Please note that Fannie Mae and Freddie Mac are exempt from the payment of documentary stamp taxes. A recent court ruling in Hernando county confirmed this exemption and we outlined this in our recent blog. However, please note that if the conveyance is to a non-exempt entity, then the transaction is not exempt and someone needs to pay documentary stamp taxes.
The question then becomes who pays the doc stamps. The answer to this question is likely a matter of contract law, and not statute. If the contract requires the SELLER to pay documentary stamp taxes (no matter who the seller is), then it is our legal opinion that the contract should trump the statutory exemption in favor of Fannie or Freddie, thus requiring Fannie or Freddie to then pay doc stamps. Fannie or Freddie are deemed to have waived their entitlement to the statutory exemption.
However, with that said, anyone who deals with Fannie or Freddie knows that they will typically insist that the buyer pay docs stamps, even if the contract suggests otherwise. Legally this may not be a supportable position, but there appears to be no existing court rulings addressing the issue (just yet).
As such, when you or your attorney are performing your legal review of the closing documents prepared by closing agents for Fannie or Freddie, do not automatically assume that they can ignore the contract and force the buyer to pay doc stamps. In fact, pushing back on the closing agent might be appropriate. Of course, how much you choose to do so is obviously up to you. If or when the judicial system addresses this issue, we will report back to you.
Sincerely,
Berlin-Patten, PLLC
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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