New Florida Case Regarding Mobile Home Lien Status in a Foreclosure Action

In Ark Real Estate Services, Inc. v. 21st Mortgage Corp., No. 4D20-122, a purchaser of real property at a foreclosure sale sued 21st Mortgage Corp., a mobile home lender that repossessed the mobile home from the land after the sale. The purchaser claimed that the foreclosure judgment extinguished the lender’s lien on the mobile home. On July 29, 2020, the Fourth DCA held that the mobile home lender’s lien survived the foreclosure sale and that the circuit court properly entered judgment against the purchaser on its claims of conversion and civil theft. 

On appeal, Ark argued that the mobile home became part of the land. It contends that the mobile home was permanently affixed to the real estate and was captured by the mortgage’s “after-acquired” property clause. Therefore, Ark argued that 21st Mortgage’s security interest in the mobile home was extinguished by the final judgment of foreclosure. The Fourth DCA rejected Ark’s argument for two reasons: 1) under Florida law, the issue of priority is established by statute, so the mobile home’s status as a fixture does not impact the validity of the security interest on the mobile home; and (2) the foreclosure action only extinguished competing interests in the land, not any interest in the mobile home. Accordingly, the first mortgagee’s foreclosure action did not impact 21st Mortgage’s security interest in the mobile home, and 21st Mortgage was well within their rights to repossess the mobile home from the subject property.

There are three important takeaways from this case. First, mobile home lenders should timely file its notice of lien with the DMV, and confirm the lien is properly noted upon the certificate of title of the mobile home. See Fla. Stat. 319.27(2). Second, once a lender has complied with the statute, there is no requirement that a lender “re-perfect” its security interest in a mobile home in the event the mobile home subsequently becomes a fixture to real property. Third, for first mortgagees initiating a foreclosure action, or subsequent purchasers at a foreclosure sale, to completely understand the status of a mobile home on real property, it is necessary to check the DMV records.

Please note this decision is not final until disposition of timely filed motion for rehearing.