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Listen up Banks- You Need to Pay the Doc Stamp Tax on Those Loan Modifications

On December 21, 2015, our firm appeared ready for trial in Palm Beach County. The Bank attorney appeared ready for trial also, except his client forgot one thing, to pay the documentary stamp taxes on a loan modification that our client had obtained prior to the foreclosure action.

Under Florida law, a tax has to be paid on mortgages and other evidence of indebtedness. A loan modification clearly falls within the requirements of the statute but, in many cases, the banks do not pay the tax or otherwise record the loan modification. This is amazing given that without recording their interest in the loan modification, third parties should not be subject to any additional amounts set forth in the loan modification so long as they record their interests in the property.

With respect to the Palm Beach case, our firm started the trial by asking the court to enter an involuntary dismissal based upon the Bank's failure to pay the documentary stamp taxes on the loan modification. The trial court declined to dismiss the case, but instead continued the case to provide the Bank sufficient time to pay the documentary stamp tax prior to a later scheduled trial date.

Our firm will continue to pursue these documentary stamp tax cases and ensure the Banks are complying with the law and paying taxes required on any other person or party in the State of Florida.

CASE NO. 502013CA010214XXXXMB