Tuesday, December 31, 2013

Waldorff Insurance and Bonding, Inc. v. Eglin National Bank case brief

Waldorff Insurance and Bonding, Inc. v. Eglin National Bank case brief summary
453 So.2d 1383 (1984)


CASE SYNOPSIS
Appellant sought review of Florida trial court's judgment of foreclosure which found that appellee bank's mortgage liens were superior to appellant's equitable interest in a condominium unit.

CASE FACTS
Appellant insurance company entered into a written purchase agreement with a condominium developer for one condominium unit. Appellant occupied, fully furnished, and paid for maintenance of the unit. Developer later executed two promissory notes and mortgages in favor of appellee bank. Appellants unit was one of the condominium units the mortgages secured. Developer later executed a quitclaim deed to the unit to appellant and considered the purchase price paid in full in return for appellant extinguishing a debt owed by developer. Appellee brought a foreclosure action.

DISCUSSION

  • The court found appellee's interest subordinate to appellant's equitable interest received upon the initial purchase agreement, because appellee had constructive notice of appellant's interest because appellant had actual possession of the unit that was open, visible, and exclusive. 
  • The Court found that even though appellant wrongfully took a bad debt tax deduction after cancelling developer's debt, developer's relief from debt constituted valuable consideration.

CONCLUSION
Foreclosure judgment reversed and remanded because appellee bank's interest was subordinate to appellant's equitable interest because appellant had actual possession of the unit, which placed appellee on constructive notice of appellant's interest, and because cancellation of a debt owed by unit seller constituted valuable consideration for the quitclaim deed.

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