Did a timeshare receivables loan qualify for Florida's wholesale warehouse mortgage exemption, avoiding added tax on collateral assignments?

Plain-English summary

The timeshare receivables agreement qualified as a wholesale warehouse mortgage agreement. As a result, recording collateral assignments of consumer notes and mortgages did not create additional documentary stamp or nonrecurring intangible tax, provided all required tax had already been paid when each consumer mortgage was recorded.

The receivables promissory note and lender advances were also outside those two Florida taxes. They were executed and delivered outside Florida, and the receivables loan was not directly secured by a mortgage on Florida real property.

The Department warned that annual intangible tax liability could still arise on the receivables loan. The ruling addressed the documentary stamp and nonrecurring taxes, not every possible tax on the financing.

What this means for you

The warehouse exemption prevents a second tax layer when already-taxed consumer mortgage obligations are pledged to finance the originator. It does not excuse tax due on the original Florida consumer mortgages.

Direct Florida real-property security for the warehouse lender or Florida execution and delivery of the principal obligation would change the facts supporting the result.

Common questions

Q: Were the consumer mortgages taxed? Yes. Required stamp and nonrecurring intangible taxes were paid on their full principal when recorded.

Q: Were the later collateral assignments taxed again? No, because the receivables agreement qualified for the warehouse exemption.

Q: Was the receivables note itself taxed? No. It was executed and delivered outside Florida and lacked direct Florida real-property security.

Q: Did the ruling eliminate annual intangible tax? No. It expressly said annual intangible-tax liability might arise.

Citations and references

• Fla. Stat. § 201.21 — wholesale warehouse mortgage exemption
• Fla. Stat. § 201.08 — documentary stamp tax
• Fla. Stat. § 199.133 — nonrecurring intangible tax tied to Florida real-property security
• Fla. Stat. § 199.145(2) — no additional nonrecurring tax after assignment of a taxed obligation
• Fla. Admin. Code r. 12B-4.053(28) — collateral assignments generally taxable absent an exemption
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97M-002

Original ruling text

SUMMARY

The Department held that a Receivables Agreement does
qualify as a wholesale warehouse agreement. Therefore,
based on the exemption, no Florida documentary stamp tax or
nonrecurring intangible personal property tax shall be due
on the recordation of the collateral assignments of the
consumer Notes and Mortgages, provided that all required
stamp taxes and intangible taxes are paid upon recordation
of the consumer Mortgages. As to the Receivables Note and
the advances made under the Receivables Loan, neither the
documentary stamp tax nor the nonrecurring intangible tax
is due, since the note and advances are made outside of
Florida and not directly secured by Florida real property.
Note that annual intangible tax liability may arise on the
Receivable Loan.

Jul 10, 1997

Re: Technical Assistance Advisement No. 97(M)-002
Documentary Stamp Tax and Intangible Tax: Wholesale
Warehouse Mortgage Agreement
XXX (Hereafter "Borrower")
XXX (Hereafter "Lender")
XXX (the "Resort")

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 Receivables Agreement constitutes a Wholesale
Warehouse Mortgage Agreement under s. 201.08, F.S., and whether
documentary stamp tax or nonrecurring intangible personal
property tax is due on the Receivables Note or advances or the
recordation of the collateral assignments of the consumer Notes

and Mortgages.

Background and Statement of Facts

The Borrower is the developer of a timeshare condominium
project in Florida known as the Resort. The Borrower sells
timeshare intervals in the Resort to consumer purchasers and
accepts purchase-money notes ("Notes") and purchase-money
mortgages ("Mortgages") from the consumer purchasers in payment
of up to ninety percent (90%) of the respective purchase price
for the timeshare intervals. Each Mortgage in favor of the
Borrower is recorded with the Clerk of Circuit Court in the
County where the Resort is located, and all required documentary
stamp taxes under s. 201.08, F.S., and non-recurring intangible
personal property taxes under s. 199.133, F.S., are paid on the
recorded Mortgage based on the full principal amount of the
respective Note made by the consumer purchaser payable to the
Borrower.

To finance the Notes and Mortgages received by the Borrower
from these consumer purchasers on which all required Florida
taxes have been paid, the Borrower and the Lender have entered
into an Interval Receivables Loan and Security Agreement (the
"Receivables Agreement"). The Receivables Agreement provides
for advances from the Lender to the Borrower from time to time
(the "Receivables Loan"), evidenced by a Receivables Promissory
Note in the maximum principal amount of $XX (the "Receivables
Note"). The Receivables Agreement and the Receivables Note and
the other documents executed by the Borrower in connection with
the Receivables Loan were executed and delivered to the Lender
outside of the State of Florida. The Receivables Loan is not
secured by any mortgage of Florida real property made directly
to the Lender, and the Lender does not have any offices in the
State of Florida.

The Receivables Loan is secured by the pledge and
collateral assignment of the Notes and Mortgages from the
Borrower to the Lender. Upon completion of each interval sale
in which the Borrower receives a Note and Mortgage, the Borrower
records in the county public records a collateral assignment of
the Note and Mortgage to the Lender, and the Borrower deposits

the original Note and Mortgage with a custodian that holds all
of the pledged Notes and Mortgages for the benefit of the
Lender. The Borrower continues to collect all payments made by
the consumers under the Notes and Mortgages pursuant to a
Servicing Agreement between the Borrower and the Lender.
Subject to other lending limitations under the Receivables
Agreement, the Borrower may borrow from the Lender advances of
between 75% and 85% of the principal amount outstanding under
each consumer Note, depending upon the payment history of the
respective consumers.

Discussion and Law

Rule 12B-4.053(28) of the F.A.C., provides that where the
assignment of a mortgage is given as collateral security for a
new loan, the assignment is subject to the documentary stamp tax
under s. 201.08, F.S., when recorded in Florida. However, s.
201.21, F.S., provides that there shall be exempt from all
excise taxes imposed by s. 201.08, F.S., all promissory notes,
nonnegotiable notes, and other written obligations to pay money
(principal obligations), when the maker thereof shall pledge or
deposit with the payee or holder thereof pursuant to any
agreement commonly known as a wholesale warehouse mortgage
agreement, as collateral security for the payment thereof, any
collateral obligation or obligations, provided all taxes imposed
by this chapter upon or in respect to such collateral obligation
or obligations have been paid.

Section 199.133, F.S., provides that a one-time
nonrecurring intangible tax shall apply to a note, bond, or
other obligation for payment of money only to the extent it is
secured by mortgage, deed of trust, or other lien upon real
property located in this state. Section 199.145(2), F.S.,
provides, however, that no additional nonrecurring tax shall be
due upon the assignment of a note and mortgage on which the
nonrecurring tax has been paid. In addition, because a note and
a mortgage are personal property under Florida law rather than
real property, the collateral assignment of a note and mortgage
does not constitute a lien on real property. Accordingly, the
Receivables Note and the Receivables Loan in this transaction
are not subject to the Florida nonrecurring intangible tax

because they are not secured by any lien on Florida real
property.

Department's Position

Therefore, the Receivables Agreement does qualify as a
wholesale warehouse agreement. Based on the exemption, no
Florida documentary stamp tax or nonrecurring intangible
personal property tax shall be due on the recordation of the
collateral assignments of the consumer Notes and Mortgages,
provided that all required stamp taxes and intangible taxes are
paid upon recordation of the consumer Mortgages. As to the
Receivables Note and the advances made under the Receivables
Loan, neither the documentary stamp tax nor the nonrecurring
intangible tax is due, since the note and advances are made
outside of Florida and not directly secured by Florida real
property. Note that annual intangible tax liability may arise
on the Receivables Loan.

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 General Counsel

JESS/mh