Did Florida tax an amended note and mortgage for a Chapter 420 bond-financed affordable-housing project after default and sale?

Subject

Ch 420, F.S., Exemption Notes, Bonds and Mortgages

Plain-English summary

The second amended and restated promissory note was exempt from both Florida nonrecurring intangible tax and documentary stamp tax. The underlying loan financed a Florida multifamily rental project intended to provide housing for low-, moderate-, and middle-income households through tax-exempt special-purpose revenue bonds issued under Chapter 420.

After borrower default, a lender purchase of the original loan, receivership, project sale, and assumption and restatement of the debt, the Department held that section 420.513(1)'s exemption still covered the amended note.

What this means for you

The ruling tied the exemption to the housing agency's property, transactions, and operations under Chapter 420. The later default, sale, assumptions, and amended loan documents did not remove the stated transaction from that exemption.

Common questions

Q: Which taxes were exempt? The Chapter 199 nonrecurring intangible tax and Chapter 201 documentary stamp tax.

Q: Did the project change hands before the ruling? Yes. The facts included a court-appointed receiver, a purchase contract, an assignment to a second purchaser, and assumption of the amended loan.

Q: What document did the conclusion expressly approve? The second amended and restated promissory note secured by the second amended and restated mortgage and security agreement.

Citations and references

• Fla. Stat. §§ 199.133, 201.01, 201.08 — nonrecurring intangible and documentary stamp taxes
• Fla. Stat. § 420.513(1) — housing-agency exemption
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

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

Original ruling text

Mar 02, 1993

Re: Technical Assistance Advisement No. 93(M)-002
Intangible Tax - Chapter 199, F.S.
Documentary Stamp Tax - Chapter 201, F.S.
XXX (Lender)
XXX (Mortgagor)
XXX (Mortgagee)
XXX (Bond Trustee)
XXX (Receiver)
XXX (Purchaser #1)
XXX (Purchaser #2)

Dear :

This is in response to your recent request for a technical
assistance advisement.

Facts

The Mortgagor and Mortgagee entered into a loan transaction
secured by a Mortgage and Security Agreement wherein the
Mortgagee agreed to lend funds to the Mortgagor to construct a
multi-family rental housing project located in Florida for the
purpose of assisting individuals or families of low, moderate
and middle income to afford the cost of decent, safe and
sanitary housing. In order to provide the funds, the Mortgagee
authorized the issuance of tax exempt special purpose revenue
bonds pursuant to Chapter 420, Florida Statutes.

In order to induce the Mortgagee to make the Original Loan
and to facilitate the rating and sale of the Bonds, the Lender
entered into a Loan Purchase Agreement with the Bond Trustee
under which the Lender agreed to purchase the Original Loan upon
the occurrence of certain specified events and a Collateral
Agreement under which the Lender assigned and agreed to maintain
certain collateral as security for its performance under the
Loan Purchase Agreement.

The Mortgagor defaulted under the terms of its obligation
to the Lender and the Court Appointed Receiver acquired control
over the project.

As a result of the default by the Mortgagor, the Lender was
required to purchase the Original Loan from the Mortgagee.

With the Lender's purchase of the Original Loan, the
Receiver, with the consent of the Mortgagee and the Bond Trustee
assumed obligations under the Original Loan.

The Receiver entered into a Purchase and Sale Agreement
with Purchaser #1 for the sale/purchase of the project.

Purchaser #1 by Assignment and Assumption of Contract,
assigned its interest in the Purchase and Sale Agreement to
Purchaser #2.

The project was sold to Purchaser #2 with the consent of
the Mortgagee and the Lender and with the restatement, amendment
and renewal of certain loan documents, assumed all of the
Mortgagor's obligations with respect to the Original Loan as
restated, amended and renewed.

Requested Advisement

Is the Second Amended and Restated Promissory Note as
secured by the Second Amended and Restated Mortgage and Security
Agreement exempt from nonrecurring intangible tax and
documentary stamp tax under Chapters 199 and 201, Florida
Statutes, by reason of Section 420.513(1), Florida Statutes?

Discussion and Law

Section 199.133, Florida Statutes, provides for the
imposition of a one-time nonrecurring intangible tax upon
obligations to pay money which are secured by liens on real
property located in this state. Likewise, section 201.08,
Florida Statutes, imposes a tax on mortgages recorded in the
state. Section 201.01, F.S., reads in part as follows:

"... Unless exempt under s. 201.24 or under any state or
federal law, if the United States, the state, or any
political subdivision of the state is a party to a document
taxable under this chapter, any tax specified in this
chapter shall be paid by a nonexempt party to the
document...."

Section 420.513(1), Florida Statutes, provides in pertinent
part:

"The property of the agency, the transactions and
operations thereof... shall be exempt from taxation by the
state and its political subdivisions..."

Conclusion

Based on the statutory provisions and the information
provided in your letter, the Second Amended and Restated
Promissory Note is exempt from taxes imposed under Chapters 199
and 201, Florida Statutes, as provided in section 420.513 (1),
Florida Statutes.

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