Does Property Transfer Entail Burden of Mortgage Transfer With It ?
In Florida Department of Revenue v. De Maria, 338 So. 2d 838 (Fla. 1976), a corporation transferred property to its sole shareholder, but part of the property transferred was subject to a mortgage. Id. at 839.
The court reasoned that this encumbrance on the property made the transfer different from that in Palmer-Florida because the economic burden of the mortgage had been transferred to the individual, and the grantor corporation received a benefit in not having to pay the mortgage.
Therefore, the transaction involving that part of the property encumbered by the mortgage was not a mere transfer of title. Id.
This benefit and burden transfer constituted sufficient consideration to impose the documentary stamp tax on that part of the property subject to the mortgage. Id. at 840.
The Court also adopted the definition in Webster's New Twentieth Century Dictionary of the term "purchaser" as "one who obtains or acquires property by paying an equivalent in money or other exchange in value." Id. Thus, since consideration existed in the transaction because the burden of the mortgage had shifted, we concluded that the sole shareholder was a purchaser as to that part of the property subject to the mortgage. Id.
However, we did not apply the documentary stamp tax to the corporation's unencumbered $ 25,000 equity in the real property--that portion of the property not subject to the mortgage--because that transfer "was a mere change in form of the stockholder's equity in the corporation." Id.