Standing to Foreclose in Florida: Does the Plaintiff Actually Hold Your Note?

Mortgages are bought, sold, bundled into securities, and transferred many times over the life of a loan. The paperwork that is supposed to follow them often does not keep up. That creates one of the most important questions in any Florida foreclosure: does the company suing you actually have the legal right to bring this case? That is the question of standing — and a plaintiff that cannot prove it can have its case dismissed.

The rule: hold the note at the time of filing

Under Florida law, a party bringing a mortgage foreclosure action must demonstrate that it owns or holds the promissory note at the time it files the complaint. Standing is measured at the moment the lawsuit is commenced. A plaintiff that acquires the note after filing generally cannot cure a standing defect by pointing to a later transfer. Florida courts — including its district courts of appeal — have consistently enforced this rule. It is the note, not just the mortgage assignment, that determines the right to sue.

How standing is established

A foreclosing plaintiff in Florida generally proves standing in one of two ways:

• Physical possession of the note at filing — the plaintiff shows it had actual possession of the original note, endorsed to it or endorsed in blank (making it a bearer instrument), before it filed the complaint. Possession of a note endorsed in blank makes the holder a 'holder' under Florida's version of the Uniform Commercial Code (Fla. Stat. Ch. 673), regardless of whether a formal assignment exists.
• A valid written assignment before filing — an unbroken chain of written assignments transferring the note (and mortgage) to the plaintiff prior to the date the complaint was filed. The assignment must be complete and authentic; a backdated or post-filing assignment does not cure the defect.

Where the chain breaks — a missing endorsement, an assignment dated after the case was filed, an assignment from an entity that no longer existed, or a fabricated or 'robo-signed' transfer document — the plaintiff's standing is open to challenge.

Lost or destroyed note — Fla. Stat. § 673.3091

Sometimes a foreclosing plaintiff cannot produce the original note because it was lost, destroyed, or is otherwise unavailable. Florida law allows such a plaintiff to re-establish the lost note and proceed with foreclosure under Fla. Stat. § 673.3091, but doing so requires the plaintiff to prove the terms of the note and its right to enforce it, and that: (1) it was entitled to enforce the note when it was lost (or the loss occurred after transfer to a person entitled to enforce it); (2) the loss was not the result of a transfer or lawful seizure; and (3) it cannot reasonably obtain possession of the note. The court must also make sure you are adequately protected against paying twice — by a bond or other reasonable means — before entering final judgment. Defects in that showing are a real defense.

Common standing problems to look for

1. An assignment dated after the complaint was filed — standing is measured at filing; a later assignment generally does not cure the defect.
2. A gap in the assignment chain — the note jumps from one entity to another with no recorded transfer in between.
3. A missing or improper endorsement on the note itself — the note was endorsed to a different entity than the one suing, or the endorsement chain is incomplete.
4. An assignment executed by a party with no authority — signed by a 'robo-signer,' someone at MERS with a fabricated officer title, or an entity that had already been dissolved.
5. The plaintiff relies on MERS having assigned the note, not just the mortgage — a recurring problem because MERS typically only holds the mortgage as nominee and generally cannot transfer the note.

How to raise a standing challenge

Raise lack of standing as an affirmative defense in your Answer. In Florida, standing is a waivable affirmative defense — it is not jurisdictional — so if you do not plead it, you can lose the right to argue it. (A general denial may sometimes let you test the plaintiff's proof of standing at trial, but do not rely on raising it late — plead it expressly and early.) Once standing is in the case, you can serve discovery demands requiring production of the original note, every endorsement on it, the complete assignment history, and any lost-note affidavit or indemnification agreement. Forcing the plaintiff to actually produce and authenticate those documents is often where standing defenses are decided.

Standing as a meritorious defense

Lack of standing is also a classic potentially meritorious defense for a motion to vacate a default. If a default was entered against you and the plaintiff's standing is questionable, that defect supports both the 'meritorious defense' prong of a motion to vacate and your underlying defense once you are back in the case.