HOW LONG DOES YOUR MORTGAGE EXIST?

By
Real Estate Attorney with THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY
https://activerain.com/droplet/4Jvf

The Florida statute of repose deals with how long a mortgage lien exists. This week we received a release of a mortgage lien that had expired – after we threatened to sue the lender for slander of title.

This is not an isolated situation. The expiration of a mortgage lien happens all the time and typically neither the lender nor the borrower realizes it.

In this case the promissory note and mortgage were signed on July 1, 2007 and the mortgage and note said the loan was due in 1 year, so let’s call it July 1, 2008. The mortgage was on property not owned by the borrower, but by someone willing to use their real estate for collateral for the promissory note. Just a few payments were made and then payments stopped.

In August 2014 the borrower and the lender signed an extension agreement for the note and mortgage. It should be noted that the mortgagor, who was not the borrower, did not sign the extension agreement.

The problem is that the mortgage lien expired by operation of law (not by some device the real estate owner had to affirmatively do). When I say it expired – it ceased to exist.

After the lien ceased to exist, the lien that no longer existed could not be extended. Instead it would have to be a new lien, and it would have to be signed by the real property owner, not just the signor of the promissory note. 

In our case the lien ceased to exist on July 2, 2014, which is the one year plus the 5 years under the Florida statute of repose (Florida Statute 95.281). Although the extension could have been used if filed before the expiration of the lien, in this case it was not and therefore it was ineffective to revive the already expired mortgage. The extension was effective to extend the term of the promissory note however. In our case the extension did not affect our clients since they were not the borrower in the promissory note.

The end result was had the lender not recorded the extension agreement, the mortgage would have been legally of no further effect and a quiet title case may not have been necessary. Here, because of the recording of the extension agreement mentioning the legal description of the mortgage, the title became “slandered” or clouded and it had to be cleared with a quiet title action with a claim of slander of title. In a slander of title case, the winning party gets attorney fees.

You can read about the difference between the statute of repose and the statute of limitations in my article explaining the concept of eliminating your mortgage in QUIET TITLE TO ELIMINATE YOUR MORTGAGE - FLORIDA STATUS

This type of situation happens most often with private loans - not institutional bank loans.  That being said, short term loans from banks seem to also fall into this expired position every so often.  You need to be able to recognize when this type of situation may be ripe for some action by the property owner - and lenders need to be vigilant to not let their collateral slip away by inaction.

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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
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Gosh, it would sure take me more than one time reading it. What I am not quite understanding is that if the Mortgage is no longer there, the Promissory Note still is, so the benefit for the onwer is that his/her property can't be taken as collateral, but they are still liable for the amount on the Promissory Note.

Am I missing something?

Sep 23, 2015 01:33 PM #1
Rainmaker
281,232
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

As usual John - you are absolutely correct.

Sep 23, 2015 01:43 PM #2
Rainer
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Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

The expiration of a mortgage lien happens all the time and typically neither the lender nor the borrower realizes it. We see this all the time!!!

Sep 27, 2015 08:50 PM #3
Rainmaker
281,232
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Sham - Wow. Not here in Florida!  It happens - likely more often than we see it.... but certainly not "all the time".

Sep 27, 2015 08:58 PM #4
Anonymous
Jeff Kauffman

If the promissory note matures and the 5 years elapse, would it not also fall under the same law of repose?Or is it different for personal property?Often times with smaller mortgages the note is attached and is where I have to look for the maturity date.

Oct 06, 2015 07:22 AM #5
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Rainmaker
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Richard Zaretsky

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