       DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                             FOURTH DISTRICT

                         B.A. MORTGAGE, LLC,
                               Appellant,

                                    v.

        EDUARDO C. BAIGORRIA and SILVANA M. ELEJALDE,
                         Appellees.

                             No. 4D19-3504

                             [July 15, 2020]

   Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Barry J. Stone, Senior Judge; L.T. Case No. CACE-17-
009240 (11).

   Arnaldo Velez of Arnaldo Velez, P.A., Coral Gables, for appellant.

  Bruce K. Herman of The Herman Law Group, P.A., Fort Lauderdale, for
appellees.

KUNTZ, J.

   B.A. Mortgage LLC appeals the circuit court’s final judgment
concluding B.A. Mortgage’s mortgage on the Homeowners’ property was an
unenforceable, wild mortgage recorded outside the chain of title. We
reverse.

                              Background

   Miguel Hernandez signed a mortgage on behalf of his company Chase
Home Loans, LLC, borrowing $100,000.00 from B.A. Mortgage to acquire
property. Two days later, Mr. Hernandez conveyed the property from
Chase Home Loans to himself through a quitclaim deed. He recorded the
deed and, seventeen minutes later, recorded the mortgage.

   Mr. Hernandez took out a second mortgage on the property. When he
defaulted on the second mortgage, the lender foreclosed and the property
was auctioned at a foreclosure sale.      At the foreclosure sale, the
Homeowners’ company, SEB Real Estate Investments, LLC, purchased the
property. Only five days later, SEB Real Estate deeded the property over
to the Homeowners.

    The Homeowners filed a complaint to quiet title and cancel the
mortgage, arguing the mortgage never attached to the property as a result
of the order in which the deed and the mortgage were recorded. The deed—
conveying the property from Chase Home Loans to Mr. Hernandez—was
recorded first. The mortgage, signed by Chase Home Loans, was recorded
minutes later. Accordingly, the Homeowners maintained that Chase Home
Loans relinquished ownership of the property before its mortgage could
attach. In response, B.A. Mortgage counterclaimed for foreclosure. The
case proceeded to a hearing on competing motions for summary judgment.

   Ruling from the bench, the court agreed with the Homeowners.
Relying, in part, on Lesnoff v. Becker, 135 So. 146 (Fla. 1931), the court
found the Homeowners benefited from the presumption that they were not
on notice of the mortgage. To overcome the presumption, B.A. Mortgage
needed to prove actual notice. Because B.A. Mortgage failed to prove
actual notice, the mortgage was an unenforceable, wild instrument falling
outside the chain of title. The court questioned the impact of the
seventeen-minute span between the recording of the deed and the
recording of the mortgage. Nevertheless, it determined the Homeowners
were entitled to quiet title and denied B.A. Mortgage’s counterclaim for
foreclosure.

                                Analysis

  B.A. Mortgage argues the Homeowners had constructive notice of the
mortgage and, as a result, the mortgage was not wild. We agree.

   Florida’s recording statute is a “notice” statute. Townsend v. C.T. Box,
291 So. 3d 114, 116 (Fla. 4th DCA 2020) (citation omitted); see also §
695.01(1), Fla. Stat. (2015). As such, there are three types of notice
relevant to determining the priority of interests under the recording
statute: actual notice, implied notice, and constructive notice. Townsend,
291 So. 3d at 116 (quoting Harkless v. Laubhan, 278 So. 3d 728, 733 (Fla.
2d DCA 2019)). Generally,

      “[a]ctual notice” stems from actual knowledge of the fact in
      question. “Implied notice” is [the] factual inference of such
      knowledge, inferred from the availability of a means of
      acquiring such knowledge when the party charged therewith
      had the duty of inquiry. “Constructive notice” is the inference


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      of such knowledge by operation of law, as under a recording
      statute.

Regions Bank v. Deluca, 97 So. 3d 879, 884 (Fla. 2d DCA 2012) (second
alteration in original) (quoting McCausland v. Davis, 204 So. 2d 334, 335-
36 (Fla. 2d DCA 1967)); see also Townsend, 291 So. 3d at 116.

   “Under a notice recording statute, a subsequent mortgagee of real
property for value and without notice (actual and constructive) of a prior
mortgage of the said real property will prevail against the prior mortgagee.”
Argent Mortg. Co., LLC v. Wachovia Bank N.A., 52 So. 3d 796, 799 (Fla. 5th
DCA 2010). As such, without knowledge of the B.A. mortgage, the
mortgage would not burden the Homeowners’ property. However, here,
both Mr. Hernandez and the Homeowners knew about the mortgage.

   First, Mr. Hernandez had actual knowledge of the mortgage when he
deeded the property to himself on behalf of his company, Chase Home
Loans; after all, he signed the mortgage for Chase Home Loans. Second,
the Homeowners had constructive knowledge of the mortgage recorded two
years before their purchase at the foreclosure sale, conceding at the
hearing that the mortgage would have been listed on a chain-of-title
search.

    The Homeowners disagree. Citing section 695.11, Florida Statutes
(2015), the Homeowners insist they could rely solely on the sequence of
the recorded documents. See § 695.11, Fla. Stat. (“The sequence of such
official numbers shall determine the priority of recordation.”). But a
similar argument was made by the lender in Argent Mortgage Co., LLC, 52
So. 3d at 800, and rejected. In that case, the lender argued that section
695.11 rendered Florida a race-notice statute. Id. The Fifth District
disagreed, finding: “The amendment to section 695.11 is designed to refine
the test for determining the time at which an instrument is deemed to be
recorded, not to alter the recording requirement found in section 695.01.”
Id. (footnote omitted). The court held that “Florida is, and remains, a
‘notice’ jurisdiction, and notice controls the issue of priority.” Id. at 801.

   We agree that Florida is a notice jurisdiction. Under the recording
statute, “[t]he act of recording an instrument in accordance with [Florida’s
recording] statute constitutes constructive notice of a prior encumbrance
on the property which is the subject of the instrument.” Whitburn, LLC v.
Wells Fargo Bank, N.A., 190 So. 3d 1087, 1091 (Fla. 2d DCA 2015) (second
alteration in original) (quoting Regions Bank, 97 So. 3d at 883).



                                      3
   The Homeowners acknowledge that, had they conducted a title search,
they would have found the mortgage. But they did not conduct one. That
the Homeowners did not inspect the public records does not permit them
to ignore the documents in the public records. See Lafitte v. Gigliotti
Pipeline, Inc., 624 So. 2d 844, 845 (Fla. 2d DCA 1993); see also M/I
Schottenstein Homes, Inc. v. Azam, 813 So. 2d 91, 95 (Fla. 2002)
(“Knowledge of clearly revealed information from recorded documents
contained in the records constituting a parcel’s chain of title is properly
imputed to a purchasing party, based upon the fact that an examination
of these documents prior to a transfer of the real property is entirely
expected.” (citations omitted)).

    Furthermore, the Homeowners had constructive notice of the mortgage
and, consequently, were not bona fide purchasers for value. A party is a
bona fide purchaser for value when “(1) the purchaser obtained legal title
to the challenged property, (2) the purchaser paid the value of the
challenged property, and (3) the purchaser had no knowledge of the
claimed interest against the challenged property at the time of the
transaction.” Harkless, 278 So. 3d at 733 (citing DGG Dev. Corp. v. Estate
of Capponi, 983 So. 2d 1232, 1234 (Fla. 5th DCA 2008)). A person with
notice of a prior interest takes the property subject to that interest. Id.
(citation omitted).

    In support of its ruling that the mortgage was “wild,” the circuit court
relied on Lesnoff, 135 So. at 146, and Sirkin v. Schupler, 105 So. 151 (Fla.
1925). Both cases are distinguishable. Lesnoff involved a second
mortgage recorded after the next purchaser bought the property subject to
the first mortgage. 135 So. at 146. In Sirkin, although the purchaser
performed a title search—one that did not reveal the mortgage—the circuit
court found the purchaser had actual knowledge of the mortgage, and the
record on appeal did not support a reversal of that finding. 105 So. at 152.
In this case, the mortgage was recorded two years before the Homeowners
bought the property. Had the Homeowners performed a title search, they
would have found it. Therefore, the mortgage was not wild.

                                Conclusion

    The circuit court’s final judgment is reversed, and the case is remanded
for further proceedings.

    Reversed and remanded. 1

1 We are mindful of the issuance of Executive Order 20-159 (extending, until
12:01 a.m. on August 1, 2020, Executive Order 20-94, which suspends and tolls

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GROSS, J., and CURLEY, G. JOSEPH, Associate Judge, concur.

                            *         *         *

   Not final until disposition of timely filed motion for rehearing.




any statute providing for a mortgage foreclosure cause of action under Florida
law). We trust any motions directed to this order shall be filed in the lower
tribunal upon issuance of our mandate.



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