effect as a conveyance unless it is so registered.
    • The exceptions to this are various involuntary transfers, described below:
      • Probate transfers
        • Probate under non-intervention Will
        • Probate without non-intervention Will
        • Trust transfers
        • Intestate transfers
      • Transfer by community property agreement (in community property states such as Washington)
      • Award in lieu of homestead
      • Mortgage foreclosure
      • Deed of Trust foreclosure
      • Real Estate contract forfeitures
      • County tax foreclosure
      • Transfers from guardianship estates
      • Quiet title actions
      • Where new title is claimed by heir-ship but no probate occurred
  • Torrens system in Seattle, Washington and surrounding neighborhoods:
    • There are 3,500 registered parcels in King County.
    • There have been no new registrations.
    • There are clusters of registered parcels in Maple Leaf, White Center, Burien, Des Moines, Sand Point, Mercer Island and Medina.
    • Registrar of Title maintains ownership records of a specific parcel of land, much like a title company.
    • All documents related to a parcel of land registered under the Torrens system are maintained in a special index that provides chain of title.
    • Unlike the general index (where all documents are indexed by name and date), the Torrens Track Index list documents by parcel.
  • Pitfalls to Watch For
    • If preliminary title report indicates land is registered, contact an attorney immediately because of time and effort needed to clear title.


  • Lender is ready to fund but can’t because title can’t be passed without opening probate (with will or intestate) and petitioning court for transfer of title. Here are the mechanics in transferring the title in such a situation 6 :
    • Filing Summons and Petition
    • Review of title documents by Examiner of Title
    • Role of Examiner of Title (must approve form of Order before Judge will sign)
    • Attaching various other court documents to Petition
    • Court Appearance/Ex Parte
    • Taxes must be current (major issue if closing proceeds will pay taxes).
    • Order of Solvency
    • Role of Registrar (must approve recording of new certificate of title)
    • Substantial attorney fees and costs (particularly if filing a probate is involved)
  • Seller is subject to Breach of Contract for failure to timely close
    • Forfeiture of earnest money
    • Professional liability of broker
    • Reduction of commission
  • Inconvenience and expense of opening probates years after death
  • Caveat: Encourage client to also file Application for Withdrawal from Registered Land if opportunity presents itself. This is also encouraged by the King County, Washington Examiner of Title.  

Full text of “The Torrens system of land title registration”

This is quite a good find, as it is from 100 years ago. Note the section on the “Machinery” required- this relates to the “Machinery Act” in NC Statutes. This writing states that the County Recorder must also act as a Register of Deeds.


VOL. 14 APRIL, 1917 NO. 2 THE Maryland State College OF Agriculture BULLETIN THE TORRENS SYSTEM OF LAND TITLE REGISTRATION BY F. B. BOMBERGER issued monthly, excepting the months of November, December, January and February. Entered at College Park, Md., as Second-Class Matter under Act of Au- gust 24, 1912.
Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text.


MAY, 1917.



Owing to the wide-spread discussion of the subject of Rural Credit in recent years and the establishment, by Act of Congress, of the Federal Land Banks for the purpose of providing farmers with ready capital for their agricultural operations, attention has been directed towards the system of Land Title Registration now operating in the State of Maryland.

The Federal Land Bank of Baltimore, through which farmers of Maryland must borrow in order to take advantage of the Act, requires from each borrower an abstract of title to his land which is to become security for his loan. This requirement has brought to the notice of many farmers the fact that our system of Title Registration and transfer is very cumbersome, expensive and uncertain in its operation.

It would seem, therefore, that the time is ripe for a consideration of our Title Registration and Transfer System with a view to discover its chief defects and to suggest remedies, if any be known. This bulletin has been prepared with the aforesaid end in view.

Land is the most tangible and least perishable form of wealth known to man. It constitutes the largest single item of wealth in the United States; yet, the difficulties attending its transfer make it almost unavailable as an emergency asset. Although more desirable as security than most personal property, yet it cannot be converted into money nearly so rapidly as can personal property. Moreover the cost attending any change of title in this country prevents its use as security for small amounts. This is not true in other countries. Why is it so in the United States?  The answer to this question may be learned by looking more carefully at the difficulties attending land title transfer in this country. Such a survey will present, at the same time, the problems to be solved by any proposed reform.


When John Doe desires to buy a parcel of real estate from Richard Roe, he will, if he be a prudent man, have Roe’s title to the estate examined. This means that a lawyer or expert title examiner will look up a series of successive transfers, running back for 50 or 100 years or longer, by which the estate came into Roe’s possession. This is necessary, for if Richard Roe has not a good title to the property, he cannot pass a good title to John Doe. The cost of this examination of title is by no means a small one; and more significant still is the fact that, if later John Doe wishes to sell the estate, the prospective purchaser will have another expert to re-examine the title; and so on every time the estate changes hands.  The same is true of the process of placing an encumbrance in the form of a mortgage on the estate. The title must be examined in each instance; and the fees must be paid.

It need not be pointed out that often the examination produces delays pending the determination of some legal point involved. It may, therefore, be concluded that the examination of titles under the present system is a constantly recurring expense and may cause much delay in the transaction of transferring title to real estate.

But the worst feature of the whole system is that after the delay and expense attending the examination of title, there is no positive assurance that the title is after all a good one. It may be and then again it may not. All that John Doe or any other buyer has after the examination, is the opinion of a lawyer or a more or less expert title examiner that the title is clear. There is nothing in the process, in many cases, to prevent another lawyer or expert from reaching an exactly contrary conclusion.  In fact the multifarious lawsuits hinging upon the question of title to real estate show conclusively that experts and lawyers do have different opinions as to the validity of titles. Title Guaranty Companies do insure the title for an individual; but the guarantee to any one holder does not extend to a subsequent holder. Each in turn must pay a fee for his insurance.

Hence, we find, that we have in use a system of procedure which charges a constantly recurring fee of considerable proportions every time title to real estate changes hands or is modified by encumbrances; that the system is unnecessarily tedious; and, finally, that the title acquired after the examination is good only in the opinion of some lawyer or expert, or is insured only while in the name of the person who pays the insurance fee.  The fact must not be lost sight of that the expense attending the transfer of title to land under the existing system is in effect a tax on land. Moreover, it is an unnecessary tax; a tax attended by no economic benefit to the person who pays. A sound system of title registration would reduce this charge to a minimum.  The Torrens System of Land Title Registration is designed to remove the delay, the expense and the uncertainty inherent in our present system of transferring title to land.



The Torrens System takes its name from Sir Robert R. Torrens, an Englishman, who in 1841 went into the customs service in South Australia and introduced into that state in 1858 the system of land title registration which bears his name. Having devised the plan, he had the unusual satisfaction of administering its operation when the law went into effect in South Australia, he having been appointed Registrar-General for the Commonwealth.

It must not be thought that this was the origin of the practice of land title registration. The practice had been customary in parts of Europe before the fourteenth century. When Torrens began to study the subject he found that similar systems had existed in Austria, Hungary and Bavaria for centuries before his day. He did not, however, copy these European systems, but devised -a new one based upon the system, then in vogue in Australia of registering title to shipping.

After its adoption in South Australia, it was in turn adopted in Victoria, New South Wales, New Zealand, Tasmania, and Queensland.  Finally all Australasia adopted the system and it has been in operation there for over half a century. It was introduced, in a much modified form, into England in 1862. Lord Cairns’ Act of 1875 improved the system somewhat; and, though it was opposed very much in the beginning by certain interests and is purely voluntary, it is constantly growing in public favor.

The system was extended to various Canadian Provinces from 1870 to 1885 and was introduced into Illinois in 1897 and into Massachusetts in 1898. Since then it has been adopted in 12 other States of the American Union, while legislation is pending for its adoption in several more. It is also in operation in Hawaii and the Philippines.

From this historical review of the inception of the Torrens System of Land Title Registration, the questions naturally arise, what is it. What does it aim to do, and what does it actually accomplish?  In answering these questions, discussion must be limited to only the main features of the system. No two of the plans found in the different States are exactly alike in detail; but, on the other hand, there are certain salient features that are common to all. Hence, instead of describing any one plan, only those features will be explained which are essential to the working of the system.


First. There is the examination of the title by a public official or officials whose special business it is to do this work. This gives to the title examinations what they do not now have — the stamp of official, judicial approval.

Second. There follows the official public registration of the certificates of title after the examination has shown the title to be good. Of course, ample provision is made to settle any legal question arising or to remove any cloud on the title before it can be registered. After such judicial proceeding is ended, the official registration makes the fact of the legality of the title a matter of public record, beyond impeachment by anyone except for a limited time and then only under unusual circumstances.

Third. There is made out by the public official, the Registrar of Titles, a copy of the registered certificate showing the true ownership of the land, which copy is given to the owner as evidence of the legality of his title.

All incumbrances against the estate that exist at the time of the registration are entered upon the original certificate that is recorded in the registrar’s books and are also incorporated in the copy which is furnished the owner. New encumbrances as they arise are entered upon the record and also upon the owner’s copy.  Discharge of encumbrances is noted in like manner. This enables anyone to ascertain at a glance, from the books of the registrar or from the copy in the hands of the owner, the exact status of the title at any time.

Fourth. Whenever the property changes hands, a new certificate is made out on the record in the name of the new owner, the new certificates being numbered in succession from the first original certificate registered, as second, third, etc. A copy of the new certificate is given to the new owner as in the first instance.

Fifth. In a great many of the systems in operation an indemnity fund is provided by charging a small fee for the initial registration to pay for any injury that might arise to anyone’s interests through the operation of the law.


The machinery provided to carry out the system is very simple. The Clerk of the Court or the Recorder of Deeds may be made also Registrar of Titles. A separate court consisting of two or three members may be provided to have jurisdiction over the questions arising out of examination of title and title registration, just as our Judges of the Orphan’s Courts have jurisdiction over matters testamentary; or, if it be desired, all legal questions can be carried to the regularly existing Circuit Courts in the Counties. The examiners of title are court officials who may be paid salaries or by fees for the services which they perform. The Registrar is responsible for all official acts of his deputies.

The system may be voluntary or compulsory, or mixed. In the voluntary system only those who desire may have their titles registered. In the compulsory system all transfers of title after a certain date may be required to be registered. In the mixed system.


5 those who desire may have their titles registered, and in addition all changes of title resulting from judicial decrees (as in case of fore- closure of mortgage or transfer of title by descent or by will) are required to be recorded and registered. The rule in all systems invariably is, however, that when a title has once been registered it must always be registered thereafter.

These are the salient features of the Torrens System of Land Title Registration, although there are many other minor features involved in the process. These successive steps may now be shown a little more in detail.


In the first place the applicant files an application in writing, which contains the name, age and address of the applicant; a statement as to whether he is married or single ; a description of the land to be registered; a statement of the applicant’s interest in the land; whether or not the land is occupied and, if so, the name and address of the occupant. It states what encumbrances exist against the estate and any claims by way of reversion or remainder against it. It also states the names of the owners of adjoining properties and contains any other matter necessary to give the court a basis for action on the case. The application is signed and sworn to by the applicant. Suitable forms are provided by the court haying jurisdiction over registration of title.

The application is recorded in the Land Registration Docket and numbered consecutively with others on file.

The application is then referred by the Registrar of Titles to examiners, with orders to make an examination of the title.

If there are adverse claims pending, notice is given to adverse claimants; non-resident claimants being notified by publication of the notice in the press for a certain number of days.The application may be answered by anyone having an interest in the estate. Defendants are summoned for the hearing.

The Registration Court may have jurisdiction over eases arising from disputed title or such cases may be referred to the regular Circuit Courts. In any case either party may appeal within a limited period (ninety days is recommended) to the Court of Appeals for final decision.

Pending the settlement of such questions, the registration of title is suspended. But when these matters are disposed of, the court decrees title and orders the title to be registered and a copy of the certificate of registration to be given to the owner. If there is no dispute or judicial contest, the registration proceeds immediately as a matter of course.

On this certificate of registration and on the copy thereof given to the owner, all encumbrances, such as liens, mortgages, and judgments are noted.

 In special cases, writs of error and appeals are permitted within a short period after the title is registered, and any new claim arising against the title may be asserted within a limited time after the claim accrues; but after the expiration of the time fixed by law for the bringing of such actions, the title is as binding as is the decree of courts in other cases. The title is absolutely unimpeachable.

If there are more owners than one, each owner receives a copy of the title certificate.

Whenever the owner creates an Encumbrance against the estate, such encumbrance is noted on the original certificate on file in the Court of Registration and the owner is required to deliver up his copy to have the encumbrance noted upon it. A glance at the owner’s certificate will show at any time the exact status of the title.

When the owner wishes to transfer the estate, the prospective purchaser can ascertain the condition of the title by a mere examination of the certificate of registration or the owner’s copy of it. Thus the recurring expense of examination of a chain of titles is eliminated.

In some systems a small fee amounting to one-tenth of one percent of the value of the estate is charged for the first registration.By this means an indemnity or insurance fund is accumulated out of which to pay for any damages resulting to owners from errors in registration of the titles.

In practice, however, it has been found that there is really little necessity for such a fund. It would seem, therefore, that if fees are to be charged for such a purpose the practice should continue for only a limited time until the system has been well established; or, if continued, the fees charged should go to pay the cost of administration.


Such is a brief outline of the Torrens System. What are the results of its operation? In the first place, it eliminates a large part of the expense, because the costs of examination of titles are limited to the one single charge that attends the original registration of title. A mere examination of the certificate of registration at any subsequent time does away with any further examination of the previous transfers of title.

Secondly, the delays incident to the transfer of title under the present plan are eliminated. Whatever delay is occasioned upon the first examination and the necessary judicial proceedings upon which the original certificate of title is founded, concludes the matter. Thereafter, new transfers, except in rare cases, may be made immediately as a matter of course. The whole transaction of title examination and transfer of the estate can be made without risk in one day, and at a minimum of cost. The fees that are charged under the LAND TITLE REGISTRATION system as it operates elsewhere will illustrate the small expense attending the transfer. The application fee is about $3.00, plus postage; fee for indexing or filing any other paper is 50 cents; examiner’s fee for examination of title is $10.00, plus one-tenth of one percent of the value of the land, plus postage. This fee is charged but once. Granting and registering title certificate costs about $3.00. Original assurance fee — one-tenth of one percent of the value of the land at time of registration. This fee is paid but once. Subsequent transfer and registration cost about $3.00 each. A new copy of certificate in ease of loss or to show state of title costs 50 cents.

Thirdly, the title that is registered is an official, guaranteed, judicial title; and, except within a limited time, under unusual conditions, it is absolutely unimpeachable. In other words unless it is attacked within a fixed time, say ninety days, it becomes absolutely final. One does not, thereafter, have to depend upon the opinion of a lawyer or title examiner, however expert he may be in the law of real estate. The State declares the title to be valid and guarantees the ownership. Thereafter the title is always shown by the certificate; nothing that occurred prior to registration of title can affect it. In case of error on the part of the examiner or of the court, the person injured may be indemnified out of the insurance fund; but the registered title remains valid.

The Torrens System enables an owner to sell a part of his land or to subdivide his estate and sell it off as building lots. All that is necessary is for the registrar to note on the certificate of title, accompanied by a plat, what parts or portions have been sold. The certificate of title shows at a glance just what part of the property has changed hands and what part remains.


Already 14 States of the Union have adopted some form of the Torrens System. Usually it has taken the form of the voluntary system, with a compulsory registration of titles transferred by descent or by will or by judicial decree. The experience of these States has been favorable. It is a significant fact that no country or state that has tried this system has ever repealed it. It absolutely meets the needs of the situation. Land transfers, under this system, are made easy, inexpensive, free from delay, and, best of all, free from doubt or uncertainty as to the validity of the title after the registration. Moreover the Torrens System has been declared constitutional by the United States Supreme Court. The reform is demanded on account of the cumbersome, expensive and uncertain conditions attaching to our present methods.

The gradual adoption of the system could be provided for by making it optional and requiring all titles determined by probate or judicial decree, to be registered and requiring title to all lands used as security for trust funds to be registered. By this means more and more of the land in any county would be registered until ultimately none would be without the guarantee of registered title. This would avoid any revolutionary upheaval; but would ultimately result in eliminating the vexatious delays, the constantly recurring expense and the obvious uncertainty that characterize our present system of unguaranteed transfer of title to land.

Land Registration pt. 1: “Certificate of Title”

This has been a pet subject of mine recently, as I believe that the justification of taxing property comes from the fact that it is registered– that the owner-to-be is receiving a benefit.

Black’s Law Dictionary, 5th Edition says:

Certificate of title. See Insurance (Title insurance).”

Title insurance. Insurance against loss or damage resulting from defects or failure of title to a particular parcel of realty, or from the enforcement of liens existing against it at the time of the insurance.    This form of insurance is taken out by a purchaser of the property or one loaning money on mortgage, and is furnished by companies specially organized for the purpose, and which keep complete sets of abstracts or duplicates of the records, employ expert title-ex­ aminers, and prepare conveyances and transfers of all sorts.    A “certificate of title” furnished by such a company is merely the formally expressed profession­al opinion of the company’s examiner that the title is complete and perfect (or otherwise, as stated), and the company is liable only for a want of care, skill, or diligence on the part of its examiner; whereas an “insurance of title” warrants the validity of the title in any and all events. It is not always easy to distinguish between such insurance and a “guaranty of title” given by such a company, except that in the former case the maximum limit of liability is fixed by the policy, while in the latter case the undertaking is to make good any and all loss resulting from defect or failure of the title.”

The C of T is merely evidence that the title is without defect, meaning all ownership heretofore has been legitimate.  The above definition says nothing about YOUR ownership.  It is merely some research done before you take possession of the land.

This is relevant because, in the Torrens system, once registered, the one applying for registration is to be issued a “Certificate of Title”.

See next post for more on the Torrens System.