Were a timeshare developer's receivables warehouse loan and collateral assignments exempt from documentary stamp and nonrecurring intangible tax?

Subject

Warehouse Mortgage

Plain-English summary

The timeshare receivables loan qualified for the wholesale warehouse mortgage exemption from documentary stamp tax. The developer pledged consumer purchase-money notes secured by recorded mortgages, and the required documentary stamp and intangible taxes had already been paid on those consumer obligations.

The receivables agreement and note were executed outside Florida and were not themselves secured by a mortgage on Florida real property. Collaterally assigning the existing notes and mortgages created no new or additional Florida mortgage, so the receivables transaction was also outside the nonrecurring intangible tax.

What this means for you

The exemptions depended on the already-taxed mortgage notes serving as qualifying collateral and on the warehouse loan itself creating no new Florida real-property lien.

Common questions

Q: Was the warehouse receivables loan subject to documentary stamp tax? No.

Q: Did recording collateral assignments create a new mortgage? No.

Q: Was nonrecurring intangible tax due on the receivables loan? No.

Citations and references

• Fla. Stat. § 201.21 — wholesale warehouse mortgage exemption
• Fla. Stat. § 199.133(1) — nonrecurring intangible tax on obligations secured by Florida real property
• Fla. Admin. Code r. 12B-4.054(3) — warehouse mortgage obligations
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 01M-002

Original ruling text

SUMMARY

QUESTION: Does the Receivables Loan evidenced by the
Receivable Agreement and Receivable Note constitute a
Wholesale Warehouse Mortgage Agreement that is exempt from
documentary stamp tax? Additionally, will the collateral
assignment of the Notes and Mortgages pursuant to the
Agreement and Loan be exempt from intangible tax.

ANSWER - Based on Facts Below: The Loan evidenced by the
Receivables Agreement and Receivable Notes qualifies as a
wholesale warehouse mortgage agreement and is exempt from
tax. The assignment of the Notes and Mortgages does not
create a new or additional mortgage and therefore is exempt
from the nonrecurring intangible tax.

Apr 12, 2001

Re: Technical Assistance Advisement No. 01M-002
Documentary Stamp Tax and Intangible Tax
Warehouse Mortgage
Sections 199.133, 201.21, F.S.; Rule 12B-4.054(4), F.A.C.
XXX (hereinafter Borrower)
XXX (hereinafter Lender)

Dear :

Your letter requesting a Technical Assistance Advisement
has been referred to this office for response. The specific
scenario for which advice has been requested is summarized
below.

Facts as Presented by Petitioner

On XXX, the Borrower entered into a loan transaction with
the Lender, who also acted as an agent for one or more colenders. The Borrower is a developer of a timeshare vacation
resort ("Resort"). The Borrower sells fee simple timeshare

intervals in the Resort to consumer purchasers. When consumer
purchasers choose to finance the timeshare purchase, the
Borrower accepts a purchase money note (the "Notes") secured by
a purchase money mortgage (the "Mortgages") in favor of the
Borrower. All required documentary stamp tax is paid based on
the full principal amount of each note made by the consumer
purchaser.

The Borrower entered into a Receivables Loan and Security
Agreement ("Receivables Agreement") with the Lender. The
Receivables Agreement provides for advances from the Lender to
Borrower from time to time evidenced by a Receivables Promissory
Note(s) to various co-lenders, in the maximum aggregate
principal amount of $XX. The Receivables Agreement and the
Receivables Note and other documents executed by the Borrower in
connection with the Receivables Loan were executed and delivered
to the Lender outside the State of Florida. The Receivables
Loan is not secured by any mortgage on Florida real property.
The Lender has no offices in the State of Florida.

The Receivables Loan is secured by the pledge and
collateral assignment of the Notes and Mortgages by the Borrower
to the Lender. Upon completion of each interval sale in which
the Borrower receives a Note and Mortgage from the consumer
purchaser, the Borrower records in the XXX County public records
a collateral assignment of the Note and Mortgage to the Lender.

Subject to other lending limitations under the agreement,
the Borrower may borrow from the Lender advances of up to XXX of
the principal amount outstanding under the eligible Notes
securing the borrowed amounts. In the event the percentage is
at any time exceeded, or in the event eligible Notes and
Mortgages pledged to the Lender become ineligible, the Borrower
is required to either pay down the excess outstanding loan
balance or provide eligible replacement Notes and Mortgages.

Request for Advisement

A request for a ruling is being made that the Receivables
Loan evidenced by the Receivables Agreement and the Receivables
Note constitutes a Wholesale Warehouse Mortgage Agreement that

is exempt from Florida's documentary stamp tax under s. 201.21,
F.S.

Secondly, you seek a ruling that the pledge and collateral
assignment of the Notes and Mortgages pursuant to the
Receivables Agreement and the Receivables Loan evidenced by the
Receivables Agreement and Receivables Note are exempt from
Florida's intangible tax imposed under s. 199.133, F.S.

Provisions of Law

Section 201.21, F.S., for documentary stamp tax purposes,
provides:

There shall be exempt from all excise taxes imposed by this
chapter all promissory notes, nonnegotiable notes, and
other written obligations to pay money bearing date
subsequent to July 1, 1955, hereinafter referred to as
"principal obligations," when the maker thereof shall
pledge or deposit with the payee or holder thereof pursuant
to any agreement commonly known as a wholesale warehouse
mortgage agreement, as collateral security for the payment
thereof, any collateral obligation or obligations, as
hereinafter defined, provided all excise taxes imposed by
this chapter upon or in respect to such collateral
obligation or obligations shall have been paid. If the
indebtedness evidenced by any such principal obligation
shall be in excess of the indebtedness evidenced by such
collateral obligation or obligations, the exemption
provided by this section shall not apply to the amount of
such excess indebtedness; and, in such event, the excise
taxes imposed by this chapter shall apply and be paid only
in respect to such excess of indebtedness of such principal
obligation. The term "collateral obligation" as used in
this section means any note, bond, or other written
obligation to pay money secured by mortgage, deed of trust,
or other lien upon real or personal property. The pledging
of a specific collateral obligation to secure a specific
principal obligation, if required under the terms of the
agreement, shall not invalidate the exemption provided by
this section. The temporary removal of the document or

documents representing one or more collateral obligations
for a reasonable commercial purpose, for the period not
exceeding 60 days, shall not invalidate the exemption
provided by this section.

Rule 12B-4.054(3), F.A.C., also provides:

All promissory notes, non-negotiable notes and other
written obligations to pay money given pursuant to a
wholesale warehouse mortgage agreement as provided under s.
201.21, F.S., shall be exempt from tax.

Section 199.133(1), F.S., which imposes the norecurring
intangible tax, states:

A one-time nonrecurring tax of 2 mills is hereby imposed on
each dollar of the just valuation of all notes, bonds, and
other obligations for payment of money which are secured by
mortgage, deed of trust, or other lien upon real property
situated in this state. This tax shall be assessed and
collected as provided by this chapter.

Position of the Department

For purposes of s. 201.21, F.S., collateral obligations are
notes, bonds, or other written obligations to pay money which
are secured by a mortgage. In this case, the consumer Notes are
secured by a mortgage; thus, the Notes qualify as collateral
obligations pursuant to s. 201.21, F.S. The Notes are pledged
to the Lender under the Receivables Agreement as security for
the payment of the Borrower's payment obligations under the
Receivables Agreement and the Receivables Note to the Lender.

Per your correspondence, all documentary stamp taxes and
intangible taxes have been paid with respect to all consumer
Notes and Mortgages when each such Mortgage is presented for
recording to the Clerk of the Circuit Court. Since the loan
evidenced by the Receivables Agreement and the Receivables Note
qualifies as a wholesale warehouse mortgage agreement under s.
201.21, F.S., it is not subject to the Florida documentary stamp
tax.

The Receivables Agreement and the transaction evidenced
thereby do not create a new or additional mortgage on any real
property. Instead, the primary collateral for the repayment of
all amounts due to the Borrower pursuant to the Receivables
Agreement and the Receivables Note are the Notes and Mortgages
being assigned by the Borrower for the repayment of its
obligation under the Receivables Note. Therefore, the
Receivables Agreement, the Receivables Note, and the
transactions contemplated therein are not subject to the
nonrecurring intangible tax under s. 199.133, F.S., because they
are not secured by a lien on Florida real property.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response, your request
and related backup documents are public records under Chapter
119, F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Celestine Grantham
Senior Tax Specialist
Technical Assistance and Dispute Resolution

Office of General Counsel

CG/mh