When borrowers fall behind on mortgage payments, lenders may start foreclosure proceedings. This allows banks or other lienholders to reclaim property used as collateral for the loan.
However, before a lender or company can file for foreclosure on a property, they must make sure that they have standing to foreclose. This is the legal right or authority of a party to initiate such an action.
Who usually has the authority to foreclose on a property in Florida?
In Florida, the party that usually has the standing to foreclose is the entity that holds the promissory note and mortgage. This may include:
- The original lender: This can be the bank or mortgage company that originally issued the loan and holds the promissory note and mortgage.
- Assignee or transferee: If the original lender has transferred the note and mortgage to another entity, that entity has the authority to foreclose. However, they must demonstrate their right to enforce the note. This might include showing a clear “chain of title,” which is an official record that traces the transfers of the title from its original owner to its current owner.
- Servicer acting on behalf of the holder: Sometimes, a loan servicer can manage the foreclosure process on behalf of the note holder. However, they must clearly establish their authority to act.
Most mortgage agreements include a grace period, which is usually around 10 to 15 days. However, if the borrower fails to make payments within this time, the lender must first send a Notice of Default. This formally declares that the borrower has breached the terms of the loan agreement. It is also a prerequisite before a lender can file a foreclosure action.
After receiving the Notice of Default, borrowers usually have a certain time period where they can “cure the default.” This simply means avoiding foreclosure and reinstating the loan by paying the overdue amount, including any accumulated interest and late fees.
Protect your interests
If your business holds mortgage notes or is facing challenges with commercial property foreclosures, proper documentation is crucial. Consider consulting with legal professionals to ensure your business interests remain protected throughout the process.