Did recording a corrective leasehold mortgage and future amended renewal mortgages trigger additional Florida documentary stamp tax?

Subject

Corrective Renewal Mortgage and Future Renewal Mortgage

Plain-English summary

The Department concluded that neither the corrective leasehold mortgage nor the future amended and restated renewal mortgages were subject to additional documentary stamp tax. They qualified as exempt renewals under section 201.09.

The original notes and leasehold mortgages had already borne documentary stamp and intangible tax on their full principal amounts. The corrective document restored provisions that appeared in the original mortgage but had been omitted from a previously recorded amendment.

The proposed documents did not increase the debt or create new contractual obligations. They continued only the identical obligations of the original leasehold mortgage, were executed by the same original obligor, and covered the existing unpaid balance.

What this means for you

Under the renewal rules applied in this 1997 ruling, changing or restating mortgage language did not automatically trigger new documentary stamp tax. The exemption depended on continuity of obligor, obligation, and principal balance, plus proper tax on the original instrument.

A document that enlarged the indebtedness, added a new obligor, or created different obligations would not fit the facts the Department approved.

Common questions

Q: Why was the corrective mortgage recorded? It restored specific provisions from the original leasehold mortgage that were missing from the first recorded amendment.

Q: Did the future renewals increase the loan balance? No. The request stated that they would not enlarge the original indebtedness.

Q: Did the borrower change? No. The identical original obligor would execute the renewal documents.

Q: Had tax been paid on the original mortgage? Yes. Documentary stamp and intangible tax had been paid on the full original principal amount.

Citations and references

• Fla. Stat. § 201.08(1) — documentary stamp tax on written obligations, mortgages, and renewals
• Fla. Stat. § 201.09 — exemption for qualifying renewals by the original obligor covering the unpaid original balance
• Fla. Admin. Code R. 12B-4.051(1) and 12B-4.054(1) — taxation and exemption of renewal instruments
• Fla. Admin. Code R. 12-11.003; Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97B4-004

Original ruling text

Mar 12, 1997

Re: Technical Assistance Advisement No. 97(B)4-004 Documentary Stamp Tax: Corrective Renewal Mortgage and Future Renewal Mortgage XXX (Taxpayer) XXX (Bank) XXX (General Partnership)

Dear :

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

Issues

Whether the Corrective Renewal Mortgage and the Future Renewal Mortgage are taxable for documentary stamp tax purposes under s. 201.08, F.S.

Facts

Taxpayer executed a promissory note in XXX in favor of Bank (Original Note) and a first leasehold mortgage recorded in Florida securing the Original Note and encumbering real and personal property in Florida. Florida documentary stamp tax and intangible tax were paid based on the full principal amount of the Original Note. The General Partnership executed a promissory note in XXX, in favor of the Bank (General Partnership Note) and a first leasehold mortgage recorded in Florida securing the General Partnership Note encumbering real and personal property in Florida with documentary stamp tax and intangible tax paid on the full principal amount of the note.

In XXX, the Taxpayer recorded a first amendment to the first leasehold mortgage in Florida and the General Partnership recorded a first amendment to the General Partnership first leasehold mortgage with documentary stamp tax paid on both recorded first amendments. Taxpayer applied for and received a

refund of the documentary stamp tax paid on the recordation of the first amendment. Taxpayer now desires to file a second corrective amendment to the prior recorded leasehold mortgage, as amended (Corrective Renewal Mortgage) without incurring additional documentary stamp tax on the recordation thereof. The Corrective Renewal Mortgage will include specific provisions which were included in the original leasehold mortgage that were not contained in the prior recorded first amendment. Further, in the future taxpayer desires to record amended and restated renewal mortgages (Amended and Restated Renewal Mortgage) without incurring additional documentary stamp tax. The Corrective Renewal Mortgage and future Amended and Restated Renewal Mortgage will only extend and continue the identical contractual obligations and will not enlarge the original contracts and obligations of the original leasehold mortgage. Further, the Corrective Renewal Mortgage and future Amended and Restated Renewal Mortgage will be executed by the identical obligor as under the original leasehold mortgage.

Taxpayer Analysis

Taxpayer asserts that no additional documentary stamp tax is due in connection with the execution and recordation of the Corrective Renewal Mortgage or the future Amended and Restated Renewal Mortgage since proper tax was paid on the original leasehold mortgage, the renewals continue the identical contractual obligations of the original leasehold mortgage, will not enlarge the indebtedness under the original leasehold mortgage and are executed by the original obligor.

Law and Analysis

Relevant to your request, s. 201.08(1), F.S., provides in part that:

On promissory notes, nonnegotiable notes, written obligations to pay money... made executed, delivered, sold, transferred, or assigned in the state, and for each renewal of the same, the tax shall be 35 cents on each $100 or fraction thereof of the indebtedness or obligation evidenced thereby. On mortgages, trust deeds, security

agreements, or other evidences of indebtedness filed or recorded in this state, and for each renewal of the same, the tax shall be 35 cents on each $100 or fraction thereof of the indebtedness or obligation evidenced thereby....

Rule 12B-4.051(1), F.A.C., provides that tax is required on a note executed in Florida, with the tax measured by the amount of the note. In addition, a document executed or recorded which renews or extends an existing obligation is subject to tax, unless it meets the requirements of s. 201.09, F.S. Rule 12B4.054(1), F.A.C., provides that an original note may be renewed for the unpaid balance of the amount which was previously disbursed, provided all other requirements of s. 201.09, F.S., are met, without additional tax due. Section 201.09, F.S., provides that a note may be renewed without tax due that extends or continues the identical contractual obligations as the original. In order to be exempt, the renewal note shall not be executed by any person other than the original obligor and must renew and extend only the unpaid balance of the original.

In this case, both the Corrective Renewal Mortgage and the future Amended and Restated Renewal Mortgage renew only the identical contractual obligations of the original leasehold mortgage, without enlargement, by the identical obligors as under the original leasehold mortgage, and proper documentary stamp tax was paid on the original leasehold mortgage.

Department's Position

Therefore, neither the Corrective Renewal Mortgage nor the future Amended and Restated Renewal Mortgage is taxable under s. 201.08(1), F.S. and both are in fact exempt renewals under s. 201.09, 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,

James E. Silvey
Tax Law Specialist
Technical Assistance and Dispute Resolution Office of the General Counsel

Jes/