Was recording a notice about billboard easement agreements subject to Florida documentary stamp tax?

Plain-English summary

Recording the notice was not subject to Florida documentary stamp tax. The notice did not contain an unconditional written obligation to pay a sum certain, did not itself secure payment with real property, and did not expressly incorporate the easement agreement or other related documents.

The Department therefore found that the notice was not a taxable written obligation, a mortgage, or a mortgage modification. It warned that a different document expressly incorporating the notice would require its own examination.

What this means for you

References to related agreements did not automatically bring their terms into the recorded notice. The ruling examined the notice itself and treated express incorporation as the key link for considering separate documents.

Common questions

Q: Did the notice become taxable because it mentioned mortgages? No. It did not itself grant a security interest or secure payment.

Q: Did the indemnification make it a promise to pay a sum certain? No. The ruling found no unconditional written obligation for a sum certain in the notice.

Q: Did this ruling cover other transaction documents? No. It expressly applied only to the submitted notice.

Citations and references

• Fla. Stat. § 201.08(1), (6) — mortgages, written obligations, and separate documents
• Fla. Stat. § 697.01 — mortgage definition
• Fla. Admin. Code r. 12B-4.053(6) — unconditional obligation to pay a sum certain
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99B4-014

Original ruling text

SUMMARY

QUESTION: Is the recording of a Notice of Agreement
Regarding Easements subject to documentary stamp tax?

ANSWER - Based on Facts Below: The Notice does not contain
an unconditional written obligation to pay a sum certain in
money, nor does it grant a security interest in real
property. Although the Notice refers to the Agreement
Regarding Easements and other documents, it does not
expressly incorporate the documents. Therefore, the Notice
is not considered to be a written obligation to pay money.
The Notice does not meet the definition of a mortgage,
since it does not secure the payment of money, nor does it
constitute a mortgage modification. The recording of the
Notice is not subject to documentary stamp tax. However,
if a Notice is expressly incorporated into any other
document, examination of the other document is necessary to
determine whether tax applies.

Sep 24, 1999

Re: Technical Assistance Advisement No. 99(B)4-014
Documentary Stamp Tax; Notice of Agreement Regarding
Easements
Section 201.08, F.S.; Rule 12B-4.053(6), F.A.C.
XXX (Florida LLC)

Dear :

This is in response to your letter dated July 12, 1999,
requesting a technical assistance advisement as to whether
documentary stamp tax will be due on the recording of a Notice
of Agreement Regarding Easements (Notice).

You have provided a copy of the Notice. This advisement
applies to this Notice only, and to no other document.

FACTS AS PRESENTED BY PETITIONER

The Florida LLC is a limited liability company formed under
the laws of Florida. The LLC owns seven properties in Florida.
Five of the seven properties at issue are encumbered by
mortgages held by a lender. The mortgages were properly
recorded and the appropriate documentary stamp taxes paid on the
full amount of the indebtedness secured. The Florida LLC had
agreed to grant X Corporation seven, thirty-year billboard
easements, one on each of the above mentioned properties. In
exchange for the easements, X Corporation has agreed to pay
approximately one million dollars per easement, by giving the
Florida LLC an up-front payment of $7.25 million dollars. In
the event that the Florida LLC exercises its contractual right
to terminate any of the easements, the Florida LLC will be
required to refund a portion of the easement fee. As part of
the transaction, the lender has been requested to execute a
Joinder and Consent permitting the grant of the five easements
that are subject to the mortgage.

In exchange for the lender executing a Joinder and Consent
with respect to the five easements, the Florida LLC has agreed
to indemnify the lender against any refunding obligations that
may arise in the event any easements are terminated. The amount
of such indemnification is uncertain because, though there is a
maximum amount that could possibly be refunded, the amount
decreases daily and is not absolute. The indemnification
provision has a remote possibility of being realized, in that
there is a provision in the easement conveyance that states that
X corporation has no obligation to remove any billboard until
such time as a pro-rata refund is received or placed in escrow.
This provision is in addition to the provisions requiring
consent by the lender prior to the termination of any easement.
It is virtually impossible that there would be anything to
indemnify against, because removal would not occur until after
the monies were first refunded or escrowed by the Florida LLC.

The conveyance of the easements was properly recorded and
appropriate documentary stamp taxes paid on the full
consideration paid for the easements. The issue at hand is
whether documentary stamp taxes are also due when the Notice is

recorded. In sum, the Notice only recites that, under a certain
Agreement Regarding Easements:

1) the Florida LLC will not relocate or terminate the
easements without the prior written consent of the
lender;

2) the obligations under the Agreements Regarding
Easements are secured by certain mortgages as if they
were originally part of the mortgage documents; and

3) modifications to the Loan Agreements secured by the
mortgages have been made.

REQUESTED ADVICE

You have requested the following advice.

1) Because the Notice does not meet the definition of a
mortgage, documentary stamp tax imposed by s. 201.08,
F.S., will not be due when the Notice is recorded.

2) Because the Notice does not contain a promise to pay a
sum certain of money, documentary stamp tax imposed by
s. 201.08, F.S., will not be due when the Notice is
recorded.

3) The Notice should be considered an exempt modification
of a mortgage, to the extent it could be a mortgage
modification, on which documentary stamp tax imposed
by s. 201.08, F.S., will not be due when the Notice is
recorded.

LAW

Section 201.08(1), F.S., imposes documentary stamp tax on
mortgages as defined in s. 697.01, F.S., which are recorded in
this state, and on written obligations to pay money that are
made, executed, and delivered in this state. To constitute a
taxable written obligation to pay money, generally, the document
must contain an unconditional written obligation to pay a sum

certain in money, signed by the obligor. See Rule 12B-4.053(6),
F.A.C. Pursuant to s. 201.08(6), F.S., taxability of a document
shall not be determined by reference to any separate document
unless the separate document is expressly incorporated into the
document at issue.

DETERMINATION

All of the documents connected with the Notice were
reviewed in order to ascertain that none of the language in such
documents could render the Notice itself to be taxable. The
other documents reviewed were the easements, the joinder and
consent permitting the grant of the five easements that are
subject to the mortgage, and the Agreement Regarding Easements.

The Notice does not contain an unconditional written
obligation to pay a sum certain in money. The Notice does not
grant a security interest in real property; that is, it does not
secure a promise to repay the lender. Although the Notice
refers to the Agreement Regarding Easements and other documents,
it does not expressly incorporate the documents. Thus, the
Notice is not considered to be a written obligation to pay money
under s. 201.08(1), F.S.

The Notice does not meet the definition of a mortgage under
s. 697.01, F.S., as it does not itself secure the payment of
money. Using this same logic, the Notice does not constitute a
modification of a mortgage. Since there is no express
incorporation of any of the other documents listed in the
previous paragraph into the Notice itself, the recording of the
Notice is not subject to the documentary stamp tax under s.
201.08, F.S. However, if a Notice is expressly incorporated into
any other document, it would be necessary to review that other
document with the Notice to determine whether the tax applies.

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. 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 from that
which is expressed in this response.

You are further advised that this response, your request
and related backup are public records under Chapter 119, F.S.,
and are subject to disclosure to the public under the conditions
of s. 213.22, F.S. Confidential information must be deleted
before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

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

JBE/mh