Did a deed moving encumbered land between trustees of the same land trust owe more than minimum documentary stamp tax?

Subject

Transfer of Real Property to Substitute Trustee

Plain-English summary

The original ruling required only the minimum 70-cent documentary stamp tax on the deed to the substitute trustee, but the official source says a revised ruling superseded it. The trust remained the same, the beneficiaries and their interests did not change, and neither the original trustee nor beneficiaries received consideration.

Although the land was encumbered and tax had been paid when the mortgages were recorded, this version applied the no-consideration trustee-conveyance exemption to the trustee substitution.

What this means for you

This page records the original analysis only. TAA 93B4-001R superseded it on April 1, 1993 and should be consulted as the later Department action rather than assuming this version remained controlling.

Common questions

Q: What did the original ruling hold? Only minimum 70-cent tax was due.

Q: Why? The same trust and beneficiaries continued, with no money or other consideration transferred.

Q: Is this the final Department ruling? No. The official status line identifies a revised superseding TAA.

Citations and references

• Fla. Stat. §§ 201.02(1), (4), 689.071 — land and land-trust transfers
• Fla. Admin. Code rr. 12B-4.012(2)(b), 12B-4.014(2)(b) — consideration and trustee conveyances
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93B4-001

Original ruling text

Status: Superseded by TAA 93(B)4-001R (Revised), April 1, 1993

Jan 29, 1993

Re: Technical Assistance Advisement No. 93(B)4-001
Documentary Stamp Tax; Transfer of Real Property to
Substitute Trustee
XXX (hereinafter Original Trustee)
XXX (hereinafter Substitute Trustee)

Dear :

You have requested a Technical Assistance Advisement
concerning tax under Ch. 201, F.S., as it applies to
substantially the following question:

Is tax due, other than the minimal amount of 70 cents,
where Original Trustee deeds encumbered real property it
holds as trustee in a so-called Illinois land trust to
substitute Trustee?

Background

On XXX, Original Trustee, purchased Florida real property
subject to a first mortgage. Documentary stamp tax affixed to
that deed indicates the consideration paid for the property was
$XX. This deed recites that Original Trustee is trustee under
the provisions of a certain Land Trust Agreement dated XX, and
known as Trust Number XX (the Agreement). This deed also
provides that the trustee is vested with both legal and
equitable title and declares the interests of the beneficiaries
to be personal property only. Additionally, the deed states the
trustee may "sell on any terms, to convey either with or without
consideration, to convey said real estate or any part thereof to
a successor or successors in trust".

The Agreement provides that Original Trustee is granted
power to "hold, convey, lease, mortgage or otherwise deal with
the title to said real estate only when authorized to do so on

the written direction of the following person or persons, towit;". The Agreement also provides the percentage of interests
each beneficiary holds in the trust and that such interest shall
be personal property. Further provisions are that the Agreement
shall not be recorded.

Original Trustee executed, as trustee under the Agreement,
a $XX mortgage dated XX, and a XX mortgage dated XX. Proper
documentary stamp tax and intangible tax were paid at the time
each mortgage was recorded.

The beneficiaries of the trust now wish to appoint
Substitute Trustee to replace Original Trustee in accordance
with the Agreement. The transfer of the same real property will
be accomplished by an instrument entitled "Warranty Deed To
Trustee Under Land Trust Agreement" executed without
consideration by the Original Trustee as "Trustee under Land
Trust Agreement dated XX Trust No. XX " to Substitute Trustee as
"Trustee Under Land Trust Agreement dated XX and known as Trust
No. XX". This deed recites that title to the real property is
vested in the Substitute Trustee and the interest of the
beneficiaries is personal property.

Discussion and Law

Section 689.071, F.S., sanctions the use of the so called
"Illinois Land Trust" in Florida. The requirements are examined
in Taylor v. Richmond's New Approach Ass'n, Inc., 351 So.2d 1094
(Fla 2 DCA 1977), which states in part that:

"The so-called Illinois land trust contemplates that title
to real property be taken in the name of a trustee under a
recorded deed of trust while a second unrecorded agreement
between the trustee and the beneficiaries declares the
trustee to be vested with full legal and equitable title
subject to certain specified rights of the beneficiaries
which are declared to be personal property of the
beneficiaries. See Florida Real Property Practice II, s.
11.32 (Fla. Bar Continuing Legal Educ. Practice Manual,
1975). Prior to 1963 it was believed that an Illinois land
trust might fail in Florida because of the statute of uses.

See McGriff v. McGill, 62 So.2d 28 (Fla. 1952); Elvins v.
Seestedt, 141 Fla. 266, 193 So. 54 (1940).

"In 1963 our legislature insured the validity of the
Illinois land trust by the enactment of Chapter 63-468,
Laws of Florida, which has now become Section 689.071,
Florida Statutes (1975). The preamble to Chapter 63-468
recites that the Illinois land trust was a method by which
developers had successfully attracted the investment of new
capital and it was deemed desirable to encourage the growth
of Florida land development by sanctioning the use of this
method of doing business. The statute permits the trustee
to convey freely without the joinder of spouses or
beneficiaries and allows third persons to deal with the
trustee without having to inquire into his authority.
Grammer v. Roman. 174 So.2d 443 (Fla. 2d DCA 1965)."

Section 201.02(1), F.S., authorizes a tax on deeds and
other instruments which transfer interests in real property to a
purchaser or any other person by his direction. The tax is
based upon the consideration paid for the property. Section
201.02(1), F.S., as amended by s. 7, 90-132 Laws of Florida now
also includes a definition that "consideration" is the fair
market value of the real property or interest therein as the
basis for tax, but only where "property other than money" is
given in exchange for the property. Florida Administrative Rule
12B-4.012(2)(b), defines "property other than money". The
Department's position is that a transfer of real property to a
land trust under s. 689.071, F.S., is a taxable event. Tax is
based upon the purchase price paid for the property, or the fair
market value of the property when deeded to the trust in
exchange for an interest in the trust or where the interest held
by the beneficiary is increased by the transfer of real property
into the trust.

Section 201.02(4), F.S., levies the same tax under
paragraph (1) of s. 201.02, on any document which transfers any
beneficial interest in a trust pursuant to s. 689.071, F.S.

Florida Administrative Code Rule 12B-4.014 (2)(b), provides
a tax exemption where a conveyance to or by a trustee is made

without "consideration".

Department's Position

The exemption from tax provided by Florida Administrative
Rule 12B-4.014(2)(b), is applicable to the deed from Original
Trustee to Substitute Trustee. The trust known as Trust Number
5004302 has not changed. Original Trustee is receiving no
consideration for the transfer of the real property. The
beneficiaries are the same and have received no consideration in
money or consideration defined as "other than money".
Consequently, the deed from Original Trustee to Substitute
Trustee requires only the minimal 70 cents tax.

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 and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details which might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

W.E. Webb
Tax Law Specialist
Technical Assistance
WEW/mh