Chapter 3-3 Statute of Repose

3-3 Statute of Repose

3-3:1 Terminates the Mortgage Lien

In contrast to the procedural nature of the statute of limitations, the statute of repose is substantive. "It provides a substantive right to be free from [the mortgage lien] after the established time period."⁹⁸

The statute of repose terminates the lien of the mortgage when the statutory period expires.⁹⁹ It "establishes an ultimate date when the lien of the mortgage terminates and is no longer enforceable."¹⁰⁰

3-3:2 Repose Time Periods

The time period applicable to a mortgage lien varies, depending on the information "ascertainable from the record of it."¹⁰¹ As described below, the applicable period is either five years after the date of maturity or twenty years after date of the mortgage.

3-3:2.1 Five Years After Maturity

If the maturity date is ascertainable from the record of the mortgage, then the repose period is five years after that maturity date, per Fla. Stat. § 95.281(1)(a).¹⁰²

This five-year time period applies even if the "maturity" date is not stated but is ascertainable only by calculating the date of final payment in a contractually defined stream of installment payments.¹⁰³ A mathematical inconsistency in the mortgage document which leaves an unpaid balance at the end of the contractual stream of payments does not render the maturity date unascertainable, at least where the inconsistency was "unapparent."¹⁰⁴

3-3:2.2 Twenty Years After Date of Mortgage

If the maturity date is not ascertainable, then the repose period is twenty years after the date of the mortgage per Fla. Stat. § 95.281(1)(b).¹⁰⁵ Note that when subsection (1)(b) applies, both the starting point and the length of time are different from subsection (1)(a) mortgages.

A clear example of this subsection's operation is found in Houck Corp. v. New River Ltd., Pasco:

In this case, the mortgage was recorded on November 1, 1984. It secured nonrecourse promissory notes that had a maturity date of October 30, 1991, but that date was not ascertainable from the recorded mortgage, and the notes were not recorded. . . . [Therefore] under section 95.281(1)(b), the mortgage lien was enforceable until November 1, 2004 [twenty years after recording].¹⁰⁶

A mortgage that bears no maturity date on its face is not considered to have an "ascertainable" maturity date merely because it incorporates the terms of an unrecorded promissory note that has a stated maturity date.¹⁰⁷ Furthermore, a conflict between the maturity stated in the note and the maturity date stated in the mortgage renders the maturity "not ascertainable" and brings the case under the twenty-year repose period of subsection (1)(b).¹⁰⁸

When a mortgage secures two obligations, one of which has an ascertainable maturity date from the recorded mortgage and one of which does not, the twenty-year statute applies.¹⁰⁹ Such arrangements are common in commercial loan arrangements. In CCM Pathfinder Palm Harbor Management, LLC v. Unknown Heirs of Gendron, one secured obligation had an ascertainable maturity, but the second secured obligation did not have an ascertainable maturity. The court held that the twenty-year repose period of subsection (1)(b) applied.¹¹⁰

3-3:2.3 Extension Agreements

If an agreement extending the maturity date of the obligation is executed and recorded, the statutory repose time periods will run from the new date, as extended.¹¹¹ However, an unrecorded extension agreement will not extend the repose time period.¹¹²

3-3:2.4 Incongruence Between Repose and Limitations

Since the twenty-year repose period of § 95.281(1)(b) is measured from the date of the mortgage, and the five-year limitation period is measured from the date of accrual, incongruent statutory time periods can emerge.

For example, the lien of a mortgage with no ascertainable maturity terminates after twenty years under subsection (1)(b), even if the mortgage secures an unrecorded 30-year promissory note. Thus, if the borrower defaulted in year 21, after the mortgage lien had terminated under § 95.281(1)(b), a foreclosure cause of action would never accrue because there would be no mortgage lien to foreclose.¹¹³

Conversely, a subsection (1)(b) mortgage with no ascertainable maturity that secures a 1-year promissory note continues as a lien on the property for twenty years under subsection (1)(b). The lien continues even after the five-year statute of limitations expires. In such cases, the breach of a non-monetary covenant occurring more than five years but less than twenty years after maturity may give rise to a viable foreclosure cause of action and may in essence save the mortgage from the statute of limitations bar.¹¹⁴

3-3:2.4a Savings Clause for Mortgages with No Ascertainable Maturity

As described above in Section 3-3:2.2, if the maturity date of the mortgage is not ascertainable from the record, then the repose period is twenty years after the date of the...