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American College of Mortgage Attorneys — Partner with the Best®

Formed in 1974, the American College of Mortgage Attorneys (ACMA) is comprised of over 500 lawyers in North America who are experts in mortgage law.

United States

Florida

Florida is a lien theory state and mortgages are used rather than deeds of trust or deeds to secure debt to secure interests in real property. The mortgage should, of course, be recorded in the county or counties where the land is located and must be acknowledged before a notary in order to be recorded. Witnesses are not required as a mortgage is not considered an interest in real property. The prudent practitioner, however, will have the mortgage executed in the presence of 2 witnesses.

SECURITY INSTRUMENT USED

In addition to the requirement that documents to be recorded must be properly notarized, Florida has some other recording requirements. All recorded documents must have a 3” x 3” block of blank space at the top right corner of the first page and a 1” x 3” block of blank space at the top right corner of each subsequent page. The name and address of each person executing the instrument and any grantees must be legibly printed, typewritten, or stamped on the document. The names of any witnesses to the document and the name of the notary public must be legibly printed, typewritten, or stamped beneath their respective signatures. Also, the name and post office address of the natural person preparing the document must be legibly printed, typewritten, or stamped upon such document. Other formalities regarding the recordation of documents can be found in Florida Statutes &sect;&nbsp;695.26.

RECORDING REQUIREMENTS

Standard provisions such as prepayment penalties, any requirement for the escrow of taxes or insurance, etc., should be expressed in the mortgage. The mortgage should also contain a provision for the appointment of a receiver - see the discussion below of Florida's version of the Uniform Commercial Real Estate Receivership Act - and provide for the handling of any leases at the property. The prepayment penalty should be expressed in the mortgage note; Florida Statutes &sect;&nbsp;697.06 provides that any note that is silent as to the right to prepay in advance of the stated maturity date may be prepaid in full without penalty. The note need not be set forth in full in the mortgage, but reference should be made to the note including the principal amount of the loan, maturity date, and similar matters. The note can be attached as an exhibit to the mortgage, although this is not necessary. Pursuant to Florida Statutes &sect;&nbsp;697.07, an assignment of rents should be included either in the mortgage itself or through a separate instrument.

UNUSUAL TREATMENT OF STANDARD PROVISIONS

Future advances can be secured in Florida, if expressly set forth in the mortgage. Florida Statutes &sect;&nbsp;697.04 provides for this, and future advances up to an amount that must be set forth in the future advance section will be secured by the lien of the mortgage if the advances are made within 20 years from the date of such mortgage or other instrument. If no amount is specified in the future advance section any future advance is limited to the original principal balance of the loan, meaning if the principal balance has been paid down a future advance can be made up to the original principal balance of the loan. The future advance should be evidenced by a future advance note, a notice of the making of the advance should be recorded, and documentary stamp tax and intangible tax (as hereafter noted) must be paid on the amount of the advance. The prudent lender (or its attorney) generally requires a title insurance endorsement bringing forward the effective date of the original lender's title policy to the date of recording the future advance, as well as increasing the policy amount.

SECURING FUTURE ADVANCES

Although it is our view that advances to protect the collateral, such as repairs, payment of taxes and insurance and the like, would be secured, whether or not expressly provided for, as a matter of best practice, the securing of such advances should be expressly provided for in the mortgage itself. TRUSTEE UNDER DEED OF TRUST: Florida is a lien theory state, and the security instrument used here is a mortgage. A deed of trust is not, therefore, applicable in Florida.&nbsp; Under Section 697.01(1), Florida Statutes, a deed of trust is treated as a mortgage and must be judicially foreclosed.&nbsp; E.g., Nissim Hadjes, Inc. v. DiCostanzo, 197 So. 2d 602 (Fla. 3d DCA 1967).

SECURING ADDITIONAL ADVANCES TO PROTECT THE COLLATERAL

Foreclosure in Florida is only by judicial action and can be commenced after the lender provides the borrower with a written “Notice of Default” that it is in default of its mortgage. (In a non-consumer mortgage context, no Notice of Default is required if contractually waived.) There is no “strict foreclosure” procedure in Florida. The foreclosure process is a suit in equity for the purpose of foreclosing the lien in which, if personal service is obtained on the obligors, the court has jurisdiction to assess and enter a deficiency judgment following the foreclosure sale. Being in equity, this is a nonjury process, although a jury trial can be demanded and obtained on appropriate counterclaims. The length of time for foreclosure will depend primarily upon how service is obtained against the defendants, and, of course, how vigorously the action is defended.&nbsp; Contested foreclosures may include motion practice, affirmative defenses, counterclaims, extensive discovery - including depositions and discovery of electronically stored information - various evidentiary and non-evidentiary hearings, expert witnesses, court-ordered mediation, multiple case management conferences, and, as noted above, a trial. Basically, the action is in rem, but quasi in rem if personal service is obtained and a deficiency will be sought. Service in in rem cases can be obtained in a substituted form, although in Florida title insurance underwriters may require a guardian ad litem for any defendants upon whom service cannot be obtained. See Florida Statutes Chapter 49. A notice of lis pendens when recorded gives constructive notice to potential lienors or other interested parties that the real property at issue is subject to pending litigation claims. The notice generally constitutes a bar to the enforcement of unrecorded liens or other interests against property if foreclosure proceedings are prosecuted through a judicial sale. See Florida Statutes &sect; 48.23. In 2019 section 48.23 was amended to provide that the protections of a recorded notice of lis pendens against unrecorded liens or other interests would continue through the recording of any instrument transferring title to the property pursuant to the foreclosure judgment. Thus, in theory, the process can take as little as a few months, or it can take 6 months or more, depending on the nature of the collateral (residential, commercial, rental, etc.) and the length of time necessary to acquire jurisdiction over the parties. This is not the case, however, if the defendant contests the foreclosure.&nbsp; Following the entry of a final judgment of foreclosure, the foreclosure sale is held by the Clerk of Circuit Court of the county in which the real property is located, which is our court of general jurisdiction. By statute, the sale is to occur not less than 20 days, but not more than 35 days from the date of the foreclosure judgment (unless the plaintiff or plaintiff's attorney consents to a later sale date), after publication of notice of the sale for at least 2 consecutive weeks prior to the sale date in a newspaper of general circulation in the county where the sale is to be held. The mortgagee is entitled to bid at the sale and is entitled to a credit on his bid for the amount found due him by the final judgment of foreclosure. This amount may include principal, interest, costs, advances to secure the collateral, attorneys' fees, and the like. All such sums comprising the final judgment amount should be spelled out specifically in the final judgment so that it will be clear that the mortgagee has the right to bid without putting up additional cash. After the sale, the clerk shall promptly file a certificate of sale and serve a copy of it on each party. Subsequently, there is a 10‑day period for “objections” to the sale, following which, absent objection, or upon the overruling of any objections, the Clerk of Court will file a certificate of title. See Florida Statutes &sect;&nbsp;45.031.

BRIEF DESCRIPTION OF PROCEDURE

Redemption may be had any time before the Clerk of Court files its certificate of sale, or as provided in the Court's judgment of foreclosure. The full amount found due by the judgment, plus post-judgment interest, must be paid. See Florida Statutes &sect;&nbsp;45.0315.

REDEMPTION PERIOD AND PRICE

A waiver of the redemption period probably would not be looked upon with favor by a Florida court, nor would a reduction in the 10-day period for objections be permitted, inasmuch as it is statutory.

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

Florida Statutes &sect;&nbsp;95.11(2)(c) requires actions to foreclose mortgages to be brought within 5 years; the triggers for the running of the limitations period have been clarified recently by Florida case decisions. Generally, the five-year limitations period does not begin to run until the date the debt matures. If the lender has the option to accelerate the debt if the borrower commits an interim default, the lender may accelerate and pursue foreclosure. If the lender elects not to exercise that option, or even if it elects to accelerate and foreclose but later dismisses the action, the lender is not barred from further foreclosure actions until five years from the date of maturity. See Capeles v. Bank of America, N.A., 314 So. 3d 593 (Fla. 3d DCA 2021; Bartram v. U.S. Bank Nat. Ass'n, 211 So. 2d 1009 (Fla. 2016); Deutsche Bank Trust Co. Americas vs. Beauvais, 188 So. 3d 938 (Fla. 3d DCA 2016).

STATUTE OF LIMITATION, AND ACCELERATION

The application for a deficiency judgment can be made after the foreclosure sale, for it is only then that it can be established whether or not a deficiency exists. The entry of a deficiency decree for any portion of a deficiency is within the court's sound judicial discretion. See Florida Statutes &sect;&nbsp;702.06. The determination of the amount of the deficiency will be based upon the difference between (1) the amount of the foreclosure judgment plus interest accrued thereon at the statutory rate and (2) the greater of (a)&nbsp;the amount of the winning bid at the foreclosure sale, or (b)&nbsp;the fair market value of the property as of the date of sale. Unless otherwise agreed to in writing, interest on judgments is set pursuant to Section 55.03(1), Florida Statutes by the State's Chief Financial Officer on a quarterly basis (7.69% as of July 1, 2023). The rate affixes to the judgment when entered and is subject to change annually at the rate set as of January 1 of each succeeding year until the judgment is paid.&nbsp; Section 55.03(1) allows the parties to contractually set the rate of post-judgment interest to one different from that set by the State.&nbsp; Whitehurst v. Camp, 677 So. 2d 1361, 1362 (Fla. 1st DCA 1996).&nbsp; However, that contractual provision has to be specific, making clear that the contractually stated rate of “X” will apply post-judgment, and the judgment itself has to be equally clear.&nbsp; For example, in In re: 6200 NE 2ND Avenue, LLC, 648 B.R. 114 (Bankr. S.D. Fla. 2022), the court held that a state court judgment awarding post-judgment interest “at the highest rate allowed by law,” meant at the highest legal rate of interest applicable to judgments - the interest rate set by the State's CFO. &nbsp; If the deficiency is sought in the foreclosure action, then the time for filing the requisite separate motion for deficiency depends on whether the final judgment reserves jurisdiction to enter a deficiency judgment. If jurisdiction is reserved, then the timing of a motion for a deficiency judgment is subject to the court's lack of prosecution rules. If jurisdiction is not reserved, a motion for a deficiency judgment must be filed within 10 days of the issuance of the certificate of title, otherwise the court will lose jurisdiction and the lender will be required to commence a separate action to collect any deficiency. Note that if repayment of the debt was secured by certain types of residential property, the deficiency action must be filed within 1 year after the certificate of title is issued by the clerk of court or 1 year after the mortgagee accepts a deed in lieu of foreclosure. See Florida Statutes &sect;&nbsp;95.11(5)(h).

DEFICIENCIES

Florida Statutes &sect;&nbsp;83.5615 - the Protecting Tenants at Foreclosure Act - provides that a residential tenant in a foreclosed property must receive a minimum of 90 days' notice before the tenant's possession can be terminated. The Florida Fair Foreclosure Act of 2013. The following are the notable provisions from The Florida Fair Foreclosure Act of 2013:

EFFECT OF FORECLOSURE ON LEASES

Section 3 of the Act creates Florida Statute &sect;&nbsp;702.015, which is intended to expedite the foreclosure process by requiring the initial disclosure of a plaintiff's status upon the filing of a foreclosure action. Specifically, &sect; 702.015(2) a complaint that seeks foreclosure against residential real estate must either contain affirmative allegations that the plaintiff is the holder of the original promissory note secured by the mortgage or it must allege the factual basis by which the plaintiff is entitled to enforce the promissory note. The remainder of &sect; 702.015 appears to apply to both residential and commercial foreclosures, and includes provisions that, if the plaintiff possesses the original note, then the plaintiff must file under penalty of perjury a certification about possession of the note, and if the plaintiff seeks to enforce a lost, destroyed, or stolen note, then the plaintiff must submit an executed affidavit under penalty of perjury that details the chain of transfer of the note and sets forth facts showing that the plaintiff is entitled to enforce the lost, destroyed, or stolen note.

SECTION 3

Section 4 of the Act creates Florida Statute &sect;&nbsp;702.036, which relates to the finality of the disposition of foreclosed property after the entry of a mortgage foreclosure judgment. If a party seeks to set aside, invalidate, or challenge the validity of a foreclosure judgment, as long as certain criteria are met, the court may only grant monetary damages and may not grant relief that adversely affects the quality or character of the title to the property (i.e., the court cannot give the property back). If a party seeks to invalidate a foreclosure judgment, the court will not grant relief other than monetary damages if: (1)&nbsp;the party seeking relief from the judgment was properly served, (2)&nbsp;the final judgment of foreclosure was entered, (3)&nbsp;the appeals periods have run with no appeals having been taken, or if an appeal was taken, it has been resolved, and (4)&nbsp;the property has been acquired for value by a person not affiliated with the foreclosing lender or the foreclosed owner. This section also provides that upon the enforcement of a lost, destroyed, or stolen note, a person who is not a party to the underlying foreclosure action (but who claims to be the person entitled to enforce the promissory note) has no claim against the foreclosed property after it is conveyed to a bona fide purchase, only monetary damages and other related relief.

SECTION 4

Section 6 of the Act relates to entry of an order to show cause and amends Florida Statute &sect;&nbsp;702.10 to read that any lienholder may request an order to show cause for the entry of a foreclosure judgment in a foreclosure action. Formerly, only a mortgage holder could request entry of an order to show cause. The changes now allow any lienholder to make that request, which includes the plaintiff and a defendant to the action who holds a lien encumbering the property, including a defendant homeowners' association, condominium association, or cooperative association that may file a lien against the property. If properly requested, the court will issue an order directed to the other parties to show cause why a final judgment of foreclosure should not be entered and will set a date and time for a hearing to show cause. The filing of defenses by a motion, responsive pleading, affidavit, or otherwise before the hearing that raise a genuine issue of material fact that would prevent entry of summary judgment or otherwise constitute a legal defense to foreclosure will cause the court not to enter a foreclosure judgment. If the defendant files defenses, the hearing will be used to consider whether the evidence does indeed raise an issue of material fact. If the defendant fails to appear at the hearing to show cause, fails to file defenses, or files an answer not contesting the foreclosure, the defendant may be considered to have waived the right to a hearing, and the court may enter a default and even a final judgment of foreclosure. Moreover, if the mortgage provides for reasonable attorney fees and the fees sought do not exceed 3% of the principal amount owed at the time of the complaint, no hearing will be necessary to determine that the attorney fees are in fact reasonable. Section 6 also provides that in any action for foreclosure other than against owner-occupied residential real estate, in addition to any other relief that the court may award, the plaintiff may request that the court enter an order directing the borrower to show cause why an order to make payments during the pendency of the foreclosure proceedings should not be entered, and if the required payments are not made, why an order to vacate the premises should not be entered. If a borrower has not waived the right to be heard on the order to show cause, the court will determine if the plaintiff is likely to prevail in the foreclosure action, and if so, the court will enter an order requiring the borrower to make payments to the plaintiff. If the court enters an order requiring payments, the payments will be payable at such intervals and amounts provided for in the mortgage before acceleration or maturity. If the payment order is granted, it will also provide that the plaintiff is entitled to take possession of the property upon the borrower's failure to make payment.&nbsp; The court is also allowed to enter a final judgment of foreclosure upon the borrower's failure to make payment.&nbsp; We Help Community Development Corp. v. Ciras, 144 So. 3d 578 (Fla. 4th DCA 2014). Finally, Section 6 provides that any payments made during the foreclosure proceeding will be credited against the mortgage obligation in accordance with the terms of the loan; however, payments made under Section 6 do not constitute a cure of any default.

SECTION 6

Florida's Evidence Code has long required that the original note be filed as evidence as a condition precedent to entry of a final judgment of foreclosure. If the original note has been lost or destroyed, the lost/destroyed note may be enforced pursuant to Article 3 of the Uniform Commercial Code, provided adequate protection is afforded the debtor should the note later be found and presented for enforcement. Section 7 of the Act enumerates certain methods of providing adequate protection where the foreclosing lender is not in possession of the original promissory note. Section 7 of the Act creates Florida Statute &sect;&nbsp;702.11, under which all of the following will be considered adequate protection: (a)&nbsp;a written indemnification agreement by a person reasonably believed sufficiently solvent to honor such an obligation, (b)&nbsp;a surety bond, (c)&nbsp;a letter of credit issued by a financial institution, (d)&nbsp;a deposit of cash collateral with the clerk of the court, or (e)&nbsp;such other security as the court may deem appropriate under the circumstances. Additionally, Subsection 2 provides that a person who wrongly claims to be a promissory note holder or entitled to enforce a promissory note and causes foreclosure is liable to the actual holder of the promissory note for actual damages suffered together with attorney's fees and costs; the actual holder of the promissory note may pursue recovery directly against any adequate protections given or by other means.

SECTION 7

The usury ceiling in Florida is 18% simple interest for loans of $500,000 or less. For loans in excess of that amount the limit is 25%. See Florida Statutes &sect;&sect;&nbsp;687.03 and 687.071. The Florida Supreme Court, in Jersey Palm-Gross, Inc. v. Henry Paper, 658 So. 2d 531, held that usury savings clauses in loan documents are but one factor to be considered in the overall determination of whether the lender intended to exact usurious interest. Stated another way, if intent to exact a usurious interest rate can be shown, a usury savings clause alone will not protect the lender. Florida has not elected to opt out of the federal preemption of state usury laws created by the National Bank Act.

USURY CEILING

The Florida Department of State privatized the process of filing and maintaining filings as of October&nbsp;1, 2001. Under the Revised Uniform Commercial Code, the proper place to file is in the location where the debtor exists (a business debtor is deemed to exist in the state where the company is incorporated or is otherwise originally registered) except for fixture filings and filings against as-extracted collateral and timber to be cut. Filings at the state level should be sent to the filing office authorized by Florida law to accept filings for the Florida Secured Transactions Registry. The proper place to file fixture filings and filings against as-extracted collateral and timber to be cut is in the office of the clerk of the circuit court of the county in which the property is located. See Florida Statutes &sect;&sect;&nbsp;679.5011 and 679.527.

LOCATION(S) FOR FILING

Normally, the mortgage itself can stand for a security agreement encumbering the personality and fixtures on the property. In Florida, a mortgage is also effective as a financing statement filed as a fixture filing or as a financing statement covering timber to be cut, subject to the provisions of &sect;&nbsp;679.5021(3). The Revised Uniform Commercial Code, in its usual “non-uniform” state, is the law in Florida effective as of January 1, 2002, and was significantly modified effective July&nbsp;1, 2013. See Florida Statutes Chapter 679, “Secured Transactions” (Article&nbsp;9 of the Code). Information regarding Florida UCC filings, continuations and renewals, as well as document images are available for downloading at www.floridaucc.com.

SECURITY INSTRUMENT USED AS A FIXTURE FILING

There are no particularly unusual provisions for a guaranty in Florida. A guaranty must, of course, be written, as specific as can be, and as comprehensive as you are accustomed to making such documents. The guaranty should be signed by those who are to be bound by it in the same fashion as the mortgage. Florida does not have a “one action” rule, so simultaneous pursuit of a mortgage foreclosure and an action on a guaranty for money damages is permitted.

UNUSUAL PROVISIONS OR REQUIREMENTS

In Florida, homestead property can be alienated in a mortgage that is properly executed, but the homestead exemption cannot be waived in an unsecured agreement. See also In re Osejo, 447 B.R. 352 (S.D. Fla. 2011) and Osborne v. Dumoulin, 55 So. 3d 577 (2011). As a note to the issue of homestead, Florida Statutes contain specific exemptions of wages from garnishment, including the exemption of all disposable earnings of a head of family whose disposable earnings are less than or equal to $750 a week. See Florida Statute &sect;&nbsp;222.11(2)(b).

STATUTES TO BE WAIVED

The homestead exemption in an unsecured guaranty cannot be waived. However, a guaranty can be secured by a mortgage so it is possible a guaranty could be secured by a mortgage on the guarantor's homestead property, which could potentially allow for enforcement of the guaranty against homestead property of the guarantor. Note, however, that no statutory or case law exists in support of such an approach.

SPECIAL PROBLEMS IN ENFORCEMENT

The statute of limitations for enforcing a note and a mortgage is covered by Chapter 95, Florida Statutes. The statute of limitations for a legal or equitable action on an obligation founded on a written instrument (i.e., a note) is 5 years. The statute of limitations for an action to foreclose a mortgage is also 5 years. See Florida Statutes &sect;&nbsp;95.11. The mortgage's terms determine when a cause of action accrues. Where the mortgage contains a mandatory acceleration clause, the statute of limitations begins to run immediately upon default. See Cook v. Merrifield, 335 So. 2d 297 (Fla. 1st DCA 1976). Most mortgages contain an optional acceleration clause. When the contract contains an optional acceleration clause, the statute of limitations accrues the earlier of (i)&nbsp;the maturity date or (ii)&nbsp;upon the lender's exercise of the option to accelerate. In 2016, the Florida Supreme Court held that where a lender has accelerated the loan in a foreclosure action, such acceleration only applies to the defaults alleged in the acceleration and not to future defaults. See Bartram v. U.S. Nat. Ass'n, 211 So. 3d 1009, 1012 (Fla. 2016). The Florida Supreme Court held that when a foreclosure action is dismissed—with or without prejudice—the dismissal returns the parties back to the same contractual relationship with the same continuing obligations. Id. Thus, if there has been a prior acceleration, the statute of limitations may have run on defaults more than 5 years prior to the subsequent foreclosure, but it would not be a bar on future foreclosure actions based on separate defaults asserted within 5 years. Id. Florida also provides a statute of repose that may bar a foreclosure action. The lien of a mortgage or other instrument encumbering real property terminates 5 years after the maturity date, if the final maturity is ascertainable from the record of it. If the final maturity is not ascertainable from the record of it, the lien terminates 20 years from the date of the mortgage, unless the holder of the mortgage records a copy of the obligation secured by the mortgage from which copy the final maturity is ascertainable. See Florida Statutes &sect;&nbsp;95.281.

STATUTE OF LIMITATION PERIOD

When the mortgage is paid, it must be satisfied of record within 60 days, as required by law in Florida. See Florida Statutes Chapter 701.04. The satisfaction should be signed and acknowledged before a notary so that it can be recorded. It need not be witnessed, however, although most practitioners, out of habit or in an excess of caution, typically have such documents witnessed. The mortgage when paid should be marked “canceled and paid” and delivered to the mortgagor, as should the note.

REQUIREMENT FOR RELEASE OF LIEN

In the case of homestead property, even if title to the property is held by 1 spouse only, the other spouse must join in the execution of the mortgage, even if the other spouse is not obligated on the mortgage note, and the mortgage must be properly acknowledged before a notary public for recording. See Chames v. DeMayo, 972 So. 2d 850 (Fla. 2007). Note, however, that there is no requirement under the Florida Constitution requiring a mortgage of homestead realty be signed in the presence of 2 attesting witnesses. See Moxley v. Wickes Corp., 356&nbsp;So. 2d 785 (Fla. 1978).

HOMESTEAD ISSUES

Florida is not a community property state; rather, Florida law provides for equitable distribution of marital assets and liabilities.

COMMUNITY PROPERTY

2 taxes are payable in connection with the making and recording of a mortgage: the non-recurring intangible tax and the documentary stamp tax. In addition, a separate documentary stamp tax is payable upon the recording of a deed in lieu of foreclosure or a certificate of foreclosure sale. See Florida Statutes &sect;&sect;&nbsp;199.133, 201.08 and 201.02, each discussed below.

MORTGAGE TAX

In order to record a mortgage, a non-recurring intangible tax of 2 mills ($2 per $1,000 of indebtedness) must be paid at or prior to recording. While this non‑recurring tax must be paid at recording, it is due within 30 days of making the mortgage, whether or not the mortgage is recorded.

INTANGIBLE TAX

Documentary stamp taxes are assessed at the rate of 35&cent; per $100 (or fraction thereof) of the mortgage or indebtedness amount and likewise are paid at the time the mortgage or other evidence of indebtedness is recorded. Notes and other obligations not secured by a mortgage recorded in Florida are also subject to documentary stamp tax if the document is executed and delivered in Florida (also at the rate of 35&cent; per $100 (or fraction thereof) of the indebtedness amount). However, when there is both a mortgage and a note or other evidence of indebtedness, the tax is paid on only the mortgage and should be paid at the time of recording, and a notation should be made on the note or other evidence of indebtedness that the tax has been paid on the mortgage. The maximum amount of documentary stamp taxes payable on non-recorded notes or other obligations that are not secured by a mortgage recorded in Florida is $2,450.

DOCUMENTARY STAMP TAX (Mortgage and Notes)

There is also a documentary stamp tax imposed under Florida Statutes &sect;&nbsp;201.02 on deeds in the amount of 70&cent; per $100 (or fraction thereof) of consideration. Note that Miami-Dade County instead imposes a tax of 60&cent; per $100 (or fraction thereof) of consideration, plus a 45&cent; surtax on deeds transferring anything other than a single-family residence. On foreclosure, documentary stamps on the clerk's foreclosure certificate of title are assessed at the rate of 70&cent; per $100 (or fraction thereof), except for in Miami-Dade County, which imposes a deed tax at the above rate. In such case, the amount of documentary stamp taxes due is based on the amount of the foreclosure bid. In the case of a deed in lieu of foreclosure, the same documentary stamp tax rate would be paid on the deed, based upon the outstanding principal balance of the debt.

DOCUMENTARY STAMP TAX (Deed)

There are 2 exemptions that are very important to borrowers. The first exemption is for renewal notes. Assuming that it can comply with the requirements for an exempt renewal, per Florida Statutes &sect;&nbsp;201.09, a borrower can renew its obligation without paying any additional tax on amounts not exceeding the existing debt. If the renewal amount is greater than the original obligation, the borrower will be required to pay tax on the incremental increase. A second exemption applies to the transfer of loan documents between lenders. No additional tax is due when loan documents are merely assigned from 1 lender to another (but are due when the loan documents are assumed by a new borrower). By combining these 2 exemptions, a borrower can reduce its tax burden. If a borrower cannot work out a refinancing with its existing lender, the existing lender may assign the note and mortgage documents to a new lender. After an assignment of the loan documents, the borrower can refinance the existing loan with the new lender. The transfer is exempt from documentary stamp and intangible taxes. The renewal is taxable to the extent it increases the outstanding principal balance of the obligation assigned. The following example will illustrate this concept: Lender A makes a loan to Borrower in the original principal amount of $10,000,000. Upon recording the original mortgage, documentary stamp and intangible taxes are paid upon the full $10,000,000. After 5 years the loan matures and the principal balance stands at $8,000,000. Borrower refinances the loan with Lender B and increases the loan amount to $12,000,000. Rather than satisfying the $8,000,000 outstanding principal balance and executing a new mortgage, Lender A assigns the existing loan documents to Lender B. Upon recording the Notice of Future Advance and Mortgage Modification, documentary stamp and intangible taxes will be due upon only the $4,000,000 difference between the outstanding balance of the existing loan and the principal balance of the new loan. The outstanding principal balance of $8,000,000 is exempt from documentary stamp and intangible taxes. To take advantage of this exemption for taxes already paid, the note and mortgage must comply with the requirements set forth in Florida Statutes &sect;&nbsp;201.09, which should be consulted to ensure that this transaction is documented appropriately.

EXEMPTION

Enforceability of choice of law provisions is a sticky subject. Briefly stated, it is our opinion that Florida courts should give effect to the choice of law provisions in the loan documents, including a guaranty. Inasmuch, however, as the property secured by the mortgage is Florida real estate, the borrower is a Florida resident or is domiciled in Florida, the loan was negotiated in Florida, and the loan documents were executed in Florida, Florida usury laws might well be held to apply as a matter of public policy.

ENFORCEABILITY OF AGREEMENTS AS TO CHOICE OF LAW

On July 1, 2020, Florida enacted the Uniform Commercial Real Estate Receivership Act (the “UCRERA”), Chapter 714, Florida Statutes. Review of the UCRERA is recommended. A major change from prior Florida law is that the UCRERA now permits a receiver to sell mortgaged property free and clear of junior liens outside of the ordinary course of business, if permitted by the court in the mortgage foreclosure action. Florida's version of the UCRERA is largely identical to the Uniform Act, with few substantive changes. One change was to clarify that the UCRERA does not affect homestead real property. Another was to modify Section 714.03 to make the notice and opportunity for hearing provisions of the UCRERA dovetail with the notice provisions of Rule 1.610 of the Florida Rules of Civil Procedure, dealing with temporary injunctive relief. A third was to modify Section 714.12(1) to provide the receiver with the power, upon subpoena, to compel a person to submit to an examination under oath, or to produce and permit inspection and copying documents, pertaining to the receivership property, “or any other matter that may affect administration of the receivership.” A fourth change was to modify Section 714.06 to make clear that, while the court “shall consider” various facts and circumstances in determining whether to appoint a receiver, appointment is not mandated even if the various facts and circumstances are present. This change preserves the court's discretion as to whether to appoint a receiver. Per Florida Rule of Civil Procedure 1.620, receivers must meet various inventory and reporting obligations to the clerk of the circuit court in connection therewith.

RECEIVERSHIP

There is no particular prohibition concerning loan application fees or commitment fees. They must bear some reasonable relation to the scope of the transaction, but if they are exorbitant, a court might well treat those fees as interest. Although it is unlikely that these charges would be considered together with the interest set forth in the note, if they are, the lender might find itself in a usury situation.

SPECIAL RULES REGARDING LOAN APPLICATION, LOAN FEES & COMMITMENT FEES

Financial institutions with their principal place of business outside the state of Florida may enter loan contracts, mortgaging servicing contracts, and other transactions protecting, managing, or conveying property in the state without additional qualifications, pursuant to Florida Statutes &sect;&nbsp;655.921, as long as such institutions are not otherwise engaging in business within the state. Florida Statutes &sect; 655.005 defines “financial institution” as a state or federal savings or thrift association, bank, savings bank, trust company, international bank agency, international banking corporation, international branch, international representative office, international administrative office, international trust company representative office, credit union, or an agreement corporation operating pursuant to the Federal Reserve Act, or an Edge Act corporation organized pursuant to the Federal Reserve Act.

LENDER QUALIFICATIONS AND LICENSURE

Florida does not have any unusual provisions or requirements for the modification of existing mortgage loans, although any such modifications should be recorded.

MODIFICATIONS

Pursuant to Florida Statutes &sect;&nbsp;403.709, Florida has enacted a statute creating a Solid Waste Management Trust Fund. Part of this act permits the state to impose a lien on property on which a waste tire site is located. The statute does not give any indication as to the priority of the lien, so it must be assumed that the lien will follow the general rule of first in time, first in right. That is, mortgages, security interests, and other liens that have already been perfected will take precedence over the environmental lien, but liens that are filed or perfected after the environmental lien is effective will be subordinate to the lien. One potential problem with this statute is that it does not require that the lien be filed or that the property owner be notified. For the discussion regarding such lien enforcement, see Florida Statutes &sect;&nbsp;403.709. Florida has also enacted a lien with respect to property owned by persons that damage state lands, Florida Statutes &sect;&nbsp;253.04(6). The lien covers all fines and damages awarded for damage to state land. It is a lien both upon the real and personal property of the violators. Florida also imposes a lien under a section regarding pollutant discharge prevention and removal, Florida Statutes &sect;&nbsp;376.308. Florida Statutes &sect;&nbsp;376.308(3)(b)-(c) provides for certain defenses available to mortgagees similar to those provided under Federal Law in connection with the ownership of a mortgage interest and the foreclosure of the mortgage and subsequent sale of the underlying security. Specifically it provides that costs of cleanup “constitute a lien on the property against any subsequent sale after the amount of the former security interest . . . is satisfied.” This lien applies only if the property is not eligible for cleanup under certain other Florida statutes.

ENVIRONMENTAL LIEN LAW

Florida's main source for guidance on legal opinions is Third-Party Legal Opinion Customary Practice in Florida. Published on December 23, 2011 by the Florida Bar Business Law Section and the Legal Opinions Committee of The Florida Bar Real Property, Probate and Trust Law Section, the report provides guidance to attorneys who render third-party legal opinions, and to attorneys who, on behalf of their clients, receive third-party legal opinions from Florida attorneys, as to the nature and meaning of the content of legal opinions and as to the diligence recommended to render such opinions.

LEGAL OPINIONS

<ol start="713">
 <li> INCEPTION OF LIEN (Priority of Lien of Mortgage): Such liens take priority and attach as a lien as of the time of the recordation of a Notice of Commencement. The Notice of Commencement statute is Florida Statutes &sect;&nbsp;713.13. If no Notice of Commencement is filed, the liens attach and take priority as of the time the Claim of Lien is recorded (Florida Statutes &sect;&nbsp;713.07).</li>
</ol> Liens for professionals, such as architects, landscape architects, engineers, and the like, do not relate back to the Notice of Commencement but attach as of the time of recordation of the Claim of Lien. Accordingly, it is incumbent upon a prudent lender to be certain that the mortgage or other security instrument is recorded before the Notice of Commencement is recorded. If the Notice of Commencement is recorded before the mortgage, any liens filed will take priority over the mortgage. <ol>
 <li> PRIORITY AS TO REMOVABLE FIXTURES (Priority of Lien of Mortgage): It would be prudent for a lender to take a separate security agreement or have the mortgage instrument drawn so as to act not only as a mortgage on the real estate but as a security agreement. Any separate security agreement should, of course, be recorded at the same time the mortgage is recorded. At the same time, a UCC-1 (financing statement) should be recorded in the county where the property is situated. This would perfect the lien as of that moment, subject of course, to any prior filings that might have been made. A search of the County records and the Florida Secured Transaction Registry records can determine whether or not there have been any UCC filings at that time (as noted above, information regarding Florida UCC filings, continuations and renewals, as well as document images are available for downloading at www.floridaucc.com). Tangible personal property so secured should be described as specifically as possible.</li>
 <li> STATUTORY RESPONSIBILITIES OF CONSTRUCTION LENDERS TO CONTRACTORS AND OTHER LIENORS: Florida Statutes &sect; 713.3471 requires construction lenders to take specific actions for the protection of borrowers and contractors. Lenders are required to issue written warnings to borrowers to obtain lien releases from contractors and lienors prior to paying them. In addition, if a lender makes a final determination to cease further advances prior to distributing all funds available under a construction loan, the lender must provide prompt written notice to the contractor and other lienors; failing to do so exposes the lender to claims from those contractors or lienors who continued to provide labor or materials to the subject property without notice that further advances would not be forthcoming.</li>
</ol>

LABOR AND MATERIALMEN'S CLAIMS—PRIORITY ISSUES

Title insurance in Florida is written on ALTA Forms.

FORM USUALLY REQUIRED BY LENDER

The following endorsements are available: <table>
 <tbody>
 <tr>
 <td width="120">
 ALTA 2
 </td>
 <td width="449">
 Truth in Lending Endorsement
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 4.1
 </td>
 <td width="449">
 Condominium Endorsement
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 5.1
 </td>
 <td width="449">
 Planned Unit Development Endorsement
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 6.0
 </td>
 <td width="449">
 Renegotiable Rate Mortgage Endorsement
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 6.1
 </td>
 <td width="449">
 Variable Rate Mortgage Endorsement
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 6.2
 </td>
 <td width="449">
 Variable Rate Mortgage—Negative Amortization Endorsement
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 7
 </td>
 <td width="449">
 Manufactured Housing Unit Endorsement
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 8.1
 </td>
 <td width="449">
 Environmental Protection Lien Endorsement
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 9
 </td>
 <td width="449">
 Restrictions, Encroachments, Minerals (Loan Policy Only)
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 9.1
 </td>
 <td width="449">
 Restrictions, Encroachments, Minerals (Owners - Unimproved Land)
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 9.2
 </td>
 <td width="449">
 Restrictions, Encroachments, Minerals (Owners - Improved Land)
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 9.3
 </td>
 <td width="449">
 Restrictions, Encroachments, Minerals (Loan Policy Only)
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 9.5
 </td>
 <td width="449">
 Restrictions, Encroachments, Minerals (Owners - Improved Land)
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 10
 </td>
 <td width="449">
 Assignment
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 11
 </td>
 <td width="449">
 Mortgage Modification
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 12
 </td>
 <td width="449">
 Aggregation Endorsement
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 13
 </td>
 <td width="449">
 Leasehold Owner's Endorsement
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 13.1
 </td>
 <td width="449">
 Leasehold Mortgagee Endorsement
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 14
 </td>
 <td width="449">
 Future Advance - Priority
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 14.1
 </td>
 <td width="449">
 Future Advance - Knowledge
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 14.2
 </td>
 <td width="449">
 Future Advance - Letter of Credit
 </td>
 </tr>
 <tr>
 <td width="120">
 ALTA 14.3
 </td>
 <td width="449">
 Future Advance - Reverse Mortgage
 </td>
 </tr>
 <tr>
 <td colspan="2" width="569">
 Revolving Credit Endorsement
 </td>
 </tr>
 <tr>
 <td colspan="2" width="569">
 Navigational Servitude Endorsement
 </td>
 </tr>
 <tr>
 <td colspan="2" width="569">
 Shared Appreciation Endorsement
 </td>
 </tr>
 <tr>
 <td colspan="2" width="569">
 Additional Interest Endorsement
 </td>
 </tr>
 <tr>
 <td colspan="2" width="569">
 Option Endorsement
 </td>
 </tr>
 <tr>
 <td colspan="2" width="569">
 Change of Partners (Fairways) Endorsement
 </td>
 </tr>
 <tr>
 <td colspan="2" width="569">
 Contiguity Endorsement
 </td>
 </tr>
 <tr>
 <td colspan="2" width="569">
 Survey Endorsement
 </td>
 </tr>
 <tr>
 <td colspan="2" width="569">
 Construction Loan Update Endorsement
 </td>
 </tr>
 <tr>
 <td colspan="2" width="569">
 Foreign Currency Endorsement
 </td>
 </tr>
 <tr>
 <td colspan="2" width="569">
 Assignment of Mortgage Endorsement
 </td>
 </tr>
 <tr>
 <td colspan="2" width="569">
 Balloon Mortgage Endorsement
 </td>
 </tr>
 <tr>
 <td colspan="2" width="569">
 Reverse Annuity Mortgage Endorsement
 </td>
 </tr>
 </tbody>
</table>

ENDORSEMENTS AVAILABLE

Another Florida statute to be considered is the balloon mortgage law found in &sect;&nbsp;697.05, Florida Statutes. In part this section requires, in (2)(a)1: “Every mortgage in which the final payment or the principal balance due and payable upon maturity is greater than twice the amount of the regular monthly or periodic payment of the mortgage shall be deemed a balloon mortgage; and, except as provided in subparagraph 2., there shall be printed or clearly stamped on such mortgage a legend in substantially the following form: THIS IS A BALLOON MORTGAGE AND THE FINAL PRINCIPAL PAYMENT OR THE PRINCIPAL BALANCE DUE UPON MATURITY IS $__________, TOGETHER WITH ACCRUED INTEREST, IF ANY, AND ALL ADVANCEMENTS MADE BY THE MORTGAGEE UNDER THE TERMS OF THIS MORTGAGE.” The statutory language is deemed mandatory. The application of the balloon mortgage law does not apply to first mortgages or any mortgage securing an extension of credit in excess of $500,000.

BALLOON MORTGAGES

Pursuant to Florida Statutes &sect;&nbsp;679.3111, the filing of a financing statement is not necessary or effective to perfect a security interest in property that is subject to statutory provisions relating to title certificates for automobiles, trailers, mobile homes, boats, farm tractors or the like, which provide for a security interest to be indicated on a certificate of title. However, if collateral is held for sale by a person who is in the business of selling goods of that kind, the filing provisions of Article&nbsp;9 apply to perfecting a security interest in such collateral. With regard to motor vehicles that are not inventory, the method of perfecting a security interest is by compliance with the certificate of title laws.

SECURITY INTEREST IN MOTOR VEHICLES

Pursuant to Florida Statutes &sect; 701.04, effective October 1, 2023, conditional language for loan payoffs is prohibited. Moreover, the new statute: <ol>
 <li>Contains specific procedures for requesting and sending payoffs;</li>
 <li>Prohibits conditional language in payoffs. The mortgagee may not “qualify, reserve the right to change, or condition or disclaim the reliance of others on the information&hellip;”&nbsp; Any such language is “void and unenforceable”;</li>
 <li>Allows a lender to correct a payoff if the lender does so within specific time parameters;</li>
 <li>Requires that funds sent to a lender in reliance on a payoff must be applied to pay down the balance. If the lender subsequently wants to claim a shortfall, the amount at issue is then the shortfall and not the full balance (interest accrues only against the shortfall);</li>
 <li>Allows lenders to pursue collection of any shortfall against their borrower. Borrowers have the right to bring appropriate defenses to that action.&nbsp; In the meantime, however, the lender must release the lien;</li>
 <li>Requires a lender to advise mortgagor if a payoff request comes from any party other than mortgagor;</li>
 <li>Requires a lender to respond to a payoff request within 10 days (formerly 14 days), provided that if that period ends on a Saturday, Sunday or holiday, the estoppel letter is considered timely if sent by the close of business on the next business day; and</li>
 <li>Requires that within 60 days after the unpaid balance of the loan secured by mortgage has been fully paid or paid pursuant to an estoppel letter, whichever is earlier, the mortgagee or mortgage servicer shall execute in writing an instrument acknowledging release of the mortgage, have the instrument acknowledged, have it sent for recording in the official records of the proper county, and have the release sent to the mortgagor or record title owner of the property.</li>
</ol> &nbsp;

Florida

Mortgage Law Summary

Continue reading the
Mortgage Law Summary for Florida

Florida

Mortgage Law Summary

Continue reading theMortgage Law Summary for Florida

Continue reading the
Mortgage Law Summary for Florida