## Facts

- Borrowers executed a first mortgage on Florida real property in favor of Olympus Mortgage Company to secure a $90,000 loan.
- That first mortgage was executed on August 31, 2004, and recorded on January 5, 2005; it was later assigned to Wachovia Bank, N.A., as trustee.
- Borrowers later executed a second mortgage on the same property in favor of Argent Mortgage Company, LLC to secure a $65,000 loan.
- The Argent mortgage was executed on December 10, 2004, and recorded on January 31, 2005.
- At the time Argent took its mortgage, the earlier Olympus mortgage had not been recorded, and Argent had no actual or constructive notice of it.
- Wachovia sued to foreclose the first mortgage and to enforce lost loan documents, naming Argent due to its recorded mortgage interest.
- A separate foreclosure action on the Argent mortgage was filed after default, and the trial court consolidated the actions.

## Issues

1. Whether Florida’s recording statutes (Fla. Stat. §§ 695.01 and 695.11) create a race-notice system or a notice system for determining mortgage priority.
2. Whether an earlier-executed but unrecorded mortgage retains priority over a later mortgage taken for value without notice when the earlier mortgage is recorded first.

## Decision

- The appellate court reversed the partial final judgment that had given priority to Wachovia’s mortgage.
- The court held Florida’s recording statute, § 695.01, is a notice-type statute, not a race-notice statute.
- Because Argent took its mortgage for value without actual or constructive notice of the prior unrecorded mortgage, Argent’s mortgage had priority.
- The case was remanded for further proceedings consistent with recognizing Argent’s priority.

## Legal Principles

- Under Florida’s notice recording statute (§ 695.01), a prior unrecorded interest is ineffective against a subsequent purchaser or mortgagee for value who takes without notice.
- Recording functions primarily to provide constructive notice; it does not retroactively defeat rights acquired earlier by a party without notice.
- Section 695.11 establishes when a duly recorded instrument provides constructive notice, but it does not convert Florida’s system into race-notice for priority disputes.
- In a priority contest under a notice statute, the controlling inquiry is whether the later acquirer lacked actual or constructive notice at the time it acquired its interest.

## Conclusion

Florida applies a notice-based recording system for real property interests, so a later mortgagee who takes for value without notice of an earlier unrecorded mortgage has priority even if the earlier mortgage is recorded before the later one.


Argent Mortgage Co., LLC v. Wachovia Bank, N.A., 52 So. 3d 796 (Fla. Dist. Ct. App. 5th Dist. 2010)