Typically, when we think of the priority of recorded documents in the public records, we believe that whoever records their document first has priority.  While this is typically the case, when it comes to mortgages and promissory notes, that is not necessarily the case.  In Florida, the mortgage follows the promissory note, not the other way around.  So just because there is an assignment of mortgage, that does not mean the assignee of the mortgage can foreclose, especially if the assignee of the mortgage does not have possession of the promissory note. 

In HSBC Bank USA v. Perez (40 Fla. L. Weekly D1064), due to a fraudulent scheme, there were two almost identical promissory notes which were secured by the same mortgage.  When the mortgagor stopped paying the mortgage (i.e., the promissory notes), different banks owned each note and each thought it could therefore foreclose. Florida’s 4^th District Court of Appeal’s opinion provides that the prevailing party with priority is not the party which recorded  its Assignment of Mortgage first, but the party which perfected its security interest pursuant to Article 9 of Florida’s Uniform Commercial Code (F.S. §679).  As the Court explained in its opinion, once the Note and/or Mortgage is assigned, assuming there are two “identical” promissory notes, then F.S. §679 controls, and priority is established by which bank perfected its security interest first.

The lesson of the story is to avoid loss of priority and avoid being the “First in Time and Last in Line” to get paid, every note and mortgage should be perfected by appropriate filings with the Florida Secretary of State pursuant to Article 9 of Florida’s Uniform Commercial Code (F.S. §679).