Florida Court Clarifies the Law Regarding E-Notes

In Rivera v. Wells Fargo Bank, N.A., ____ So. 3d ____ (Fla. 4th DCA Apr. 20, 2016), the court clarified Florida law regarding electronic notes. Plaintiff had sued borrowers who had taken out such a note for foreclosure and was successful at the trial court level. The borrowers appealed, which caused the court to clarify the law with regard to the enforcement and transfer of e-notes, as discussed, herein.


At trial, the borrowers objected to the introduction of a paper copy of the e-note, a certificate of authenticity, and the certificate’s attachments, into evidence. Plaintiff’s witness testified that the certificate of authentication illustrates the recordkeeping of the entity’s e-notes and attests to the e-note in question being in electronic form. The e-note and a document showing electronic possession were attached to the certificate. The borrower’s hearsay objection to this exhibit was overruled and, on cross examination, the witness agreed that there was no hard copy of the original note and there were no endorsements attached to it. On redirect, the witness testified that the payment history contains an acquisition screen which indicates when plaintiff became the servicer of the loan with the right to enforce the note.


The borrowers appealed, alleging, inter alia, that plaintiff failed to establish standing at the inception of the case, because it did not prove the following: (1) that the e-note contained the borrower’s signatures; or (2) that the purported owner of the e-note owned the e-note and authorized plaintiff to pursue the foreclosure. With regard to the borrowers’ first argument, the court reasoned that it was the borrower’s burden to come forward with “some evidence… which would support a finding that the signature is forged or unauthorized,” pursuant to section 673.3081(1), Florida Statutes.


The borrowers’ second argument required further scrutiny. Florida’s Uniform Electronic Transactions Act (hereinafter referred to as the “FUETA”), codified at section 668.50, Florida Statutes, provides in pertinent part that an e-note may be a “transferable record,” because it would be a note under Florida’s adaptation of Article 3 of the Uniform Commercial Code, were it to have been in writing. FUETA also provides that a person has control of such a transferable record if “a system employed for evidencing the transfer of interests in the transferable record reliably establishes that person as the person to which the transferable record was issued or transferred.” Due to the fact that the testimony established that a single authoritative copy of the e-note exists and due to the fact that the subject copy is “unique, identifiable, and unalterable,” the court found that the requirement of reliable establishment relating to the transfer had been met. The court also found the testimony regarding the acquisition screen noteworthy.


FUETA applies to the enforcement and transfer of e-notes, provided that the e-note meets certain, statutorily defined criteria, one of which being that the e-note would be a typical mortgage promissory note, if the e-note were in writing. Transfer of the e-note is governed by a different set of rules than those governing the process of placing endorsements on or attaching allonges to a note. However, that does not mean that FUETA abrogates the State of Florida’s statutory implementation of the Uniform Commercial Code, with respect to e-notes.


Morgan L. Weinstein, Esq.
Van Ness Law Firm, PLC