This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.
Take a typical Florida stock deal: the target is a distribution company that has owned its own warehouse since 2009, the buyer is paying for the operating business but is happy to take the dirt, and somebody on the buy side builds the post-closing budget by pulling the current property tax bill off the county website. Nobody records a deed at closing, because in a stock sale there is no deed — the same company owns the same warehouse the day after closing that owned it the day before. Eighteen months later, the tax bill has jumped by half, and there is a letter from the property appraiser asking why no one told them the company changed hands. Both surprises come from the same statute, and both were knowable at the letter of intent.
The 10 percent cap quietly builds a gap between assessed and just value
Florida caps how fast the assessed value of non-homestead real property can rise. Under section 193.1555, Florida Statutes, once a commercial or other non-homestead parcel is assessed at just value, annual reassessments for all levies other than school district levies can’t increase the assessed value by more than 10 percent a year. In a market like Florida’s, that cap does real work. A warehouse bought in 2009 and never sold since may carry an assessed value far below what the appraiser would call just value today, because the cap has been compounding a discount for fifteen years. The current tax bill reflects the capped number, not the market number.
That’s the trap in relying on the seller’s bill for the pro forma. The cap isn’t a permanent feature of the parcel — it’s a feature of continuity of ownership. Break the continuity and the property resets to just value on the next January 1, and the 10 percent cap starts over from the higher base. For a long-held property in an appreciated submarket, the reset alone can move the operating budget enough to matter in a leveraged deal. The number the lender underwrote and the number the county sends out the January after closing are different numbers.
A stock sale is a change of ownership or control even though no deed is recorded
Here is the part deal lawyers miss more often than tax lawyers: the reset isn’t limited to deeded transfers. Section 193.1555(5)(b) defines a change of ownership or control to include any sale or transfer of legal or beneficial title — and also the “cumulative transfer of control or of more than 50 percent of the ownership” of the legal entity that owned the property when it was last assessed at just value. Sell 100 percent of the stock of the company that owns the warehouse and you have changed control of the entity; the parcel resets to just value the following January 1 even though title never moved and nothing hit the deed records.
Two refinements make the definition sharper than it first looks. First, the trigger is cumulative. It isn’t only the single closing that takes a buyer past 50 percent — a series of smaller transfers among founders, investors, and family vehicles can cross the line in stages, with the reset landing after the transfer that tips the total. A company that recapitalized in 2019, bought out a co-founder in 2022, and sold a stake to a sponsor in 2024 may have crossed 50 percent somewhere in the middle without anyone connecting the cap table to the county appraiser. Second, the statute has a public-company exception — ordinary buying and selling of shares on a public exchange doesn’t count — but the exception expressly does not apply to a merger with or acquisition by another company, including an acquisition made by acquiring outstanding shares. The carve-out was written with M&A specifically carved back in.
The DR-430 is the notice, and silence has a 50 percent price
Because entity deals don’t generate a recorded instrument, the Legislature built a self-reporting rule. Under section 193.1556, an owner of property assessed under the cap must promptly notify the property appraiser of any change of ownership or control. A recorded deed serves as notice by itself, which is why asset deals rarely raise the issue. In a stock or LLC-interest sale there is nothing recorded, so the Department of Revenue’s Form DR-430 exists to do what the deed would have done — tell the appraiser to reassess.
The penalty structure is what should get a deal team’s attention. If the owner doesn’t give notice and the appraiser later determines the property enjoyed the cap in years it wasn’t entitled to it, the statute reaches back up to 10 years and imposes the taxes avoided, plus 15 percent interest per annum, plus a penalty of 50 percent of the taxes avoided — with a tax lien available against any property the owner holds in the county. On a parcel with a wide gap between capped and just value, several years of avoided taxes grossed up by half again is not a rounding error. And because the reassessment obligation follows the property while the deal documents allocate everything by contract, an unfiled DR-430 from a pre-closing transfer becomes the buyer’s problem in fact even if it was the seller’s obligation on paper.
What this does to deal math and drafting
The practical program is short. First, diligence the gap: pull the TRIM notice or the appraiser’s parcel card and compare assessed value to just value for every Florida parcel the target owns — the delta is your reassessment exposure, and it belongs in the model before the letter of intent locks economics. The same review folds naturally into the real property diligence a buyer of an owner-occupied business is running anyway. Second, diligence the history: walk the cap table backwards to the year the property was last assessed at just value and ask whether cumulative transfers crossed 50 percent at any earlier point. If they did and no DR-430 was filed, that’s a quantifiable pre-closing tax exposure to cover with a special indemnity, not a boilerplate tax rep. Third, allocate the filing: the purchase agreement should say who files the DR-430 for the closing itself and by when. It’s a one-page form; the fight is never about the work, it’s about the reassessment consequence everyone would rather not model.
Keep the regimes straight while you’re at it. Florida’s documentary stamp tax has its own entity-transfer rules, and the conduit-entity doc stamp analysis runs on different definitions and different timing than the assessment cap — a deal can be clean for one and exposed on the other. And the reset risk is one more input into the asset-versus-stock structure decision: an asset deal reprices the real estate for tax assessment openly, while a stock deal does it quietly, one January later, whether or not anyone budgeted for it.
The takeaway
Florida’s non-homestead cap is a benefit that dies at closing, and it dies just as thoroughly in a stock sale as in a deeded one. The buyer’s January surprise is the predictable one — model the reset to just value and the fresh 10 percent cap from the new base. The subtler exposure is historical: cumulative transfers that crossed 50 percent years ago with no DR-430 on file, compounding at 15 percent with a 50 percent penalty waiting behind a 10-year lookback. A disciplined M&A process treats the county property appraiser as a party who eventually finds out — because under section 193.1556, the owner is required to tell them.
If you are buying or selling a company that owns Florida real estate, feel free to reach out to my firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
