Gilbert Garcia Group Senior Litigation Attorney Joseph Dayan shares the fundamentals of foreclosure standing in Florida.

A Primer on Foreclosure Standing in Florida

I. Who Has Standing to Foreclose?

• Per FS § 673.3011, the person entitled to enforce an instrument (“Note”) is:

1. The “holder” of the instrument (defined by FS §671.201 (22)(a) as the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession)

2. A nonholder in possession of the instrument with the rights of a holder, or

3. A person not in possession of the instrument who is entitled to enforce the instrument pursuant to s. 673.3091 …

II. When Must Standing be Proven or Established?

• When proving standing in a foreclosure action, the Plaintiff must only demonstrate standing at inception and standing at judgment. Wilmington Trust, National Association v. Moon, 238 So. 3d 425, 427-428 (Fla. 5th DCA 2018); Ventures Trust 2013-I-H-R v. Asset Acquisitions and Holdings Trust, 202 So.3d 939 (Fla. 2d DCA 2016). Plaintiff must show it had standing at the inception of the case and at the time it seeks a final judgment (either at trial or summary judgment).

III. Standing as the “Holder” (FS § 673.3011(1))

• Florida case law also establishes that the “Holder” of the Note has standing to foreclose. Deutsche Bank Nat’l Trust Co. v. Lippi, 78 So. 3d 81, 84 (Fla. 5th DCA 2012); Riggs v. Aurora Loan Servs., LLC, 36 So. 3d 932, 933 (Fla. 4th DCA 2010); Philogene v. ABN Ambro Mortg. Group Inc., 948 So. 2d 45, 46 (Fla. 4th DCA 2006). If the Plaintiff is the “Holder” of the Note the Mortgage follows the Note and the party entitled to enforce the Note may also enforce the Mortgage, even without a formal assignment. Johns v. Gillian, 184 So. 140 (Fla. 1938); WM Specialty v. Salomon, 874 So. 2d 680 (Fla. 4th DCA 2004); Taylor v. Bayview, 74 So. 3d 1115 (Fla. 2nd DCA 2011).

• Pursuant to FS 702.015(4), if the Plaintiff is in possession of the original promissory Note, the Plaintiff must file under penalty of perjury a certification with the court, contemporaneously with the filing of the complaint for foreclosure stating that the Plaintiff is in possession of the original promissory Note. A proper Certification under this section essentially establishes standing at inception of the action.

• Even in cases filed prior to Note Certifications being required, if the Plaintiff pled holder status, attached a correct copy of the Note being enforced to its Complaint, and then later filed the original Note in the same condition, standing as a holder was established. Clay County Land Trust v. JPMorgan Chase Bank, N.A., 152 So. 3d 83, 84 (Fla. 1st DCA 2014); Ortiz v. PNC Bank, Nat’l Ass’n, 188 So. 3d 923, 925 (Fla. 4th DCA 2016), and U.S. Bank as Trustee v. Laird, 200 So. 3d 176, 177 (Fla. 5th DCA 2016).

IV. Standing as a Nonholder in Possession with the Rights of a Holder (FS § 673.3011(2))

• If a Plaintiff must enforce a Note that is specially indorsed to another entity, it is a nonholder in possession. A nonholder in possession may prove its right to enforce the Note through evidence of a valid transfer, proof of purchase of the debt, or evidence of a valid assignment (an assignment that transfers both the Note and mortgage). A nonholder in possession must account for its possession of the instrument by proving the transaction (or series of transactions) through which it acquired the Note. Bank of New York Mellon Trust Co., N.A. v. Conley, 188 So.3d 884 (Fla. 4^th DCA 2016); See also: Murray v. HSBC Bank USA, 157 So.3d 355 (Fla. 4^th DCA 2015); St. Clair v. U.S. Bank Nat. Ass’n, 173 So.3d 1045 (Fla. 2d DCA 2015).

V. Enforcing a Lost Note (FS § 673.3011(3) and FS § 673.3091)

• A Plaintiff can establish standing to enforce a Note even if it does not have possession of the Note. This is specifically permitted by FS § 673.3011(3). However, the Note must be re-established through the requirements of FS § 673.3091.

• When pleading the right to enforce a lost Note in a Complaint, per FS § 702.015(5), the Plaintiff must provide with its Complaint and Affidavit that details a clear chain of all endorsements, transfers, or assignments of the promissory note that is the subject of the action, that must set forth facts showing that the plaintiff is entitled to enforce a lost, destroyed, or stolen instrument pursuant to s. 673.3091, that states adequate protection will be provided per s. 673.3091(2), and which must include as exhibits copies of the note and the allonges to the note, audit reports showing receipt of the original note, or other evidence of the acquisition, ownership, and possession of the note as may be available to the plaintiff.

• Per FS 673.3091, a Plaintiff may enforce a lost Note if i was entitled to enforce the instrument when loss of possession occurred, or has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred. Per the statute, a Plaintiff must also establish that loss of possession was not the result of a transfer by the person or a lawful seizure, that it cannot reasonably obtain possession of the instrument because the instrument, it must prove the terms of the instrument, its right to enforce the instrument, and must adequately protect the borrower against wrongful enforcement of the Note.

• The term “indirectly” in the statute allows a Plaintiff to enforce the Note, even if they obtained the rights to enforce after the Note from another after it was lost. Importantly, a Plaintiff must establish the chain of transfers/ownership in order to show its right to enforce the Note (standing). A Plaintiff must submit evidence of a proper transfer to it or ownership of the Note and this must establish the Plaintiff’s right to enforce the Note prior to the initiation of the lawsuit. Such evidence could include (but is not limited to) a purchase and sale agreement with a loan schedule that includes the specific Note (loan) being foreclosed, an affidavit of ownership, an instrument of sale for the specific Note, or an unbroken chain of assignments that assign both the Note and Mortgage. Courts prefer evidence of timely transfer or ownership of the particular loan being foreclosed (must show transfer or ownership prior to the action being foreclosed). Johnson v. U.S. Bank National Association, 222 So.3d 635, 637 (Fla. 2d DCA 2017). See also: Peters v. Bank of New York Mellon, 227 So.3d 175, 178-179 (Fla. 2d DCA 2017).