Tax Type
Recordation Tax
Description
Extension of Deed of Trust
Topic
Documents Subject to Tax
Date Issued
09-09-1985
September 9, 1985
Re: §58.1-8O9 Supplemental Writing
Dear ****
You have furnished a blank "Extension Agreement" form which a financial institution is proposing to record and ask what policy should be followed by clerks in taxing the instrument.
The instrument recites the details of an existing note and a deed of trust previously admitted to record, including the outstanding balance of principal and interest. The extension agreement then provides that the provisions of the note are amended in the following respects:
1. The balance due on the note is stated,
2. The interest rate is stated,
3. The installment dates and amounts are stated, and
4. The due date of the entire balance of principal and interest is stated.
The extension agreement does not amend any other provision of the note.
Under §58.1-809 a supplemental writing is exempt from tax when the sole purpose and effect is to modify the terms, conditions, parties, or provisions of the note secured by a previously recorded deed of trust, provided that the supplemental writing does not increase the principal obligation secured by the previously recorded deed of trust and that a tax was paid upon recordation of the deed of trust (or that it was a permanent loan deed of trust exempt from tax under §58.1-8O4 C.)
Accordingly I am of the opinion that an extension agreement of the type furnished is exempt from recordation tax under §58.1-8O9 provided that the supplemental writing does not increase the principal obligation secured by the previously recorded deed of trust and that a tax was paid on that prior recorded instrument. If, however, there is an increase in the amount of the principal obligation secured, then a tax on the whole amount of the obligation set forth in the Extension Agreement would be due under §58.1-807. The Extension Agreement is not in form or substance a deed of trust or mortgage so the provisions of §58.1-803, including paragraph D, would not apply.
Sincerely,
W. H. Forst
Tax Commissioner
Re: §58.1-8O9 Supplemental Writing
-
- Extension of Deed of Trust
Dear ****
You have furnished a blank "Extension Agreement" form which a financial institution is proposing to record and ask what policy should be followed by clerks in taxing the instrument.
The instrument recites the details of an existing note and a deed of trust previously admitted to record, including the outstanding balance of principal and interest. The extension agreement then provides that the provisions of the note are amended in the following respects:
1. The balance due on the note is stated,
2. The interest rate is stated,
3. The installment dates and amounts are stated, and
4. The due date of the entire balance of principal and interest is stated.
The extension agreement does not amend any other provision of the note.
Under §58.1-809 a supplemental writing is exempt from tax when the sole purpose and effect is to modify the terms, conditions, parties, or provisions of the note secured by a previously recorded deed of trust, provided that the supplemental writing does not increase the principal obligation secured by the previously recorded deed of trust and that a tax was paid upon recordation of the deed of trust (or that it was a permanent loan deed of trust exempt from tax under §58.1-8O4 C.)
Accordingly I am of the opinion that an extension agreement of the type furnished is exempt from recordation tax under §58.1-8O9 provided that the supplemental writing does not increase the principal obligation secured by the previously recorded deed of trust and that a tax was paid on that prior recorded instrument. If, however, there is an increase in the amount of the principal obligation secured, then a tax on the whole amount of the obligation set forth in the Extension Agreement would be due under §58.1-807. The Extension Agreement is not in form or substance a deed of trust or mortgage so the provisions of §58.1-803, including paragraph D, would not apply.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner