Buried within the Governor of Maryland’s budget is a proposal that eliminates the ability of a grantor, as guarantor of a loan, to defer payment of Maryland mortgage recordation taxes on an indemnity deed of trust (“IDOT”) until such time when the loan liability becomes directly payable by the grantor. Currently, based on a Maryland attorney general’s opinion, the grantor does not pay recordation tax at the time the IDOT is recorded because it only secures a contingent liability as the grantor, as guarantor of the loan, is not primarily obligated to pay the debt secured by the IDOT. In the past, various standalone bills that attempt to impose recordation taxes on IDOTs at the time of recordation have failed to pass; however, this is the first bill to be included in the Governor’s budget. The current bill ties the IDOT provision directly to funding of teacher pensions. If enacted, the costs to most commercial borrowers in Maryland are expected to increase significantly because all new IDOTs in excess of $1 million would be subject to mortgage recordation tax. If the bill passes, the change would take effect on July 1, 2012.