Chapter 16-2 The Note and Mortgage Contracts

• Jurisdiction: United States

16-2 The Note and Mortgage Contracts

16-2:1 The Terms of the Note and Mortgage Control

There is no Florida statute which specifically provides that a prevailing party is entitled to recover attorney's fees in a mortgage foreclosure action. With some exceptions, discussed below, the parties can only recover attorney's fees if the note, mortgage or other loan documents provide for payment of such fees. The vast majority of residential and commercial mortgages held by institutions provide that the lender is entitled to recover its attorney's fees incurred in enforcing the mortgage.

The typical residential mortgage utilizing the Fannie Mae/Freddie Mac Uniform Instrument has several provisions regarding the borrower's obligation to pay attorney's fees in the event of default. The Uniform Instrument provides that a lender may be entitled to attorneys' fees for protection of its security interest in legal proceedings, including bankruptcy, probate, condemnation or forfeiture, code enforcement or other laws or regulations (Paragraph 9), upon reinstatement by a borrower for a payment default (Paragraph 19), in foreclosure (Paragraph 22), and attorney's fees awarded on appeal (Paragraph 24).

In addition, a mortgagee may be entitled to attorney's fees when "any default has occurred that allows the mortgagee to institute a foreclosure action or collect the monies payable under the note," even if the foreclosure remedy sought is denied.⁵ Likewise, where a mortgage provides that the lender may recover fees upon default, the lender may recover fees even if foreclosure is denied.⁶ However, if a mortgage does not have a contractual provision regarding the award of attorney's fees, or if it is found that there is no valid mortgage contract between the parties to the suit, no fees may generally be awarded.⁷

In rare cases, the loan documents do not contain provisions for payment of attorney's fees in favor of the mortgagee, and in such cases, the mortgagee is generally not entitled to recover fees in foreclosing the mortgage.⁸ If the loan documents do not contain enforceable attorney's fee provisions, a practitioner may consider using the Offer of Judgment and Demand for Judgment statute⁹ and Proposal for Settlement rule¹⁰ to shift responsibility for attorney's fees, discussed below in Section 16-5.

16-2:2 Reciprocal Provisions of Fla. Stat. § 57.105(7) Apply to Foreclosure Actions

If a mortgage contains a provision allowing attorney's fees when the holder of the note and mortgage is required to take any action to enforce it, Fla. Stat. § 57.105(7) provides that the court may also allow reasonable attorney's fees to the other party when that party prevails in any action with respect to the mortgage.¹¹ In other words, the statute makes a unilateral provision on attorney's fees in favor of one party reciprocal, or available to either party to the mortgage.¹² Application of this statute is discretionary, however, and is not mandatory.¹³

16-2:3 No Contract, No Fees

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