November 7, 2023

Safeguarding Your Rights: How Note Transfer Language Affects Foreclosure Proceedings

When it comes to lost or destroyed promissory notes in foreclosure cases, the stakes can be high. Recent developments in Florida’s legal landscape have underlined the pivotal role of including explicit note transfer language in mortgage assignments. In the groundbreaking case of Wilmington Savings Fund Society v. Charm-B, Inc., Florida’s Second District Court of Appeals emphasized the criticality of an unbroken chain of assignments, each expressly transferring the note, to establish standing for foreclosure on a lost promissory note. This legal insight could significantly impact the outcomes of similar cases in the future. 

Understanding the Legal Terrain  

Florida Statute Section 673.3091 delineates the parameters for establishing entitlement to enforce a lost promissory note. It requires plaintiffs to demonstrate either their direct entitlement to enforce the note (either as a holder or as a non-holder in possession with the right to enforce) at the time of its loss or their acquisition of ownership from an entitled party. While proving this may be straightforward in some scenarios, situations where the note was lost years earlier often present substantial challenges, particularly when lost by someone other than the current plaintiff. 

The statute does not demand precise details about the time or circumstances of the note’s loss. Yet, in practice, proving entitlement often hinges on establishing the last party in possession before the loss. This can involve digging up historical records from defunct servicers, lenders, or custodians, a task that can be arduous, if not impossible. 

The Significance of Note Transfer Language  

The Wilmington ruling highlights an alternative approach to establishing the right to enforce a lost promissory note. It underscores the importance of including note transfer language in assignments of mortgage. Under Florida law, an assignment of mortgage alone does not confer standing in a foreclosure case. However, when an assignment of mortgage explicitly indicates the transfer of the accompanying note, and there is an unbroken chain of such note assignments, the burden of proof for establishing standing is met without need for any additional evidence. 

Notably, while this legal strategy is beneficial in cases of lost note foreclosures, it also holds value in note possession cases. It simplifies the often-intricate process of proving standing in matters where the plaintiff is not custody of the original note bearing a complete chain of endorsements, especially when business records are hard to obtain or when establishing the necessary evidence requires resort to proprietary records that need to be protected. 

Implications for Lenders and Practical Recommendations  

It’s essential for lenders to grasp the significance of including note transfer language in assignments of mortgage, particularly in cases where a lost promissory note might emerge as an issue. While many assignments of mortgage currently lack this critical language, its inclusion can serve as a potent tool for establishing standing. Simply incorporating the phrase “together with the note” in the assignment could be the pivotal factor between triumph and dismissal in a legal battle. 

The evolving legal landscape demands proactive measures from lenders and legal practitioners alike. Considering the ramifications of these recent developments, it’s prudent to prioritize the inclusion of note transfer language in mortgage assignments to bolster the strength of foreclosure cases, especially in situations where a promissory note’s loss is a pressing concern. 

By staying attuned to these legal intricacies and adapting strategies accordingly, lenders and legal professionals can navigate lost note cases with greater confidence and a higher chance of success. 

How Can I Help?  

As a seasoned legal professional specializing in foreclosure litigation, here’s how I can assist you: 

Expert Guidance: Leverage my in-depth understanding of Florida’s foreclosure laws to navigate complex lost note cases effectively. 

Strategic Support: Rely on my strategic approach to strengthen your legal standing and protect your interests throughout the litigation process. 

Personalized Assistance: Count on my dedicated support and tailored solutions to ensure a favorable outcome that meets your specific needs. 

Don’t let legal complexities overwhelm you. Reach out to me today, and let’s work together to ensure a secure and successful resolution to your foreclosure litigation concern.

Bryan Jones
Attorney, Real Estate
Kelley Kronenberg-Fort Lauderdale, FL
(954) 370-9970