Florida Financial Case Law Update

Foreclosures

Lost Note and Mortgage - Nat’l Loan Investors v. Joymar Assoc., 767 So. 549 (Fla. 3d DCA 2000)

A mortgage assignee filed a foreclosure complaint, including a count for the reestablishment of the lost note and mortgage. The assignee asserted that it did not know the time or manner of the loss or destruction of the note or mortgage. The defendant mortgagor obtained a dismissal of the complaint, based upon its assertion that the plaintiff had failed to allege that any one at any time ever had possession of the note or mortgage, or that it knew the time and manner of the loss. HOLDING: The plaintiff should have been allowed the right to amend its complaint, where the cause of action may be stated through proof of an assignable right of enforcement.

Mortgage Expired Before Foreclosure - Zlinkoff v. Aldenbruck, 765 So. 2d 840 (Fla. 4th DCA 2000)

Aldenbruck sold a condominium and took back a mortgage in 1987. The maturity date of the mortgage was 1992. An extension note with a maturity date of February 1992 was executed but not recorded. Subsequently, the maturity date of the mortgage was orally extended. The borrowers eventually defaulted on the mortgage and on condominium dues. The condominium association filed a foreclosure action. In the meantime, Zlinkoff searched the public records and found that the 1987 mortgage had matured in 1992. Zlinkoff then became the successful bidder at the association’s foreclosure sale. Then Aldenbruck filed for foreclosure of his mortgage. HOLDING: The Aldenbruck mortgage was no longer a lien upon the real property since the maturity date of record had expired, and that Zlinkoff had not taken title subject to any mortgage. This case can be distinguished from the cases where an unrecorded extension agreement may be upheld if the same parties who participated in the extension agreement, or who had actual knowledge of the extension.

Right of Redemption - Deluxe Motel, Inc. v. Patel, 770 So. 2d 283 (Fla. 5th DCA 2000)

Lendor Patel filed a foreclosure action against Deluxe Motel in 1996. On November 10, 1997, after no attempt at redemption was made by Deluxe Motel, the clerk issued a certificate of title to the successful bidder, Patel. The foreclosure was appealed and on February 12, 1999, the court reversed the judgment and the case was remanded for further proceedings. Deluxe Motel did not affirmatively seek to vacate the public sale or the certificate of title, or to regain possession or ownership of the property. Thereafter, the case went to trial, and a final judgment of foreclosure was entered on January 14, 2000. This judgment did not provide for another sale, and stated that defendant could redeem the property up until January 7, 2000. Defendant appealed. HOLDING: The redemption period provided in the final judgment had expired one week before the entry of the judgment, thus depriving Defendant of a right of redemption. Appellate court remanded the case for the trial court to vacate the portion of the final judgment as to the January 7, 2000 date and instead provide that the defendant would have 15 days to redeem from the date of the amended final judgment.

Right of Redemption - Indian River Farms, et al., v. YBF Partners, 777 So. 2d 1096 (Fla. 4th DCA 2001)

On September 2, 1999, a final judgment of foreclosure as entered in favor of YBF Partners and against Florida Industries Investment Corporation. At the judicial sale, Martin Properties, Inc., was the successful bidder, and it tendered the purchase price to the clerk. The defendant and Indian River Farms filed objections to the sale, asserting that they had an agreement with Martin Properties whereby Martin Properties was to be their lender and was to purchase the subject property at the sale in the name of Indian River Farms. The trial court overruled the objections, finding that the objections did not raise any defect or irregularity with regard to the sale procedure and authorized issuance of the certificate of title to Martin Properties, Inc. Thereafter, the defendant and Indian River Farms filed for a rehearing, asserting that they had an agreement with VOSR, assigning to VOSR all right in the subject property. Just before the issuance of the Certificate of Title, VOSR attempted to redeem, but the clerk refused to accept the tender. HOLDING: The right of redemption was timely exercised since the final judgment of foreclosure provided that “on the filing of the certificate of title, Defendants’ and all persons claiming under or against Defendants....shall be foreclosed of all estate or claim.....” Further, VOSR did not need the court’s permission to exercise a right of redemption, and thus the certificate of title was ordered vacated.



Mortgages

Equitable Subrogation - SunTrust Bank v. Riverside Nat’l Bank of Fla., 26 Fla. L. Weekly D513 (Fla. 4th DCA February 14, 2001)

A first mortgage was recorded in 1993, and a second mortgage recorded in 1995. The first mortgage was refinanced in 1998, with a satisfaction of the first mortgage being recorded. The refinance lender thought it would have a first mortgage on the property because its title search failed to discover the 1995 second mortgage. This situation was not discovered until the property went into foreclosure. HOLDING: The refinance lender was entitled to relief under the equitable subrogation doctrine, to the extent that the second mortgagee would be no worse off than it would have been if the original first mortgage had not been satisfied.

Interest Paid Not Payable in Advance - BTD - 1977 - HHC LLC v. Cathedral Park Partnership, 760 So. 2d 1036 (Fla. 5th DCA 2000)

The general rule is that interest on a promissory note is not payable in advance unless there is a specific agreement of the parties. The intention to make interest payable in advance must be expressed in unambiguous and unmistakable language.

Purchase Money Wraparound Mortgage - Holland v. McCullen, 764 So. 2d 810 (Fla. 2d DCA 2000).

Sellers took back a second wraparound mortgage, which provided that the sellers would continue to make the payments on the first mortgage. Buyers agreed to pay the sellers on the second mortgage, and to abide by the terms of the first mortgage, except for making payment of principal and interest. Later the sellers refused to keep the property insured as was required by the first mortgagee and failed to inform the buyers, continuing to accept the buyers’ payments on the second mortgage. The first mortgagee filed for foreclosure, the buyers counterclaimed against the sellers, alleging breach of contract, requesting indemnification, and requesting damages for civil theft. HOLDING: The buyers were entitled to prevail on the breach of contract and indemnification issues, but the court denied the buyers’ civil theft count, finding that there was a genuine issue of material fact as the sellers’ intent to wrongfully deprive the buyers of their money inasmuch as the sellers’ had tendered payments to the first mortgagee of the principal, interest, and insurance, but did not pay enough to pay for the increased insurance costs.

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