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This superseded ruling found no tax due when the contingent mortgage was recorded because no present obligation to pay a sum certain existed.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This page is historical: revised TAA 95M-001R superseded the ruling on April 7, 1995.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 A: No, under this superseded ruling.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Status: Superseded by TAA 95M-001R (Revised) issued April 7, 1995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

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