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Last Update: 10/10/20

Florida homeowners – especially those in trouble on their home loans and considering foreclosure, short sale, or what to do about their underwater mortgage – need to know the difference between some of the documents that they signed when they bought their home.

Note, Mortgage, Deed of Trust: what are they and what do they mean? What Does Florida Law say about these Real Estate Documents?

Understanding these documents is especially important for a Florida homeowner if they are facing financial problems and can’t make their mortgage payments; if they are looking at paying a mortgage that is much higher than the current value of their home; or if they’ve stopped paying their home loan payments because they lost their job and are waiting to be foreclosed upon by their lender (or have already had foreclosure proceedings begun against them).

A Florida foreclosure defense attorney should begin their client discussions with an overview of these legal documents and what duties and obligations they hold for both the borrower and the lender.

See: Conditions a Bank Must Satisfy Before Filing a Foreclosure in Florida

What is a Mortgage Under Florida Law?

A mortgage is a legal document under Florida real estate law that grants a bank or other lending institution a lien against your real property (in this document, the bank is also known as a “mortgagee”). A mortgage gives the lender a lien against the homeowner’s home which exists until the home loan is paid in full. The lien can only be foreclosed upon if certain conditions are met, i.e., the note isn’t paid. The bank wants this lien against your home as protection (collateral) for the money it’s lending to you.  If the note isn’t paid, then the lender can foreclose on the collateral, the home, via the mortgage in a foreclosure lawsuit.

What is a Note Under Florida Law?

The note is another legal document, a signed paper that provides legal evidence that there has been a loan of money from the bank to the homeowner for the purpose of buying the real estate. The note sets forth conditions for how the loan will be repaid. The terms of the note, sometimes referred to as a “promissory note”, will also include how much interest is being charged, when the payments are due each month, where they are to be sent, if there are any penalties for paying the note off early, and all sorts of conditions to protect the party lending the money.  A note is a contract and, as such, is controlled by Florida contract law.

Why Are Notes and Mortgages So Important?

In Florida, mortgages and notes are both executed documents, in other words, signed paperwork. They work together but they are not the same thing and are governed by some different areas of law.

One is more powerful than the other. The note is evidence under the law of a primary promise to pay an obligation; the mortgage document itself is incident to the note. Carpenter v. Longan, 83 US 271, 274 (1872); Scott v. Taylor, 58 So. 30, 31 (Fla. 1912); Taylor v. American Nat’l Bank, 57 So. 678, 685 (Fla. 1912); Brown v. Snell, 6 Fla. 741 (1856); Thomas v. Hartman, 553 So. 2d 1256, 1257 (Fla. 5th DCA 1989); Restatement (Third) of Property (Mortgages) § 1.01 (1997).

The mortgage instrument is the security for the indebtedness, as shown in the note. Mellor v. Goldberg, 658 So. 2d 1162, 1163 (Fla. 2d DCA 1995); Grier v. M.H.C. Realty Co., 274 So. 2d 21, 22 (Fla. 4th DCA 1973).

One big reason both documents are important? Before a bank can file a foreclosure action in a Florida court, the law requires that the bank demonstrates with proper evidence that it is both the owner and holder of both the note and mortgage. Your Construction Center, Inc. v. Gross, 316 So.2d 596, 597 (Fla. 4th DCA 1975). According to 37 FLA. JUR. MORTGAGES AND DEEDS OF TRUST §240, it’s simple: “[o]ne who does not have the ownership, possession, or the right to possession of the mortgage and the obligation secured by it, may not foreclose the mortgage.”  To try and do so is to proceed with a wrongful foreclosure.

Bottom line, if the homeowner facing foreclosure can show that the bank or servicer trying to foreclose on him down at the courthouse has no “standing” – in other words, cannot show it is a holder and owner of the note and mortgage – then a proper foreclosure defense can be successful and the foreclosure action may fail.

What is a Deed of Trust Under Florida Law?

This is a trick question. With so many people coming to Florida to buy homes or condos or retirement spots here, lots of people think that deeds of trust are part of the real estate documents they need to worry about here in the Sunshine State.

Not true. Florida is a “mortgage-only” state. Florida does not recognize deeds of trust in its state law.

Do You Have a Question?

If you are struggling with financial difficulties regarding your Florida home or condo, and have either stopped making your mortgage payment or you’re thinking you may have to stop paying your home loan soon, then a good piece of advice is to speak with an experienced Florida real estate lawyer to learn about your rights and to learn the different foreclosure defenses that may be available to you.

Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

See: 3 Types of Foreclosure Defenses In Florida 


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Do you have questions or comments? If so, feel free to ask Larry about the issues that concern you the most by sending him an email or by calling him now at (954) 458-8655.

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