Did a deed to a land trust, an out-of-state collateral assignment, or a Florida UCC-1 filing trigger documentary stamp tax?

Subject

Warranty Deed, Collateral Assignment of Beneficial Interest, and UCC Financing Statement

Plain-English summary

None of the three described instruments produced documentary stamp tax. A deed transferring the Florida property to a land trust was exempt because the taxpayer remained the sole beneficial owner; the land-trust agreement itself was not taxable whether recorded or unrecorded.

The collateral assignment of the taxpayer's beneficial interest, including leases, rents, and profits, was treated as a mortgage. But it was consummated outside Florida and would not be recorded in Florida, so it was not taxable under section 201.08.

Filing the UCC-1 financing statement with the Florida Secretary of State was also not taxable by itself. The cited rule nevertheless required a notation on the UCC filing stating whether documentary stamp tax was due.

What this means for you

Documentary stamp tax turned on what each instrument transferred, where the security assignment occurred, and what was filed or recorded in Florida. A land-trust deed can be exempt when beneficial ownership stays unchanged, while a security document may produce a different result if it or the underlying obligation is recorded.

Common questions

Was the deed to the land trust taxable? No. The taxpayer remained the sole beneficiary, so the deed did not transfer beneficial ownership.

Was the collateral assignment taxable? No on these facts, because it occurred outside Florida and was not recorded in Florida.

Was the UCC-1 filing taxable? No, not by itself. The filing still required a notation concerning stamp-tax status.

Citations and references

• Fla. Stat. §§ 201.02 and 201.08(1)
• Fla. Admin. Code rr. 12B-4.014(2)(b), 12B-4.014(8), 12B-4.053(28), and 12B-4.053(33)
• Fla. Stat. § 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94B4-023

Original ruling text

Dec 27, 1994

Re: Technical Assistance Advisement No. 94(B)4-023 Documentary Stamp Tax; Warranty Deed, Collateral Assignment of Beneficial Interest, and UCC Financing Statement XX (Affiliate) XX (Taxpayer) XX (Lender)

Dear :

This is in response to your recent request for a technical assistance advisement pursuant to s. 213.22, F.S., and Florida Administrative Code Rule 12-11.003.

The following is the description of the transactions outlined in your letter:

1. By Special Warranty Deed dated XX, 1993 and recorded
   XX, 1993 in Official Records Book XX, Page XX of the Public Records of XX County, Florida, Affiliate obtained title to certain real property. Subsequently, Affiliate was merged into Taxpayer pursuant to the laws of the State of XX. No deed was given in connection with such merger and therefore no documentary stamp taxes were due under the merger transaction pursuant to Rule 12B-4.014(8), F.A.C. Subsequent to the time of conveyance of the property and prior to the date of this request, Taxpayer has conveyed certain portions of the property described in the deed but remains the owner of the majority of the property set forth in the deed.
2. Taxpayer has entered into a multi-state financing
   transaction with Lender and in connection therewith, the Taxpayer executed a promissory note, dated XX, 1994 (the Note), evidencing a $X revolving credit obligation secured by collateral in XX and XX. Taxpayer has requested that additional collateral be provided in the form of the Property in XX, Florida.

The note was executed in XX, the terms of the note and loan agreement are governed by XX law, and no negotiations occurred within the State of Florida.

REQUESTED RULINGS

ISSUE NO. 1

Whether recording the deed in the State of Florida by Taxpayer transferring the property to a Land Trust (the identity of which has not been yet determined) under the terms of a Land Trust Agreement of which the Taxpayer will be sole beneficiary, and the Land Trust Agreement shall be negotiated in the State of XX and may be governed by the laws of Florida and will not be recorded, is taxable.

ISSUE NO. 2

Whether Taxpayer collaterally assigning its beneficial interest (leases, rents and profits) to Lender as additional security for the obligation under the note which will be consummated outside of Florida and which will not be recorded is taxable.

ISSUE NO. 3

Whether filing of UCC-1 Financing Statement with the Florida Secretary of State is taxable.

DISCUSSION AND LAW

ISSUE NO. 1

As stated in Rule 12B-4.014(2)(b), F.A.C., a deed to or from a trustee conveying real property is exempt from the tax to the extent that the deed does not transfer the beneficial ownership of the real property.

The Department's position is to treat deeds to or from land trusts in the same manner as deeds to other trusts. If a grantor transfers real property to a land trust where the

grantor receives the beneficial interest in the land trust, or the trustee transfers the real property to the beneficiary, then no tax would be due even if the deed is given subject to a mortgage. Land Trust Agreement itself is not taxable.

ISSUE NO. 2

As stated in Rule 12B-4.053(28), F.A.C., any document which assigns a mortgage as collateral security for a loan is subject to tax if recorded in the state. Collaterally assigning its beneficial interest to Lender as additional security for the obligation is considered a mortgage.

ISSUE NO. 3

Pursuant to Rule 12B-4.053(33), F.A.C., the filing or recording in Florida of a UCC Financial 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 Financing Statement stating whether tax is due or not.

DEPARTMENT'S POSITION

RESPONSE TO ISSUE 1

A Land Trust is a vehicle by which real estate is conveyed to a trustee under an arrangement that gives to the beneficiaries full management and control of the property. Two instruments are essential to a Land Trust. They are: A deed conveying property into the trust and a Land Trust Agreement.

A deed to a trustee conveying real property is exempt from the documentary stamp tax under s. 201.02, F.S., to the extent that the deed does not transfer the beneficial ownership of the real property or to the extent that there is no consideration for the transfer. Land Trust Agreement itself, recorded or unrecorded, is not taxable.

RESPONSE TO ISSUE 2

The collateral assignment of beneficial interest which will not be recorded and will occur outside of the state is not taxable for the documentary stamp tax under s. 201.08, F.S.

RESPONSE TO ISSUE 3

The filing or recording in Florida of a UCC Financing Statement is not taxable under s. 201.08(1), 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,

Baldan E. Sulker
Tax Audit Specialist III
Technical Assistance

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