STATE OF FLORIDA, DEPARTMENT OF REVENUE, APPELLANT,
v.
BONARD ENTERPRISES, INC., A FLORIDA CORPORATION, APPELLEE
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The court affirmed that a mortgage assumption agreement without release of the original mortgagor is not subject to documentary stamp taxes under Florida law. The decision clarifies that such an assumption merely provides additional security for a single existing obligation rather than creating a new taxable obligation.
A mortgage assumption agreement where the original mortgagor is not released from liability is not subject to documentary stamp taxes. Only when an assumption agreement releases the mortgagor does a novation occur, creating a new obligation subject to the tax.
[1] A mortgage assumption agreement is not subject to documentary stamp taxes when the original mortgagor is not released from liability.
[2] A novation occurs, and a new obligation subject to documentary stamp tax arises, when a mortgage assumption agreement releases the original mortgagor.
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Join FLexlaw to unlock all legal intelligence“There remains a single written obligation to pay that is not increased and the assumption operates merely as additional security for its payment. However, when the assumption agreement releases the mortgagor, a novation has occurred with the existing obligation being discharged and replaced with a new obligation.”
Establishes the critical distinction between assumptions that do and do not release the mortgagor, determining tax liability
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Join FLexlaw to unlock all legal intelligenceBonard Enterprises, Inc. entered into a mortgage assumption agreement. The original mortgagor was not released from liability under the agreement. The…
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PER CURIAM.
We affirm the trial court’s summary final judgment holding that appellee’s mortgage assumption agreement was not subject to documentary stamp taxes under section 201.08, Florida Statutes (1985), where, as here, there had been no release of the original mortgagor. We adopt the rationale of 1975 Op.Att’y Gen.Fla. 075-154 (June 3, 1975), which was as follows:
There remains a single written obligation to pay that is not increased and the assumption operates merely as additional security for its payment. However, when the assumption agreement releases the mortgagor, a novation has occurred with the existing obligation being discharged and replaced with a new obligation. This new obligation would be subject to the documentary stamp tax_ (Citations omitted.)
See 1962 Op.Att’y Gen.Fla. 062-43 (Mar. 9, 1962). See also Hialeah, Inc. v. Dept, of Revenue, 380 So. 2d 562 (Fla. 3d DCA 1980) (Department stipulated that a mortgage assumption agreement which did not release the original mortgagor was not subject to documentary stamp taxes). This is consistent with Fla.Admin.Code Rule 12B-4.-053(19) which provides:
Assumption of Mortgage and Release of Liability: A written assumption agreement whereby the original obligor is released from liability of the debt, whether such release is incorporated therein, previously or simultaneously entered into by separate agreement of release between all parties, or provided in the terms of the original mortgage, constitutes a promise to pay and is taxable.
See also Fla.Admin.Code Rule 12B-4.-054(24).
We do not say there may not be doubt as to whether the assumption agreement constituted a “written obligation to pay money” under section 201.08. But doubt in this regard is to be resolved in favor of the taxpayer. See Leadership Housing, Inc. v. Dept. of Revenue, 336 So. 2d 1239 (Fla. 4th DCA 1976).
The legislature is presumed to have been aware of the Department’s foregoing position. Not having thereafter amended the relevant legislation, the legislature may be considered to have thereby implicitly affirmed that position as reflecting the legislative intent. See Johnson v. State, 91 So. 2d 185 (Fla.1957); White v. Johnson, 59 So. 2d 532 (Fla.1952).
Affirmed.
CAMPBELL, A.C.J., and LEHAN and THREADGILL, JJ., concur.
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Dep't OF Revenue v. SUN Bank, 556 So. 2d 1154 (Fla. 5th DCA 1990)…titled an indenture of mortgage and deed of trust, the document is merely an agreement whereby AMI agrees to guarantee payment in the event Brook-wood defaults on the first mortgage bonds. In State, Department of Revenue v. Bonard Enterprises, Inc., 515 So. 2d 358 (Fla. 2d DCA 1987), review denied, 523 So. 2d 576 (Fla.1988), the second district held that an agreement to assume a mortgage was not subject to documentary stamp tax under section 201.08, Florida Statutes (1985), where there had been no release of…
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NCNB Nat'l Bank OF Fla. v. Dep't OF Revenue OF the State OF Fla., 523 So. 2d 738 (Fla. 2d DCA 1988)…e. Whether an assumption which does not release the original mortgagor operates as enlargement or is merely additional security for the debt, was recently decided by this court in State of Florida, Department of Revenue v. Bonard Enterprises, Inc., 515 So. 2d 358 (Fla. 2d DCA 1987). In Bonard, we found that where, as here, there was no release of the original mortgagor, the mere assumption of the debt did not constitute an enlargement subjecting the new agreement to documentary stamps tax. In Bonard, the cou…
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Alachua Cnty. v. Expedia, Inc., 175 So. 3d 730 (Fla. 2015)…of the issue for which the Counties now seek redress reflects the Legislature’s willingness to maintain the status quo of not subjecting the OTCs’ markup charges to the transient rental taxes. See generally Dep’t of Revenue v. Bonard, Enter., Inc., 515 So. 2d 358, 359 (Fla. 2d DCA 1987) (“The [Legislature is presumed to have been aware of the Department’s foregoing position. Not having thereafter amended the relevant legislation, the [Legislature may be considered to have thereby implicitly affirmed that pos…
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Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Johnson v. State, 91 So. 2d 185 (Fla. 1956)
- White v. Johnson, 59 So.2d 532 (Fla. 1952)
- Leadership Hous., Inc. v. Dep't OF Revenue of the State of Fla., 336 So. 2d 1239 (Fla. 4th DCA 1976)
- Hialeah, Inc. v. Dep't OF Revenue, 380 So. 2d 562 (Fla. 3d DCA 1980)