Court: District Court of Appeal of Florida; December 29, 2010; Florida; State Appellate Court
Argent Mortgage Company, LLC appeals a trial court judgment favoring Wachovia Bank regarding the priority of two mortgages on the same property. The Olympus Mortgage, executed on August 31, 2004, was recorded on January 5, 2005, and subsequently assigned to Wachovia. The Argent Mortgage, executed on December 10, 2004, was recorded on January 31, 2005. Wachovia filed a foreclosure complaint against the Burkes’ property, joining Argent, which claimed priority for its mortgage.
The trial court found that the Olympus Mortgage had priority over the Argent Mortgage, citing Florida statutes 695.01 and 695.11 as establishing a 'race-notice' framework. Argent contends this interpretation is erroneous, asserting that section 695.01 is solely a notice statute and that it should take precedence over the Olympus Mortgage. Wachovia acknowledges that section 695.01 is a notice statute but argues that amendments to section 695.11 have shifted Florida’s statutes to a race-notice system.
The excerpt concludes by outlining the definitions of recording statute types: race, notice, and race-notice, which dictate the conditions under which subsequent mortgagees can prevail over prior mortgagees.
Under a race-notice recording statute, a subsequent mortgagee who acquires property for value and without notice of a prior mortgage will have priority if their mortgage is recorded before the prior one. However, if the prior mortgage is recorded at the time the subsequent mortgage is executed, the subsequent mortgagee cannot claim to be without constructive notice. In this case, Wachovia succeeds under a race recording statute because the Olympus Mortgage was recorded before the Argent Mortgage. Conversely, Argent prevails under a notice recording statute since it was a subsequent mortgagee for value without notice of the Olympus Mortgage when executing the Argent Mortgage. Wachovia also prevails under a race-notice statute for the same reasons. Florida's recording statute, identified as a notice type, aims to protect subsequent purchasers—including mortgagees and creditors—from claims based on prior unrecorded interests. Florida courts consistently interpret this statute to protect subsequent purchasers who acquire title without notice of prior unrecorded instruments. The burden of proving notice rests with the party claiming under an unrecorded interest, as there is a presumption that the subsequent purchaser acted in good faith. Generally, competing interests in land are prioritized based on their creation date, but subsequent rights can supersede earlier ones if acquired without notice of the earlier rights.
Unrecorded rights, titles, or lien interests, including equitable rights from resulting trusts and constructive trusts, are typically regarded as inferior to rights acquired without actual notice of these unrecorded interests. The Florida Supreme Court's ruling in *Van Eepoel Real Estate Co. v. Sarasota Milk Co.* illustrates that if a bona fide purchaser for value (B) fails to record their deed before a subsequent bona fide purchaser (C) acquires the same property without notice of B's interest, C's title prevails. This outcome reflects B's failure to promptly record, thus estopping them from asserting their claim.
The trial court accepted Wachovia's position that a 1967 amendment to section 695.11 of the Florida Statutes changed Florida's status from a 'notice' to a 'race-notice' jurisdiction. However, analysis of the historical context and language of section 695.11 indicates that its purpose was to clarify the timing of when an instrument is considered recorded, not to redefine the recording requirements of section 695.01. The 1967 amendment introduced language determining that priority is based on the sequence of official register numbers, rather than altering the existing framework. Even if an instrument is indexed incorrectly but has an official register number, it is still deemed recorded.
The cases cited by Wachovia do not modify the statute's explicit language regarding priority based on official numbers. Wachovia's reliance on *Rice v. Greene* to support a race-notice interpretation is flawed, as that case did not examine section 695.11 and was focused on the principle that an unrecorded deed is ineffective against subsequent purchasers without notice.
Mr. Greene, as the subsequent purchaser in Rice, holds priority over the property based on a notice type of recording statute, due to paying value and lacking notice of an earlier warranty deed during the conveyance. The timing of Mr. Greene's deed recording does not alter this priority. Florida remains a 'notice' jurisdiction where notice determines priority. Argent, as a subsequent mortgagee who paid value and lacked notice of the Olympus Mortgage at the time of executing the Argent Mortgage, also has priority over the Olympus Mortgage. The trial court's partial summary judgment favoring Wachovia on priority was erroneous and has been reversed and remanded. The consolidation of foreclosure actions by the trial court contradicts Wachovia’s argument that Florida’s sections 695.01 and 695.11 mirror New Jersey’s race-notice statute. Case law clarifies that section 695.11 establishes when an instrument is recorded and serves as notice, deeming instruments recorded from the time of filing. Section 695.11 states that instruments required to be recorded officially serve as notice to all upon official recording. The principle that subsequent property dealings imply constructive notice of recorded instruments is upheld, and section 695.11 plays a crucial role in determining priority among judgment liens. A judgment must be recorded to create a lien on real property, where an earlier recorded judgment, indicated by a lower official register number, takes precedence.
