An IDOT (Indemnity Deed of Trust) secures a Note to the Lender which note is executed not by the property owner, but rather by the borrower and guarantor.  The IDOT is recorded among the land records to secure only the guarantors liability.

 For instance, lets pretend that The Preferred Title Group, Inc. (hereafter PTG)  takes a loan from a lender and the lender requires security in the form of real estate.  PTG does not own real estate, but I, Charlene Perry, do.  So, I would offer the real estate as collateral, the loan would be issued to PTG  who would be named as the obligor, and I (Charlene), would guaranty the repayment of the Note and use my real estate as collateral for my gurantee.   In the event of default the lender would seek recourse from both PTG and me.  Ultimately in the event of default the lender would foreclose on the real estate owned by me.  

Prior to July 1,2012 there was no requirement to pay documentary stamps (taxes) on the IDOT at the time of recording. (As of July 1, 2012 recordation taxes must be paid on IDOT's securing loans of $1 Million or more)  The rule, prior to July 1, 2012,  was that when the IDOT was recorded, the debt that it secured had not been "incurred" by the guarantor, and. therefore, no recordation was due until default by the borrower.  As time went on and defaults on IDOT's became more and more prevelant some Maryland jurisdictions claimed tha the unpaid recordation taxes due on the IDOT created a lien on the property and that a purchaser at foreclosure sale was required to pay both the unpaid recordation taxes on the IDOT and recordation taxes and transfer taxes on the Trustee's Deed following the foreclosure sale. Essentially, a double dip. 

As you might imagine, this created a entirely new category of costs associated with foreclosures in Maryland and many foreclosure attorneys as well as their clients and many REO title agents locally ended up having to pay these double dip fees until some clarity from the Tax Court was provided.

On August 28, 2012, the court held that in an IDOT transaction, although recordation taxes are typically due when the borrower defaults, only the guarantor is liable  for such taxes. The Court held that the unpaid recordation taxes due on the IDOT do not create a lien on the underlying property  There is no statutory or legal authority that provides that any other party, including the purchaser at a foreclosure sale, must pay the recordation taxes due on the IDOT.  The Court held that after foreclosure, the purchaser need only pay the recordation taxes on the consideration paid on the Trustee's Deed.

One local county in particular has been ordered by the Court to refund  taxes collected by them on foreclosed IDOT's.  

The decision is still subject to review, an appeal can be made to the Ciruit Court.

For now at least those of us working in the REO field know with some clarity what fees we need to collect and present to the clerk of the court when attempting to file our Trustee's Deeds in cases of foreclosure on IDOT's.