Real Estate Attorney with THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY

You can have a cow without a tail, but you cannot have a tail without a cow.

My law office has been receiving reports of aggressive tactics of mortgage lenders pursuing borrowers on the promissory note alone.  This means they are avoiding foreclosure actions and going straight after borrower assets. Some self educated or video seminar educated borrowers contacted me saying that if the lender goes after the borrower only on the promissory note, then the lender gives up the right to pursue a mortgage foreclosure, opening the door to the borrower getting the home free and clear of the mortgage lien while still not having satisfied the promissory note.

The Wishful Thinking Rule:

The espoused theory of law is that the promissory note, once reduced to a money judgment by the court, is no longer attached to the mortgage. That brings into play the saying, “The mortgage follows the note”.  The common sense thought is that if there is no longer a promissory note, then there is no mortgage to enforce, and the mortgage lien can be eliminated through a quiet title action – thus the house is “free and clear”.  It reminds me of the Vermont Judge who when referring to the relationship of a promissory note and mortgage, said "You can have a cow without a tail, but you cannot have a tail without a cow".  He was referring to the legal concept that you cannot have a mortgage that is not supported by an obligation, like a promissory note, but you can have a promissory note without a mortgage.  The cow is the promissory note and the tail is the mortgage.

Now the Law:

Although plausible, case law in most of the United States does in fact allow the pursuit of the remedies of foreclosure of the mortgage as well as suit on the promissory note and the remedies may be pursued together, independently and in no particular order.

Florida cases have relied on cases both in state and out of state for guidance.   Essentially, it has to do with election of remedies.  If one remedy is inconsistent with another remedy, you have to decide which one you want to pursue and the one you don’t pursue is waived.  As stated in 25 Am.Jur.2d, Election of Remedies, § 11:

“It has been said that the so-called 'inconsistency of remedies' is not in reality  an inconsistency between the remedies themselves, but must be taken to mean that a certain state of facts relied on as the basis of a certain remedy is inconsistent with, and repugnant to, another certain state of facts relied on as the basis of another remedy.  For one proceeding to be a bar to another for inconsistency, the remedies must proceed from opposite and irreconcilable claims of right and must be so inconsistent that a party could not logically assume to follow one without renouncing the other. * * *"

It goes on in Section 12 to state:

“Applying the test of 'inconsistency' of remedies, it is held that a remedy is not inconsistent where it merely seeks further relief which the court may grant consistent with that already given, or is of such a character as to indicate that the adoption of one is not an intentional relinquishment of the other or others.  Thus, remedies are merely cumulative and not inconsistent where the party in the one expresses upon the record reliance upon the same facts upon which he relies in the other, as where both remedies recognize the existence and validity of a contract and proceed in affirmance thereof, or are predicated on a breach of the contract and seek redress for such breach, * * *"

Dual Remedies Provided They Are Not Inconsistant:

One Florida appellate court thus stated in a case widely cited by other courts, “Turning now to the specific actions under consideration, the great weight of authority seems to be that the remedies available to a mortgagee, i.e., suit on the note or foreclosure of the mortgage, are not inconsistent remedies, and pursuit of one without satisfaction is not a bar to the other.”  Am Jur further clarifies it as follows:
"Except as affected by statute in a few states, and subject to the conflict of authority as respects the effect of an execution or an attachment upon the mortgaged property by the judgment creditor, or a sale there under, the cases are uniform in holding that until the mortgage debt is actually satisfied, the recovery of a judgment on the obligation secured by a mortgage, without the foreclosure of the mortgage, although merging the debt in the judgment, has no effect upon the mortgage or its lien, does not merge it, and does not preclude its foreclosure in a subsequent suit instituted for that purpose, * * *"

There are some states (notably California) which by statute could cause a different outcome.  Seek the advice of an attorney licensed in the affected State and qualified in real estate litigation to understand the importance of a foreclosure or note collection lawsuit filed against a borrower.

So the answer is that the lender CAN pursue the note first, then go after the borrower on the foreclosure IF the note OR THE MONEY JUDGMENT EMINATING FROM THE NOTE, is not yet fully satisfied.

(Special thanks to my son Max Zaretsky who did the legal research for this article)
Copyright 2011 Richard P. Zaretsky, Esq.
Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.
Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! New Website
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Re-Blogged 2 times:

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Vickie Nagy
Palm Springs, CA

I am sincerely glad that the regulations in California tend to differ from those in Florida. This sounds like a nasty situation.

Sep 15, 2011 03:38 PM #1
David Steinfeld


Fantastic article and well researched and written.

Dave Steinfeld

Sep 15, 2011 04:55 PM #2
Wendy Rulnick
Rulnick Realty, Inc. - Destin, FL
"It's Wendy... It's Sold!"

Richard and Max - Thank you for this in-depth article about notes and mortgages. Are you seeing more senior lienholders going after the promissory note with a judgment before foreclosing on the mortgage?  Also, if you had a hypothetical situation, where someone owed a $30,000 promissory note secured by a mortgage, and the entire $30,000 was paid by seizing of other assets, why wouldn't the mortgage be satisfied and removed at that point?

Sep 21, 2011 10:57 AM #3
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Wendy - Actually, I have not personally seen this event where the lender proceeded first on the mortgage note, unless it was a junior mortgage note -- that event we see all the time!  However I have gotten questions from many regarding the first note issue where the lender has proceeded first under the fist mortgage note.

The case law indeed provides that the mortgage is only still a viable lien until the money obligation is paid or otherwise satisfied in full.  So in your hypothetical, if the bank seized assets with a value of $30,000, there would be no further function of the mortgage and it would be successfully defeated in a foreclosure action.

Sep 21, 2011 02:46 PM #4
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