Did Florida documentary stamp and nonrecurring intangible taxes apply to a warehouse-loan securitization and collateral assignments?

Subject

Warehouse Mortgage Exemption

Plain-English summary

The original ruling found no Florida documentary stamp or additional nonrecurring intangible tax on the described securitization steps, provided the stated location and prior-tax conditions were met. The bonds and warehouse loan agreement were executed and delivered outside Florida, so Florida documentary stamp tax did not apply to those written payment obligations.

Transfers of the Florida and non-Florida loan obligations among the affiliates and into the taxpayer were treated as transfers of receivables, not new Florida real-property transfers or collateral for new loans. Florida obligations had already borne the applicable documentary stamp and nonrecurring intangible taxes, while non-Florida obligations were not secured by Florida real property.

Florida collateral-assignment documents recorded to secure the bonds would ordinarily be taxable security documents. The original ruling applied the wholesale warehouse mortgage exemption because the assigned collateral obligations secured the principal warehouse obligation and all documentary stamp tax due on the Florida collateral obligations had already been paid. No additional nonrecurring intangible tax was due on assignments of previously taxed Florida obligations.

The official PDF directs readers to revised TAA 98M-004R. This page preserves the original analysis, but the revised advisement must be consulted before relying on it.

What this means for you

The original result depended on a tightly documented chain: where the principal obligations were executed and delivered, whether an assignment transferred ownership or secured a new loan, whether collateral involved Florida real property, whether earlier tax was fully paid, and whether the warehouse agreement satisfied the statutory exemption.

Common questions

Q: Why were the bonds and warehouse agreement outside Florida's documentary stamp tax? They were to be made, executed, delivered, and held outside Florida.

Q: Why were affiliate transfers of the loans not taxed again? They transferred receivables and were not new real-property conveyances or collateral security for new loans; Florida obligations had already been taxed.

Q: Could recording a collateral assignment in Florida normally create tax? Yes, but the original ruling applied the wholesale warehouse mortgage exemption when all tax on the underlying Florida collateral obligations had been paid.

Q: Is this the Department's final ruling for the transaction? No. The PDF says to refer to revised TAA 98M-004R.

Citations and references

• Fla. Stat. §§ 201.01, 201.08 — written obligations and security documents made, delivered, filed, or recorded in Florida
• Fla. Stat. § 201.21 — wholesale warehouse mortgage exemption
• Fla. Stat. §§ 199.133, 199.145(2) — nonrecurring intangible tax and previously taxed assignments
• Fla. Admin. Code rr. 12B-4.053(28), (34), 12B-4.054(4), (6) — out-of-state notes and mortgage assignments
• State v. Sweat, 152 So. 432 (Fla. 1934)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98M-004

Original ruling text

SUMMARY

An out-of-state limited liability company has entered into
a wholesale warehouse mortgage loan agreement with an outof-state corporation. The out-of-state limited liability
company made Florida and non-Florida loans to third parties
which are either secured by mortgage(s) securing real and
personal property, by a perfected security interest in
personal property, or secured by leases of personal
property. The loans were pledged to the out-of-state
corporation under the terms of the warehouse mortgage loan
agreement. A Florida corporation affiliated with the outof-state corporation made certain Florida and non-Florida
loans to third parties secured in the same manner as the
out-of-state limited liability company's loans. For
purposes of a securitization transaction, the out-of-state
limited liability company will transfer and assign its
loans to a new affiliate ("Parent"), formed for the
purposes of the securitization transaction. Parent will
then transfer and assign the loans to the Florida
corporation, who will in turn transfer and assign the loans
to the taxpayer in exchange for a limited partnership
interest in the taxpayer.

As part of the securitization transaction, the taxpayer
will enter into an Indenture and wholesale warehouse
mortgage loan agreement with a bank. Certain bonds will be
issued by the taxpayer to an out-of-state grantor trust and
will grant to the bank a security interest in the
collateral obligations held by the taxpayer to secure the
taxpayer's obligation to repay the bonds. The bonds and
wholesale warehouse mortgage loan agreement will be made,
executed and delivered outside of Florida.

The only mortgages securing the Florida mortgage warehouse
agreements are Florida mortgages where all documentary
stamp tax and intangible tax has been paid. The bonds and
warehouse loan agreement are not subject to documentary
stamp tax and intangible tax as they are made, executed and
delivered outside of Florida. No tax is due on any of the
transfers and assignments of collateral obligations made by

the parent to the Florida corporation, nor is any tax due
on the transfer and assignment of loans from the Florida
corporation to the taxpayer. No tax is due upon the
execution, delivery, filing or recordation in Florida of
the Florida Collateral Assignment documents, which pledge
Florida collateral obligations to the bank as security for
the taxpayer's obligation under the bonds and warehouse
loan agreement.

Refer to Revised TAA 98(M)-004R

Jul 16, 1998

Re: Technical Assistance Advisement No. 98(M)-004
Documentary Stamp Tax and Nonrecurring Intangible Tax;
Warehouse Mortgage Exemption
ss. 199.133, 199.145, 201.01, 201.08, 201.21, 201.23, F.S;
XXX (The Taxpayer)
XXX (Corporation)
XXX (FI)
XXX (FIII)
XXX (FI & FIII)

Dear :

This is in response to your letter dated May 30, 1997,
requesting a Technical Assistance Advisement regarding the
applicability of Documentary Stamp Tax and Intangible Tax, under
the facts and documents set forth herein.

Statement of Facts Presented by the Taxpayer

FIII, an out-of-state limited liability company, has
negotiated and entered into a wholesale warehouse mortgage loan
agreement (the "FIII Warehouse Loan Agreement") with
Corporation, also located outside of Florida. The FIII
Warehouse Loan Agreement was the subject of TAA 97(M)-004.

Pursuant to the terms of the FIII Warehouse Loan Agreement,

FIII has made certain Florida and non-Florida loans to third
parties (the "FIII Loans"). These loans are either (i) secured
by a recorded mortgage encumbering a fee simple interest in real
estate, (ii) secured by a recorded mortgage encumbering a
leasehold interest in real estate, (iii) secured by a perfected
security interest in personal property, or (iv) secured by
leases of personal property which, for Florida documentary stamp
tax purposes, are treated as personal property financing
transactions. Such loans were pledged to Corporation under the
terms of the FIII Warehouse Loan Agreement. Additionally, FIII
used the FIII Warehouse Loan Agreement proceeds to purchase
Florida and non-Florida real property which it then leased to
third parties ("True Lease Transactions").

FI, a Florida corporation which is an affiliate of FIII,
also made certain Florida and non-Florida loans to third parties
(the "FI loans") that are secured in the same manner as the FIII
Loans and are pledged to another lender under the terms of a
separate warehouse loan agreement. Additionally, FI used its
warehouse loan agreement proceeds to enter into True Lease
Transactions.

As part of a proposed securitization transaction (the
"Securitization Transaction"), FIII will transfer and assign the
FIII Loans to a new affiliate, Parent, which will be formed for
purposes of the Securitization Transaction and which will own
and hold all of the issued and outstanding capital stock and
equity member interests of FI and FIII. The transfer of the
FIII Loans to Parent will be a distribution to Parent in its
capacity as the sole equity member of FIII. Upon receipt of
title to the FIII loans, Parent will transfer and assign the
FIII Loans to FI as a contribution to the capital of FI. FI
then will immediately transfer and assign the FI Loans and FIII
Loans to Taxpayer as a capital contribution in exchange for a
limited partnership interest in Taxpayer. This transfer is
necessary because, under the terms of the FIII Warehouse Loan
Agreement, FIII may not own a limited partnership interest in
Taxpayer.

The FI Loans and the FIII Loans will hereinafter be
referred to individually and collectively as the "Collateral

Obligations."

As part of the Securitization Transaction, Taxpayer is
negotiating and will enter into an Indenture and Wholesale
Warehouse Mortgage Agreement (the "Warehouse Loan Agreement")
with a to-be-determined national bank (the "Indenture Trustee")
Under the terms of the Warehouse Loan Agreement, Taxpayer will
issue certain bonds (the "Bonds") to an out-of-state grantor
trust (the "Grantor Trust") and will grant to the Indenture
Trustee a security interest in the Collateral Obligations held
by Taxpayer to secure Taxpayer's obligation to repay the Bonds
in accordance with the terms thereof and the terms of the
Warehouse Loan Agreement. The Grantor Trust then will sell
interests in the Bonds to investors in the form of Grantor Trust
certificates. The Bonds and the Warehouse Loan Agreement will
be made, executed, and delivered outside of Florida.

As of this date, the Bonds and Warehouse Loan Agreement
have not been executed and nothing has been filed or recorded in
Florida with regard to the Warehouse Loan Agreement or any
collateral to be provided by Taxpayer to secure its payment
obligations thereunder (as described below). The Indenture
Trustee will hold the Warehouse Loan Agreement outside of
Florida.

For purposes of analyzing the Florida taxation issues in
connection with the Securitization Transaction, the Collateral
Obligations (as summarized above) generally may be categorized
as follows: (1) Florida Collateral Obligations, (2) non-Florida
Collateral Obligations, and (3) non-Collateral Obligations
(i.e., True Lease Transactions).

Florida Collateral Obligations arise from FI and FIII
making loans to third parties which are secured by mortgages or
pledges of Florida assets (i.e., real and personal property
located in Florida). Notes, mortgages and security agreements
creating the Florida Collateral Obligations generally were made,
executed and delivered in Florida. When notes or other written
obligations to pay money were made, executed or delivered in
Florida, or when mortgage or security agreements relating to
Florida Collateral Obligations were filed or recorded in

Florida, documentary stamp taxes were paid on the principal
amount of the Collateral Obligations as required by s. 201.08,
F.S., as well as appropriate nonrecurring intangible taxes due
under Chapter 199, F.S.

Non-Florida Collateral Obligations involve FI and FIII
making loans to third parties which are secured by mortgages or
pledges of real and personal property outside of Florida. All
notes or other written obligations to pay money, mortgages and
security agreements creating and securing the non-Florida
Collateral Obligations were made, executed and delivered outside
of Florida. Some documents, such as commitment letters, closing
statements, UCC financing statements, side letters, construction
loan agreements, draw requests and escrow agreements, may have
been made, executed or delivered in Florida. In no event are
documents evidencing or securing the non-Florida Collateral
Obligations recorded or filed in Florida, and none of the nonFlorida Collateral Obligations made, executed or delivered in
Florida contain a written promise to pay; define, amend, modify
or enlarge any existing promise to pay; or acknowledge receipt
of funds.

True Lease Transactions involve FI and FIII using FI and
FIII Warehouse Loan Agreement proceeds to purchase (and in some
cases construct improvements on) Florida and non-Florida real
property, and then lease the property to third party lessees
pursuant to the terms of a typical arm's length (nonfinancing)
lease agreement. Such transactions may also involve FI and FIII
entering into a ground lease of undeveloped Florida or nonFlorida real property and then constructing improvements thereon
for eventual lease to third parties under a typical lease
agreement. The documentary stamp taxes on deeds under s.
201.02, F.S., were paid on FI and FIII's purchase of any Florida
real property, as well as the documentary stamp tax and
nonrecurring intangible tax imposed under Chapters 201 and 199,
F.S., in respect of any recorded collateral assignments of
leases or mortgages on Florida property granted by FI and FIII
to the warehouse lenders.

The Warehouse Loan Agreement requires Taxpayer to grant a
security interest in the Collateral Obligations to or in favor

of the Indenture Trustee (the "Collateral Assignments") to
secure Taxpayer's repayment of the indebtedness represented by
the Bonds. The Collateral Assignments will either be a
collateral assignment of mortgage or an assignment of security
agreement. Similarly, the Warehouse Loan Agreement requires
Taxpayer to grant a security interest in favor of the Indenture
Trustee in its rights relating to the True Lease Transactions,
either by a collateral assignment of the landlord's interest in
a lease or by a recorded mortgage. The documents pledging
Taxpayer's interest in the Collateral Obligations and True Lease
Transactions in favor of the Indenture Trustee are hereinafter
referred to collectively as the "Collateral Assignment
Documents."

The Collateral Assignments and the Collateral Assignment
Documents will not incorporate by reference the Warehouse Loan
Agreement, but will state that they are given as security for
Taxpayer's obligations under the Warehouse Loan Agreement. The
Assignment Documents assigning Taxpayer's interest in Florida
Collateral Obligations and True Lease Transactions to or in
favor of the Lender may be made, executed and delivered, and
will be recorded or filed in Florida. The Collateral Assignment
Documents transferring Taxpayer's interest in non-Florida
Collateral Obligations and True Lease Transactions to or in
favor of the Indenture Trustee may be made, executed and
delivered in Florida, but will be recorded outside of Florida.

Additional facts relevant to the request, provided in a
letter dated June 19, 1998, concern the structure of the notes
and mortgages. The only mortgages securing the Florida mortgage
warehouse agreements are Florida mortgages that had all the
proper documentary stamp tax and intangible tax paid. There are
no out of state mortgages securing the Florida mortgage
warehouse agreements.

Requested Advisement

A) The Bonds and Warehouse Loan Agreement will not be
subject to Florida documentary stamp tax because they
will not be made, executed or delivered in Florida.
B) No documentary stamp tax or nonrecurring intangible

tax will be due on the transfer and assignment by FIII
to Parent of Florida and non-Florida Collateral
Obligations, which Collateral Obligations represent
loans previously originated by FIII.
C) No documentary stamp tax or nonrecurring intangible
tax will be due on the transfer and assignment by
Parent to FI of Florida and non-Florida Collateral
Obligations, which Collateral Obligations represent
loans previously originated by FIII.
D) No documentary stamp tax or nonrecurring intangible
tax will be due on the transfer and assignment by FI
to Taxpayer of Florida and non-Florida Collateral
Obligations, which Collateral Obligations represent
loans previously originated by FI and FIII.
E) Documentary stamp tax and nonrecurring intangible tax
will not be due upon the execution, delivery, filing
or recordation in Florida of the Florida Collateral
Assignment Documents, which documents pledge Florida
Collateral Obligations to the Indenture Trustee as
security for Taxpayer's obligation under the Bonds and
Warehouse Loan Agreement.

Provisions of Law

Section 201.08, F.S., imposes documentary stamp tax on
promissory notes and other written obligations to pay money
which are made, executed or delivered in Florida, and upon
mortgages, trust deeds, security agreements and other evidences
of indebtedness which are filed or recorded in Florida.

A promissory note which is made, executed and delivered
outside of Florida is generally not a taxable document for
documentary stamp tax purposes within the purview of ss. 201.01
and 201.08, F.S. 1980 Op. Att'y. Gen. Fla. 080-79 (Sept. 24,
1980); See also Rule 12B-4.053(34), F.A.C.

An assignment of a mortgage by a lender to a new lender who
has purchased the note and mortgage and becomes the holder of
the note and mortgage is not subject to documentary stamp tax.
(State v. Sweat, 152 So 432 (1934)). However, where the
assignment of a mortgage is given as collateral security for a

new loan, the assignment is a taxable mortgage when recorded in
Florida. See Rules 12B-4.054(6) and 12B-4.053(28), F.A.C.

Section 201.21, F.S., exempts from all excise taxes
principal obligations when the maker thereof pledges or deposits
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 excise taxes imposed
under Chapter 201, F.S., upon or in respect to such collateral
obligation or obligations shall have been paid. The term
"collateral obligation" means any note, bond, or other written
obligation to pay money secured by mortgage, deed of trust, or
other lien upon real or personal property. A collateral
assignment of a collateral obligation made pursuant to a
wholesale warehouse mortgage agreement does not invalidate the
exemption from documentary stamp taxation under this provision.
See Rule 12B-4.054(4), F.A.C.

Section 199.133(1), F.S., imposes a one-time nonrecurring
tax on every promissory note and other obligation for payment of
money if, and to the extent, such note or obligation is secured
by a mortgage, deed of trust, or other lien upon Florida real
property.

Under the provisions of s. 199.133(2), F.S., the
nonrecurring tax applies 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
situated in Florida.

Per s. 199.145(2), F.S., no additional nonrecurring
intangible tax is due upon the assignment by the obligee of a
note, bond, or other obligation for the payment of money upon
which the nonrecurring tax previously has been paid.

Determination

The responses to your questions are as follows:

A) The Bonds and Warehouse Loan Agreement will not be

subject to Florida documentary stamp tax because they
will not be made, executed or delivered in Florida.

The Taxpayer's written obligation to pay off the Bonds
will be set forth exclusively in the Bonds and
Warehouse Loan Agreement. Both the Bonds and the
Warehouse Loan Agreement will be made and executed by
the Taxpayer outside Florida and delivered to the
Indenture Trustee or Grantor Trust outside Florida.
Since the Florida documentary stamp tax is not imposed
upon obligations to pay money which are made, executed
and delivered outside Florida, the Bonds and Warehouse
Loan Agreement are not subject to the documentary
stamp tax.

B) No documentary stamp tax or nonrecurring intangible
tax will be due on the transfer and assignment by FIII
to Parent of Florida and non-Florida Collateral
Obligations, which Collateral Obligations represent
loans previously originated by FIII.

Documentary Stamp Tax

Since the distribution of Collateral Obligations by
FIII to Parent is in the nature of a transfer for
consideration of receivables, which is not a transfer
of real property under s. 201.02, F.S., and is not a
transfer of collateral security for a new loan, the
transfer will be exempt from documentary stamp tax.

Nonrecurring Intangible Tax

No additional nonrecurring intangible tax will be due
on the transfer and assignment by FIII to Parent of
the Florida Collateral Obligations since the tax has
previously been paid on the Florida Collateral
Obligations. No nonrecurring intangible tax will be
due on the transfer and assignment by FIII to Parent
of the non-Florida Collateral Obligations because the
obligations will not be secured by a mortgage, deed of
trust, or other lien on Florida real property.

C) No documentary stamp tax or nonrecurring intangible
tax will be due on the transfer and assignment by
Parent to FI of Florida and non-Florida Collateral
Obligations, which Collateral Obligations represent
loans previously originated by FIII.

Documentary Stamp Tax. An assignment of a mortgage by
a lender to a new lender who has purchased the note
and mortgage and becomes the holder of the note and
mortgage is not taxable; provided, however, that where
the assignment of a mortgage is given as collateral
security for a new loan, it is a taxable mortgage when
recorded in Florida. Since the contribution of
Collateral Obligations by Parent to FI is in the
nature of a transfer for consideration of receivables,
which is not a transfer of real property under s.
201.02, F.S., and is not a transfer of collateral
security for a new loan, the transfer will be exempt
from documentary stamp tax.

Nonrecurring Intangible Tax. No additional
nonrecurring intangible tax will be due upon the
transfer and assignment by Parent to FI of the Florida
Collateral Obligations because a nonrecurring tax
previously has been paid. No nonrecurring intangible
tax will be due upon the transfer and assignment of
the non-Florida Collateral Obligations because such
obligations will not be secured by a mortgage, deed of
trust, or other lien upon Florida real property.

D) No documentary stamp tax or nonrecurring intangible
tax will be due on the transfer and assignment by FI
to Taxpayer of Florida and non-Florida Collateral
Obligations, which Collateral Obligations represent
loans previously originated by FI and FIII.

Documentary Stamp Tax

Since the contribution of Collateral Obligations by FI
to Taxpayer is in the nature of a transfer for

consideration of receivables, which is not a transfer
of real property under s. 201.02, F.S., and is not a
transfer of collateral security for a new loan, the
transfer will be exempt from documentary stamp tax.

Nonrecurring Intangible Tax

No additional nonrecurring intangible tax will be due
on the transfer and assignment by FI to Taxpayer of
the Florida Collateral Obligations since the tax has
previously been paid on the Florida Collateral
Obligations. No nonrecurring intangible tax will be
due on the transfer and assignment by FI to Taxpayer
of the non-Florida Collateral Obligations because the
obligations will not be secured by a mortgage, deed of
trust, or other lien on Florida real property.

E) Documentary stamp tax and nonrecurring intangible tax
will not be due upon the execution, delivery, filing
or recordation in Florida of the Florida Collateral
Assignment Documents, which documents pledge Florida
and non-Florida Collateral Obligations to the
Indenture Trustee as security for the Taxpayer's
obligation under the Bonds and the Warehouse Loan
Agreement.

Documentary Stamp Tax. The documentary stamp tax,
absent an exemption, taxes collateral assignments of
mortgages or security agreements which are filed or
recorded in Florida. However, the wholesale warehouse
mortgage exemption provided in s. 201.21, F.S.,
exempts from the documentary stamp tax promissory
notes and other obligations to pay money ("principal
obligations") where, pursuant to a wholesale warehouse
mortgage agreement, the maker of the principal
obligation pledges to or deposits with the obligee, as
collateral security for the payment of the principal
obligation, any note or other written obligation to
pay money which is secured by a mortgage, deed of
trust, security agreement, or other lien upon real or
personal property with respect to which all

documentary stamp taxes imposed thereon have been
paid. The pledging of a specific collateral obligation
to secure a specific principal obligation, if required
under the terms of the wholesale warehouse mortgage
agreement, does not invalidate the applicability of
the wholesale warehouse mortgage exemption. Per the
additional facts provided in the letter of June 19,
1998, the only mortgages securing the Florida
warehouse mortgage agreements are Florida mortgages,
where all documentary stamp tax has been paid.

In the present case, the mere execution and delivery
of Collateral Assignment Documents in Florida will not
subject such documents to documentary stamp tax
because such documents will not contain a promise to
pay. The filing or recording in Florida of Collateral
Assignment Documents assigning the Taxpayer's
interests in Florida Collateral Obligations in favor
of the Lender, absent a specific exemption, would be
subject to Florida documentary stamp tax. However,
pursuant to the terms of the Warehouse Loan Agreement,
the Taxpayer is required to pledge or collaterally
assign to or in favor of the Indenture Trustee the
Florida Collateral Obligations as collateral security
for the payment of the Taxpayer's obligation to pay
money under the Bonds and the Warehouse Loan
Agreement. Accordingly, if all Florida documentary
stamp taxes due upon or with respect to all Florida
Collateral Obligations have been paid, the Collateral
Assignment Documents assigning the Taxpayer's
interests in Florida Collateral Obligations pledged to
or in favor of the Indenture Trustee under the Florida
Wholesale Warehouse Agreement, will not be subject to
Florida documentary stamp tax.

Nonrecurring Intangible Tax. No additional
nonrecurring intangible tax will be due upon the
recordation or filing in Florida of the Florida
Collateral Assignment Documents because a nonrecurring
tax previously has been paid upon the recordation or
filing of the Florida Collateral Obligation documents.

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,

Joy B. Eldred, C.P.A.
Tax Law Specialist
Technical Assistance and Dispute Resolution
Office of General Counsel

JBE/mh