Did Florida documentary stamp tax apply to a note modification, out-of-state guaranty, or related UCC-1 filings?

Subject

Mortgage Modification Agreement

Plain-English summary

None of the three submitted document groups incurred additional Florida documentary stamp tax. The note modification only changed the interest rate and reduced monthly payments without increasing principal, so it qualified as an exempt renewal.

The guaranty was a contingent obligation executed outside Florida and was also exempt. The revised UCC-1 financing statements were not taxable because the note, security agreement, or another obligatory document was not filed or recorded with them, although the UCC-1 still needed the required stamp-tax notation.

What this means for you

The ruling analyzed each document independently. A financing statement alone did not trigger tax, but recording an underlying evidence of obligation as security for the guaranty could have changed the answer.

Common questions

Q: Did changing interest and monthly payments tax the modification? No, because principal was not enlarged.

Q: Why was the guaranty exempt? It was contingent and executed outside Florida.

Q: Were the UCC-1 filings automatically ignored for stamp tax? No. They were not taxed on these facts, but still needed a notation explaining whether proper tax had been or would be paid, or was not required.

Citations and references

• Fla. Stat. §§ 201.08, 201.09, 201.22 — documentary stamp tax and renewals
• Fla. Admin. Code rr. 12B-4.053, 12B-4.054 — renewals, guaranties, and financing statements
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93B4-004

Original ruling text

Feb 24, 1993

Re: Technical Assistance Advisement No. 93(B)4-004
Documentary Stamp Tax - Mortgage Modification Agreement
Sections 201.08, 201.09 and 201.22, F.S.
Florida Administrative Code Rules 12B-4.054(1), (5), (17)
and (30); 12B-4.053(32)(a) and (33)
XXX (Partnership A)
XXX (Lender)
XXX (Partnership B)

Dear :

This is in response to your recent request for a technical
assistance advisement regarding documentary stamp tax as it
applies to various documents.

Facts

Partnership A is a XXX limited partnership with its
principal office located in XXX and no office in XXX.

The Lender's principal office is in XXX.

Partnership B is an XXX limited partnership with its
principal office located in XXX.

Proposed Transaction

Partnership B owned a shopping center more commonly known
as XXX Shopping Center located in XXX County (hereinafter
Shopping Center). The Shopping Center is encumbered by a
mortgage and security agreement made by Partnership B in favor
of the Lender. The mortgage was given to secure the payment of a
purchase money loan from the Lender to Partnership B. The loan
is evidenced by a note made by Partnership B in favor of the
Lender and is non-recourse with limited recourse carveouts. The
required documentary stamp tax and intangible tax due on the
note and mortgage were paid based on the original principal

amount of the note.

The Lender and Partnership B entered into a Note
Modification Agreement which only modified the interest rate and
reduced the amount of monthly payments.

Partnership B conveyed the Shopping Center subject to the
mortgage to Partnership A.

Partnership A subsequently executed a Guaranty Agreement in
favor of the Lender. The Guaranty was executed outside the
state.

In connection with the Guaranty, Partnership A filed with
the Florida Secretary of State and the County Clerk of Circuit
Court UCC-1 Financing Statements in favor of the Lender. These
were filed and recorded with attachments (EXHIBIT "A" and
EXHIBIT B) further identifying the property.

Requested Advisement

Issue 1 - Is the Note Modification Agreement exempt from
Florida documentary stamp tax as a renewal note?
Issue 2 - Is the Guaranty Agreement subject to Florida
documentary stamp tax?
Issue 3 - Are the UCC-1 Financing Statements subject to
Florida documentary stamp tax?

Discussion and Law

Issue 1

Florida Administrative Code Rule 12B-4.054(1)(b) states
that a renewal note executed merely to increase the rate of
interest or to extend the length of payments of an existing
note, without enlargement of the existing principal balance, is
not taxable.

Section 201.09(1), F.S., provides that the renewal of any
existing note which extends or continues the identical
contractual obligations of the original without enlargement in

any way of the original obligation and attaches a copy of the
original note showing full payment of the tax due is exempt from
tax on the renewal.

Issue 2

A contingent obligation is a written promise to pay money
which is not fixed and absolute at time of execution and is not
subject to tax according to Florida Administrative Code Rule
12B-4.054(5).

Florida Administrative Code Rule 12B-4.054(17) provides
that a promissory note made in another state, by a foreign
corporation to a payee in this state, payable at a bank in
another state is not taxable. However, any evidence of
obligation as defined in s. 201.08(1), F.S., recorded in Florida
as security for the Guaranty would be subject to tax.

Issue 3

The filing or recording in Florida of a UCC-1 Financing
Statement is not taxable under s. 201.08(1), F.S., unless the
note, security agreement or other obligatory document is also
filed or recorded. However, a notation relative to stamp tax is
required on the UCC-1 Financing Statement whether tax is due or
not. The notation shall state that proper stamp taxes under
chapter 201, F.S., have been placed on the promissory
instruments and will be placed on any additional promissory
instrument, or that tax is not required.

Conclusion

The Note Modification Agreement is exempt from documentary
stamp tax in accordance with s. 201.09(1), F.S., and Florida
Administrative Code Rule 12B-4.054(1)(b).

The Guaranty is a contingent obligation and also executed
outside the state which makes it exempt from tax under s.
201.08, F.S., and Florida Administrative Code Rule 12B-4.054(5)
and (17).

The UCC-1 Financing Statements, as revised, are not subject
to documentary stamp tax in accordance with Florida
Administrative Code Rule 12B-4.054(30).

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,

Nadine C. Posey
Technical Assistant
Technical Assistance

NCP/mh