Florida Shortens Mortgage Estoppel Deadline to 10 Days, Delineates New Requirements
Overview
The Florida legislature amended the mortgage estoppel letter law effective October 1, 2023, reducing the time period for sending an estoppel letter 14 days to 10 days from the mortgagee/servicer’s receipt of a written request for an estoppel letter. See F.S. § 701.04, titled Cancellation of mortgages, liens, and judgments. If the written request is made by someone other than the borrower, the request must include proof of legal interest of the requestor, and the mortgagor/borrower must be notified of the request by the other person. The amendments also added requirements for receipt and delivery timelines, corrections to estoppel letters, and prohibition of reservation to change figures, with an exception for active foreclosure and bankruptcy cases.
How Estoppels Requests Are Received and Delivered
The written request must be sent by first class mail, postage prepaid; by common carrier delivery service; or by email, facsimile or other electronic means at the address provided by the mortgagee/servicer. The request is considered received 5 business days after it is sent by first class mail with the United States Postal Service, or the day it is delivered by a common carrier delivery service, email, facsimile, electronic means or automated system. If any date falls on a weekend or holiday, the receipt date is the next business day.
As changed in the new version, the estoppel must be sent within 10 days by any of the above methods, except that the mortgagee/servicer is not required to pay for a common carrier delivery service, and the 10th day is the next business day if it falls on a weekend or holiday.
What Must an Estoppel Letter Contain, How to Correct After Sent
The law as updated states the estoppel letter must, not the former “may,” include unpaid
balance of the loan as of the date in the letter, including an itemization of the principal, interest, and any other charges comprising the unpaid balance, and interest accruing on a per-day basis.
Except for mortgages for which a notice of lis pendens in a foreclosure case or a suggestion of bankruptcy has been properly filed and recorded, the mortgagee/servicer may not qualify, reserve the right to change, or condition or disclaim the reliance of others, and any attempt to do so is null and void. This exception is critical for active foreclosure cases which are not placed on hold, due to ongoing fees and costs attributable to case activity and default servicing, like service of process and property inspection fees.
In the case of mortgages where there is not a pending action, the mortgagee/servicer can send a corrected estoppel letter in the same manner as the original estoppel, including sending the letter to the mortgagor/borrower. The corrected estoppel letter supersedes the original one if received by the requestor by 3 pm in the requestor’s time zone at least 1 business day before payment is issued.
Release and Satisfaction of Mortgage within 60 Days
Upon receiving full payment or payment pursuant to an estoppel letter, the
mortgagee/servicer must, within 60 days, execute a release of the mortgage and a satisfaction of the mortgage, have those documents recorded, and send copies of both to the person who made full payment. The prevailing party in a civil action brought against the creditor or assignee, or the attorney of record in the case of a judgment, to enforce the requirements of this subsection is entitled to reasonable attorney fees and costs. Regarding implementation of the amended statute, there are several cases that have imposed fees and costs for failing to timely release a paid off mortgage within 60 days. There are few, if any, published cases addressing violation of the 10-14 day deadline for providing an estoppel letter.
Legislative Intent
The Florida Legislature added the following statement to section 701.041, Title insurer; mortgage release certificate:
Section 3.
The Legislature finds that the timeliness and accuracy of an estoppel letter is critical because the parties to a real estate transaction must rely on the estoppel letter to establish the loan payoff amount necessary to release the mortgage, which in turn will allow the owner to confer clean title to a buyer or to refinance the property. The Legislature further finds that estoppel letters increasingly contain conditional language disclaiming the ability of an owner to rely on the stated loan payoff amounts, extending even to the return of such payments submitted by owners. These practices create unnecessary delays in the efficient operation of this state’s real estate market, which is a vital economic contributor to this state, and impose needless costs and burdens on property owners and buyers. In addition, the Legislature finds that real estate lending, mortgages, real estate transactions, and estoppel letters are extensively regulated under both Florida and federal law. The Legislature finds and determines that this act makes changes to state law which appropriately balance the parties’ interests, are reasonable and necessary to serve and achieve an important state interest, are necessary for the prosperity and welfare of the state and its property owners and inhabitants, and must be applied to existing mortgages in order to provide effective relief.
