How much documentary stamp tax applied when a cooperative issued proprietary leases to original mobile-home-park subscribers?

Subject

Mobile Home Parks

Plain-English summary

Only the minimum 70-cent documentary stamp tax was due on proprietary leases issued to qualifying original subscribers. Those residents had subscribed by the date the cooperative purchased the park and either supplied their pro-rata purchase funds or became absolutely obligated to pay them.

The Department treated the cooperative as the subscribers' agent for acquiring the park. The result also required proper tax to have been paid when the cooperative itself acquired the property.

What this means for you

The minimum-tax result was limited to original subscribers whose financing relationship existed when title vested. It did not approve the same treatment for people who subscribed only after the cooperative completed the purchase.

Common questions

Q: Why was only minimum tax due? The agreement established an agent-principal or resulting-trust structure for the original subscribers' funded acquisition.

Q: Did a resident have to pay all cash before closing? The ruling allowed either payment of the pro-rata share or an absolute obligation to pay it.

Q: Was tax on the cooperative's own park purchase still required? Yes. Proper tax had to have been paid on that acquisition.

Citations and references

• Fla. Stat. §§ 201.02(1), (2), 719.103 — cooperative occupancy documents
• Fla. Admin. Code rr. 12B-4.013(26)(c), 12B-4.014(5) — cooperatives and agent-to-principal transfers
• Department of Revenue v. Zuckerman-Vernon Corp., 354 So. 2d 353 (Fla. 1977)
• Womack v. Madison Drug Co., 20 So. 2d 256 (Fla. 1944)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93B4-002

Original ruling text

Feb 17, 1993

Re: Technical Assistance Advisement No. 93(B)4-002
Documentary Stamp Tax; Mobile Home Parks
XXX (hereinafter Taxpayer)

Dear :

Taxpayer, a Florida cooperative mobile home owners
association, has requested a technical assistance advisement
concerning tax under s. 201.02, F.S., applicable to the
following issue:

Does Florida Administrative Code Rule 12B-4.014 (5), exempt
from tax proprietary leases of mobile home sites from
Taxpayer to its original subscribing members who furnished
the funds for Taxpayer to acquire such property?

Background

Taxpayer is a corporation formed pursuant to the provisions
of Chapter 723, F.S. This organization is formed pursuant to
contractual arrangements including a subscription agreement
between individuals and Taxpayer to establish a mobile home park
cooperative and for the issuance of certificates and proprietary
leases on individual lots in the mobile home cooperative. The
cooperative is created on an existing mobile home park. The
right to subscribe is not offered to anyone other than the
person owning the mobile home sitting on the cooperative unit
until after the park is acquired. Approximately 60% of existing
tenants that own mobile homes within the park subscribe by the
day the purchase of the mobile home park is completed.

Pursuant to the contractual arrangements between the
parties, the purchaser of a proprietary lease interest in the
mobile home cooperative places funds in escrow which are to be
used to acquire the mobile home park by Taxpayer, which will be
made the subject of the proprietary lease. In the event closing
of the purchase of the mobile home park is not accomplished the

escrow is refunded to the subscriber.

Paragraph 3 of a document entitled "Subscription Agreement
For Membership Certificate And, Upon Conversion, A Proprietary
Lease" (the Agreement) which is executed between Taxpayer, as
seller, and individuals owning mobile homes in the "park", as
purchasers reads:

(Deleted)

Paragraph 4 of the Agreement states that:

(Deleted)

Additionally Paragraph 8 of the Agreement provides that:

(Deleted)

Discussion And Law

Section 201.02 (2), F.S., as amended by s. 9, Chapter 9232, L.O.F., now levies the same rate of tax prescribed by s.
201.02 (1), F.S., on documents by which the right to occupy any
dwelling situated on real property that is owned by any form of
cooperative association as defined in s. 719.103, F.S. Also see
Fla. Admin. Code Rule 12B-4.013(26)(c).

Florida Admin. Code Rule 12B-4.014(5), exempts tax on a
deed from an agent to his principal conveying real property
purchased for and with the funds of the principal. A
corporation may act as agent for an individual. Patek v.
Associated Ins. Underwriters Inc., 160 So.2d 721 (3 DCA, 1964).

A resulting trust arises when one party pays the
consideration for the purchase of property but title is taken in
the name of another. Department of Revenue v. Zuckerman-Vernon
Corp., 354 So.2d 353 (Fla. 1977). In Womack v. Madison Drug
Co., 155 Fla. 335, 20 So.2d 256 (1944), the court determined
that a resulting trust "must arise, if at all, at the instant
legal title vests and the alleged beneficiary must have paid the
purchase price or bound himself by an absolute obligation to pay

it."

Department's Position

The Agreement supports that Taxpayer is agent for original
subscriber for the purpose of purchasing the "park" property.
Further, the Agreement establishes that principals shall have
either paid Taxpayer their pro-rata share of the purchase price
or have an absolute obligation to pay it. Therefore, only
minimal 70 cents documentary stamp tax would be due on
proprietary leases from Taxpayer to only those persons
subscribing prior to the purchase of the "park" by Taxpayer,
provided proper tax was paid when Taxpayer acquired the "park"
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 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
Technical Assistant
Technical Assistance

WEW/mh