Monday, August 13, 2012

Deed Recorded For Only 73 Minutes Before Being 'Erased' By Clerk Enough To Provide Constructive Notice; Subsequent Buyer, Lender Left Holding The Bag

In Tallahassee, Florida, The Associated Press reports:

  • A Florida appellate court on Thursday said electronic property records are official once they are filed even if later erased by mistake.

    A three-judge panel of the 1st District Court of Appeal upheld the foreclosure by First City Bank of Florida on a Walton County lot that had been sold to two different buyers by Bluewater Real Estate Investments LLC.

    The panel unanimously rejected an appeal by Michael and Bonnie Mayfield and Branch Banking and Trust Co. The Mayfields bought the lot in 2009 through a mortgage from BB&T.

    They were unaware the lot had been purchased three years earlier by another buyer, Wright and Associates of Northwest Florida, which obtained a mortgage from First City.

    The couple didn't know about the first sale because the county court clerk's office removed the record to fix an error but failed to re-record the corrected version. First City foreclosed when the first buyer defaulted.

    District Judge Clayton Roberts wrote that the panel recognized "the harshness of the result" because the Mayfields and BB&T are "innocent parties."

    Roberts though noted courts have consistently ruled that Florida law says once a document is filed that serves as "constructive notice" to all parties although this is the first case of its kind involving electronic rather than paper public records.

    The document on the 2006 sale was in the electronic record for only 73 minutes on July 6, 2006. That was the only time a member of the general public could have discovered it, but that makes no difference, the court ruled.

    Roberts concluded the opinion by writing the only remedy for the Mayfields and BB&T may be to sue the clerk who made the mistake.(1)
For the ruling, see Mayfield v. First City Bank of Florida, Case No. 1D11-3681 (Fla. 1st DCA, August 2, 2012).

(1) Presumably, the Mayfields and BB&T each had title insurance policy protection, in which case it's the title insurer that issued the policies that's left holding the bag by having to indemnify each party for their loss, as well as having already provided and paid for the legal battle in court (ie. attorneys fees, etc.).

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