Chapter 4-6 Constructive Possession of the Note

• Jurisdiction: Florida

4-6 Constructive Possession of the Note

A holder may possess the note directly or through an agent.⁴⁵ The agent who possesses the note on behalf of the holder may be a loan servicer⁴⁶ or law firm.⁴⁷ Constructive possession of a note exists where the holder has the power to exercise control over the note, such that he or she may deliver possession of the note possessed by the agent, if desired.⁴⁸ The existence of the agency relationship must be proved by competent, substantial evidence.⁴⁹ An agency relationship may be proven by the terms of a pooling and servicing agreement⁵⁰ or a power of attorney.⁵¹ An attorney is the agent of the client in all matters concerning the prosecution or defense of a lawsuit.⁵² The filing of the original note with the court by a previous noteholder is not by itself sufficient to establish constructive possession of the note by a new plaintiff that proceeds to file a subsequent foreclosure while the note remains filed with the court.⁵³ However, where the noteholder files the note with the clerk of court, and then proceeds to file a subsequent foreclosure while the note remains with the clerk of court, the noteholder has constructive possession necessary to establish standing in the later foreclosure action.⁵⁴ The clerk of court does not become the holder of the note when the noteholder files the note with the Court.⁵⁵

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Notes:

^[45] UCC § 3-201 (2016) (The official comments explain that "[n]egotiation always requires a change in possession of the instrument because nobody can be a holder without possessing the instrument, either directly or through an agent."); Phan v. Deutsche Bank Nat'l Trust Co., 198 So. 3d 744 (Fla. 2d DCA 2016) (holding that a plaintiff may demonstrate by competent, substantial evidence its standing to foreclose a mortgage under section 673.3011 where it has constructive possession of a mortgage note through its agent at the time it files a complaint for foreclosure); Fannie Mae v. Rafaeli, 225 So. 3d 264 (Fla. 4th DCA 2017) (". . . although the note owner may have been able to initiate a foreclosure action as the holder with constructive possession of the note, the original servicer was also able to initiate the action as the holder with physical possession").

^[46] In Deutsche Bank Nat'l Trust Co. v. Applewhite, 213 So. 3d 948 (Fla. 4th DCA 2017), the trial court dismissed the bank's case at trial on the grounds that a document was not produced showing the authority of the original loan servicer to...