What documentary stamp tax applied to the trustee and title-clearing hotel-property deeds?

Subject

Deeds to Beneficiary or to Successor Trustee

Plain-English summary

Only the minimum Florida documentary stamp tax applied to both proposed deed paths. The bank trustee could deed the hotel property either to a successor trustee or to the trust's sole corporate beneficiary for minimum tax.

The Tribe's quitclaim deed to either recipient, used to clear a public-record ambiguity caused by an earlier grantee-description error, also required only the minimum tax as a corrective deed.

What this means for you

The result depended on continuity of beneficial ownership and correction of the recorded title description. The ruling did not treat the deeds as ordinary sales of the hotel property to a new beneficial owner.

Common questions

Was the trustee-to-successor-trustee deed fully taxable? No. Only minimum documentary stamp tax applied.

What about a deed directly to the sole beneficiary? The same minimum-tax result applied.

Why was the Tribe's quitclaim deed treated similarly? It was described as clearing an ambiguity in the public records.

Citations and references

• Fla. Stat. §§ 201.02(1) and 213.22
• Fla. Admin. Code r. 12B-4.014(2), (3)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94B4-012

Original ruling text

Aug 31, 1994

Re: Technical Assistance Advisement No. 94(B)4-012 Documentary Stamp Tax Deeds to Beneficiary or to Successor Trustee XXX (Corporation) XXX (Trust) XXX (Tribe) XXX (Hotel Property)

Dear :

You have petitioned for a Technical Assistance Advisement pursuant to s. 213.22, F.S., and Florida Administrative Code Rule 12-11.003.

Issue

Whether a deed from the Bank, as Trustee for the Trust, of the Hotel Property to either a Successor Trustee for the Trust, or to the Corporation as the sole beneficiary of the Trust, is subject to tax under section 201.02, F.S. In addition, whether a quit claim deed from the Tribe to either the Successor Trustee or to the Corporation, as sole beneficiary of the Trust, to clear title, is subject to tax under section 201.02, F.S.

Background

The Tribe was organized and recognized under the Indian Reorganization Act of June 18, 1934, 48 Stat. 984, 25 U.S. Code, as was the Tribe's wholly owned Corporation. The trust agreement was and at all times has been between the Bank and the Corporation as the sole beneficiary of the Trust, and the Bank at no time had the authority to act on behalf of the Tribe.

On March 21, 1984, the Bank, as Trustee for the Trust, acquired a mortgage lien interest in the Hotel Property. An additional leasehold mortgage lien interest was acquired on October 7, 1985. By an assignment (the Assignment of Mortgage)

from another bank dated September 29, 1986, the Bank as Trustee for the Trust, acquired certain Multi-Family Mortgages, Assignments of Rents and Security Agreements dated July 29, 1983, and April 30, 1984, respectively. The four mortgages described are herein collectively referred to as `the Mortgages'.

Notwithstanding the fact that the Bank acquired the Mortgages as Trustee for the Trust, the instruments by which the Bank acquired the interests identified the Bank as Trustee for the Tribe, due to a clerical error. The Bank as Trustee for the Trust acquired Final Judgements of Foreclosure with respect to the Mortgages. The Bank as Trustee for the Trust received a Certificate of Title on April 13, 1988. The Certificate of Title also reflected that the Bank was Trustee for the Tribe instead of the Trust.

At the time the foreclosure was taking place, negotiations were being held with a realty corporation as the fee owner of the Hotel Property. A warranty deed was recorded on April 14, 1988, transferring the Hotel Property to the Bank as Trustee for the Trust. The inconsistency between the description of the grantee in the Certificate of Title and the warranty deed has led to confusion in the public records.

The Corporation now desires to have the Bank, as Trustee for the Trust, transfer the Hotel Property either to a Successor Trustee for the Trust or to the Corporation as sole beneficiary of the Trust. Further, a quit claim deed will be given by the Tribe to the Successor Trustee or to the Corporation, as sole beneficiary of the Trust, for the purpose of eliminating any ambiguity in the public records.

Your position is that both an instrument of conveyance from the Bank as Trustee to the Successor Trustee or to the Corporation as the sole beneficiary and the quit claim deed from the Tribe to The Successor Trustee or to the Corporation will require only the minimum documentary stamp tax.

Discussion and Law

The tax levied by s. 201.02(1), F.S., is an excise tax on deeds, instruments, or writings transferring any interest in real property. The tax shall be 70 cents per each $100 of consideration. For purposes of this section, consideration includes money paid or to be paid, the discharge of any obligation, and the amount of any mortgage, purchase money mortgage, or other encumbrance. If the consideration is other than money, the consideration shall be presumed to be the fair market value of the real property being transferred.

Rule 12B-4.014(2), F.A.C., provides that a conveyance of unencumbered property as a gift is not taxable and that a conveyance to or by a trustee not pursuant to a sale is not taxable. In addition, Rule 12B-4.014(3), F.A.C., provides that a deed to correct a deficiency in a previous deed on which the tax has been paid requires only the minimum tax.

Department's Position

Therefore, a deed from the Bank as Trustee to the Successor Trustee or to the Corporation as sole beneficiary will require only the minimum documentary stamp tax pursuant to rule 12B4.014(2), F.A.C. In addition, the quit claim deed from the Tribe to the Successor Trustee or to the Corporation as sole beneficiary to clear title will require only the minimum documentary stamp tax pursuant to Rule 12B-4.014(3), F.A.C.

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,

James E. Silvey
Tax Law Specialist
Technical Assistance

JES/jes