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When The Bank Loses Your Note

The Promissory Note is one of the most critical documents needed to effectuate a foreclosure action. If defines the terms of the agreement between you and the Bank, as well as outlining specific rights and duties of each party. But what happens when the Bank cannot locate the original Note, or claims it has been lost or destroyed? Unfortunately, that does not mean a free house, but it does mean the Bank has to go through a lot of extra steps to try and foreclose. And if the Bank does not follow the specific requirements to re-establish a lost Note, competent legal representation can help you prevail on this issue.

Florida Statutes 673.3091 titled “Enforcement of lost, destroyed, or stolen instrument” states:

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

  1. 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;
  2. The loss of possession was not the result of a transfer by the person or a lawful seizure; and
  3. 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.
  1. 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.”

While many Banks try to re-establish the lost instrument (also known as a Note), they often fall short when it comes to “adequate protection”. Banks typically include language in their final judgment that states they will indemnify or protect the borrower if someone other than the Bank tries to come and enforce the Note against the borrower. However, some courts and Florida Statutes identify a list of other possible means of establishing proper “adequate protection”. When the Banks are held accountable for proving this element to re-establish the lost Note, they often struggle and fail to show the court that they complied with what is required.

It’s not uncommon for a Bank to have lost the original Note, but unfortunately, many borrowers aren’t aware of this until it’s too late. Make an appointment with our office for a consultation and let us help you identify if the original Note in your case was lost and what we can do to help prevent the Bank from re-establishing it and foreclosing against your home.