Kansas Attorney General Opinion 2012-034

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STATE OF KANSAS OFFICE OF THE ATTORNEY GENERAL
DEREK SCHMIDT ATTORNEY GENERAL
MEVOALL HILL 120 SW 10TH A.C. 2ND FLOOR TOPTRA. RS CG612-1597 (785) 296-2215 + TAX (785) 296-6296
December 28, 2012
ATTORNEY GENERAL OPINION NO. 2012-34
Richard Euson, County Counselor Sedgwick County 525 N. Main, Suite 359 Wichita, KS 67203-3790
Re:
Personal and Real Property-Commercial Real Estate Broker Lien Act-
Notice of Lien; Recording in the Office of the Register of Deeds
Taxation-Mortgage Registration and Intangibles-Mortgage Registration Fee
Synopsis: A notice of a commercial real estate broker's lien is a "mortgage of real property" as that term is defined by the Mortgage Registration Act. A commercial real estate broker must pay the mortgage registration fee before filing such a notice with the county register of deeds. Cited herein: K.S.A. 58-30a01; 58-30a03; 58-30a04; 58-30a05; 58-30a08; 58-30a13; 79-3101; 79-3102.
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Dear Mr. Euson:
As County Counselor for Sedgwick County, you ask whether a notice of a commercial real estate broker's lien on commercial real estate, recorded with the county register of deeds pursuant to the Commercial Real Estate Broker Lien Act1, is a "mortgage of real property" for purposes of the Mortgage Registration Act.2
You inform us that the Sedgwick County Register of Deeds, operating under the assumption that these notices are mortgages, has been requiring payment of the
1 K.S.A. 58-30a01 et seq.
2 K.S.A. 79-3101 et seq.

Richard Euson
Page 2
mortgage 	registration 	fee 	prescribed 	by 	K.S.A. 	79-3102 	before 	recording 	them.
Recently, however, one broker argued that a notice of a broker’s lien is not a mortgage
and thus not subject to the mortgage registration fee. 	Because of time limitations for
filing, you advised the Sedgwick County Register of Deeds to record the notice without
payment of the fee, but you now seek our opinion for the benefit of future filings.
“To insure that the cost of a system for recording mortgages is not borne by the public,
but 	by 	those 	who 	wish 	the 	protection 	of 	notice,” 	the 	Mortgage 	Registration 	Act
prescribes a fee that must be paid before any “mortgage of real property” is recorded
with the county register of deeds. 3 This Act defines “mortgage of real property” to
include “every instrument by which a lien is created or imposed upon real property.” 4 In
determining whether a notice of a broker’s lien is a “mortgage of real property,” we look
to this statutory definition rather than the ordinary meaning of the term.
The key question, then, is whether a notice of a broker’s lien is an instrument by which
the broker’s lien is either “created” or “imposed upon real property.” You recognize that
a commercial real estate broker’s lien is created by statute and not by the notice.
Specifically, the Commercial Real Estate Broker Lien Act provides that, when certain
conditions are met, a broker shall have a lien on commercial real estate in the amount
of the broker’s compensation as agreed upon by the owner or purchaser of the
property.5
Although a broker’s lien is not created by the notice of the lien, you believe this notice is
an instrument by which the lien is “imposed upon” the real estate. 	We agree. 	As
relevant here, “impose” ordinarily means “to establish or apply by authority.” 6 And,
under the Commercial Real Estate Broker Lien Act, a broker’s lien does not “attach” to
the real estate until the broker records a notice of the lien with the county register of
deeds. 7 Thus, the notice is an instrument by which the lien is imposed upon, or
attached to, the property.8
Admittedly, a notice of a broker’s lien standing alone does not impose any lien on real
property. 	The lien must be created pursuant to statute. 	Then, the notice must be
recorded with the register of deeds in order for the lien to attach; an unrecorded notice
has no legal effect. 	However, because recording the notice with the register of deeds
has the effect of attaching the lien to the property, the notice is an instrument “by which”
a broker’s lien is imposed upon real estate.
3 Misco Industries, Inc. v. Bd. of Sedgwick County Comm’rs, 235 Kan. 958, 961 (1984).
4 K.S.A. 79-3101.
5 K.S.A. 58-30a03.
6 See, e.g., http://www.merriam-webster.com/dictionary/impose.
7 See K.S.A. 58-30a05 (if the broker has an agreement with the seller) or K.S.A. 58-30a08 (if the broker
has an agreement with the buyer). The form of the notice is prescribed by K.S.A. 58-30a04, while K.S.A.
58-30a13 provides that the broker’s lien is void if the broker does not record it as provided in the Act.
8 We realize that because the mortgage registration fee is considered to be a tax, the definition of
“mortgage of real property” must be strictly construed in favor of the taxpayer. See GT, Kansas, LLC v.
Riley County Register of Deeds, 271 Kan. 311, 317-18 (2001). Even so, a notice of a broker’s lien falls
squarely within the Mortgage Registration Act’s definition of a “mortgage of real property.”

Richard Euson
Page 3
We are in receipt of a letter from the attorney for the broker in Sedgwick County who
argued that a notice of a broker’s lien is not subject to the mortgage registration fee.
This letter cites the Kansas Supreme Court’s decision in Misco Industries, Inc. v. Board
of Sedgwick County Commissioners,9 for the proposition that:
In determining whether an instrument is a mortgage or not, courts are
guided to the substance of the transaction, not the form. 	The fact that an
instrument is entitled Notice does not preclude it from being a mortgage.
The ultimate determination in a case where it is sought to construe
whether an instrument is a mortgage or not is the intention of the parties
who executed the instrument. 10
Along with other points, the letter argues that a notice of a broker’s lien is not a
mortgage because the parties do not intend for it to be one. In fact, the letter notes, the
notice is executed by the broker alone, so the owner of the property has no intent at all
respecting the instrument.
We do not, however, read Misco Industries as holding that an instrument must be
executed by two or more parties in order to be a mortgage for purposes of the Mortgage
Registration Act. As noted above, the Act defines “mortgage of real property” as “every
instrument by which a lien is 	created or imposed upon real property,”11 and an
instrument executed by a single party can, as here, satisfy this definition. 	Holding that
the term “mortgage of real property” only includes instruments executed by two or more
parties would require reading words into the statute that are not readily found there,
something the Kansas Supreme Court has consistently declined to do. 12
Similarly, we also do not interpret Misco Industries as suggesting that the parties’ beliefs
concerning whether an instrument is a “mortgage of real property” for purposes of the
Mortgage Registration Act somehow trump the statutory definition of that term. 	In fact,
Misco Industries relied on the Kansas Supreme Court’s earlier decision in Assembly of
God v. Sangster,13 which held that an instrument was a mortgage despite a clause in
the instrument stating that the parties did not intend it to be one. 14 Instead of relying on
the expressed intent of the parties, the Assembly of God Court looked to the purpose of
the instrument in question.15
9 235 Kan. 958 (1984).
10 Id. at 963.
11 K.S.A. 58-30a03 (emphasis added).
12 See, e.g., Bd. of County Comm’rs of Leavenworth County v. Whitson, 281 Kan. 678, 685 (2006). The
letter also suggests that requiring two or more parties is consistent with the ordinary meaning of the word
“mortgage,” citing Black’s Law Dictionary’s definition of “mortgage” as a conveyance or grant. This may
be true, but because the term “mortgage of real property” is defined in statute, we look to this definition,
not the ordinary meaning of the term.
13 178 Kan. 678 (1955).
14 Id. at 681.
15 Id.

Richard Euson
Page 4
Here, one purpose of recording the notice of a broker’s lien is to cause the lien to
become attached to — or imposed upon — the commercial real estate. The notice thus
falls within the Mortgage Registration Act’s definition of “mortgage of real property,”
regardless of whether the parties (or the broker alone) “intended” for the notice to be
considered a mortgage subject to the recording fee.
Our conclusion that a notice of a broker’s lien is a “mortgage of real property” does not
necessarily resolve whether the mortgage registration fee must be paid. 	That is
because the Mortgage Registration Act contains several exemptions from the fee. 	A
letter from the Kansas Association of Realtors argues, among other things, that one of
these exceptions, K.S.A. 79-3102(d)(5), applies to a notice of a broker’s lien. 	This
exception provides that “[n]o registration fee whatsoever shall be paid, collected or
required for or on . . . any mortgage or other instrument given in the form of an affidavit
of equitable interest solely for the purpose of providing notification by the purchaser of
real property of the purchaser’s interest therein.” 16 The Kansas Association of Realtors
argues that this exemption covers a notice of a broker’s lien because the purpose of
such a notice is to provide notification to others of the broker’s interest in the property.
We disagree with this analysis. 	Even assuming that a notice of a broker’s lien is an
“affidavit of equitable interest,” the plain text of this exception only includes affidavits
filed “for the purpose of providing notification by the purchaser of real property of the
purchaser’s interest therein.” 17 Because a mortgage broker is not the “purchaser” of the
commercial real estate, a notice of a broker’s lien does not fall within this exception. 18
Neither do we see any other exception that would exempt a notice of a broker’s lien
from the mortgage registration fee.
Accordingly, we opine that a notice of a commercial real estate broker’s lien is a
“mortgage of real property” as that term is defined by the Mortgage Registration Act and
that a commercial real estate broker must pay the mortgage registration fee prescribed
by K.S.A. 79-3102 before filing such a notice with the county register of deeds.
Sincerely,
Derek Schmidt
Attorney General
16 K.S.A. 79-3102(d)(5).
17 Id. (emphasis added).
18 See also Misco Industries, 235 Kan. at 961 (exemptions from taxation “must be strictly construed
against the party who claims the exemption and such party must bring himself clearly within the
exemption provisions”).

Richard Euson
Page 5

Dwight Carswell
Assistant Attomey General

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