Green Emerald Homes, LLC v. Residential Credit Opportunities Trust
Decision Date | 27 June 2018 |
Docket Number | Case No. 2D17–4410 |
Parties | GREEN EMERALD HOMES, LLC, Appellant, v. RESIDENTIAL CREDIT OPPORTUNITIES TRUST; John Doe or any other Person in Possession; and Magnolia Park at Riverview Homeowners Association, Inc., Appellees. |
Court | Florida District Court of Appeals |
Brennan Grogan of Levine Law Group, Palm Beach Gardens, for Appellant.
Melisa Manganelli of Law Offices of Mandel, Manganelli & Leider, P.A., Boca Raton, for Appellee Residential Credit Opportunities Trust.
No appearance for remaining Appellees.
Green Emerald Homes, LLC, challenges the order granting Residential Credit Opportunities Trust's motion to sequester rents pursuant to section 697.07, Florida Statutes (2017). The order requires that Green Emerald Homes—as title owner to property which is the subject of Residential Credit's foreclosure action—deposit rents collected on the property into the trust account of Residential Credit's attorneys pending resolution of the foreclosure action. We reverse.
In 2008, three individuals—Jonathan Orjuela, Yury Tatiana Mesa Diaz, and Michael Arjuela (the borrowers)—executed a promissory note and mortgage in favor of CTX Mortgage Company, LLC. The mortgage contains an assignment of rents provision and was recorded in the public records of Hillsborough County in March 2008.
In June 2014, as the result of a junior lienholder foreclosure action instituted by Magnolia Park at Riverview Home Owners Association, Inc., Green Emerald Homes purchased the property and was issued a certificate of title. In September 2014, Residential Credit was assigned the note and mortgage, becoming the senior lienholder.1 One month later, Residential Credit filed a foreclosure action, naming Green Emerald Homes, Magnolia Park, and unknown tenants as defendants.2 In April 2017, after issuing "demand for rents" letters to Green Emerald Homes and the borrowers but not receiving those rents, Residential Credit filed a "Motion to Sequester Earnings, Revenues, Rents, Issues, Profits, and Incomes," relying on section 697.07 and the terms of the mortgage. The motion sought an order directing any and all defendants, including specifically Green Emerald Homes, to deposit "all earnings, revenues, rents, issues, profits and income earned and derived from the property at issue."
Following a hearing, the trial court granted Residential Credit's motion and ordered Green Emerald Homes to file a copy of any rental agreements to which it was a party for 2017 and to deposit into the trust account of Residential Credit's attorneys any rents collected from March 2017 forward. The order also required that any rents due but not previously paid to Green Emerald Homes by renters of the property be tendered by the renters to Residential Credit's attorneys for deposit into their trust account. We conclude that the trial court erred in granting the motion to sequester rents.3
The mortgage executed by the borrowers contains the following assignment of rents provision:
"[A] mortgagor and mortgagee are free to contract for an assignment of rents, and enforcement of that assignment will be governed by [ section 697.07 ]." Ginsberg v. Lennar Fla. Holdings, Inc., 645 So.2d 490, 498 (Fla. 3d DCA 1994). Section 697.07"establish[es] procedures designed to give effect to the parties' rent assignment agreement." Wane v. U.S. Bank, Nat'l Ass'n, 128 So.3d 932, 934 (Fla. 2d DCA 2013) (alteration in original) (quoting Ormond Beach Assocs., Ltd. P'ship v. Citation Mortg., Ltd., 634 So.2d 1091, 1092 (Fla. 5th DCA 1994) ). Section 697.07 provides, in pertinent part:
"[A]n assignment of rents creates a lien on the rents in favor of the mortgagee, and the mortgagee will have the right to foreclose that lien and collect the rents, without the necessity of foreclosing on the underlying mortgage." Ginsberg, 645 So.2d at 498 ; see also § 697.07(2). However, during the pendency of a foreclosure of the mortgage the statute also allows the rents to be deposited into the registry of the court or another depository designated by the court upon motion by the mortgagee or mortgagor. § 697.07(4) ; see also Wane, 128 So.3d at 934 (). To be entitled to the sequestration of rents, the movant must establish only "a pending foreclosure action and an assignment of rents provision in the applicable mortgage." Wane, 128 So.3d at 934.
Green Emerald Homes does not dispute that Residential Credit has standing to enforce the assignment of rents or seek sequestration of rents. The mortgage establishes that CTX Mortgage Company, LLC, was the original lender and mortgagee. See § 721.82(6), Fla. Stat. (2008) ( ). When Residential Credit was later assigned the mortgage and note, it assumed "all beneficial interest under the mortgage," as well as the debt evidenced by the note and "all rights accrued or to accrue under" the mortgage and note. Thus, Residential Trust became the mortgagee.
Green Emerald Homes does dispute, however, Residential Credit's claim of entitlement to sequestration of rents as against Green Emerald Homes.4 Green Emerald Homes asserts that it is not a party to the mortgage and is not the mortgagor for purposes of section 697.07. We agree.
The mortgage identifies the mortgagors and borrowers as the three individuals who executed the mortgage. See also § 721.82(7) ( ). When Green Emerald Homes purchased the property at the Magnolia Park foreclosure sale, it did not become the mortgagor/borrower. See Bank of N.Y. Mellon, ex rel. Certificate Holders of CWABS Inc.,...
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...to it under a separate document not subject to the foreclosure action." Green Emerald Homes, LLC v. Residential Credit Opportunities Tr, 256 So. 3d 211, 215 (Fla. 2d DCA 2018).[169] Fla. Stat. § 697.07(3); see also Ginsberg v. Lennar Florida Holdings, Inc., 645 So. 2d 490 (Fla. 3d DCA 1994)......
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...to it under a separate document not subject to the foreclosure action." Green Emerald Homes, LLC v. Residential Credit Opportunities Tr., 256 So. 3d 211, 215 (Fla. 2d DCA 2018).[169] Fla. Stat. § 697.07(3); see also Ginsberg v. Lennar Florida Holdings, Inc., 645 So. 2d 490 (Fla. 3d DCA 1994......