As a Fort Lauderdale commercial litigation lawyer, I proactively seek to assist my clients with monitoring changes in the law that might affect their businesses. One such change has occurred in Chapter 701, Florida Statutes, which pertains to assignments and cancellations of mortgages, and directly affects those involved in residential and commercial lending.
As of July 1, 2016, Section 701.03—which sets forth the time frame in which a lender must cancel of record a mortgage that has been fully paid by a borrower—requires a lender to cancel a mortgage within 45 days from the date on which the mortgage loan is satisfied. Since 1973 (more than 40 years ago!), lenders in the State of Florida have had 60 days in which to cancel a mortgage of record after a borrower pays the full amount due under the mortgage. Thus, the new 45-day requirement shortens the time period by 15 days.
Section 701.03 was further amended to address open-end mortgages, popularly known as “equity-line mortgages.” Under the new Statute, a lender of an open-end mortgage is required to cancel the open-mortgage within 45 days of receiving written notice from the borrower of his or its intent to close the mortgage. However, under the express terms of Section 701.03, a lender’s requirement to close an open-ended mortgage does not apply to any open-ended mortgage existing before July 1, 2016, if (but only if) the loan agreement contained procedures for canceling the mortgage. Otherwise, the requirement to cancel will apply.
The recent change in the long-standing law is a stark reminder of the importance of paying attention to changes in the law, especially statutory law, which is often altered by the Legislature with little to no media attention or scrutiny. A lender that fails to timely cancel a mortgage is liable to a borrower for any attorney’s fees incurred in any civil action to compel a lender’s compliance with Section 701.03. Banks and financial institutions will need to ensure that their policies and procedures are modified to comport with the statutory change. Borrowers will no doubt be monitoring whether lenders comply.
Whether you are a local or regional bank in need of local counsel, or a borrower in need of assistance with either defending a foreclosure or negotiating a mortgage loan workout, call a Ft Lauderdale business lawyer at (954) 440-0901 to assist you with your issue.