UTS Updated 2022.08.01 PDF

T HEUNI F ORMT I T L E ST ANDARDS APu b l i c at i o no f t heF l o r i d aBar Re al Pr o p e r t y , Pr o b at e&T r u s t L a wSe c t i o n The underlying photograph provided courtesy of the State Archives of Florida The Cover The underlying photograph included on the cover page is provided courtesy of the State Archives of Florida. The description below was initially published in the Florida Bar Journal, March 1959 Supplement, Pages 208, 213 This 140-year-old water color sketch which accompanied a land survey made in Florida during the second Spanish occupation, 1783-1821, remains fresh and unspoiled. The original illustrated survey, prepared by a Spanish surveyor named Roberto McHardy, is on file in the office of Field Note Division, Department of Agriculture, in the Capitol at Tallahassee. A glance at the history of the period reveals that the origin of disagreement of title standards is not recent. The dossier containing McHardy's survey of Geronimo Alvarez' land was assembled in connection with Alvarez confirming this Spanish land grant before the Board of Commissioners — East Florida. This Board was created by act of Congress on May 8, 1822. The act was passed Pursuant to Article VIII of the Treaty of February 22, 1819, wherein all Spanish grants of land made prior to January 24, 1818, were to be "ratified and confirmed to the persons in possession of the lands, to the same extent that the said grants would be valid if the territories had remained under the domain of his Catholic Majesty." The first meeting of the Board was held on August 4, 1823 with the three duly appointed Commissioners, Davis Floyd, William F. Blair and Alexander Hamilton. The Board at this initial meeting passed certain regulations in an effort to standardize the procedures of confirming Spanish land grants and the titles to lands in East Florida. One of the regulations read as follows: "All persons claiming title to lands under any patent grant, concession or order of survey, will make a brief statement by Memorial setting forth the situation, boundaries and if possible, the deraignment of title, to the Lands claimed, and by whom granted, and by what authority, and whether the same be the whole or part of the original grant." It appears in the minutes of this first meeting of the Board that Alexander Hamilton dissented to the resolution that claimants be not required to produce plan title papers translated into the English language, but in all cases be -permitted to file the original Spanish documents. Among the members of this first Board of Commissioners there arose in 1824 such a "divergence of opinion between Hamilton and the other Commissioners as to procedure that Hamilton refused to participate in the sessions and bombarded President Monroe, Secretary of Treasury Crawford, Secretary of State Adams, and the Chairman of the House Committee on Public Lands with serious charges against his colleagues and those in charge of Public Archives."1 Hamilton resigned on March 31, 1824. The land surveyed by McHardy consisted of a 500-acre tract "on the west side of Hillsborough River" and "located south of 210 acres situated on Gabardy's Canal, granted to Rafael Andrew and confirmed to Jose Sanchez." This property was granted to one Geronimo Alvarez by the Spanish territorial governor, Jose Coppinger, who was the last of the territorial governors of East Florida during the second Spanish occupation and prior to Spain's ceding of the Floridas to the United States by treaty ratified and proclaimed February 22, 1821. It is likely that the grant to Alvarez, an "ensign of the Irish 1 (G & S, V 750) (Spanish Land Grants in Florida, Vol. 2, page 43). company of Militia of this city" (St. Augustine) was based on the Spanish royal order of 1815 for patriotic service. “The royal order of 1815 permitting grants for patriotic services was supposed to have been made in response to Governor Kindelan's recommendation two years earlier. The `Patriot War' had just ended and the Governor suggested to one Juan Ruiz de Apadoca, Captain-General of Cuba, rewards for the three white militia companies and for the 3rd battalion of Cuba: (1) to each of the militia officers, a royal commission for each grade possible to him as a provincial; and (2) to all soldiers of the militia and to the married officers and soldiers of the 3rd battalion of Cuba, lands in proportion to the size of their families. He admitted that his plan would not, in reality, give them anything which was not already open to them, but he thought that 'public approbation would content the men and stimulate their patriotism’.”2 Few residents of New Smyrna Beach today realize that the title to a Portion of the lands now occupied by them was initially confirmed through the petitions of Geronimo Alvarez and an artistically inclined Spanish surveyor by the name of Roberto McHardy. 2 Ibid., page 25. PREFACE The Florida Uniform Title Standards are designed to serve as a reference for some of the more common problems encountered in the examination of titles to real estate in Florida. The purpose of uniform title standards, generally, is to facilitate conveyancing by eliminating needless objections to marketability of title. A title standard is a voluntary agreement made in advance by members of the Bar on the manner of treating a particular title problem when and if it arises. These standards are interpretations of existing law and practice, and, although they are approved by the Real Property, Probate, and Trust Law Section of The Florida Bar, they do not have the formal approval of any court or legislative body. Nevertheless, if they are generally adhered to, their purpose should be accomplished satisfactorily. These title standards are intended to be used not only by experienced title attorneys, but also by those with little experience or those whose work may bring them into contact with title examinations less frequently. Accordingly, some of the standards set forth well settled principles of law, while others are statements of generally prevailing practices in areas where the applicable law provides no definitive answers. Each title standard begins with a statement of the Standard, followed by one or more illustrative Problems, citations to Authorities & References, and in some cases, Comments designed to call attention to related issues and cautionary matters. The Standard itself rather than the Problems or comments, was intended to be the focal point, and primary consideration should be given to it. The main purpose of the Problems is to give examples of the application of the Standard to representative factual situations, most of which are readily apparent. In some instances, the Problems were used as a vehicle to address less obvious issues related to the Standard. The Problems are illustrative and not intended to be all-inclusive. The Authorities and References were included to indicate the source material in support of the Standard. It was not always possible to find primary authorities directly on point, and therefore in some instances the citations are to references that are merely of persuasive value. Also, citations to secondary authorities were frequently included as a convenience for locating a discussion of the subject matter. The Comments were designed to call attention to related issues, to raise cautionary notes to be considered in applying the Standard, and in some instances to point out limitations or exceptions with respect to the application of the Standard. Occasionally, the Comments were used to set forth arguments contrary to the position adopted in the Standard. This was done for informational purposes only, and not intended to detract from the Standard as stated. Finally, whenever possible, cross-references to other Standards were included so that related issues might more readily be considered. UNIFORM TITLE STANDARDS Foreword to the July 2022 Update The July 2022 update of the electronic uniform title standards (eUTS) includes a revised Chapter 17 reflecting court decisions interpreting the Marketable Record Title Act and legislative updates to the Act. In addition, a citation was corrected in UTS 1.1. Minor amendments to the forward and table of contents reflect the newest approval date, but in all other ways the eUTS remain unchanged. The March 2021 Update of the electronic Uniform Title Standards (eUTS) included a new chapter on Easements, approved by action of the Executive Council in December 2020. Edits were made to the Preface, Foreword, and Table of Contents. References to archives were removed, all other portions of the eUTS remain unchanged. The eUTS was previously republished in July 2020 to include the standards updated under the leadership of the Immediate Past Chair, Christopher Smart, and approved incrementally by the Section. Similar incremental republications have intervened, but the last major re-write of the Title Standards was approved at the June 1, 2012, Executive Council meeting, when the Real Property Probate & Trust Law Section (“the Section”) approved the “final” revised standard to the Uniform Title Standards, completing the first major update of the Title Standards since 1981. The 2012 version of the standards was published under the leadership of then Chair, Patricia P. Jones, and represented the first time the standards existed solely in electronic form (eUTS). The Uniform Title Standards are standards for examining title to real property in Florida with the goal of resolving disagreements among real property attorneys on various types of title defects and their impact on the marketability of the title. Even though fewer attorneys today perform title examinations, the standards still serve as a resource for attorneys representing buyers and sellers in real estate transactions, where contracts typically call for the seller to convey marketable title. The popular FR/BAR Contract for Sale and Purchase has long incorporated the Uniform Title Standards as the “standard” for determining a buyer’s marketable title to the real property. Since its inception in the early 1970’s, the FAR/BAR Contract has provided that “(m)arketable title shall be determined according to applicable standards adopted by authority of The Florida Bar and in accordance with law.” Of equal significance to all Floridians is the fact that the Florida courts have consulted and cited to the Uniform Title Standards when confronted with title issues covered by the standards. See, e.g., Marshall v. Hollywood, Inc., 236 So.2d 114 (Fla. 1970); City of Miami v. St. Joe Paper Co., 364 So.2d 439 (Fla. 1970); and Cunningham v. Haley, 501 So. 2d 649 (Fla. 5th DCA 1986). Understandably, the issues in these cases dealt with the proper application of Florida’s Marketable Record Title Act. Most recently, the Fifth District Court of Appeals cited to the Uniform Title Standards in a decision dealing with corporate authority to convey real property. DGG Development Corp. v. Estate of Capponi, 983 So. 2d (Fla. 5th DCA 2008). The Uniform Title Standards occupied a central role in the function of the Section when it was created in 1954, becoming the first committee established by the Section. In fact, Florida’s first title standards committee existed as a committee of the Board of Governors of The Florida Bar (“BOG”) before there was a RPPTL Section. After the Section was created, the BOG effectively ceded responsibility for developing uniform standards to the The first known set of published Florida title standards is the set that appeared as a supplement to the March 1959 issue of The Florida Bar Journal. The Committee Chair at that time was David Catsman, who wrote in the Forward to the standards that Florida joined 25 other states in utilizing this method of solving some of the problems involved in real property title transactions. The next known publication of title standards was in 1975, under the leadership of Sherwood Spencer, who noted that the 1975 update was the work of a task force led by Mandell Glicksberg, Professor of Law at University of Florida School of Law, with the help of a grant from the George B. Carter Foundation. (George B. Carter was a founder of Lawyers’ Title Guaranty Fund, which became Attorneys’ Title Insurance, Fund, Inc.) The Uniform Title Standards Committee was then set up as a continuing committee of the Section responsible for updating and revising the Standards. In the following years, revisions to the title standards would be developed under Professor Glicksberg’s leadership and would utilize the resources of the University of Florida Law Review. Their work culminated in the third revision of the Uniform Title Standards in 1981. That version was published in a small blue three-ring binder and distributed by the Section to new members; it can still can be found on the shelves of good law libraries. Since the late 1990’s, the members of the Uniform Title Standards Committee, which was renamed the Title Issues and Standards Committee, have undertaken to research and draft revised standards on their own, with conferencing support provided by the Section. The members of the committee are a broad representation of the title insurance industry as well as attorneys in the private practice of law. The most-current compilation is always published on the home page of the Committee’s website and is freely available to all visitors. Archives of prior versions are available to Section members only. Rebecca L.A. Wood Chair, Title Issues and Standards Committee July 2022 Space does not permit me to personally recognize everyone who has contributed to this effort over the years, but I would like to specially recognize the following members of the Section for their dedication and hard work on the new content: Christopher Smart, Immediate Past Chair Amanda Hersem Co-Chair Robert Graham, Vice Chair Melissa Scaletta, Vice Chair Karla Staker, Vice Chair Jeremy Cranford Jeff Dollinger Michael Gelfand Laura Licastro Cynthia Manfredi Lee Offir Sanjiv Patel Cynthia Raleigh FLORIDA The Florida Uniform Title Standards, prepared by the Real Property, Probate and Trust Law Section of the Florida Bar (with updated content approved July 23, 2022), are available to the public on the committee webpage. FLORIDA UNIFORM TITLE STANDARDS Table of Contents 0.0 Construction of Title Problems Chapter 1. 1.1 1.2 1.3 1.4 1.5 Agency and Powers of Attorney Execution and Recordation of Power of Attorney for Deed Affixing Name of Principal in Execution of Instruments by Attorney in Fact Authority to Convey Real Property Witness on Power of Attorney for Mortgage of Homestead Property Witness on Power of Attorney for Mortgage of Non-Homestead Property Chapter 2. 2.1 2.2 Bankruptcy Effect of Bankruptcy Proceedings on Title of Debtor’s Real Estate Sale, Lease, Or Use of Debtor’s Real Property by Debtor or Trustee In Bankruptcy Effect of Bankruptcy on Right to Foreclose Effect of Trustee in Bankruptcy Abandoning Property of Debtor Effect of Judgment Discharged in Bankruptcy on Title to After-Acquired Property 2.3 2.4 2.5 Chapter 3. 3.1 3.1-1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 Chapter 4. 4.1 4.2 Conveyances Conveyances to an Unincorporated Voluntary Association Conveyances to and by Trustees of Unincorporated Churches Deed Purporting to Correct Previous Effective Deed Affidavit Acknowledgment – Necessity for Seal (Florida and Foreign Countries) Acknowledgment – Necessity for Seal (Out of State) Erroneous, Inconsistent or Omitted Date After- Acquired Title Conveyance without Consideration Certain Defects in Deeds Cured Corporations and Limited Liability Companies Acknowledgment of Corporate Instruments Prior Conveyance of All or Substantially All Property and Assets Of A Corporation 4.2-1 Current Conveyance of All or Substantially All Property and Assets Of A Corporation 4.3 Conveyance by Corporations 4.3-1 Conveyance by Corporations: Authority to Convey; Fraud 4.4 Foreign Corporations 4.4-1 Dissolved Foreign Corporation 4.5 Administratively Dissolved Corporations 4.5-1 Voluntarily Dissolved Corporations 4.6 Corporation Name Omitted from Signature 4.7 Use of Scroll Seal by Corporation 4.8 Conveyance by a Limited Liability Company 4.9 Statutory Apparent Authority of a Manager of a Manager-Managed Limited Liability Company 4.10 Limited Liability Company Statement of Authority 4.11 Single Member Limited Liability Companies – Creditor Claims 4.12 Certificate of Authority to Transact Business in Florida – Foreign Limited Liability Company 4.13 Authority to Convey Property of Foreign Limited Liability Companies Chapter 5. 5.1 5.2 5.3 Estates of Decedents Title Derived Through Intestate Decedent Title Derived Through Testate Decedent Sale of Non-Homestead Real Property by Personal Representatives without Court Authorization or Confirmation 5.4 Sale of Non-Homestead Real Property by Personal Representatives with Court Authorization or Confirmation 5.5 Acquisition of Estate Lands by Fiduciaries Prior To January 1, 1976 5.5-1 Personal Representatives – Conflicts of Interest 5.6 Deed under Power of Sale Granted to Two or More Personal Representatives 5.7 Limitation on Power of Sale 5.8 Power of Personal Representative to Mortgage Real Estate 5.9 Release of Dower by Surviving Spouse - Intentionally Deleted 5.10 Powers of Personal Representatives 5.11 Powers of Surviving Personal Representatives 5.12 Title Derived From Personal Representative Not Having Statutory Preference in Appointment 5.13 Probate Non-Claim Act — United States and Florida 5.14 Effect of Order of Final Discharge 5.15 Recital of Heirship in Deed 5.16 Foreign Will as Muniment of Title 5.17 Satisfaction of Mortgage Held by Estate of Non-Resident Decedent Chapter 6. 6.1 6.2 6.3 Concurrent Ownership Creation of Tenancy by the Entireties Interspousal Creation of Tenancy by the Entireties Conveyance of Entireties Property by One Spouse to a Third Person 6.4 6.5 6.6 6.7 6.8 6.9 6.10 6.11 6.12 Conveyance of Entireties Property by One Spouse to the Other Effect of Dissolution of Marriage on Property Held as Tenants by the Entireties Presumption of Continuation of Marriage Title in Surviving Tenant by the Entireties — Homestead Creation of Joint Tenancy Mortgages Made to Husband and Wife Create a Tenancy by the Entireties Enhanced Life Estate: Deed for Non-Homestead Property Enhanced Life Estate: Life Tenant and Homestead Property Enhanced Life Estate: Remainderman and Homestead Property Chapter 7. 7.1 7.2 7.3 Leases Transfer of Lessee’s Interest Priority of Lease as Against Subsequent Mortgage Cancellation of Leases Chapter 8. 8.1 8.2 8.3 8.4 8.5 8.6 Construction Liens Effective Dates of Construction Liens Duration of Construction Liens Claim of Lien — Notice Construction Liens — Priority as Against Purchasers and Others Validity of Construction Liens Incurred by Lessee as Against Lessor’s Interest Construction Liens — Waiver Chapter 9. 9.1 9.2 9.2-1 Judgments & Mortgages Lien of Judgment Limitation on Lien of Judgment Limitations on Lien of Judgments Recorded on or after July 1, 1987 and prior to July 1, 1994 9.2-2 Limitations on Lien of Judgments Recorded on or after July 1, 1994 9.3 Service of Process 9.4 Title Acquired by Mortgagor after Execution of Mortgage 9.5 Merger of Title and Mortgage 9.6 Irregularities and Discrepancies in Satisfactions of Mortgages 9.7 Satisfaction of Corrective or Re-Recorded Mortgage Chapter 10. 10.1 10.2 10.3 10.4 10.5 10.6 Names Abbreviations, Derivatives, and Nicknames Rule of Idem Sonans Recitals of Identity in Conveyances Use or Non-Use of Middle Names and Initials Effect of Suffix Name Variances in Corporate Conveyances Chapter 11. Plats 11.1 Correcting Error in Name or Designation of Plat 11.2 Private Dedications 11.3 11.4 11.5 11.6 Chapter 12. 12.1 12.2 12.3 12.4 12.5 Title to Public Streets Abutting Platted Lots Reservation of Public Street Dedicated By Plat Abandonment of Public Street on Platted Land Description Made by Reference to a Plat Tax Liens Divestment of State Estate Tax Lien Federal Estate Tax Liens Federal Estate Tax Lien on Survivorship Property Estate Tax Lien — Limitations Lien of Intangible Personal Property Taxes Chapter 13. Trusts 13.1 Conveyances or Mortgages By or To Trustees — Effect Of Designation “Trustee” 13.2 Implied Power of Sale 13.3 Execution of Deed by Trustees 13.4 Deed Executed By the Survivor of Two or More Trustees Chapter 14. 14.1 14.2 Servicemembers Civil Relief Act Servicemembers Civil Relief Act — Default Judgments Servicemembers Civil Relief Act — Foreclosure of Mortgages - Intentionally Deleted Chapter 15. Tax Titles 15.1 Tax Deed of Record for Four Years Chapter 16. 16.1 16.2 16.3 16.3-1 16.4 16.5 16.6 Recording, Notice, and Priorities Reference to Unrecorded or Improperly Recorded Instrument Delay in Recording Conveyance Delayed Recording of Deed to Mortgagor Delayed Recording of Deed to Mortgagor — Rights of Third Parties Power of Attorney — Time of Recording Wild Instruments — Stranger to Stranger Effect of Possession on Priority under Recording Act Chapter 17. 17.1 17.2 17.3 17.4 17.5 17.6 17.7 Marketable Record Title Act Purpose of the Marketable Record Title Act Marketable Record Title and Root of Title Interests Extinguished Recording a Notice to Preserve Interests Rights of Persons in Possession Instruments Recorded Subsequent to a Root of Title Rights of Persons to Whom Taxes are Assessed 17.8 Rights of the United States, Florida, TIITF & WMD 17.9 Elimination of Dower - Intentionally Deleted 17.10 Defects Inherent in Minuments of Title Chapter 18. 18.0 18.1 18.2 Homestead Homestead Exemptions — Head of Family Alienation of Homestead Property — Joinder of Spouse Gratuitous Alienation of Homestead Property before January 7, 1969 - Intentionally Deleted 18.3 Gratuitous Alienation of Homestead Property on or after January 7, 1969 18.4 Alienation of Homestead Property — Power of Attorney 18.5 Alienation of Homestead Property by Guardian Prior to October 1, 1970 or from July 1, 1975 through October 1, 1977 - Intentionally Deleted 18.6 Alienation of Homestead Property by Guardian between October 1, 1970 and July 1, 1975 or on or after October 1, 1977 18.7 Devise of Homestead Property before January 7, 1969 - Intentionally Deleted 18.8 Devise of Homestead Property on or after January 7, 1969 18.8-1 Descent of Homestead Property 18.9 Homestead – Jurisdiction of County Judge - Intentionally Deleted 18.10 Sale of Devised Homestead by Personal Representative Chapter 19. Partnerships - Intentionally Deleted Chapter 20. Marital Property 20.1 Recital of Unmarried Status 20.2 - 20.10 Intentionally Deleted Chapter 21. 21.1 21.2 21.3 21.4 Descriptions Test of Sufficiency of Property Description Designation of County in Metes and Bounds Description Conveyance Described Only by Reference to Previous Recorded Document Conflict between Specific Description and Statement of Acreage Chapter 22. 22.1 22.2 22.3 22.4 22.5 22.6 22.7 22.8 Easements Easements by Express Grant Easements by Reservation Easements by Implication from Plat Easements by Implication from Necessity Easements by Prescription Easements Appurtenant Termination of Easements Created by Reservation or Grant Extinguishment of Easements by Merger of Dominant and Servient Estates Assignability of Commercial Easements in Gross 22.9 STANDARD 00 CONSTRUCTION OF TITLE PROBLEMS STANDARD: THE ATTORNEY, UPON EXAMINING AN ABSTRACT OF TITLE TO LAND, SHOULD CONSTRUE QUESTIONS IN FAVOR OF MARKETABILITY WHENEVER POSSIBLE. Problem: What questions and objections should be raised by the examining attorney? Answer: Objections and requirements should be made only when the irregularities or defects appearing in the abstract of title actually impair the title or may be expected to expose the purchaser or lender to the hazards of adverse claims or litigation. When such a situation arises the attorney should consult, when possible, with the prior examiner and endeavor to resolve the question in favor of marketability. He should communicate, when possible, with the prior examining attorney before delivering his opinion of title to his client. The Florida Bar February 2003 CHAPTER 1 AGENCY AND POWERS OF ATTORNEY _________________ STANDARD 1.1 EXECUTION AND RECORDATION OF POWER OF ATTORNEY FOR DEED STANDARD: WHEN A DEED IS EXECUTED BY VIRTUE OF A POWER OF ATTORNEY, THE POWER OF ATTORNEY MUST BE EXECUTED AND RECORDED IN THE SAME MANNER AS THE DEED, EXCEPT THAT A POWER OF ATTORNEY EXECUTED IN ANOTHER STATE BY AN INDIVIDUAL WHICH IS USED TO CONVEY NON-HOMESTEAD PROPERTY MAY BE EXECUTED IN COMPLIANCE WITH THE LAW OF THE STATE OF EXECUTION. Problem 1: John Doe executes a power of attorney in Florida authorizing Richard Roe to convey real property, but the power of attorney does not contain two subscribing witnesses. Roe, as attorney in fact for Doe, executes a deed of Blackacre from Doe to Simon Grant. The deed and power of attorney are both recorded. Is the conveyance valid against subsequent bona fide purchasers and creditors? Answer: No. Problem 2: John Doe executes a power of attorney in New York authorizing Richard Roe to convey non-homestead real property in Florida. Although the power of attorney is acknowledged it does not contain two subscribing witnesses. New York law did not require subscribing witnesses at the time. Roe, as attorney in fact for Doe, executes a deed of Blackacre from Doe to Simon Grant. The deed and power of attorney are both recorded. Is the conveyance valid against subsequent bona fide purchasers and creditors? Answer: Yes. Problem 3: John Doe gives Richard Roe a power of attorney, properly executed and acknowledged, authorizing Roe to convey real property, but the power of attorney is not recorded. Roe, as attorney in fact for Doe, executes and records a deed of Blackacre from Doe to Simon Grant. Is the conveyance valid against subsequent bona fide purchasers and creditors? Answer: No. The power of attorney must be recorded in addition to the deed. The Florida Bar April 2022 Authorities & References: F.S. 95.231(1), Fla. Stat. (2015); § 689.111, Fla. Stat. (2015); § 695.01 (2015); § 709.015(2), Fla. Stat. (2015); § 709.2106(3), Fla. Stat. (2015); 2A C.J.S. Agency § 40 (2014); FUND TN 4.02.01. Comment: The general law is that a power of attorney must be executed with the same formality as the law requires for the instrument to be executed under it. 2A C.J.S. Agency § 40 (2014). Section 709.2105(2), Florida Statutes, which became effective October 1, 2011, requires powers of attorney to be signed by the principal and by two subscribing witnesses. However, a power of attorney executed in another state which does not require two subscribing witnesses is valid in Florida if its execution complied with the law of the state of execution. § 709.2106(3), Fla. Stat. Note that 709.2106(3) only applies to powers of attorney executed by individuals. Note further that “another state” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. Last, it should be noted that the requirement of subscribing witnesses does not apply to military powers of attorney. Special considerations apply to homestead property. Section 689.111, Florida Statutes (2015) authorizes a deed of homestead property to be executed by virtue of a power of attorney if the power of attorney is executed in the same manner as a deed. Therefore, a power of attorney, regardless of where it is executed, must contain two subscribing witnesses if it is to be used to convey homestead property. A power of attorney must be recorded in the official records of the county in which the real property is situated to be valid against subsequent bona fide purchasers and creditors. F.S. 695.01 (2015). To be entitled to recordation it must contain an acknowledgement. F.S. 695.03 (2015). Note: Section 95.231(1), Florida Statutes (2015), validates a power of attorney that has been of record for five years or more and that accompanies a deed as if there had been no lack of witnesses or defects in the acknowledgment. The Florida Bar April 2022 STANDARD 1.2 AFFIXING NAME OF PRINCIPAL IN EXECUTION OF INSTRUMENTS BY ATTORNEY IN FACT STANDARD: IN THE EXECUTION OF AN INSTRUMENT BY AN ATTORNEY IN FACT, THE NAME OF THE PRINCIPAL SHOULD BE SPECIFICALLY SET FORTH AND MAY BE EITHER WRITTEN, PRINTED OR TYPED. Problem: Blackacre was purportedly conveyed by a deed in which the wording of the execution is "John Doe by Richard Roe, as his attorney in fact." The name of John Doe was typed but Richard Roe's name was signed, and Roe acknowledged that he executed the deed as attorney in fact for John Doe. Roe has a power of attorney in proper form. Did the grantee acquire title? Answer: Yes. Authorities & References: State v. Hickman, 189 So.2d 254 (Fla. 2d DCA 1966), cert. den. 194 So.2d 618 (Fla. 1966); 2 FLA. JUR. 2d, Agency and Employment, §53 (1998); FLORIDA REAL PROPERTY SALES TRANSACTIONS (CLE 1997), Sec. 6.65; ATIF TN 4.02.02. The Florida Bar February 2016 STANDARD 1.3 AUTHORITY TO CONVEY REAL PROPERTY STANDARD: TO EMPOWER AN AGENT TO CONVEY REAL PROPERTY THE POWER OF ATTORNEY MUST GIVE CLEAR AUTHORITY TO DO SO, ALTHOUGH THE REAL PROPERTY NEED NOT BE SPECIFICALLY DESCRIBED IF THE TERMS OF THE INSTRUMENT SHOW SUCH LAND TO BE WITHIN THE PRINCIPAL’S INTENTION IN THE GRANTING OF THE POWER. Problem 1: John Doe gives to Richard Roe a power of attorney authorizing Roe “to generally act for me and in my name, place and stead, in any state and in relation to all matters, to do any and all things to execute any and all instruments which I might or could do if personally present.” Does Roe have the authority to convey land owned by Doe? Answer: No. Problem 2: John Doe gives to Richard Roe a power of attorney authorizing Roe to “sell and convey any and all land owned by me,” without specifically describing such land. Does Roe have the authority to convey any part or all of such land? Answer: Yes. Authorities & References: F.S. 709.2201(1) (2015); 2A C.J.S., Agency §§223, 230 (2007); AmJur 2d., Agency Comment: With respect to homestead property, see Title Standard 18.4 (Alienation Of Homestead -- Power Of Attorney). The Florida Bar §29 (2010); FUND TN 4.02.03; 27 FUND CONCEPT 123 (October 2005); Bloom v. Weiser, 348 So. 2d 651 (Fla. 3d DCA 1977) February 2016 STANDARD 1.4 WITNESSES ON POWER OF ATTORNEY FOR MORTGAGE OF HOMESTEAD PROPERTY STANDARD: WHEN A MORTGAGE OF HOMESTEAD PROPERTY IS EXECUTED BY VIRTUE OF ANY POWER OF ATTORNEY, THE POWER OF ATTORNEY MUST CONTAIN TWO SUBSCRIBING WITNESSES UNLESS IT IS A MILITARY POWER OF ATTORNEY. Problem 1: John Doe executed a power of attorney in Florida authorizing Richard Roe to mortgage any of John Doe’s real property. The power of attorney does not contain two subscribing witnesses. Would a mortgage executed by Roe, as Doe’s attorney in fact, constitute a valid mortgage lien on Doe’s homestead property in Florida? Answer: No. Problem 2: John Doe executed a power of attorney in New York authorizing Richard Roe to mortgage any of Doe’s real property. The power of attorney does not contain two subscribing witnesses. New York law did not require subscribing witnesses at the time. Would a mortgage executed by Roe, as Doe’s attorney in fact, constitute a valid mortgage lien on Doe’s homestead property in Florida? Answer: No. Authorities & References: F.S. 689.111 (2015); F.S. 689.01 (2015). Comment: Section 689.111, Florida Statutes, provides that a mortgage of homestead may be executed by virtue of a power of attorney, provided the power of attorney is executed in the same manner as a deed. Section 689.01, Florida Statutes, provides that two subscribing witnesses are required for execution of a deed. Therefore, two subscribing witnesses are required for execution of a power of attorney used to mortgage homestead property. Section 709.2106(3), Florida Statutes, provides that a power of attorney executed in another state which does not require two subscribing witnesses is valid in Florida if its execution complied with the law of the state of execution. That statute, however, should not be relied upon as to mortgages of homestead property in light of 689.111, which is specific as to homestead property and requires two subscribing witnesses. The Florida Bar February 2016 Note, however, that witnesses are not required for military powers of attorney. 10 U.S.C. § 1044b. Further, it should be noted that a power of attorney must be recorded in the official records of the county in which the real property is situated to provide constructive notice of the mortgage to subsequent bona fide purchasers and creditors. F.S. 695.01 (2015). To be entitled to recordation it must contain an acknowledgment. See F.S. 695.03 (2015). For information on the necessity of subscribing witnesses on powers of attorney used to mortgage nonhomestead property, please see Title Standard 1.5. The Florida Bar February 2016 STANDARD 1.5 WITNESSES ON POWER OF ATTORNEY FOR MORTGAGE OF NONHOMESTEAD PROPERTY STANDARD: WHEN A MORTGAGE OF NONHOMESTEAD PROPERTY IS EXECUTED BY VIRTUE OF A POWER OF ATTORNEY, THE POWER OF ATTORNEY MUST CONTAIN TWO SUBSCRIBING WITNESSES UNLESS IT: (1) WAS EXECUTED PRIOR TO OCTOBER 1, 1995; (2) IS A NONDURABLE POWER OF ATTORNEY EXECUTED PRIOR TO OCTOBER 1, 2011; (3) WAS EXECUTED IN ANOTHER STATE BY AN INDIVIDUAL IN COMPLIANCE WITH THE LAW OF THE STATE OF EXECUTION; OR (4) IS A MILITARY POWER OF ATTORNEY. Problem 1: On September 1, 2011, John Doe executed a durable power of attorney authorizing Richard Roe to mortgage real property but the power of attorney does not contain two subscribing witnesses. In 2015, may Roe, as attorney in fact for Doe, execute a mortgage of nonhomestead Florida property? Answer: No. Any durable power of attorney executed on or after October 1, 1995, but before October 1, 2011, requires two subscribing witnesses if it is used to mortgage or convey Florida real property, regardless of where the power of attorney was executed. Problem 2: On October 1, 2011, John Doe executed a power of attorney in New York authorizing Richard Roe to mortgage real property but the power of attorney does not contain two subscribing witnesses. New York law did not require subscribing witnesses at the time. In 2015, may Roe, as attorney in fact for Doe, execute a mortgage of nonhomestead Florida property? Answer: Yes. Authorities & References: F.S. 689.111, 689.01, 709.08(1), 709.2105(2), 709.2106(3) (2015). Comment: All durable and non-durable powers of attorney executed in Florida on or after October 1, 2011, require two subscribing witnesses. F.S. 709.2105(2) and 709.2106(1). This title standard sets forth the general rule that a power of attorney used to execute a mortgage of nonhomestead property must contain two subscribing witnesses, subject to the following four exceptions. The Florida Bar February 2016 (1) The power of attorney was executed prior to October 1, 1995. Prior to that date, Florida law did not require a power of attorney used to execute a mortgage on nonhomestead property to contain subscribing witnesses. (2) The power of attorney is a nondurable power of attorney executed prior to October 1, 2011. Prior to October 1, 2011, a nondurable power of attorney used to execute a mortgage on nonhomestead property only needed to be executed with the same formalities as the mortgage. Since mortgages do not require witnesses, a nondurable power of attorney used to execute the mortgage did not require witnesses. (3) The power of attorney was executed in another state by an individual in compliance with the laws of the state of execution. Section 709.2106(3), Florida Statutes, provides that a power of attorney executed in another state which does not require two subscribing witnesses is valid in Florida if its execution complied with the law of the state of execution. Note that 709.2106(3) only applies to powers of attorney executed by individuals. Note further that “another state” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. (4) The power of attorney is a military power of attorney. Federal law exempts military powers of attorney from the typical state law requirements for form, substance or formality, including subscribing witnesses. 10 U.S.C. § 1044b. A power of attorney must be recorded in the official records of the county in which the real property is situated to provide constructive notice of the mortgage to subsequent bona fide purchasers and creditors. F.S. 695.01 (2015). To be entitled to recordation it must contain an acknowledgement. F.S. 695.03 (2015). For information on the necessity of subscribing witnesses on powers of attorney used to mortgage homestead property, please see Title Standard 1.4. The Florida Bar February 2016 CHAPTER 2 BANKRUPTCY ___________________________________ STANDARD 2.1 EFFECT OF BANKRUPTCY PROCEEDINGS ON TITLE OF DEBTOR'S REAL ESTATE STANDARD: ON OR AFTER OCTOBER 1, 1979, THE FILING OF A PETITION IN BANKRUPTCY CREATES AN ESTATE WHICH INCLUDES ALL LEGAL OR EQUITABLE INTERESTS OF THE DEBTOR IN REAL PROPERTY AS OF THE TIME OF FILING OF THE PETITION, INCLUDING THAT WHICH MAY BE LATER EXEMPTED FROM THE BANKRUPTCY PROCEEDINGS. Problem 1: John Doe held three parcels of property by various tenancies: Blackacre by a tenancy by the entireties, Whiteacre by a joint tenancy, and Greenacre by a tenancy in common. Doe filed a petition in bankruptcy on or after October 1, 1979, and subsequently he and his various co-tenants attempted to convey Blackacre, Whiteacre, and Greenacre to Richard Roe. Doe was later granted a discharge and the proceeding was closed. Is Roe's title valid? Answer: No. Whether the bankruptcy proceedings are voluntary or involuntary, the filing of the bankruptcy petition creates an estate over which the trustee has dominion. Property held by the entireties by a debtor whose spouse does not also file a petition in bankruptcy will still become property of the estate until an exemption is established. Likewise, interests in tenancies in common or joint tenancies will become property of the estate until such property is exempted. Problem 2: Same facts as above, except that Doe also holds Blueacre as trustee for the benefit of Marvin Moe. What will happen to Blueacre upon the filing of the petition in bankruptcy? Answer: The estate will consist only of such right and title to the property as was possessed by the debtor. Generally, the estate will hold such property subject to the outstanding interest of the beneficiary. Authorities & References: Bankruptcy Code, 11 U.S.C. §§ 522, 541, 549 (2001); § 222.20, Fla. Stat. (2001); 4 COLLIER ON BANKRUPTCY 1522 (15th ed. 2001); 5 COLLIER ON BANKRUPTCY 1541, 1549 (15th ed. 2001); FUND TN 5.06.01. The Florida Bar May 2003 Comment: Section 541(a) provides that the commencement of a bankruptcy case creates an estate and specifies what property shall comprise the estate. Essentially, the estate is composed of all legal or equitable interests of the debtor in property, wherever located, as of the time the case is filed. This estate includes all types of property, both tangible and intangible. In short, an important provision of § 541 is that all interests of the debtor in property as of the commencement of the case become the property of the estate. See § 541(a) (1). Once the property comes into the estate, the debtor is permitted to exempt it in accordance with § 522 of the Code. Pursuant to § 522(b) (1), the State of Florida has opted to veto the federal statutory scheme of exemptions; therefore, Florida’s state law exemptions control in Florida bankruptcy cases. 4 COLLIER ON BANKRUPTCY 1522.01 (15th ed. 2001); § 222.20, Fla. Stat. (2001). Nonetheless, under Bankruptcy Code, 11 U.S.C. § 522(b) the debtor must affirmatively claim any available exemption to release the property from the “estate.” See 5 COLLIER ON BANKRUPTCY 1541.02 (15th ed. 2001). Moreover, any challenge to a claimed exemption must be timely filed or it is lost. After commencement of the bankruptcy case, protection is afforded to a transferee of real property who obtains the property in good faith, without knowledge, and for a fair equivalent value. Bankruptcy Code, 11 U.S.C. § 549(c). A purchaser at a judicial sale also is protected against avoidance of the transfer by the trustee in bankruptcy. See 5 COLLIER ON BANKRUPTCY 1541 (15th ed. 2001). However, this protection does not exist if the trustee has recorded a copy or notice of the petition in the land records of the jurisdiction where the property is located. If a fair equivalent value is not paid, but some value is given, then a lien arises in favor of the transferee to the extent that some value was present. Bankruptcy Code, 11 U.S.C. § 549(c) (2001). Some protection is afforded transferees of property from a debtor who is involved in involuntary bankruptcy proceedings. Bankruptcy Code, 11 U.S.C. § 549(b). This provision only applies to transferees who take during the period between commencement of the case and entry of the order of relief. Bankruptcy Code, 11 U.S.C. § 303. Such a transfer is validated only to the extent that value was given after commencement of the case under this section; however, knowledge of the bankruptcy proceedings is irrelevant. 5 COLLIER ON BANKRUPTCY 1549 (15th ed. 2001). Note: An interest which the debtor acquires by bequest, devise, inheritance, or as a result of a property settlement or a divorce decree also becomes property of the estate if the interest is acquired within 180 days after the filing of the petition. Bankruptcy Code, 11 U.S.C. § 541(a) (5). The Florida Bar May 2003 STANDARD 2.2 SALE, LEASE, OR USE OF DEBTOR'S REAL PROPERTY BY DEBTOR OR TRUSTEE IN BANKRUPTCY STANDARD: ON OR AFTER OCTOBER 1, 1979, EITHER THE DEBTOR IN POSSESSION OR THE TRUSTEE IN BANKRUPTCY CAN PROPERLY SELL, LEASE, OR USE THE REAL PROPERTY OF THE DEBTOR'S ESTATE PROVIDED THAT NOTICE AND OPPORTUNITY FOR A HEARING OF ANY SUCH SALE, LEASE, OR USE OF THE PROPERTY IN THE ESTATE (OTHER THAN IN THE ORDINARY COURSE OF BUSINESS) IS PROVIDED AS REQUIRED BY THE BANKRUPTCY CODE. Problem l: A trustee in bankruptcy in the bankruptcy proceedings of John Doe entered into a contract for the sale of Doe's nonexempt real property to Richard Roe. The sale was not in the ordinary course of business. Notice of the proposed sale was given to Doe's creditors, but no hearing was ever requested by a party in interest and no hearing was ever held on the matter. The sale was subsequently completed. Did valid title pass to Roe? Answer: Yes. Bankruptcy Code, 11 U.S.C. §§ 102(1) and 363(b) simply require notice and an opportunity for a hearing of any sale, lease, or use of property of the estate other than in the ordinary course of business. A court order is not required. Problem 2: Same facts as above, except that Doe, who is a debtor in possession, himself sells the property to Roe. Did valid title pass? Answer: Yes. Authorities & References: Bankruptcy Code, 11 U.S.C. §§ 102, 361, 363 (2001); 3 COLLIER ON BANKRUPTCY 1363 (15th ed. 2001); FUND TN 5.05.02. Comment: Bankruptcy Code, 11 U.S.C. § 363 defines the rights and powers of parties with interests in property of the estate. 3 COLLIER ON BANKRUPTCY 1363.01 (15th ed. 2001). Section 363(b) states that the trustee may, "after notice and a hearing," use, sell, or lease the property, "other than in the ordinary course of business." A court order is not required. Bankruptcy Code, 11 U.S.C. § 363(b) (1) (2001); 3 COLLIER ON BANKRUPTCY 1363.02 (15th ed. 2001). Bankruptcy Code, 11 U.S.C. § 102(1) defines "after notice and a hearing" as "after such notice as is appropriate in the particular circumstances, and such opportunity for a hearing as is appropriate in the particular circumstances but authorizes an act without an actual hearing if notice is properly given and if such a hearing is not requested in a timely manner by a party in interest." Thus, the burden is shifted to interested parties to provide the request for a hearing and, should no such request be made, action may be taken without a hearing. 3 COLLIER ON BANKRUPTCY 1363.02 (15th ed. 2001). NOTE: ADDITIONAL REQUIREMENTS EXIST UNDER Bankruptcy Code, 11 U.S.C. § 363(f) FOR SALES “FREE AND CLEAR” OF LIENS AND ENCUMBRANCES. The Florida Bar May 2003 The requirements of notice and a hearing should be considered to have been met if the public records of the appropriate county reflect the recordation of one of the following: a. A certified copy of the bankruptcy court docket showing that no request for a hearing was made pursuant to the notice; or, b. A certified copy of the notice filed in the bankruptcy court together with a certified copy of any court order entered after a request for a hearing. Bankruptcy Code, 11 U.S.C. § 363(e) provides that at any time, on request of an entity with an interest in property which has been or is proposed to be used, sold, or leased, the court shall prohibit or condition such use, sale, or lease as necessary to provide adequate protection. Section 361 states that adequate protection may be provided by periodic cash payments to provide for the decrease in value, or by additional replacement security to compensate for the decrease in value, or by other relief which will result in "the indubitable equivalent of such entity's interest in such property." The requirement of adequate protection is mandatory. If the proposed use, sale, or lease cannot be so conditioned then it must be prohibited. See 3 COLLIER ON BANKRUPTCY 1363.05 (15th ed. 2001). Section 363(h) permits the sale of any interest of a co-owner in property in which the debtor had, at the time of filing of the case, "an undivided interest as a tenant in common, joint tenant, or tenant by the entirety," provided that certain conditions specified in this section are met. Purchasers are protected under § 363(m) from the effect of a "reversal or modification on appeal" from the authorization to sell as long as the purchaser acted in good faith. See 3 COLLIER ON BANKRUPTCY 1363.06 (15th ed. 2001). Notwithstanding the provisions of § 363(m), Bankruptcy Rule 6004(g) operates to stay an order authorizing the use, sale, or lease of property until the expiration of ten days after entry of the order, unless the court orders otherwise. If the trustee or debtor in possession is operating a business, it may sell property in the ordinary course of business without notice and a hearing unless the court orders otherwise. Bankruptcy Code, 11 U.S.C. § 363(c) (l). The Florida Bar May 2003 STANDARD 2.3 EFFECT OF BANKRUPTCY ON RIGHT TO FORECLOSE STANDARD: ON OR AFTER OCTOBER 1, 1979, PRIOR RELIEF FROM THE BANKRUPTCY AUTOMATIC STAY IS NECESSARY FOR A VALID FORECLOSURE OF A MORTGAGE ENCUMBERING SUCH PROPERTY. Problem: John Doe, a mortgagor under a conventional mortgage, files a bankruptcy proceeding on or after October 1, 1979, at which time the subject mortgage is in default. The mortgagee desires to foreclose the mortgage without the approval of the bankruptcy court. May the mortgage foreclosure be commenced? Answer: No. The bankruptcy automatic stay extends to all of the property of the estate and all property of the debtor, regardless of whether it is located within the district in which the court sits. Authorities & References: Bankruptcy Code, 11 U.S.C. § 362 (2001); 3 COLLIER ON BANKRUPTCY 1362 (15th ed. 2001). Comment: The automatic stay, which arises upon the filing of a bankruptcy petition, stops all foreclosure actions. Code § 362(a). This automatic stay is broader than the stay in the previous Bankruptcy Act and includes a stay against a pending mortgage foreclosure in a liquidation bankruptcy which was not stayed under the old Bankruptcy Act. Section 362(b) provides a number of exceptions to this stay. A complete discussion may be found in 3 COLLIER ON BANKRUPTCY 1362.04 (15th ed. 2001). Section 362(e) provides that thirty days after a request for relief from the stay, the stay will be automatically vacated unless the court, after notice and a hearing, orders such stay continued in effect pending a final hearing. In addition, § 362(d) provides that, under certain circumstances, the stay may be terminated, annulled, modified, or conditioned upon request of a party in interest after notice and a hearing. If the court does not grant relief from the stay, it will remain in effect. Code § 362(c) (2) (2001). However, if the stay is vacated pursuant to § 362(e), no further court order is necessary to permit foreclosure unless the court order granting stay relief so specifies. The Florida Bar May 2003 STANDARD 2.4 EFFECT OF TRUSTEE IN BANKRUPTCY ABANDONING PROPERTY OF DEBTOR STANDARD: AFTER NOTICE AND A HEARING, THE TRUSTEE MAY ABANDON PROPERTY OF THE ESTATE WHICH IS BURDENSOME OR OF INCONSEQUENTIAL VALUE. Problem: After authorization by the bankruptcy court, a trustee in bankruptcy abandoned Blackacre, which was property of the estate. The property was abandoned to John Doe, the debtor, because of his possessory interest in the property. May Doe convey valid title to Blackacre to Richard Roe? Answer: Yes. Authorities & References: Bankruptcy Code, 11 U.S.C. §§ 350, 521, 554 (2001); ATIF TN 5.01.01. Comment: Section 554 of the Bankruptcy Code provides that after notice and a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate; similarly, upon request of a party in interest and after notice and a hearing, the court may order the trustee to abandon any such property of the estate. Code § 554(c) provides that in the absence of a court order to the contrary, any property scheduled under § 521(1) and not otherwise administered at the time of closing of a case is deemed abandoned to the debtor and deemed administered for the purpose of § 350. Section 554(d) provides that unless the court orders otherwise, property of the estate that is not abandoned and that is not administered in the case remains property of the estate. This subsection recognizes that abandonment requires notice and that there can be no abandonment by mere operation of law of property which is not listed in the debtor's schedules or otherwise disclosed to the creditors, and that such property will remain property of the estate. The unscheduled and unadministered asset remains property of the estate and the estate must be reopened and the property abandoned, sold, or exempted in order to remove it from the estate. But Note: If a lender desires to proceed against property that has been abandoned to the debtor before the debtor receives a discharge, the lender should obtain relief from the automatic stay, because the stay relates to property of the debtor as well as to property of the estate. The notice and hearing discussed above have the same construction as discussed in Title Standard 2.2 (Sale, lease, or use of debtor's real property by debtor or trustee in bankruptcy). If these requirements are met, the abandonment takes place and vests title to the abandoned property in the transferee, regardless of whether the transferee receives a deed. The Florida Bar May 2003 STANDARD 2.5 EFFECT OF JUDGMENT DISCHARGED IN BANKRUPTCY ON TITLE TO AFTER-ACQUIRED PROPERTY STANDARD: A JUDGMENT LIEN ACQUIRED BEFORE BANKRUPTCY THAT IS SUBSEQUENTLY DISCHARGED IN BANKRUPTCY AND IS NOT SUBJECT TO EXCEPTIONS TO DISCHARGE IN BANKRUPTCY WILL NOT BECOME A LIEN ON PROPERTY ACQUIRED AFTER DISCHARGE. Problem: A judgment upon claims not subject to exceptions to discharge in bankruptcy was entered against John Doe on August 1, 1998, and a certified copy was recorded so as to constitute a lien on real property. Doe filed a petition in bankruptcy on January 4, 1999, properly scheduling the judgment, and subsequently received a discharge in the bankruptcy proceeding. Before one year following discharge had elapsed, Doe acquired a parcel of real property. Does the lien of the judgment attach to this after-acquired property? Answer: No. The judgment, properly discharged in the bankruptcy proceeding, does not become a lien against property thereafter acquired by the debtor. The judgment is not a lien against the after-acquired property, and no petition pursuant to F.S. §55.145 (200I) is necessary. Authorities & References: Albritton v. General Portland Cement Co., 344 So. 2d 574 (Fla. 1977); Bankruptcy Code, 11 U.S.C. §§ 350, 523, 524, 541 (2001); F.S. § 55.145 (2001); 5 COLLIER ON BANKRUPTCY 1524, 1522 (15th ed. 2001); ATIF TN 5.03.02. Comment: Section 524(a) of the Bankruptcy Code provides that a discharge as to claims not subject to exceptions to discharge in bankruptcy is completely effective and will operate as an injunction against the commencement of any action or any act to collect a debt as a personal liability of the debtor. Section 524(a) (3) specifically operates as an injunction against the commencement of an action to collect against any property of the debtor that is acquired after filing the bankruptcy petition. A creditor, including a judicial lien creditor, could not levy upon property acquired by the debtor after the filing of the bankruptcy petition. After the discharge in bankruptcy, no enforceable judgment exists against the person of the debtor. Code § 554(a) (2001). As there is no actual cloud on title to the after-acquired property following discharge in bankruptcy, no action pursuant to F.S § 55.145 (2001) is necessary. It is recommended that marketable title be reflected in the official records of the county in which the property is located. Therefore, certified copies of the petition in bankruptcy, the schedule of liabilities showing the judgment, and the order of discharge preferably should be recorded in that county. Note: Judgment liens against property owned by the debtor prior to bankruptcy proceedings are not covered by this Title Standard. Generally, the judgment lien continues to attach to property that was owned by the debtor before bankruptcy, even though the debtor has been personally discharged from the debt. The Florida Bar May 2003 CHAPTER 3 CONVEYANCES _____________________________________ STANDARD 3.1 CONVEYANCES TO AN UNINCORPORATED VOLUNTARY ASSOCIATION STANDARD: A CONVEYANCE TO AN UNINCORPORATED VOLUNTARY ASSOCIATION DOES NOT OPERATE TO VEST LEGAL TITLE IN SUCH ASSOCIATION, UNLESS SPECIFICALLY AUTHORIZED BY STATUTE. Problem: Blackacre was conveyed to Wild Life Hunting and Fishing Association, an unincorporated voluntary association. Later, Blackacre was conveyed by this association by its president and secretary to John Doe. Did Doe acquire marketable title to Blackacre? Answer: No. Authorities & References: Reid v. Barry, 93 Fla. 849, 112 So. 846 (1927) (unincorporated religious society); Daniels v. Berry, 513 So. 2d 250 (Fla. 5th DCA 1987) (unincorporated civic association); Escambia Properties, Inc., v. Largue, 260 So. 2d 213 (Fla. 1st DCA 1972) (corporation formed after acquisition of title); 1 BOYER, FLORIDA REAL ESTATE TRANSACTIONS § 10.02 (2002); FUND TN 6.01.02 B. (unincorporated church); FUND TN 10.04.05 (legal existence of parties to conveyance); FUND TN 10.04.09 (unincorporated labor unions); FUND TN 11.01.05 (conveyance to corporation prior to incorporation). Comment: Though most unincorporated associations are not legal entities capable of acquiring or conveying real estate, there are some exceptions. If a business trust is a legal entity for purposes of holding title under the laws of the country or state where it was formed, then it would be considered a legal entity with the same powers and abilities in Florida. See FUND TN 31.01.01. Partnerships and joint ventures under Ch. 620, Fla. Stat., are other types of unincorporated associations capable of acquiring or conveying title. See Title Standards, Chapter 19 (Partnerships). With respect to conveyances to partnerships, see Title Standards, Chapter 19 (Partnerships). The Florida Bar February 2003 STANDARD 3.1-1 CONVEYANCES TO AND BY TRUSTEES OF UNINCORPORATED CHURCHES STANDARD: EVERY DEED OR OTHER INSTRUMENT TRANSFERRING REAL PROPERTY TO NAMED OR UNNAMED TRUSTEES OF A NAMED UNINCORPORATED CHURCH VESTS TITLE TO THE PROPERTY IN THE TRUSTEES OF THE UNINCORPORATED CHURCH AND THEIR SUCCESSORS WITH FULL POWER AND AUTHORITY TO CONVEY AND MORTGAGE THE PROPERTY TRANSFERRED. Problem: The deed to Blackacre transfers the property to "the trustees of United Kingdom Church." United Kingdom Church is an unincorporated church. May the trustees of United Kingdom Church convey the property to John Doe? Answer: Yes. If the deed transfers the property to named or unnamed trustees of a named unincorporated church, the trustees have full authority to convey or mortgage the property. Authorities & References: § 692.101, Fla. Stat. (2001); 45 Fla. Jur. 2d Religious Societies § 9 (2002); 1 BOYER, FLORIDA REAL ESTATE TRANSACTIONS § 10.10 (2002); FLORIDA REAL PROPERTY TITLE EXAMINATION AND INSURANCE § 3.70 (Fla. Bar CLE 4th ed. 1996); FUND TN 6.03.01. Comment: The pastor, secretary, or other authorized administrative personnel of an unincorporated church may execute an affidavit stating the names of the trustees of the unincorporated church as of the date stated in the affidavit. Such an affidavit is conclusive as to the facts stated therein as to purchasers and mortgagees without notice. All deeds and mortgages executed by the trustees of an unincorporated church and recorded in the public records of the county where the real property is located prior to the effective date of the statute, May 21, 1986, are good and valid if they were not contested by suit commenced within two years after the effective date of the act. The Florida Bar February 2003 STANDARD 3.2 DEED PURPORTING TO CORRECT PREVIOUS EFFECTIVE DEED STANDARD: A GRANTOR WHO HAS CONVEYED LAND BY AN EFFECTIVE AND UNAMBIGUOUS DEED CANNOT AVOID THE EFFECT OF SUCH CONVEYANCE BY EXECUTING A NEW DEED MAKING A CHANGE IN THE CONVEYANCE, EVEN THOUGH THE LATTER DEED PURPORTS TO CORRECT OR MODIFY THE FORMER. Problem: John Doe, the record owner of Blackacre, conveyed the west half of Blackacre to Richard Roe. Doe later conveyed the east half of Blackacre to Roe by a deed containing a recital that it was executed to correct an erroneous description in the previous deed. Doe then executed a deed of the west half of Blackacre to Simon Grant. Did Grant acquire marketable title to the west half of Blackacre? Answer: No. The later conveyance from Doe to Roe of the east half of Blackacre did not nullify the former conveyance of the west half of Blackacre. It is necessary for Simon Grant to obtain a conveyance from Roe. Authorities & References: Kirkpatrick v. Ault, 177 Kan. 552, 280 P.2d 637 (1955); Hilterbrand v. Carter, 27 P.3d 1086 (Or. Ct. App. 2001); 26A C.J.S. Deeds §§ 31, 174 (2001); FUND TN 10.03.03. Comment: The Standard is designed to point out that marketability of title cannot be achieved by the apparent unilateral action of the grantor. Where the rights of third parties are not involved, the grantee's acceptance of the corrective deed may nullify the effect of the prior deed, as between the parties. The Florida Bar February 2003 STANDARD 3.3 AFFIDAVIT STANDARD: WHENEVER POSSIBLE AND IN CONFORMITY WITH STANDARDS PROMULGATED HERE, THE EXAMINER SHOULD ACCEPT AND RELY ON AN AFFIDAVIT WHICH STATES SUFFICIENT FACTS TO NEGATE A POSSIBLE DEFECT IN AN OTHERWISE MARKETABLE TITLE. Problem 1: Blackacre was conveyed to John Doe. Later a conveyance appears from J. Doe. May an affidavit that grantee and grantor are one and the same person be accepted as true? Answer: Yes. Problem 2: Blackacre was conveyed to John Doe. A judgment appears against J. Doe. May an affidavit to the effect that J. Doe and John Doe are not the same person be accepted? Answer: Yes. Problem 3: Blackacre was owned by John Doe and Jane Doe, his wife, as an estate by the entireties. There is a conveyance by Jane Doe, a widow, and a death certificate of J. Doe appears of record. May an affidavit be accepted that J. Doe and John Doe are one and the same person? Answer: Yes. Problem 4: Blackacre was conveyed to Simon Grant. Simon Grant then conveyed to John Doe. There was no recitation of the marital status of Simon Grant on the deed of conveyance. Should an affidavit from a person with knowledge of the facts, stating that Simon Grant was a single man at the time of the conveyance, be accepted? Answer: Yes. Authorities & References: Felt v. Morse, 80 Fla. 154, 85 So. 656 (1920); ; Annot., 7 A.L.R. 1166, 1171 (1920); BASYE, CLEARING LAND TITLES §§31-45 (2d ed. 1970); I FLORIDA REAL PROPERTY PRACTICE §9.31 (CLE 2d ed. 1971); ATIF TN 10.04.07, 18.02.01, 20.02.05. Comment: With respect to continuous marriage affidavits, see Title Standard 6.6. The Florida Bar August 2003 STANDARD 3.4 ACKNOWLEDGMENT − NECESSITY FOR SEAL (FLORIDA AND FOREIGN COUNTRIES) STANDARD: A CERTIFICATE OF ACKNOWLEDGMENT, MADE IN FLORIDA OR IN A FOREIGN COUNTRY, TO BE VALID AND ENTITLE THE INSTRUMENT TO WHICH IT IS APPENDED TO BE RECORDED MUST HAVE THE OFFICER'S SEAL AFFIXED. Problem 1: A certificate of acknowledgment attached to a deed was duly signed by a Florida notary (or other authorized official), but his seal was not affixed. The clerk accepted the deed for recordation. Was the recordation effective? Answer: No. Problem 2: Same facts as in Problem 1 except that the Florida notary had obtained and attached a certificate of notarial authority from the Secretary of State, as provided in F.S. 117.03. The clerk overlooked the omission of the notary's seal and recorded the deed. Was the recordation valid and effective? Answer: No. Problem 3: A certificate of acknowledgment attached to a deed was duly signed by a notary of a foreign country having a seal, or by an authorized officer of the United States, but no seal was affixed. The clerk accepted the deed for recordation. Was the recordation valid and effective? Answer: No. Authorities & References: F.S. 695.03(1), (3) (2002); Norris v. Billingsley, 48 Fla. 102, 37 So. 564 (1904); Florida Nat'l Bank & Trust Co. v. Hickey, 263 So.2d 269 (3d D.C.A. Fla. 1972); ATIF TN 1.02.07, 1.04.02. Comment: A certificate evidencing the authority of an officer to act is not a substitute for the positive statutory requirement of a seal in executing an acknowledgment certificate. But see James v. Gollnick, 100 Fla. 829, 130 So. 450 (1930) (the lack of a notary's seal may be cured seven years after recordation by F.S. 694.08). See also, F.S. 95.231 (2002); ATIF TN 1.02.07. Exceptions to this Standard are those acknowledgments of members of the Armed Forces and their spouses taken in accordance with F.S. 695.031 (2002). Spouses were not included prior to May 2, 1957. Also, under the Uniform Electronic Signature Act, neither a rubber stamp nor an impression seal is required for an electronic notarization. F.S. 668.50(11)(a) (2002); ATIF TN 1.02.07. Effective January 1, 1992, a Florida notary’s seal must be a rubber stamp. F.S. 117.05(3)(a) (2002); ATIF TN 1.02.07. From 1973 to 1992, the seal may be of the rubber stamp or impression type. See ATIF TN 1.02.07. The Florida Bar August 2003 STANDARD 3.5 ACKNOWLEDGMENT -- NECESSITY FOR SEAL (OUT OF STATE) STANDARD: A CERTIFICATE OF ACKNOWLEDGMENT MADE OUT OF FLORIDA BUT IN THE UNITED STATES, TO BE VALID AND ENTITLE THE INSTRUMENT TO WHICH IT IS APPENDED TO BE RECORDED, MUST BE UNDER THE SEAL OF THE OFFICER OR COURT OF THE OFFICIAL AUTHORIZED BY FLORIDA LAW, UNLESS THE ACKNOWLEDGMENT IS MADE BEFORE A NOTARY PUBLIC WHO DOES NOT AFFIX A SEAL, IN WHICH CASE IT IS SUFFICIENT IF THE NOTARY PUBLIC TYPES, PRINTS, OR WRITES BY HAND ON THE INSTRUMENT, “I AM A NOTARY PUBLIC OF THE STATE OF (STATE), AND MY COMMISSION EXPIRES ON (DATE)”. Problem: A certificate of acknowledgment attached to a deed dated in 1991 was duly signed by a South Dakota notary who did not affix a seal. However, the instrument included the statement, “I am a notary public of the state of South Dakota, and my commission expires on July 1, 1992.” The clerk accepted the deed for recordation. Was the recordation valid and effective? Answer: Yes. Authorities & References: F.S. 695.03(2) (2002); ATIF TN 1.04.01. Comment: See Comment, Title Standards 3.4 (Acknowledgment -- Necessity For Seal (Florida and Foreign Countries). The following are the officers before whom an acknowledgment or proof may be made in another state: a civil law notary of this state; a judge or clerk of any court of the United States or of any state, territory, or district; a United States commissioner or magistrate; a notary public, justice of the peace, master in chancery, or registrar or recorder of deeds of any state, territory, or district having a seal. For all officers except notaries public, the acknowledgment or proof must be under the seal of the officer or court, as the case may be. Effective October 1, 1980, F.S. 695.03 (2) was amended to provide that if the acknowledgment or proof is made before a notary public who does not affix a seal, it is sufficient for the notary public to type, print, or write by hand on the instrument, “I am a Notary Public of the State of (state), and my commission expires on (date).” F.S. 695.03 (2). The Florida Bar August 2003 STANDARD 3.6 ERRONEOUS, INCONSISTENT OR OMITTED DATE STANDARD: THE FACT THAT AN INSTRUMENT SUCH AS A DEED OR MORTGAGE IS UNDATED, BEARS A DATE DIFFERENT FROM THE DATE OF THE ACKNOWLEDGMENT, OR BEARS AN IMPOSSIBLE DATE, DOES NOT AFFECT THE VALIDITY OF THE INSTRUMENT AS A MUNIMENT OF TITLE. Problem 1: Doe's deed to Blackacre conveying it to Roe is dated June 1, 1998. The acknowledgment is dated May 31, 1998. Is Roe's title marketable? Answer: Yes. Problem 2: A deed to Blackacre from Doe to Roe bears no date but is otherwise regular. Is Roe's title marketable? Answer: Yes. Problem 3: A deed to Blackacre from Doe to Roe is dated April 31, 1998, an impossible date. The acknowledgment is dated April 20, 1998. Is Roe's title marketable? Answer: Yes. Authorities & References: Douglas v. Tax Equities, Inc., 144 Fla. 791, 797, 198 So. 5, 8, rehearing denied, 144 Fla. 801, 198 So. 578 (1940); Moody v. Hamilton, 22 Fla. 298 (1886); Henry v. First Indiana Bank, 200 B.R. 59 (Bkrtcy. M.D. 1996); 26A C.J.S. Deeds §38 (2002); 19 Fla. Jur.2d Deeds Sec. 19 (2003);Game, Examination of Abstracts, 6 U.FLA.L.REV. 77, 80 (1953); ATIF TN 1.02.02. The Florida Bar August 2003 STANDARD 3.7 AFTER ACQUIRED TITLE STANDARD: A WARRANTY DEED AUTOMATICALLY CONVEYS AFTER ACQUIRED TITLE TO THE GRANTEE. Problem 1: In 2010, before receiving title to Blackacre, John Doe gave a warranty deed to Joe Roe conveying Blackacre. In 2012, Simon Grant conveyed Blackacre to John Doe. Does Joe Roe have marketable title to Blackacre? Answer: Yes. John Doe’s after acquired title automatically passed through to Joe Roe by operation of law. The best practice would be to re-record a copy of the deed from John Doe to Joe Roe after the deed from Simon Grant is of record to ensure that it appears in the chain of title. Authorities & References: Nottingham v. Denison, 63 So. 2d 269 (Fla. 1953) (warranty deed conveys after acquired title). Comment: A deed even without warranties of title may convey after acquired title. See, Tucker v. Cole, 3 So. 2d 875 (Fla.1941); Daniell v. Sherrill, 48 So. 2d 736 (Fla. 1950) (When a person conveys land in which he has no interest at the time, but afterwards acquires title, he is estopped to deny the conveyance). On the other hand, a quit claim deed does not convey after acquired title as the quit claim deed conveys only whatever title the grantor holds at the time of the conveyance. Goldtrap v. Bryan, 77 So. 2d 446 (Fla. 1955); June Sand Co. v. Devon Corporation, 23 So. 2d 621 (Fla. 1945). The practitioner should re-record the prior deed so that it is within the chain of title. The title of a mortgagor acquired after the execution of a mortgage may inure to the benefit of the mortgagee if the mortgage contains warranties of title. See, Hillman v. McCutchen, 166 So. 2d 611 (Fla. 3d DCA), cert. denied, 171 So.2d 391 (Fla. 1964) (“where a mortgage contains a full covenant of warranty of title, then any title acquired by the mortgagor after execution of the mortgage inures to the benefit of the mortgagee”) However, a mortgage executed and recorded before a mortgagor acquires title to the property will not be in its chain of title. Therefore, it may not impart constructive notice to bona fide purchasers and encumbrancers and may not be superior to their subsequently recorded interests. The Florida Bar February 2016 STANDARD 3.8 CONVEYANCE WITHOUT CONSIDERATION STANDARD: CONSIDERATION IS CONVEYANCE OF REAL PROPERTY. NOT NECESSARY FOR A VALID Problem 1: John Doe conveyed Blackacre as a gift to Richard Roe. Is Richard Roe’s title marketable? Answer: Yes, in the absence of evidence of inequitable conduct by Roe. Problem 2: John Doe conveyed Blackacre as a gift to his local college. Is the college’s title marketable? Answer: Yes. Authorities & References: F.S. 689.01; 689.03; 689.09; Chase Federal Sav. and Loan Ass'n v. Schreiber, 479 So.2d 90 (Fla. 1985) (consideration unnecessary for a conveyance of land.); FUND TN 10.03.08. Comment: Chapter 689’s requirements for a valid conveyance of real property do not include the receipt of consideration, and thereby significantly limited the prior common law requirements for the receipt of consideration. Chase v. Schreiber held that an owner of real property may convey it without consideration to any person the grantor chooses, regardless of family or marital relationship. According to the Court in Chase v. Schreiber, the “role of consideration in land conveyancing has been reduced to a mere matter of form except when courts choose to rely on the lack of consideration as a reason to intervene when something fraudulent or inequitable has taken place.” Id. at 99. With respect to such exception, a court may rescind a deed for failure of consideration where consideration is demonstrably intended by the parties as part of the transaction such as where the grantee obtained the conveyance through fraud, misrepresentation or undue influence. Id. at 102 Note, however, that prior to January 7, 1969, homestead property could be alienated only in a bona fide transaction based upon a valuable consideration. See, Archived Title Standard 18.2. It should be noted, however, that a recipient of an executed and delivered deed for no consideration is not entitled to protection under section 695.01, Florida Statutes, which protects subsequent purchasers for valuable consideration against unrecorded interests. Chase v. Schreiber, at 101, 102. The Florida Bar February 2016 A conveyance as a gift to a charitable institution is valid. Montgomery v. Carlton, 126 So. 135, at 140 (Fla. 1930) (property donated to charity in which the title is vested absolutely and with no conditions vests absolute title into the charity). The Florida Bar February 2016 STANDARD 3.9 CERTAIN DEFECTS IN DEEDS CURED STANDARD: A DEFECTIVE ACKNOWLEDGEMENT OR A LACK OF A SEAL OR WITNESSES IN A CONVEYANCE OF REAL PROPERTY MAY BE CURED AFTER THE STATUTORY PERIOD HAS RUN. Problem 1: A deed recorded in 2007 from John Doe to Richard Roe lacked two witnesses. May the deed be treated as an effective conveyance in 2013? Answer: Yes. The defect was cured after being recorded five years pursuant to F.S. 95.231. Problem 2: A deed recorded in 2005 from John Doe, as Trustee for the John and Jane Doe Trust, to Richard Roe lacked two witnesses. May the deed be treated as an effective conveyance in 2013? Answer: Yes. The defect was cured after being recorded seven years pursuant to F.S. 694.08. Problem 3: A 2007 deed from John Doe to Richard Roe contained an acknowledgment which misspelled the name of the grantor, did not specify whether the grantor was personally known to the notary or produced a driver license or other personal identification, did not have the notary’s printed name under the notary’s signature, and lacked a notary seal. May the deed be treated as an effective conveyance in 2013? Answer: Yes. The defect was cured after being recorded five years pursuant to F.S. 95.231. Problem 4: A 2007 deed from John Doe and Richard Roe to Simon Grant contained an acknowledgement which acknowledged John Doe’s signature but not Richard Roe’s. May the deed be treated as an effective conveyance by Richard Roe in 2013? Answer: No. The applicable curative statutes may cure acknowledgement but not a missing acknowledgement. Problem 5: A 2007 deed from John Doe to Richard Roe lacked two witnesses. In 2011, John Doe conveyed the same property to Thomas Frank in a deed with no defects. Does Richard Roe have marketable title in 2013? Answer: No. Although in the absence of fraud, adverse possession, or pending litigation, F.S. 95.231 may have cured the earlier deed’s technical defect, the statute is not retroactive, taking effect only after the five year The Florida Bar a defective period.The later deed created a competing interest, resulting in a cloud on title as to both interests. Authorities & References: F.S. 95.231; F.S. 694.08; ATIF TN 1.03.01 Comment: Where the grantor has conveyed in his individual capacity, F.S. 95.231 cures the lack of a seal or witnesses, or a defective acknowledgement, after five years from date of recording, in the absence of fraud, adverse possession or pending litigation. Where the grantor conveyed in an official or representative capacity, such as an attorney in fact, trustee or corporate officer, F.S. 95.231 may not apply. However, F.S. 694.08 cures the same defects after seven years from date of recording where the defective deed was executed in an official or representative capacity and where the grantee, in a subsequently recorded deed, conveyed with evident intent to do so. Although F.S. 95.231 and F.S. 694.08 may cure a defective acknowledgement, neither will cure a total lack of acknowledgement of the signature of a grantor. Sanders v. Pepoon, 4 Fla. 465, at 471 (1852); FUND TN 1.05.01; FUND TN 1.03.01. However, the title examiner may resort to a review of the whole instrument to determine the sufficiency of the acknowledgement. Edenfield v. Wingard, 89 So.2d 776 (Fla. 1956); FUND TN 1.02.06 See Standards 3.4 and 3.5 concerning the necessity that acknowledgements include the seal of the notary or other authorized official. An instrument signed by one or more persons not named in the granting clause is insufficient. Heath v. First National Bank in Milton, 213 So.2d 883 (Fla. 1st DCA 1968); Likewise, a deed which omits the name of a grantee is inoperative as a conveyance. Myers v. Francis, 548 So.2d 833 (Fla. 3d DCA 1989); FUND TN 10.04.03. The Florida Bar February 2016 CHAPTER 4 CORPORATIONS AND LIMITED LIABILITY COMPANIES _______________________ STANDARD 4.1 ACKNOWLEDGMENT OF CORPORATE INSTRUMENTS STANDARD: AN INSTRUMENT OF A CORPORATION IS ENTITLED TO BE RECORDED WHEN EXECUTED BY THE PROPER OFFICER(S) WHOSE CAPACITY IS RECITED IN THE INSTRUMENT, BUT NOT IN THE ACKNOWLEDGMENT. Problem: A corporate deed is executed by John Doe as President. His office is set out under his signature, but the acknowledgment merely recites: “The foregoing instrument was acknowledged before me this ___ day of _____, (year), by John Doe.” (Signature of Notary Public—State of Florida) (Print, Type or Stamp Commissioned Name of Notary Public) Personally Known ___OR Produced Identification ___. Type of Identification Produced _______________. Is the acknowledgment sufficient for the instrument to be recorded? Answer: Yes. Authorities & References: F.S. 695.03 (2017); House of Lyons, Inc. v. Marcus, 72 So. 2d 34 (Fla. 1954); see also Edenfield v. Wingard, 89 So. 2d 776 (Fla. 1956); Florida Nat’l Bank & Trust Co. v. Hickey, 263 So. 2d 269 (Fla. 3d DCA 1972); Mills v. Barker, 664 So. 2d 1054 (Fla. 2d DCA 1995); F.S. 117.05 (2017); FUND TN 1.02.06. Comment: Florida favors a liberal policy of upholding certificates of acknowledgment. As long as substantial compliance with the recording requirements is available from the instrument as a whole, obvious clerical errors and technical omissions will be disregarded and not allowed to defeat the acknowledgment. The Florida Bar February 2018 STANDARD 4.2 PRIOR CONVEYANCE OF ALL OR SUBSTANTIALLY ALL PROPERTY AND ASSETS OF A CORPORATION STANDARD: UNLESS THE OFFICIAL RECORDS SHOW THAT A CORPORATE DEED IN THE CHAIN OF TITLE CONSTITUTED A CONVEYANCE OF ALL OR SUBSTANTIALLY ALL OF THE PROPERTY AND ASSETS OF THE CORPORATION, A PRACTITIONER MAY ASSUME THAT THE TRANSACTION DID NOT REQUIRE AUTHORIZATION BY A MAJORITY OF THE SHAREHOLDERS FOR A SALE OF ALL OR SUBSTANTIALLY ALL OF THE CORPORATE PROPERTY AND ASSETS. Problem 1: Appearing in the chain of title is a properly executed deed of a corporation conveying one or more parcels of land. Nothing in the official records shows that the property conveyed constituted all or substantially all of the property and assets of the corporation. Must a practitioner make independent inquiry as to whether the conveyance was a conveyance of all or substantially all of the property and assets of the corporation and whether the corporation had the authorization of a majority of the shareholders to make the sale? Answer: No. Problem 2: The deed of the corporation recites, or the official records show, that the deed was a conveyance of all or substantially all of the property and assets of the corporation. Must the practitioner make an independent inquiry as to whether the corporation had the authorization of a majority of the shareholders? Answer: Yes. However, if the conveyance was made on or after July 1, 1990, the effective date of F.S. 607.1201, shareholder approval is not necessary for conveyances of all or substantially all of the property and assets of the corporation, when such conveyances are made in the usual and regular course of business, unless the corporation's articles of incorporation require otherwise. Authorities & References: F.S. 607.1201 (2017); F.S. 607.1202 (2017); FUND TN 11.01.01. Comment: In 1990, the Florida Legislature repealed F.S. 607.241 (1989), which required shareholder authorization for a conveyance of all, or substantially all, of the property and assets of a corporation. The Florida Business Corporation Act now provides that a corporation may dispose of all, or substantially all, of its property in the usual and regular course of business without shareholder authorization unless the articles of incorporation provide otherwise. F.S. 607.1201 (2017). However, if the disposition of property is not in the usual and regular course of business, the corporation’s board of directors must obtain shareholder authorization for the disposition. F.S. 607.1202 (2017). A disposition of corporate assets may be considered a sale of “substantially all” of those assets if the sale substantially limits the corporation’s business or serves to destroy the fundamental purpose for which the corporation was organized. Schwadel v. Uchitel, 455 So. 2d 401 (Fla. 3d DCA 1984); see also South End Improvement Group, Inc. v. Mulliken, 602 So. 2d 1327 (Fla. 4th DCA 1992) (the test is whether the disposition’s quantitative or qualitative impact, or both, would fundamentally change the nature of the corporation); BSF Co. v. Philadelphia Nat’l Bank, 204 A.2d 746 (Del. The Florida Bar February 2018 1964); National Bank of Commerce v. United States, 158 F. Supp. 887 (E.D. Va. 1958); Union-May-Stern Co. v. Industrial Commission of Missouri, 273 S.W.2d 766 (Mo. Ct. App. 1954); FLORIDA CORPORATE PRACTICE §10.46 (Fla. Bar CLE 8th ed. 2015). Effective July 1, 1991, as to corporations not for profit, the applicable statutes are F.S. 617.1201 and.1202; see also Lensa Corp.v. Poinciana Gardens Ass’n, 765 So. 2d 296 (Fla. 4th DCA 2000). When taking a deed or other instrument transferring title to real property, consideration must be given to Title Standard 4.2-1. The Florida Bar February 2018 STANDARD 4.2-1 CURRENT CONVEYANCE OF ALL OR SUBSTANTIALLY ALL PROPERTY AND ASSETS OF A CORPORATION STANDARD: A CURRENT CONVEYANCE OF ALL OR SUBSTANTIALLY ALL OF THE PROPERTY AND ASSETS OF A CORPORATION, WITHOUT SHAREHOLDER APPROVAL, CONVEYS MARKETABLE TITLE IF (I) IT IS IN THE USUAL AND REGULAR COURSE OF BUSINESS AND (II) THE CORPORATION’S ARTICLES OF INCORPORATION DO NOT REQUIRE SUCH APPROVAL. Problem 1: ABC Real Estate Corporation, in the business of selling real estate, is conveying Blackacre to John Doe. Blackacre constitutes all or substantially all of the property and assets of the corporation. Should the practitioner review the articles of incorporation to determine if shareholder approval is required? Answer: Yes. Problem 2: Same facts as above, but ABC Corporation is in the business of manufacturing. Should the practitioner require evidence of shareholder approval? Answer: Yes. Problem 3: Same facts as Problem 2, except that Blackacre does not constitute all or substantially all of the property and assets of the corporation. Should the practitioner require evidence of shareholder approval? Answer: No. Authorities & References: F.S. 607.1201 (2017); F.S. 607.1202 (2017); F.S. 692.01 (2017); FLORIDA CORPORATE PRACTICE §10.46 (Fla. Bar CLE 8th ed. 2017); FUND TN 11.01.01. Comment: This standard applies only to what a practitioner should do in connection with a corporate conveyance being made in a current transaction. Reference should be made to Title Standard 4.2 to determine what a practitioner may justifiably infer when the corporate conveyance has already become a part of the chain of title. F.S. 607.1201 (2017) does not require majority shareholder authorization of a disposition of all, or substantially all, of the property and assets of a corporation which is in the usual and regular course of business unless authorization is required by the corporation’s articles of incorporation. The requirement of majority shareholder authorization does not apply in the case of a mortgage on any or all of the corporate property and assets, whether or not in the usual and regular course of business, unless the articles of incorporation provide otherwise. F.S. 607.1201 (2017). A conveyance that is in the usual and regular course of business does not require majority shareholder authorization. However, majority shareholder authorization is required for any disposition of all, or substantially all, of the property and assets of a corporation not in the usual and regular course of business. F.S. 607.1202 (2017). The articles of incorporation or the board of directors may require a greater vote than a majority of shareholders, or authorization by a particular voting group. Evidence of shareholder authorization may, among other possibilities, take the form of minutes of the shareholders’ meeting at which authorization was given. The Florida Bar February 2018 As a precautionary note, “usual and regular course of business” could be interpreted differently by various courts, and a conveyance of all of substantially all of the corporation’s assets may or may not be considered in the ordinary course of business. In situations where there is doubt, always seek a corporate resolution from the corporation indicating that a majority of the shareholders have authorized the conveyance. The practitioner should bear in mind that additional limitations on corporate conveyances may exist in the articles of incorporation or bylaws. A careful practitioner should consider asking the corporation for a copy of the articles of incorporation and bylaws if the practitioner is unsure whether the conveyance will require the authorization of more than a majority of the shareholders. Effective July 1, 1991, as to corporations not for profit, the applicable statutes are F.S. 617.1201 and.1202; see also Lensa Corp.v. Poinciana Gardens Ass’n, 765 So. 2d 296 (Fla. 4th DCA 2000). In situations where the facts are not readily discernible from an examination of the land records, the prudent practitioner may want to document on the face of the deed, in affidavits, resolutions or other documents filed in the land records, whether the transaction is a sale of all or substantially all of the assets of the corporation, and if so whether it was authorized by the majority of the shareholders or a sale within the ordinary course of business. The Florida Bar February 2018 STANDARD 4.3 CONVEYANCE BY CORPORATIONS STANDARD: A CORPORATION MAY CONVEY ITS LAND EITHER BY AN INSTRUMENT IN WRITING SIGNED IN ITS NAME BY AN AUTHORIZED AGENT IN THE PRESENCE OF TWO SUBSCRIBING WITNESSES, OR BY AN INSTRUMENT SEALED WITH THE COMMON OR CORPORATE SEAL AND SIGNED IN ITS NAME BY ITS PRESIDENT OR ANY VICEPRESIDENT OR CHIEF EXECUTIVE OFFICER. Problem 1: ABC Corporation conveyed Blackacre by deed executed by its President in the presence of two subscribing witnesses. The deed contained no corporate seal. Is the conveyance valid? Answer: Yes. Problem 2: ABC Corporation conveyed Blackacre by deed executed by its Secretary in the presence of two subscribing witnesses. There was no authorizing resolution from the board of directors. Is the conveyance valid? Answer: No. Problem 3: ABC Corporation conveyed Blackacre by deed sealed with the corporate seal and executed by its president. There were no subscribing witnesses. Is the conveyance valid? Answer: Yes. Authorities & References: F.S. 689.01 (2017); F.S. 692.01 (2017); F.S. 692.02 (2017); Ocean Bank v. Inv-Uni Inv. Corp., 599 So. 2d 694 (Fla. 3d DCA 1992); Adams v. Whittle, 135 So. 152 (Fla. 1931); Douglass v. State Bank of Orlando, 82 So. 593 (Fla. 1919); Campbell v. McLaurin Inv. Co., 77 So. 277 (Fla. 1917); Norman v. Beekman, 50 So. 876 (Fla. 1909); Snead v. U.S. Trucking Corp., 380 So. 2d 1075 (Fla. 1st DCA 1980) rev. denied 389 So. 2d 1116 (Fla. 1980); Prezioso v. Cameron, 559 So. 2d 423 (Fla. 4th DCA 1990); Skyline Outdoor Commc’ns, Inc. v. James, 903 So. 2d 997 (Fla. 1st DCA 2009); See Pan-American Const. Co. v. Searcy, 84 So. 2d 540 (Fla. 1956); 1 BOYER, FLORIDA REAL ESTATE TRANSACTIONS §10.07 (Bender 2015); FLORIDA REAL PROPERTY SALES TRANSACTIONS §7.43 (Fla. Bar CLE 7th ed. 2013); FLORIDA REAL PROPERTY SALES TRANSACTIONS §7.44 (Fla. Bar CLE 7th ed. 2013); FUND TN 11.05.02, 11.05.03. Comment: If the corporate conveyance is made by an instrument in writing signed by an authorized agent in the presence of two subscribing witnesses, the conveyance is valid. F.S. 689.01 (2017). If the corporate conveyance is made by an instrument sealed with the corporate seal and signed by the president, vice-president, or chief executive officer, no corporate resolution need be recorded to evidence the authority of the party executing the conveyance, and the instrument will be valid. F.S. 692.01 (2017). If a corporate conveyance is made by an instrument in writing signed by any person other than the president or chief executive officer of the corporation in the presence of two subscribing witnesses (in accordance with F.S. 689.01), and without a corporate seal, an authorizing resolution should be recorded which evidences the authority of the The Florida Bar February 2018 person signing the deed. A vice president may execute a deed on behalf of a corporation without an authorizing resolution from the corporation’s board of directors if the deed contains the corporate seal. F.S. 692.01. However, contrary to dicta in DGG Dev. Corp. v. Estate of Capponi, 983 So. 2d 1232 (Fla. 5th DCA 2008), when a vice president signs a deed on behalf of a corporation in the presence of two subscribing witnesses, and such deed does not contain a corporate seal, an authorizing resolution should be obtained. In DGG Dev. Corp. v. Estate of Capponi, the court, citing F.S. 692.01, correctly included vice presidents as officers who could convey the corporation’s property by a deed containing the corporate seal, without the need for an authorizing resolution. However, the court apparently incorrectly cited the previous version of this title standard, as well as Fund TN 11.05.03, and FLORIDA REAL PROPERTY SALES TRANSACTIONS §7.43 (Fla. Bar CLE 7th ed. 2013) (formerly §6.43), as support for including a vice president as an officer, together with presidents and chief executive officers, who may convey corporate property by a deed executed in accordance with F.S. 689.01 (i.e., without a common or corporate seal) without an authorizing resolution from the corporation’s board of directors. A careful practitioner should always obtain an authorizing resolution from the corporation when a vice president will be signing on behalf of the corporation, and the deed does not contain a corporate seal. There is uncertainty as to whether a corporation can make a valid conveyance in trust without having two subscribing witnesses to the deed. F.S. 689.06 requires two witnesses and does not make an exception for corporations. Therefore, caution dictates having two subscribing witnesses on corporate conveyances under seal. See FLORIDA REAL PROPERTY SALES TRANSACTIONS §7.45 (Fla. Bar CLE 7th ed. 2013). The attesting signature of a secretary or assistant secretary is not necessary to the validity of a corporate conveyance, but it serves to identify the seal used and the officers making the conveyance. See FLORIDA REAL PROPERTY SALES TRANSACTIONS §7.48 (Fla. Bar CLE 7th ed. 2013). The Florida Bar February 2018 STANDARD 4.3-1 CONVEYANCE BY CORPORATIONS: AUTHORITY TO CONVEY; FRAUD STANDARD: ON OR AFTER JANUARY 1, 1972, AN INSTRUMENT CONVEYING LAND OF A CORPORATION, SEALED WITH THE COMMON OR CORPORATE SEAL AND SIGNED IN THE CORPORATE NAME BY ITS PRESIDENT, VICE-PRESIDENT, OR CHIEF EXECUTIVE OFFICER IS, ABSENT FRAUD IN THE TRANSACTION BY THE PERSON RECEIVING THE INSTRUMENT, VALID WHETHER OR NOT THE OFFICER SIGNING FOR THE CORPORATION WAS AUTHORIZED BY THE BOARD OF DIRECTORS TO DO SO. Problem: On January 1, 2002, John Doe gives valuable consideration in exchange for an instrument conveying Blackacre, owned by ABC Corporation. The instrument is sealed with the common or corporate seal and signed in the corporate name by Richard Roe, the chief executive officer of ABC Corporation. Roe does not have authority from the board of directors to execute such an instrument. Is the deed valid? Answer: Yes, absent fraud in the transaction by Doe. Authorities & References: F.S. 692.01 (2017); F.S. 607.0304 (2017); Jackson v. Citizens’ Bank & Trust Co., 44 So. 516 (Fla. 1907); Snead v. U.S. Trucking Corp., 380 So. 2d 1075 (Fla. 1st DCA 1980) rev. denied 389 So. 2d 1116 (Fla. 1980); Prezioso v. Cameron, 559 So. 2d 423 (Fla. 4th DCA 1990); Ocean Bank of Miami v. Inv-Uni Inv. Corp., 599 So. 2d 694 (Fla. 3d DCA 1992); Radison Props., Inc.v. Flamingo Groves, Inc., 767 So. 2d 587 (Fla. 4th DCA 2000); FUND TN 11.05.03. Comment: When there is doubt as to the authority of the corporate officer to sign for the corporation, such questions should be resolved by requiring evidence of the authority of the corporate officer to convey. Rothfleisch v. Cantor, 534 So. 2d 823 (Fla. 4th DCA 1988). In the case of fraud, subsequent good faith purchasers for value and without notice of the fraud take free of any defect arising from the fraud. F.S. 692.01 (2017). The Florida Bar February 2018 STANDARD 4.4 FOREIGN CORPORATIONS STANDARD: THE FAILURE OF A FOREIGN CORPORATION TO OBTAIN A CERTIFICATE OF AUTHORITY PRIOR TO TRANSACTING BUSINESS IN FLORIDA DOES NOT PRECLUDE IT FROM ACQUIRING, HOLDING, ENCUMBERING, OR DISPOSING OF TITLE TO REAL PROPERTY IN THIS STATE. Problem 1: ABC Company, a New York corporation, is the record owner of a tract of land in Florida. It has never obtained a certificate of authority to transact business in Florida. The corporation conveyed the property. Is the conveyance valid? Answer: Yes. Problem 2: Same facts as above, except that ABC Company did obtain a certificate of authority from the Florida Department of State to transact business in Florida which has since been withdrawn or revoked. Is the conveyance valid? Answer: Yes. Authorities & References: F.S. 607.1501(1) (2017); F.S. 607.1501(2)(g) (2017); F.S. 607.1501(2)(m) (2017); F.S. 607.1502(5) (2017); see Hogue v. D.N. Morrison Const. Co., 156 So. 377 (Fla. 1934); Herbert H. Pape, Inc. v. Finch, 136 So. 496 (Fla. 1931); Rubin v. Kapell, 105 So. 2d 28 (Fla. 3d DCA 1958); Batavia, Ltd. v. United States, 393 So. 2d 1207 (Fla. 1st DCA 1980) Comment: Upon the issuance of a certificate of revocation, or upon the filing of an application for withdrawal, the authority of a foreign corporation which had previously obtained a certificate of authority to transact business in Florida will cease. F.S. 607.1531(3) (2017); F.S. 607.1520(1) (2017). Under the facts of Problem 2, because the foreign corporation conveyed the property without having a valid certificate of authority to transact business in Florida, the corporation is in the same position as under the facts of Problem 1. See F.S. 607.1502(5) (2017). The practitioner should note that a foreign corporation may also own or create a security interest in real property without obtaining a certificate of authority to transact business. F.S. 607.1501(2)(g) (2017); F.S. 607.1501 (2)(m) (2017); FLORIDA REAL PROPERTY SALES TRANSACTIONS §7.54 (Fla. Bar CLE 7th ed. 2013). If a foreign corporation conveys property in connection with activities which require a certificate of authority from the Florida Department of State to transact business and it does not have the certificate, the corporation will be subject to statutory penalties. F.S. 607.1502 (2017). However, the conveyance of title will be valid. F.S. 607.1502(5) (2017). As to foreign corporations not for profit, the applicable statutes are F.S. 617.1501(2) and 617.1502(5) (2017). The Florida Bar February 2018 STANDARD 4.4-1 DISSOLVED FOREIGN CORPORATION STANDARD: TITLE TO FLORIDA REAL PROPERTY HELD BY A DISSOLVED FOREIGN CORPORATION MUST BE CONVEYED BY A PERSON OR PERSONS AUTHORIZED UNDER THE LAWS OF THE FOREIGN STATE OR COUNTRY TO CONVEY PROPERTY OF THE DISSOLVED FOREIGN CORPORATION. Problem 1: XYZ Corporation, incorporated under the laws of Foreign State, secured a certificate of authority to transact business in Florida and was subsequently dissolved. After dissolution, XYZ Corporation’s board of directors conveyed to John Doe land located in Florida which was owned by the Corporation. The directors had the power to convey property of the dissolved corporation under Foreign State’s laws. Does Doe have marketable title? Answer: Yes. Problem 2: Same as Problem 1, except that under Foreign State’s laws the directors did not have the power to convey the property of the corporation after dissolution. Does Doe have marketable title? Answer: No. Problem 3: Same as in Problem 1, except that XYZ Corporation’s certificate of authority to transact business in Florida was withdrawn or revoked, or was never obtained, prior to the conveyance. Does Doe have marketable title? Answer: Yes. Authorities & References: F.S. 607.01401(5) (2017); F.S. 607.1405 (2017); F.S. 607.1501 (2017); F.S. 607.1502(5) (2017); F.S. 607.1505(3) (2017); RESTATEMENT (SECOND) OF CONFLICT OF LAWS §299 (1971); 36 Am. Jur. 2d Foreign Corporations §396 (2015); see Order of United Commercial Travelers v. Wolfe, 331 U.S. 586 (1947); Oklahoma Natural Gas Co. v. Oklahoma, 273 U.S. 257, 260 (1927). Comment: Foreign corporations are excluded from the requirements of Florida law pertaining to transfer of property after dissolution because foreign corporations are excluded from the definition of a corporation under the statute. F.S. 607.01401 (2017); F.S. 607.1405 (2017); F.S. 607.1505(3) (2017). Dissolved foreign corporations are thus governed by the laws of the state or country of incorporation. Failure to obtain a valid certificate of authority to transact business before making the conveyance is of no consequence to the marketability of title. F.S. 607.1502(5) (2017); see F.S. 607.1501 (2017); Title Standard 4.4 (Foreign Corporations). F.S. 692.03 purports to validate a conveyance executed by the surviving directors or trustees of a dissolved foreign corporation if the conveyance has been of record for at least seven years. The Florida Bar February 2018 STANDARD 4.5 ADMINISTRATIVELY DISSOLVED CORPORATIONS STANDARD: A CORPORATION WHICH HAS BEEN ADMINISTRATIVELY DISSOLVED MAY CONVEY REAL PROPERTY ONLY AS NECESSARY TO WIND UP AND LIQUIDATE ITS BUSINESS AND AFFAIRS. Problem 1: ABC Corporation conveyed a portion of its land after June 30, 1990. At the time of the conveyance, it was administratively dissolved for failure to file its annual report and pay certain corporate fees and taxes that were required at the time. Was the conveyance valid? Answer: Yes but only if the conveyance was appropriate to wind up and liquidate the corporation’s business and affairs. F.S. 607.1405 (2017). Problem 2: ABC Corporation conveyed a portion of its land after June 30, 1990. At the time of the conveyance, the officers of the corporation did not know that the corporation had been administratively dissolved, and did not convey the property with the intent of winding up and liquidating the corporation’s business and affairs. The officers of the corporation reinstated the corporation shortly thereafter. Following the reinstatement, was the conveyance valid? Answer: Yes. F.S. 607.1422 (3) (2017) Problem 3: ABC Corporation conveyed a portion of its land. It was not yet administratively dissolved, but at that time it had not filed its annual report or paid certain corporate fees and taxes that were required at the time. Was the conveyance valid? Answer: Yes. Authorities & References: F.S. 607.1422 (3) (2017); F.S. 607.1622 (2017); see Webb v. Scott, 176 So. 442 (Fla. 1937); 330 Michigan Ave., Inc. v. Cambridge Hotel, Inc., 183 So. 2d 725 (Fla. 3d DCA 1966); FLORIDA REAL PROPERTY SALES TRANSACTIONS §7.51 (Fla. Bar CLE 7th ed. 2013); FUND TN 11.01.06.; FUND TN 11.04.07; FUND TN 11.04.02; FUND TN 11.04.12. Comment: The prescribed penalties for failure to file the required annual report include dissolution or cancellation of the corporation’s certificate of authority to do business. F.S. 607.1622(8) (2017). If the corporation has not yet been administratively dissolved, the validity of a conveyance by a corporation is not affected by the fact that the corporation at the time of the conveyance was delinquent in the filing of its annual report and the payment of fees and taxes due under Chapter 607, F.S. If the corporation was administratively dissolved, its reinstatement will relate back to the effective date of the dissolution and validate a conveyance that occurred while dissolved that was not for the purpose of winding up the affairs of the corporation. F.S. 607.1422 (3) (2017). The Florida Bar February 2018 STANDARD 4.5–1 VOLUNTARILY DISSOLVED CORPORATIONS STANDARD: A CORPORATION WHICH HAS BEEN VOLUNTARILY DISSOLVED MAY CONVEY PROPERTY ONLY IF IT IS IN THE COURSE OF WINDING UP AND LIQUIDATING THE CORPORATION’S BUSINESS AND AFFAIRS. Problem: ABC Corporation conveyed a portion of its land in 2010. In 2009, the corporation had been voluntarily dissolved by its directors and shareholders. Was the conveyance valid? Answer: Yes. F.S. 607.1405 (2017) Authorities & References: F.S. 607.1

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