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 97B4-005

Original ruling text

Mar 12, 1997

Re: Technical Assistance Advisement No. 97(B)4-005
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 XX, 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/