Did a conditional purchase agreement, memorandum, and vendee's mortgage create documentary stamp or nonrecurring intangible tax before any present payment obligation arose?

Plain-English summary

This superseded ruling found no tax due when the contingent mortgage was recorded because no present obligation to pay a sum certain existed.

The conditional purchase agreement, memorandum, contingent repayment obligation, and mortgage did not create an immediate fixed payment obligation. The ruling therefore found no documentary stamp or nonrecurring intangible tax due at recording. It said nonrecurring intangible tax would become due if the seller defaulted and the buyer pursued foreclosure, measured by the amount subject to foreclosure.

What this means for you

This page is historical: revised TAA 95M-001R superseded the ruling on April 7, 1995.

Common questions

Q: Was tax due when the mortgage was recorded?
A: No, under this superseded ruling.

Q: Why not?
A: The obligation was contingent and no present sum certain was payable.

Q: When did the ruling say nonrecurring intangible tax would arise?
A: Upon default and foreclosure, based on the amount subject to foreclosure.

Citations and references

• Fla. Stat. § 201.08 — documentary stamp tax on written obligations and mortgages
• Fla. Stat. § 199.133 — nonrecurring intangible tax on secured obligations
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95M-001

Original ruling text

Status: Superseded by TAA 95M-001R (Revised) issued April 7,
1995

Jan 18, 1995

Re: Technical Assistance Advisement No. 95(M)-001
Documentary Stamp and Intangible Taxes;
Conditional Purchase Agreement
Sections 199.133 and 201.08, F.S.
XXX (Buyer)
XXX (Seller)

Dear :

Your letter requesting a Technical Assistance Advisement
has been received by this office. Your request concerns the
taxability of a conditional purchase agreement and a conditional
payment obligation and is based upon the following scenario:

Seller owns a certain property located in Florida. This
property includes a golf course, tennis courts and related
club facilities (Club Property). Buyer, a Florida not-forprofit corporation, was formed to sell equity membership
interest in the Club Property and to ultimately purchase
the Club Property from Seller.

The Seller and Buyer have entered into a Conditional
Purchase Agreement through which the Buyer will sell
memberships to individuals for an agreed sum. The Seller
agrees to convey the Club Property to the Buyer upon one of
two specific events, but no later than XX. The Buyer and
Seller will record a Memorandum of Agreement that will
summarize the Conditional Purchase Agreement. To secure
the Buyer against default by the Seller, Seller has given
Buyer a Vendee's Mortgage that is to be recorded in the
county where the Club Property is located. Should the
Seller default under the Conditional Purchase agreement
Buyer may demand repayment of all sums given over to Seller
(Contingent Repayment Obligation) or foreclose on Vendee's

mortgage on the Club Property that secures the Contingent
Repayment Obligation.

Requested Advisement

Based upon the scenario above the following requests for
technical advice are made:

1. The agreement containing the Contingent Repayment
   Obligation is not subject to the provisions under the
   documentary stamp tax imposed by s. 201.08 nor the
   nonrecurring intangible tax imposed by s. 199.133,
   F.S.
2. The recording of the Memorandum does not trigger the
   documentary stamp tax nor the nonrecurring intangible
   tax.
3. The recording of the mortgage securing the Seller's
   Contingent Obligation under the Conditional Sales
   Agreement will not be subject to the documentary stamp
   nor the nonrecurring intangible tax.

Provisions of Law

Section 201.08 imposes a tax on the value of all promissory
notes and other written obligations to pay money. This section
also imposes a tax on mortgages on Florida real property
recorded in the public records.

Section 199.133 imposes a nonrecurring intangible tax on
obligations for the payment of money secured by a lien on
Florida real property.

Discussion of Law

Based upon the provisions of the Conditional Purchase
Agreement and the Memorandum of Agreement no specific obligation
to pay is created. Therefore, the documents are not subject to
the tax imposed by s. 201.08, F.S., on obligation for the
payment of money. The same is true for the Contingent Repayment
Obligation and the Mortgage securing the Contingent Repayment
Obligation, since the Seller has no present obligation to pay a

sum certain under either of these documents. These documents
are also not subject to the tax imposed by s. 199.133, F.S.

Based upon the fact that no present obligation to pay is
created by the agreements and documents in this transaction, no
nonrecurring intangible tax is due at the time of recording the
mortgage. No tax is due at recording, because the obligation to
be secured is contingent upon a value to be determined in the
future. Should the Seller default on its obligation under the
mortgage and the Buyer seek to foreclose against the mortgage
the nonrecurring intangible tax will be due at that time, based
upon the amount subject to the foreclosure.

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,

J.V. Parramore, Jr.
Tax Law Specialist
Technical Assistance

JVP/mh