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Florida home owners – 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 long ago when they bought their home.

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

Understanding these documents is especially important for the Florida home owner if they are facing problems in making 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 and are waiting to be foreclosed upon by their lender (or have already had foreclosure proceedings begun against them down at the courthouse).

Florida foreclosure defense attorneys should begin their client discussions with an overview of these legal documents and what power they hold.

What is a Mortgage Under Florida Law?

A mortgage is a legal document under Florida real estate law that demonstrates on paper that the owner of a piece of land is granting a lien against that real property to someone else (the bank – 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 property lien as protection (collateral) for the money it’s lending.  If the note isn’t paid, then the lender can foreclose on the collateral, the home, via the mortgage.

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 home owner 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 demonstrate 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 home owner 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 folk 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.

This is only a brief overview of these documents.  If you would like more detailed information, please feel free to contact us by either calling (954) 458-8655 or emailing us using the “Contact Us” form on the right side of this page.

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