Judges: K. N. AYERS
Agency: Department of Revenue
Latest Update: Nov. 29, 1977
Summary: Parties only intended to convey a lot, not a lot and a house. Documentary stamp tax due only on the lot. Dismiss claim for tax on house also.
77-1079.PDFSTATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
STATE OF FLORIDA DEPARTMENT ) OF REVENUE, )
)
Petitioner, )
)
vs. ) CASE NO. 77-1079
) D & D BUILDERS OF FT. LAUDERDALE, ) INC., )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above styled case on September 14, 1977 at Ft. Lauderdale, Florida.
APPEARANCES
For Petitioner: Edwin J. Stacker, Esquire
Assistant Attorney General The Capitol
Tallahassee, Florida 32304
For Respondent: Kenneth G. Stevens, Esquire
201 Southeast 2nd Street
Ft. Lauderdale, Florida 33301
By Notice of Proposed Assessment dated May 9, 1977 the Department of Revenue, Petitioner, seeks to assess D & D Builders of Ft. Lauderdale, Inc., Respondent, for the documentary stamp taxes, penalty and interest representing the value of the house constructed on lot sold by Respondent to Kenneth H. and Janet A. Maxwell. One witness testified on behalf of Respondent and seven exhibits were admitted into evidence.
FINDINGS OF FACT
By Deposit Receipt dated June 12, 1975 (Exhibit 1) Kenneth H. Maxwell and Janet A. Maxwell contracted to purchase a lot for $7,000 from D & D Builders of Ft. Lauderdale, Inc. (D & D) with house to be built thereon for $29,900 in accordance with described plan. $3,690 was paid as earnest money deposit on this contract. It was intended that Maxwell would obtain a construction loan from the lending institution and before making the loan the lender required the value and plan number of the house to be included on the deposit receipt contract.
The property was deeded to the Maxwells by Warranty Deed dated July 14, 1975 (Exhibit 2) and documentary stamp taxes in the amount of $21 was attached
thereto. This is the correct amount for a $7,000 consideration for such a transfer.
On July 15, 1975 a mortgage deed was executed by the Maxwells to the First Federal Savings and Loan Association of Highlands County to secure a loan in the amount of $33,200 and intangible taxes were paid thereon.
At the time D & D and the Maxwells entered into their contract it was intended that Maxwell, who taught construction at a local junior college, would build his own house. When Maxwell attempted to get a building permit the county would not issue one because he was not a licensed contractor. He then arranged for D & D to pull the permit and for the bank to make the draws payable to D & D who would disburse the funds to the subcontractors, suppliers, and Maxwell.
On July 15, 1975 the lender disbursed a check to D & D for $3,310 which, when added to the $3,690 initially paid by the Maxwells, completed the
$7,000 payment for the lot to the seller D & D. Thereafter Maxwell constructed his house.
D & D made the draws and disbursed the funds to suppliers, subcontractors, and to Maxwell. Exhibit 5 shows 8 checks were made payable to Maxwell totaling some $4,400. D & D did not supervise construction, received no compensations for its services, and acted only as a conduit for the construction loan.
CONCLUSIONS OF LAW
Section 201.02(1) Florida Statutes, which imposes a documentary stamp tax upon written transactions in which interest in realty are conveyed, provides:
"On deeds, instruments, or writings whereby any lands, tenements, or other realty, or any interest therein, shall be granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser, or any other person by his direction, on each $100 of the consideration therefor the tax shall be 30 cents. When the full amount of the consideration for the execution, assignment, transfer, or conveyance is not shown on the face of such deed, instrument, document, or writing, the tax shall be at the rate of 30 cents for each $100 or fractional part thereof of the consideration therefor."
Section 201.021 F.S. contains similar provisions imposing a surtax on documents relating to land.
These statutory provisions have been interpreted by the courts to require the payment of the documentary stamp tax upon the value of the lot and home where buyer acquires lot and home in one "package" where acquisition of neither home nor lot is independent of the other. In Dreher v. Florida Revenue Commission, Case No. 1727 (Fla. 6 Cir. 1970) the buyers selected a lot and house with separate values being assigned to each in the contracts. However, the deed was not delivered until the home was completed and the total purchase price paid. The court held that "regardless of the assignment of an arbitrary land
value to the lots involved, what is really present is an overall agreement for purchase of a lot and a home constructed on that lot" and cited Raccoon Development, Inc. v. The United States and Brookside Sales v. The United States, reported as U.S. Court of Claims, numbers 45-64 and 46-64 (3/15/68). Raccoon involved the recording of a contract for deed to purchase the lot with deed not delivered until the completion of the house. In Raccoon, supra, the court said:
"It is not disputed that the documentary stamp due is measured by the net consideration paid for the realty conveyed where that consideration is definite in amount."
The instant case differs from Dreher and Raccoon in that the deed, upon which the stamp tax is claimed to he due, was delivered before construction was commenced. Even though the lender-mortgagee requires a contract for house and lot to be presented as a "package" upon which the lender can determine the loan to be made, this alone does not confer upon such a transaction legal attributes not otherwise present.
Package deals subject to documentary stamp taxes are defined in Rule 12A-4.13(22) F.A.C. as follows:
"Joint Venture Contracts, Package Deals. Where corporations engage in business of land development for residential purposes conduct the operations in conjunction with sister corporations (or even same corporation) engaged in building homes, and one individual is controlling shareholder and principal officer of all corporations, tax is required on the deeds based upon the total price that home purchaser pays for house and lot and not limited to portion of consideration attributable to the lot. The tax attaches at the time the deed or other instrument of conveyance is delivered, irrespective of the time the sale is made or the instrument is recorded. The critical factor is the intention of the parties. (Robert L. Dreher and Robert L. Dreher Construction Inc. v.
Revenue Commission, et al, Cir. Court., Pasco County, Florida; Raccoon Development, Inc. v. U.S. (1968 391 F.2d 610)."
The intent of the parties to the transaction here involved was for D & D to sell a lot to Maxwell and for the latter to build a house on that lot.
First Development Corp. of America v. Florida Department of Revenue, Case No. 70-1974 (Fla. 12th Cir. 1972) involved the amount of documentary stamp taxes due on a deed conveying a parcel of land upon which a home was to be constructed. In finding as a fact that the purchaser intended to buy and the seller intended to sell a lot with a home constructed thereon, the court clearly announced the rule upon which these cases are to be determined. That is whether upon execution of the contract the seller intends to sell and the buyer intends to buy a lot with a house constructed on that lot. If so, the total value of the transaction is subject to documentary stamps on the deed conveying the land.
Here the intent of the parties was to convey only a lot. The deed was delivered before construction was commenced and the seller took no part in the actual construction of the house.
Respondent's contention that the Petitioner should have looked to the purchaser for the documentary stamp taxes alleged to be owed has some equitable merit; however the law is well settled that claim may be made upon either party to the transaction for any deficiency in documentary stamp taxes on deeds.
From the foregoing it is concluded that D & D intended to sell only a lot and that the purchaser intended to buy only a lot at the time the deed dated July 14, 1975 was executed by D & D Builders to the Maxwells, that the consideration paid for this lot was $7,000, and that the proper amount of documentary stamp taxes were placed on the deed. It is therefore,
RECOMMENDED that the proposed assessment in the amount of $271.17 be dismissed.
DONE and ENTERED this 22 day of September, 1977, in Tallahassee, Florida.
K. N. AYERS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304
(904) 488-9675
COPIES FURNISHED:
Edwin J. Stacker, Esquire Assistant Attorney General The Capitol
Tallahassee, Florida 32304
Kenneth G. Stevens, Esquire
201 Southeast 2nd Street
Ft. Lauderdale, Florida 33301
================================================================= AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
STATE OF FLORIDA, DEPARTMENT OF REVENUE,
Petitioner,
vs. CASE No. 77-1079
D & D BUILDERS OF FT. LAUDERDALE, INC.,
Respondent.
/
FINAL ORDER OF THE DEPARTMENT OF REVENUE
This cause comes before the Department of Revenue after hearing having been held pursuant to Chapter 120, Florida Statutes. Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer,
K.N. Ayers, held a public hearing in the above-styled case on September 14, 1977, at Ft. Lauderdale, Florida. Said Hearing Officer has heretofore submitted to the Department a Recommended Order dated September 22, 1977.
APPEARANCES:
Edwin J. Stacker, Esquire Assistant Attorney General The Capitol
Tallahassee, Florida 32304 Representing Petitioner
Kenneth G. Stevens, Esquire
201 S. E. 2d Street
Ft. Lauderdale, Florida 33301 Representing Respondent
Pursuant to Section 120.57(1)(b)9, Florida Statutes, the Department of Revenue, after careful analysis of the Recommended Order elects to modify a conclusion of law contained in said Recommended Order.
The Department of Revenue adopts the following as the Final Order of the Department of Revenue:
By Notice of Proposed Assessment dated May 9, 1977, the Department of Revenue, Petitioner, seeks to assess D & D Builders of Ft. Lauderdale, Inc., Respondent, for the documentary stamp taxes, penalty and interest representing the value of the house constructed on lot sold by Respondent to Kenneth H. and
Janet A. Maxwell. One witness testified on behalf of Respondent and seven exhibits were admitted into evidence.
FINDINGS OF FACT
By Deposit Receipt dated June 12, 1975 (Exhibit 1) Kenneth H. Maxwell and Janet A. Maxwell contracted to purchase a lot for $7,000 from D & D Builders of Ft. Lauderdale, Inc. (D & D) with house to be built thereon for $29,900 in accordance with described plan. $3,690 was paid as earnest money deposit on this contract. It was intended that Maxwell would obtain a construction loan from the lending institution and before making the loan the lender required the value and plan number of the house to be included on the deposit receipt contract.
The property was deeded to the Maxwells by Warranty Deed dated July 14, 1975 (Exhibit 2) and documentary stamp taxes in the amount of $21 was attached thereto. This is the correct amount for a $7,000 consideration for such a transfer.
On July 15, 1975 a mortgage deed was executed by the Maxwells to the First Federal Savings and Loan Association of Highlands County to secure a loan in the amount $33,200 and intangible taxes were paid thereon.
At the time D & D and the Maxwells entered into their contract it was intended that Maxwell, who taught construction at a local junior college, would build his own house. When Maxwell attempted to get a building permit the county would not issue one because he was not a licensed contractor. He then arranged for D & D to pull the permit and for the bank to make the draws payable to D & D who would disburse the funds to the subcontractors, suppliers, and Maxwell.
On July 15, 1975 the lender disbursed a check to D & D for $3,310 which, when added to the $3,690 initially paid by the Maxwells, completed the $7,000 payment for the lot to the seller D & D. Thereafter Maxwell constructed his house.
D & D made the draws and disbursed the funds to suppliers, subcontractors, and to Maxwell. Exhibit 5 shows 8 checks were made payable to Maxwell totaling some $4,400. D & D did not supervise construction, received no compensations for its services, and acted only as a conduit for the construction loan.
CONCLUSIONS OF LAW
Section 201.02(1) Florida Statutes, which imposes a documentary stamp tax upon written transactions in which interest in realty are conveyed, provides:
"On deeds, instruments, or writings whereby any lands, tenements, or other realty, or any interest therein, shall be granted, assigned, transferred, or otherwise conveyed
to, or vested in, the purchaser, or any other person by his direction, on each $100 of the consideration therefor the tax shall be 30
cents. When the full amount of the consideration for the execution, assignment, transfer, or conveyance is not shown on the face of such
deed, instrument, document, or writing, the tax shall be at the rate of 30 cents for each
$100 or fractional part thereof of the considera- tion therefor.
Section 201.021 F.S. contains similar provisions imposing a surtax on documents relating to land.
These statutory provisions have been interpreted by the courts to require the payment of the documentary stamp tax upon the value of the lot and home where buyer acquires lot and home in one "package" where acquisition of neither home nor lot is independent of the other. In Dreher v. Florida Revenue Commission, Case No. 1727 (Fla. 6 Cir. 1970) the buyers selected a lot and house with separate values being assigned to each in the contracts. However, the deed was not delivered until the home was completed and the total purchase price paid. The court held that "regardless of the assignment of an arbitrary land value to the lots involved, what is really present is an overall agreement for purchase of a lot and a home constructed on that lot" and cited Raccoon Development, Inc. v. The United States and Brookside Sales v. The United States, reported as U.S. Court of Claims, numbers 45-64 and 46-64 (3/15/68). Racoon involved the recording of a contract for deed to purchase the lot with deed not delivered until the completion of the home. In Racoon, supra, the court said:
"It is not disputed that the documentary
stamp due is measured by the net consideration paid for the realty conveyed where that consider- ation is definite in amount."
The instant case differs from Dreher and Raccoon in that the deed, upon which the stamp tax is claimed to be though the lender-mortgagee requires a contract for house and lot to be presented as a package upon which the lender can determine the loan to be made, this alone does not confer upon such a transaction legal attributes not otherwise present.
Package deals subject to documentary stamp taxes are defined in Rule 12A- 4.13(22) F.A.C. as follows:
"Joint Venture Contracts, Package Deals.
Where corporations engage in business of land development for residential purposes conduct the operations in conjunction with sister corporations (or even same corporation) engaged in building homes, and one individual is controlling shareholder and principal officer of all corporations, tax is required on the deeds based upon the
total price that home purchaser pays for house and lot and not limited to portion of consideration attributable to the lot.
The tax attaches at the time the deed or other instrument of conveyance is delivered, irrespective of the time the sale is made or the instrument is recorded. The critical factor is the intention of the parties. (Robert L.
Dreher and Robert L. Dreher construction, Inc. v. Revenue Commission, et al.,
Cir. Court., Pasco County, Florida;
Raccoon Development, Inc. v. U.S. (1968 391 F.2d 610)."
The intent of the parties to the transaction here involved was for D & D to sell a lot to Maxwell and for the latter to build a house on that lot.
First Development Corp. of America v. Florida Department of Revenue, Case No. 70-1974 (Fla. 12th Cir. 1972) involved the amount of documentary stamp taxes due on a deed conveying a parcel of land upon which a home was to be constructed. In finding as a fact that the purchaser intended to buy and the seller intended to sell a lot with a home constructed thereon, the court clearly announced the rule upon which these cases are to be determined. That is whether upon execution of the contract the seller intends to sell and the buyer intends to buy a lot with a house constructed on that lot. If so, the total value of the transaction is subject to documentary stamps on the deed conveying the land.
Here the intent of the parties was to convey only a lot. The deed was delivered before construction was commenced and the seller took no part in the actual construction of the house.
Respondents contention that the Petitioner should have looked to the purchaser for the documentary stamp taxes alleged to be owed has no merit; the law is well settled that claim may be made upon either party to the transaction for any deficiency in documentary stamp taxes on deeds.
From the foregoing it is concluded that D & D intended to sell only a lot and that the purchaser intended to buy only a lot at the time the deed dated July 14, 1975 was executed by D & D Builders to the Maxwells, that the consideration paid for this lot was $7,000, and that the proper amount of documentary stamp taxes were placed on the deed. It is therefore,
ORDERED that the proposed assessment in the amount of $271.17 be dismissed.
CERTIFICATION
I certify that the foregoing is the Final Order of the Department of Revenue adopted by the Governor and Cabinet on November 22, 1977.
Harry L. Coe, Jr. Executive Director Department of Revenue
Room 102, Carlton Building Tallahasse, Florida 32304
Dated this 3rd day of November, 1977.
Docket for Case No: 77-001079
Orders for Case No: 77-001079
| Issue Date |
Document |
Summary |
|
Nov. 22, 1977 |
Agency Final Order
|
|
|
Sep. 22, 1977 |
Recommended Order
|
Parties only intended to convey a lot, not a lot and a house. Documentary stamp tax due only on the lot. Dismiss claim for tax on house also.
|
