DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA

FOURTH DISTRICT

MICHAEL STEINBERG,

Appellant,

v.

WELLS FARGO BANK, N.A.,

Appellee.

No. 4D14-1200

[October 21, 2015]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm 

Beach County; Edward H. Fine, Judge; L.T. Case No. 50-2010-CA-016912-

AW.

Bruce Botsford of Bruce Botsford, P.A., Fort Lauderdale, for appellant.

David A. Greene and Anthony M. Stella of Fox Rothschild, LLP, West 

Palm Beach, for appellee.

GROSS, J.

We affirm the final judgment of foreclosure and write to address one 

issue—whether the deferred interest provision of a note and mortgage 

triggered the tax imposed by section 201.08(2), Florida Statutes (2010). 

We hold that the deferred interest provision fell under an exception to the 

general rule of taxability, so that no tax was due on the deferred interest 

added to the principal amount owed by the borrower and the mortgage 

and note were enforceable.

A bank loaned appellant $640,000. The adjustable rate note contained 

a “deferred interest” provision providing that if a payment was insufficient 

to pay the total amount of accrued interest from the previous month, any 

unpaid interest would be added to the principal and would accrue interest 

at the same rate as the principal. The note also included a “dragnet 

clause,” which required that the unpaid balance caused by this accrual of 

deferred interest never exceed 125% of the original loan amount. At the 

time the complaint was filed, appellant’s deferred interest resulted in a 

principal amount owed of $647,079.04. The bank had paid documentary 

stamp taxes only on the original principal of $640,000.
- 2 -

Steinberg argues that his deferred interest amounted to a “future 

advance” within the meaning of section 201.08(1)(a), Florida Statutes 

(2010), which would have required the payment of a documentary stamp 

tax. We reject this argument because the advances here did not trigger 

the obligation to pay a tax.

Section 201.08 concerns, among other things, the documentary stamp 

tax owed on promissory notes and mortgages. Subsection (1)(b) requires 

a tax be paid on mortgages filed or recorded in Florida. Where there is 

both a mortgage and a note, the tax must be paid “at the time of 

recordation.” Id. If the mortgage or security interest “secures future 

advances,” the tax on the initial debt is paid at the time of recordation and 

the tax on any future advances is paid at the time the advance is made. 

Id. Where no tax has been paid on a “future advance,” the underlying 

mortgage or note is not “enforceable in any court of this state as to any 

such advance unless and until the tax due” on each advance has been 

paid. Id.; see Glenn Wright Homes (Delray) LLC v. Lowy, 18 So. 3d 693,

696 (Fla. 4th DCA 2009).

Steinberg reasons that section 201.08(1)(b) should be read in 

conjunction with section 697.04(1)(b), Florida Statutes (2010), entitled 

“Future advances may be secured.” Steinberg points to language in 

section 697.04(1)(b), which states: “any increase in the principal balance 

as a result of negative amortization or deferred interest shall be secured 

by the mortgage.” Reading sections 201.08(1)(b) and 697.04(1)(b) together, 

Steinberg concludes “that any increase in the principal balance as a result 

of negative amortization is secured by the mortgage” and is a form of 

taxable future advance. The problem with this argument is that nothing 

in section 697.04 expands or contracts the concept of a taxable future 

advance set forth in section 201.08(1)(b). See also Wane v. Loan Corp., 

552 F. App’x 908 (11th Cir. 2014). Section 697.04 primarily concerns the 

securing of future advances under a mortgage; it is not a taxation statute.

Section 201.08(1)(b) creates an exception to the general rule of 

taxability of future advances: 

Notwithstanding the aforestated general rule, any increase in 

the amount of original indebtedness caused by interest 

accruing under an adjustable rate note or mortgage having an 

initial interest rate adjustment interval of not less than 6 

months shall be taxable as a future advance only to the 

extent such increase is a computable sum certain when 

the document is executed. 

(Emphasis added). 
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As a result of this statutory exception, section 201.08(1) did not 

prohibit the bank’s enforcement of the note and mortgage. Appellant had 

a “pick-a-payment” mortgage that allowed four payment options each 

month–ranging from payment of the full amount of principal and interest 

to a payment of less than the amount of interest due for that particular 

month, thereby implicating the deferred interest provision of the note. At 

the time the mortgage and note were executed, there was no way to know 

which payment option appellant would choose each month. Therefore, the 

extent of any deferred interest amount was not a “computable sum certain 

when the document[s were] executed,” such that any deferred interest 

added to the principal amount was not a taxable “future advance” within 

the meaning of subsection 201.08(1)(b).

Accordingly, the bank did not owe any taxes under section 201.08(1)(b), 

so its note and mortgage were enforceable.

Affirmed.

STEVENSON and TAYLOR, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.