On May 5, 2023, the Florida Legislature concluded another legislative session. During this most recent session, it passed several laws that have an impact on financial institutions and credit unions. We want to take this time to make you aware of these changes and how they may impact your credit union.
One bill that was passed during the latest session makes changes to Section 701.041, Florida Statutes, and payoff letters. Pursuant to these changes, a payoff letter must be provided in writing within ten (10) days of receipt of a written request. This is a change from the previous requirement of fourteen (14) days. The changes also address requests from third parties. If a request is made by someone other than the borrower, such as a title company, the request must include a copy of the instrument showing their entitlement to the payoff letter. Upon receipt of the request, the credit union must make the borrower aware of the third party’s request for a payoff letter.
The changes also provide clarification on how requests must be both received and sent. Regarding requests for a payoff, they must be sent to the credit union by first-class mail, postage prepaid, common carrier service, or by e-mail, facsimile, or other electronic means at an address made available by the credit union. The request is considered received five (5) business days after it is deposited in the mail, provided it is sent by first-class mail; the day it is delivered by common carrier; or the day it is sent, if sent by e-mail, facsimile, or other electronic means. If the delivery date falls on a non-business day, it will revert to the next business day. These dates are important, as they will determine the ten-day window for responding to the request. The payoff letter must be sent to the requesting party in the manner requested in the written request for a payoff.
The legislative change also addresses what information must be provided in the letter. Under the changes, the payoff letter must provide an itemization of the amounts owed on the loan, as well as the daily interest, per diem, and a good through date for the payoff. Under the previous law, the credit union was only required to provide the total unpaid balance. The change also addresses the accuracy of the letters. Unless the mortgage is subject to a current foreclosure or bankruptcy, the credit union cannot reserve the right to change, condition, or disclaim the information provided in the payoff letter. Any attempt to do so will be void and unenforceable. Therefore, it is important that accurate information be provided in the payoff letter. The statute does provide an exception if the payoff letter contains a mistake. If there is a mistake, a corrected payoff letter must be received by the requesting party by 3:00 P.M. in their time zone at least one (1) business day before a payment is issued in reliance of the original payoff letter. If these conditions are not met, the credit union must honor the original payoff letter.
These changes take effect October 1, 2023.
Satisfaction of Mortgage and Judgement Lines
Not only does Section 701.041, Florida Statutes, address payoff letters, it also addresses satisfaction of mortgage and judgment liens. Whenever payment is made in full on a mortgage or a judgment lien, the credit union, its servicer, or lawyer of a judgment lien, must record a satisfaction within sixty (60) days. It is important that you record the satisfaction within sixty days, because failure to do so can entitle the borrower or judgment debtor to an award of reasonable attorney’s fees.
These changes take effect October 1, 2023.
Collateral Protection Insurance (CPI)
The Legislature also enacted regulations for Collateral Protection Insurance. Under the new statute, Section 627.9901, Florida Statutes, regulations are provided for insurers as it relates to CPI. Under this new law, a CPI policy cannot be applied any earlier than the date of lapse of coverage and must terminate when the borrower obtains acceptable insurance coverage, the mortgage is no longer a lien on the property, or a date specified in the policy or by the lender. If CPI is added, an individual policy or a certificate of insurance must be mailed by first-class mail to the borrower at their last known address. Any policy coverage must be based on the replacement cost value of the property. The Statute provides a basis for determining what the value may be and is set forth in Section 627.9905, Florida Statutes. In the event of any loss, any insurance proceeds that exceed the unpaid principal balance must be paid to the borrower.
This law took effect July 1, 2023.
The Florida Legislature also passed a series of laws to combat real property fraud in Florida.
Witnesses to a Recorded Instrument
Another change is to witnesses to recorded instruments. Under Section 695.26(1)(c), Florida Statutes, any witness to a recorded instrument must include their post office address beneath their signature. This is in addition to requiring that the witness’s name appear legibly under their signature.
This change takes effect January 1, 2024.
The Legislature also addressed what it felt were inconsistencies in quitclaim deeds. A quitclaim deed is a legal instrument in Florida that transfers title to real property. Unlike a warranty deed or special warranty deed, a quitclaim deed does not include any warranties by the grantor as to the marketability of title or even its ownership interest. These are commonly used for conveyances amongst family or divorcing spouses, as well as deeds in lieu of foreclosure. The Legislature, in its desire to create uniformity, created a form quitclaim deed that is found in Section 689.025, Florida Statues. The notable change is that it requires the parcel identification number or a blank box for this formation to be included.
These changes took effect July 1, 2023.
Lee County Pilot Program
The Legislature created the Title Fraud Prevention Through Identify Verification Pilot Program in Lee County, Florida. Under the Pilot Program, the Lee County Clerk of Court will require the production of a government issued photo identification document from the person that is presenting a document for recording that acts as a conveyance of real property. If the recording is done in person, the Clerk will record their name and address, along with the book and page of the document being recorded. This information will be kept confidential. If the recording request is made by electronic means, the Clerk will retain a copy of the government issued photo identification document. If proper identification is not provided, the Clerk can refuse to record any document that conveys title to real property.
This Pilot Program will continue until July 1, 2025. By no later than December 31, 2025, the Clerk must present a report regarding the Program to the Governor, Speaker, and President of the Senate.
Statewide Notification Service
Under a new law, the Clerk of Court in every county in Florida must create and operate a free recording notification service. Under this service, the owner of real property can opt-in to receive electronic notification anytime a document is recorded that encumbers or conveys real property that they own. The notification will be sent within twenty-four (24) hours of the document being recorded.
Mandatory compliance by the Clerks of Court is required by July 1, 2024.
If you have any questions about these recently enacted laws and how they may impact your credit union, please do not hesitate to contact one of the lawyers at SVL for legal advice.
What is an Interpleader and How is it Used to Protect the Credit Union in Account Disputes?
Interpleader – this type of action has come up a lot lately, and I wanted to address what it is, how it is used, and what a Credit Union may expect from such an action.
In Florida, an Interpleader “is an equitable proceeding,” governed by Florida Rule of Civil Procedure 1.240, which enables a third party, who faces liability as a result of conflicting claims to an asset, but that has no interest in that asset, to commence an action against the competing claimants and to compel them to litigate the matter among themselves in order to determine who is entitled to the assets. The rule states as follows:
Persons having claims against the plaintiff may be joined as defendants and required to interplead when their claims are such that the plaintiff is or may be exposed to double or multiple liability. It is not ground for objection to the joinder that the claim of the several claimants or the titles on which their claims depend do not have a common origin or are not identical but are adverse to and independent of one another, or that the plaintiff avers that the plaintiff is not liable in whole or in part to any or all of the claimants. A defendant exposed to similar liability may obtain such interpleader by way of crossclaim or counterclaim. The provisions of this rule supplement and do not in any way limit the joinder of parties otherwise permitted. Fla. R. Civ. P. 1.240.
Traditionally, and in most instances, interpleader actions involve escrow agents in real estate transactions or entitlement to insurance proceeds. However, as to Credit Unions, the most common actions involve a dispute as to ownership of funds in an account following the death of the owner, a dispute following a divorce, or a final draw in a construction contract. As I am sure you are aware, it is not uncommon for a Credit Union holding money to be placed in a situation where multiple parties claim entitlement to the funds being held. While in many, if not most, of these situations, it is clear who is entitled to the funds, occasionally due to a timing issue or other intervening issues, it is not clear who is entitled to the funds. Given the competing claims to the funds, a Credit Union can wait for the parties to resolve their dispute or file an interpleader action, asking a Court to decide who should get the funds being held. In the absence of an interpleader action, a Credit Union must either give the asset or property to one of the parties claiming ownership or face a lawsuit for wrongfully giving the funds to the other claimant. An interpleader action, therefore, enables a Credit Union to turn the disputed funds over to the registry of the Court while the claimants litigate it. It is designed to eliminate multiple lawsuits over the same funds and to protect the interpleading party (here, the Credit Union) from actual or potential liability.
In Florida, to initiate an interpleader action, a Credit Union must file a complaint, alleging that it is the holder of the assets, has no claim to the assets in dispute, and does not know to which claimant the funds should be delivered, and may be exposed to double or multiple liability. The Court must then decide whether the interpleader is proper. The Court has discretion to allow the interpleader, but it may deny the relief if the Credit Union is guilty of some wrongdoing. If the Court grants the interpleader, the Credit Union is typically directed to deposit the funds in the registry of the Court, discharging the Credit Union from further liability while the claimants are given the right to litigate their claims. As to the court costs and attorney’s fees, these are typically assessed against the funds being held, if the Credit Union has either a contractual right or common law right as a “disinterested party.” The actual timeline for said actions is shorter than most actions, because it typically only involves one hearing on the matter. However, like all actions, the timing is highly dependent on the current status or backlog of matters in the Court in which it is filed.
If you have any questions about interpleader actions or how to initiate one, please do not hesitate to contact one of the lawyers at SVL for legal advice.
Staff Spotlight on McKinley Hill
McKinley was born in Memphis, Tennessee, and moved at the age of 8 to a small town in Alabama, called Opp. Her family moved to Tallahassee, Florida, when her dad got a football coaching job at North Florida Christian where McKinley attended high school. McKinley is starting Florida State University in the fall as a sophomore due to her 36 dual enrollment credits! She is planning on majoring in social work and then attending law school to become a child advocacy lawyer. McKinley’s family are huge Florida State fans, and she says it was a dream to be accepted and attend FSU for college!
At the office, McKinley is our bankruptcy clerk. She assists the bankruptcy legal assistants with setting up their new files, preparing the Notices of Appearance for the specific cases, and e-filing them on PACER. She is also beginning to prepare reaffirmation agreements for Chapter 7 bankruptcies and proceeding to send those to either the debtor or the debtor’s attorney. We are grateful to have McKinley here with us part-time while she is attending school!
In McKinley’s spare time, away from the office, she likes to stay active. She loves to run, workout, kayak, hike, and find/walk trails around town. She also likes going to the beach with her family and exploring new restaurants and stores in Tallahassee. Thank you McKinley for all you do!
Staff Spotlight on Haley Grant
Haley was born and raised in Tallahassee, Florida. She joined the SVL team in June of this year and is one of our legal assistants in the post-judgment department. Haley assists our Credit Union clients in recovering money once a Final Judgment is entered.
Away from the office, Haley enjoys spending time with her family, especially her sister-in-law and her niece, who is 16 months old. To Haley, Little Miss is the best entertainment. Haley enjoys watching her experience the world through her eyes. The three of them love watching movies and taking golf cart rides together. Haley has a golden doodle pup named Remi who she loves to spend time with, as well.
We are happy to have Haley as a part of our team! Thank you for all you do for the firm.
Back to School & Making a Difference
We kicked off the new school year by sponsoring two local children and providing them with all their school supplies. It is always amazing to see our employees come together to make a difference with our gratitude projects. Not only did we donate crayons, notebook paper, erasers, pencils, earphones, backpacks, and other supply needs, but our staff’s monetary contribution also allowed our firm to donate gift cards for the children to shop for new clothes! What a huge way to help those in need. Great job SVL!