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Florida Banking Law Blog

Legal developments impacting banking, finance and loan enforcement in Florida

Welcome to the Florida Banking Law Blog!

Posted in Uncategorized

Rogers Towers, P.A. welcomes you to its Florida Banking Law Blog! A product of the firm’s Banking and Financial Services Practice Group, the blog will serve as a convenient way for us to share our expertise in banking-related legal issues. We represent banks and other providers of financial services in a broad range of matters throughout the state of Florida. As a result of our significant experience, we will have much to share in the upcoming blog posts and we hope that you will find these posts to be informative and beneficial to you in your respective positions in the industry. We appreciate your interest in the field and in Rogers Towers, P.A., and we look forward to your comments in response to our blog.

Urban Land Institute Report Answers: What Markets are Poised for Growth in 2016?

Posted in Uncategorized

With the real estate markets in large cities such as San Francisco, Washington, D.C. and New York City saturated with domestic and foreign capital, driving market prices beyond the reach of many developers and lenders, investors naturally look for alternative markets that offer lower capital thresholds to entry but project strong future returns. The question then becomes: Where are these secondary markets, and what market characteristics predict future growth? The latest report from the Urban Land Institute (“ULI”) provides an in-depth look at those markets that planners, developers, brokers, financiers and others in the real estate industry believe are poised for the greatest growth, and cities across Florida have piqued the interest of industry insiders.

Forecasting real estate development and investment opportunities across the U.S. and Canada, ULI’s Emerging Trends in Real Estate 2016 report emphasizes increased investment attention garnered by 18-hour cities: locations that do not feature the population density and established attractions of 24-hour cities (think NYC) but that have nonetheless experienced a revitalization of the urban core catalyzing investment and growth in the surrounding area. Based on the results of over 400 interviews with leaders in the real estate industry and more than 1,400 survey responses, the 2016 Emerging Trends report projects a favorable outlook for many of Florida’s cities; Miami, Tampa/St. Petersburg, Orlando, Fort Lauderdale and Jacksonville all placed within the ULI’s U.S. Markets to Watch: Overall Real Estate Prospects top-75 cities list. The list factors in investment, development and homebuilding opportunities.

Jacksonville attracted attention in the report as one of the “villes” (which term includes Nashville and Knoxville, TN and Gainesville, FL): cities “offering opportunities to take advantage of faster-growing demographics, economies, concentrations in desirable industries, and . . . aggressive development plans to establish growth centers within the community.” Offering lower costs of doing business and high quality of life metrics, the “villes” are poised for continued economic growth, according to the ULI.  The report also highlighted Florida’s real estate resurgence in general, noting the positive attitude toward the state’s growth exhibited by interviewees and survey respondents.    

The Urban Land Institute is a membership-based professional organization representing the land use and development disciplines. A full copy of ULI’s Emerging Trends in Real Estate 2016 report can be found on the organization’s website: http://uli.org/research/centers-initiatives/center-for-capital-markets/emerging-trends-in-real-estate/americas/. Rogers Towers, P.A. is a strong supporter of ULI’s Central Florida chapter. More information on ULI Central Florida may be found here: http://centralflorida.uli.org/.

Fourth DCA Rules an Allonge Does Not Need to be Physically Attached to a Promissory Note

Posted in Foreclosure, Legal Rulings, Special Assets Litigation

To establish standing to enforce a promissory note, a lender must prove that it is the rightful holder of the negotiable instrument. Typically, this entails producing the original note together with all allonges endorsing the note to subsequent holders. Under Florida’s Uniform Commercial Code (“UCC”), an allonge must be “affixed” to the note such that it becomes part of the instrument itself.[1] This requirement prevents fraud and preserves the chain of title.

Borrowers frequently challenge the validity of allonges when it is unclear whether an allonge was stapled or otherwise firmly affixed to a note. However, the Fourth District Court of Appeal recently clarified, for the first time, that an allonge need not be physically attached to an instrument to satisfy the UCC.

In Purificato v. Nationstar Mortgage, LLC, the lender established standing by entering the original promissory note and allonge into evidence. The allonge identified the borrowers, the loan number, and the original date and amount of the loan. The lender also introduced a computer screen shot showing that the lender stored both the note and allonge in its records as a single electronic document. However, the lender offered no evidence that the allonge was physically affixed to the note prior to litigation.

In a 3-0 decision, the Fourth District Court of Appeal rejected the borrowers’ contention that the UCC requires an allonge to be physically attached to a note. The appellate court held that “[w]here an allonge contains evidence of a clear intent that the note and the allonge were to be physically attached to each other, such evidence of intent is sufficient to establish a valid endorsement under the UCC.” The court further suggested that electronic attachment of allonges to negotiable instruments may be acceptable.

While an allonge need not be physically attached to a promissory note, lenders should ensure that an original note and an original allonge are physically stored together. The note and allonge should also be electronically scanned as a single file.

The full text of the case is available here.

[1] Section 673.2041(1), Florida Statutes provides that “[f]or the purpose of determining whether a signature is made on an instrument, a paper affixed to the instrument is part of the instrument.”

Out of the Box Real Estate Financing

Posted in Commercial Lending, Loan Participations

As someone interested in both real estate development and finance, I follow John Anderson’s musings at RJOHNTHEBAD. John is a developer and leader of the Incremental Development Alliance, and often teaches at Small Developer Boot Camps promoted by the Congress for New Urbanism. In a recent post, John discussed how his friend and fellow developer, Monte Anderson, recruits local entrepreneurs as tenants for the buildings he renovates or builds. Monte mentors these entrepreneur tenants to build their businesses with the end goal of helping them qualify for SBA 7(a) loans in order to purchase the buildings. John described the arrangement as a win/win. This made me curious, what is the SBA 7(a) loan program?

The SBA 7(a) Loan Program provides loans to small businesses. The funds received through this loan program can be used for myriad purposes, including the purchase of real estate. The SBA does not provide strict eligibility criteria, but does provide some universally applicable requirements. To be eligible for assistance, businesses must: (i) operate for profit; (ii) be small, as defined by SBA; (iii) be engaged in, or propose to do business in, the United States or its possessions; (iv) have reasonable invested equity; (v) use alternative financial resources, including personal assets, before seeking financial assistance; (vi) be able to demonstrate a need for the loan proceeds; (vii) use the funds for a sound business purpose; (viii) not be delinquent on any existing debt obligations to the U.S. government.

Once these minimal requirements are satisfied, a business owner can use the SBA 7(a) loan proceeds for myriad purposes. Loan proceeds are perhaps typically used to fund working capital requirements, purchase equipment or machinery for the business, or to help expand the existing business. But the loan proceeds can be used to purchase real estate in the same fashion that Monte and his entrepreneur tenants have used the SBA 7(a) Loan Program. Beyond the purchase of real estate, the SBA also allows for 7(a) funds to be used for the construction of a new building or the renovation of an existing building.

So, despite the SBA 7(a) Loan Program’s wrapping as a business loan, the program may prove valuable to a real estate entrepreneur or small business owner who has found the right property but is struggling to find financing.

Complete SBA 7(a) Loan Program information can be found here.