What happens in a foreclosure when the promissory note is lost?

Lost Promissory Notes and Foreclosures

What happens when a bank is seeking to foreclose but it is not in possession of the originally promissory note?  The answer is that It must first re-establish the note under law, or it cannot foreclose.   

What does a bank have to show to re-establish the lost note?

Enforcement of lost, destroyed, or stolen instrument.—

(1) A person not in possession of an instrument is entitled to enforce the instrument if:

(a) The person seeking to enforce the instrument 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;

(b) The loss of possession was not the result of a transfer by the person or a lawful seizure; and

(c) The person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.

(2) A person seeking enforcement of an instrument under subsection (1) must prove the terms of the instrument and the person’s right to enforce the instrument. If that proof is made, s. 673.3081 applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.

What is adequate protection?

Florida law provides that if the complaint seeks to reestablish and enforce a lost, destroyed, or stolen promissory note, “[t]he court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.” F.S. 673.3091(2). F.S. 702.11 provides further clarity as to what types of adequate protection are reasonable, as follows:

• A written indemnification agreement by a person reasonably believed to be sufficiently solvent to honor such an obligation—F.S. 702.11(1)(a).

• A surety bond—F.S. 702.11(1)(b).

• A letter of credit—F.S. 702.11(1)(c).

• A deposit of cash collateral with the clerk of court—F.S. 702.11(1)(d).

• Other security deemed appropriate by the court under the circumstances— F.S. 702.11(1)(e).

Florida Foreclosure Defense Lawyer

If the plaintiff lost the original promissory note and is seeking to foreclose on you then you should contact Florida mortgage foreclosure defense attorney Andrew J. Pascale today at 877-667-1211 to protect your rights.  Please note that this blog does not provide legal advice and is intended for illustrative purposes only.