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Argent Mortg. Co., LLC v. Wachovia Bank N.A. - 52 So. 3d 796 (Fla. Dist. Ct. App. 2010)

Rule:

Recording statutes are classified into three categories: race, notice, and race-notice. These can generally be described as follows. Under a race recording statute, a subsequent mortgagee of real property will prevail against a prior mortgagee of the said real property if the subsequent mortgage is recorded before the prior mortgage. Under a notice recording statute, a subsequent mortgagee of real property for value and without notice (actual and constructive) of a prior mortgage of the said real property will prevail against the prior mortgagee. Under a race-notice recording statute, a subsequent mortgagee of real property for value and without notice (actual and constructive) of a prior mortgage of the said real property will prevail against the prior mortgagee if the subsequent mortgage is recorded before the prior mortgage. Importantly, under either a notice or a race-notice recording statute, the subsequent mortgagee cannot be without constructive notice if the prior mortgage has been recorded as of the time of execution of the subsequent mortgage.

Facts:

Wachovia Bank, as the prior mortgagee, brought a foreclosure action naming Argent as the subsequent mortgagee. The circuit court ruled that Wachovia Bank had priority over the subsequent mortgage. Argent appealed, asserting that § 695.01, Fla. Stat., alone, determined which mortgage had priority, and was a "notice" statute, not a "race-notice" statute.

Issue:

Was the circuit court correct in ruling that the prior mortgagee had priority over the subsequent mortgagee?

Answer:

No.

Conclusion:

The court ruled in favor of the subsequent mortgagee and found that § 695.01 was a "notice" type of recording statute. The subsequent mortgagee did not have notice of the prior mortgage at the time of execution of the subsequent mortgagee, but the prior mortgage was recorded before the subsequent mortgage. Because the subsequent mortgage was for value and the subsequent mortgagee did not have notice of the prior mortgage, the subsequent mortgage had priority over the prior mortgage.

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