Foreclosure AppealsForeclosure Defense Florida

Why Do Florida’s Appellate Courts Let Banks Skip Out on Paying Taxes?


If you’ve ever taken out a mortgage or bought or sold a home, you know that you owe the State of Florida a few hundred or a few thousand dollars which is collected when your transfer or mortgage documents are recorded. When you’re an average citizen, you pay those taxes…whether you like it or not.  They’re called documentary and intangible taxes…and they are recorded right on the face of the documents. The amounts are relatively small…and the price we all pay to be part of this wonderful state. Those taxes pay for things like, the Florida Court System and schools and roads and other necessary things.

Well, years ago, I discovered that the big banks were getting away with not paying documentary and intangible taxes in the context of foreclosure proceedings.  We won case after case when we advised trial court judges that the banks were not paying their fair share. (and often after bank attorneys argued that the rules did not apply to them.) My office is papered with Orders signed by judges, just like the one below:


The law was and remains crystal clear and simple….and good judges all across this state were and remain willing to hold banks accountable….and demand that those amounts however small, be paid by the banks.

Florida’s appellate courts have this issue briefed up…ready and waiting for a written opinion which makes the already very clear law…even more clear.

Bowman (5D15-3924) Initial Brief

Bowman (5D15-3924) Reply Brief

The issue of failure to pay the taxes that all should pay were the key issues in these briefs filed in these cases….

The loan documents were unenforceable because the Bank did not pay taxes on the modification.

The Bank did not pay documentary stamp taxes on the modification.

It is black letter law that documentary stamp taxes owed on a mortgage, trust deed, security agreement, or other evidence of indebtedness filed or recorded in this State, and for each renewal of same, is 35 cents on each $100.00 of indebtedness. § 201.08(1)(b), Fla. Stat.  And adding a borrower to or increasing the principal balance of the mortgage or the other evidence of indebtedness is a “renewal” within meaning of the statue because

a renewal shall only include modifications of an original document which change the terms of the indebtedness evidenced by the original document by adding one or more obligors, increasing the principal balance, or changing the interest rate, maturity date, or payment terms.

  • 201.08(5), Fla. Stat.(Emphasis added).

And while a statutory exemption allows a taxpayer to only pay taxes on difference in the increase in principal, this exemption only applies if the renewal is executed by the original obligor. § 201.09(1) and (2), Fla. Stat.  Further, the taxpayer seeking to shelter itself under this exemption has the burden of establishing its entitlement to the exemption. Green v. Pederson, 99 So. 2d 292, 296 (Fla. 1957) (“It is well settled that he who would shelter himself under an exemption clause in a tax statute must show clearly that he is entitled under the law to exemption; and the law is to be strictly construed as against the person claiming the exemption and in favor of the taxing power.”).

Here, the modification agreement (Exhibit 3) increased the principal balance owed under the note and mortgage from $408,350.00 to $457,180.99.  It was therefore a renewal within meaning of the statute and documentary stamp taxes were required to be paid prior to enforcement of the mortgage:

The mortgage, trust deed, or other instrument shall not be enforceable in any court of this state as to any such advance unless and until the tax due thereon upon each advance that may have been made thereunder has been paid.

  • 201.08(1)(b) (emphasis added).

And this is because “Section 201.08(1)(b), Florida Statutes (2007), precludes judicial enforcement of a mortgage “unless and until the tax due thereon…has been paid.”  One 79th Street Estates v. American Investment Services, 47 So. 3d 886, 890 n. 1 (Fla. 3d DCA 2010). See also Nikooie v. JPMorgan Chase Bank, N.A., 183 So. 3d 424, 430 (Fla. 3d DCA 2014) (“The Fifth District has addressed the particular question presented in the instant case, holding that ‘any court,’ including an appellate court, should refuse enforcement of a promissory note under section 201.08(1) if there is no evidence that the required documentary stamp taxes have been paid.”); Silber v. Cn’R Industries of Jacksonville, Inc., 526 So.2d 974 (Fla. 1st DCA 1988) (holding that where documentary stamp taxes have not been attached to a note, the note is unenforceable and therefore in a suit to enforce same, the note holder should not be entitled to attorney’s fees). But see Glenn Wright Homes (Delray) LLC v. Lowy, 18 So. 3d 693 (Fla. 4th DCA 2009) (holding that § 201.08(1) does not prohibit enforcement of an unsecured promissory note).

Thus, since the Bank failed to produce any evidence that it paid the requisite documentary stamp taxes or move for abatement once the Homeowners brought this to its attention, the trial court was obligated to dismiss the action without prejudice. Somma v. Metra Electronics Corp., 727 So. 2d 302, 305 (Fla. 5th DCA 1999) (“[O]nce the court discovers that the documentary taxes have not been paid, the court must dismiss the action without prejudice.”).

The trial court did not reach on the merits of the Homeowners’ argument in its order denying rehearing.  Rather, it provided that this argument may not be raised for the first time on rehearing.  But the purpose of rehearing is to give the trial court a second opportunity to rule if it is convinced it erred in the first place. Balmoral Condominium Assoc. v. Grimaldi, 107 So. 3d 1149, 1151 (Fla. 3d DCA 2013) (explaining that the purpose of rehearing is “to give the trial court an opportunity to consider matters which it overlooked or failed to consider.”) (citations omitted).  Therefore, rehearing was a proper vehicle to argue the unenforceability of the loan documents.

And to the extent the trial court’s reference to “any pleading” in its order denying rehearing meant that the Homeowners waived the issue by failing to raise it as an affirmative defense, this too was a mistaken view of the law. Somma, 727 So. 2d at 604 (“[A] defendant’s failure to plead a plaintiff’s noncompliance with section 201.08 does not waive the state’s right to receive payment of the requisite taxes nor does such noncompliance excuse the court from complying with the prohibition contained in the statute.”)

The Bank did not pay intangible taxes on the modification.

In addition to documentary stamp taxes, the Bank was also required to pay intangible taxes on the modification agreement since the principal of the new obligation exceeded the principal of the initial note and mortgage. § 199.145(4)(b), Fla. Stat.  And it is black letter law that failure to pay appropriate intangible taxes prevents enforcement of the mortgage. § § 199.282(4), Fla. Stat. (“No mortgage, deed of trust, or other lien upon real property situated in this state shall be enforceable in any Florida court…until the nonrecurring tax imposed by this chapter, including any taxes due on future advances, has been paid and the clerk of circuit court collecting the tax has noted its payment on the instrument or given other receipt for it.”). See also Nookie, 183 So. 3d at 431 (“The failure to pay intangible tax on the increased principal amount also precludes enforcement.”).

But rather than hold banks accountable…..Florida’s appellate courts are content to continue to allow banks and business to skirt the responsibilities….that the rest of us are required to comply with.

Welcome to the big bad new world we all live it.


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