How did Florida apply documentary stamp and intangible taxes to mobile-home cooperative leases, stock, and purchase notes?

Subject

Mobile Home Cooperatives

Plain-English summary

The memorandum of lease was generally subject to documentary stamp tax at the rate in effect when delivered, but qualifying original subscribers owed only minimum tax. Minimum treatment required that a resident subscribed by the park-purchase date, paid or became absolutely obligated for a purchase share, and that proper tax had been paid when the cooperative acquired the park.

For later occupancy transactions, tax followed the consideration for the lot and mobile home and the applicable delivery-date rules. The stock certificate was separately taxed using the number of shares times the stated $1 par value, not the purchase price of the home and lot.

Any party to a purchase promissory note could be liable for documentary stamp tax. Holders of the notes and corporate stock were subject to the former intangible tax described in the ruling.

What this means for you

One cooperative purchase could generate distinct tax questions for the occupancy document, stock issuance, financing note, and later ownership transfers. The ruling did not use one tax base for all of them.

Common questions

Q: Did failure to record an old occupancy memorandum avoid tax? No. Tax was due at the rate in effect when the memorandum was delivered.

Q: Who paid tax on post-March 23, 1992 memoranda? The ruling said the purchaser was responsible.

Q: Was cooperative stock taxed on the mobile home's purchase price? No. This corporation's stock tax used shares times $1 stated par value.

Citations and references

• Fla. Stat. §§ 201.01, 201.02, 201.05, 201.08 — documentary stamp tax on documents, stock, and notes
• Fla. Stat. § 199.032 — former intangible tax
• Fla. Stat. §§ 719.103, 719.105 — cooperative interests and recording
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93B4-003

Original ruling text

Feb 17, 1993

Re: Technical Assistance Advisement 93(B)4-003
Documentary Stamp Tax; Mobile Home Cooperatives
XXX (hereinafter Petitioner)

Dear :

Petitioner, a Florida cooperative mobile home owner's
association, has requested a Technical Assistance Advisement
concerning taxes under Chapter 201, Florida Statutes, as they
apply to certain documents involving Petitioner.

Issues Presented

"A. Documentary Stamp Taxes.

1. Petitioner, is aware that Section 201.02 Florida
   Statutes provides for a tax of seventy-cents ($.70)
   per hundred ($100) dollars of consideration for deeds,
   instruments or writings, whereby any interest in lands
   is signed to third persons. It goes on to state that
   a tax is payable upon documents by which the right is granted to a tenant-stockholder to occupy an apartment in a building owned by a cooperative apartment corporation.' The law is not clear as to whether tax is owed upon such instruments in a cooperative otherwise properly formed under Chapter 719 Florida Statutes, but not located in abuilding'.
2. Section 201.02 (3), Florida Statutes further provides
   that the tax imposed by subparagraph (2) is paid by
   the purchaser, and the document must be recorded in
   the office of the Clerk of the Circuit Court as
   evidence of ownership.
3. Based upon the above law, in the case of a cooperative
   formed for the purpose of operating a mobile home
   community, is tax due on the memorandum of lease
   executed among the parties, and if so, what is the
   rate? If the transaction occurred prior to the

current year, and the memorandum were inadvertently
not recorded, what amount of tax is due? If there
have been several transactions, who is responsible for
tax, if any, due on the intervening transactions?
Additionally, how is the tax to be calculated - does
the tax only apply on the value of the stock that is
purchased, or must the value of the mobile home
included in a subsequent transfer be included? For
original transferees, it is our understanding that Mr.
Webb has previously opined that no tax is due for the
original transfer. Please provide authority for the
statement by Mr. Webb and confirm that this indeed is
the case.

"B. Intangible Taxes.

1. Section 201.08, Florida Statutes provides for taxes to
   be imposed on certain promissory notes.
2. Where a Purchaser of a lot signs a note in favor of
   either the Petitioner or a subsequent Seller, must the
   Seller or Purchaser pay the taxes on the note? If a
   series of transactions have taken place and tax is
   determined to be due under the referenced section of
   Florida Statutes, how is the tax to be collected, and
   by whom?"

Background

"Petitioner is a Florida corporation for profit, formed in
1988 for the purpose of acquiring title to real property
consisting of a mobile home park with three hundred sixtyone (361) lots. The corporation purchased the property in
1990, and began to issue shares to original purchasers,
each of whom acquired a share of stock in the corporation
and the proprietary lease which allows the stockholder to
keep a mobile home upon the lot owned by the corporation,
all in accordance with Chapter 719, Florida Statutes.

"As part of the transaction referred to above, Petitioner
had, in some cases, stockholders who paid cash for the
purchase of their property interests, while others obtained

financing from the corporation. Over time, certain of the
property interests in the park have been conveyed to
subsequent purchasers."

Discussion And Law

Documentary Stamp Tax

Effective March 23, 1992, s. 201.02(2), F.S., was amended
by s. 9, Ch. 92-32, Laws of Florida, to provide that in addition
to the tax imposed on documents granting a tenant-stockholder
the right to occupy an apartment in a building owned by a
cooperative corporation, the tax is also due on such documents
granting a tenant-stockholder the same right in any dwelling on
real property owned by any other form of cooperative association
defined in s. 719.103.

Section 201.02(3), F.S., continues to provide that the tax
levied by subsection (2) shall be paid by the purchaser, and the
document recorded in the office of the clerk of circuit court as
evidence of ownership. Also see s. 719.105, F.S., as amended by
s. 11, Ch. 92-32, Laws of Florida.

Based upon a 1983 Florida court case the Department's
position was that any instruments transferring any interest,
ownership or membership in a site owned by a cooperative mobile
home corporation were subject to tax under s. 201.02(1), F.S.,
as an interest in real property. See Fla. Admin. Code Rule 12B4.013(26)(c). The tax is based upon the consideration paid for
both the lot and mobile home.

Deeds and other instruments conveying an interest in real
property are subject to tax based upon the rate of tax in effect
when the deed is delivered. Section 201.02(1), F.S.; Fla.
Admin. Code Rule 12B-4.011(1). Original issues of stock are
subject to tax based upon rate of tax in effect when the stock
is issued. Section 201.05, F.S.; Fla. Admin. Code Rule 12B4.031(1). The transfer of stock is subject to tax based upon
the rate of tax in effect when the stock was transferred until
June 30, 1987, when s. 201.04, F.S., was repealed. See s. 28,
Ch. 87-102, Laws of Florida. Promissory notes and other written

obligations to pay money are subject to tax based upon the rate
of tax in effect when the note is executed. Section 201.08 (1),
F.S.; Fla. Admin. Code Rule 12B-4.051(1).

Florida Admin. Code Rule 12B-4.014(5), provides that tax is
not due on a deed from an agent to his principal conveying real
property purchased for and with funds of the principal. 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). The 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. Womack v. Madison Drug
Co., 155 Fla. 335, 20 So.2d 256 (1944). Also see Am Jur 2d,
Trust s. 192.

Department's Position

Documentary Stamp Tax and Intangible Tax

Based upon the foregoing:

1. Tax is due on the memorandum of lease executed between
   Petitioner and its members based upon the rate of tax
   in effect when the memorandum of lease was delivered,
   except only minimal tax is required on the memorandum
   of lease where pursuant to contractual arrangements
   persons owning a mobile home in the park who were
   stock subscribers by the day the purchase of the
   mobile home park was completed furnished their portion
   of the purchase price or bound themselves by an
   absolute obligation to pay it. However, proper tax
   must have been paid when the property was sold to
   Petitioner.
2. If the transaction occurred prior to the current year
   and the memorandum was not recorded, tax is due based
   upon the rate of tax in effect when the memorandum was
   delivered to the subscriber.
3. Where there has been several subsequent transactions,
   any of the parties to the transactions are liable for

the tax. However, any tax due on a memorandum of
lease made after March 23, 1992, is payable by the
purchaser.

4. In your case each certificate of stock is taxable
   based on the number of shares times the stated par of
   $1.00 at the rate of tax in effect when issued. The
   price paid for the mobile home and lot is not the
   consideration for tax on stock.
5. (a) Any party to a promissory note is liable for
   payment of documentary stamp tax. Section 201.01,
   F.S.; Fla. Admin. Code Rule 12B-4.002(1)(a).
   (b) The holders of the promissory notes and corporate
   stock would be subject to the payment of intangible
   tax imposed by s. 199.032, F.S.

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