Under this addition to the statute, the mortgagee or servicer is now prohibited from using qualifying language that reserves the right to adjust figures listed in the payoff statement.
Effective October 1, 2023, a significant change was made to Florida Statute §701.04 governing the substance of estoppel letters―aka payoff statements―which will affect the enforceability of estoppel letters existing on October 1, 2023, and those created afterwards.
The most notable change to the statute includes the addition of the following language:
[T]he mortgagee or mortgage servicer may not qualify, reserve the right to change, or condition or disclaim the reliance of others on the information provided in an estoppel letter under paragraph (b), and any attempt to do so is void and unenforceable.
Paragraph (b) of the statute provides as follows:
The estoppel letter must at a minimum include:
1. The unpaid balance of the loan secured by the mortgage as of the date specified in the estoppel letter, including an itemization of the principal, interest, and any other charges comprising the unpaid balance; and
2. Interest accruing on a per-day basis for the unpaid balance from and after the date specified in the estoppel letter, if applicable.
Under this addition to the statute, the mortgagee or servicer is now prohibited from using qualifying language that reserves the right to adjust figures listed in the payoff statement. The only exceptions to this clause is for (1) lis pendens in a foreclosure action or (2) a suggestion of bankruptcy, which has been filed and recorded. The added language means that payoff statements must accurately reflect the amount required to satisfy the outstanding debt without any conditions or qualifying language. In other words, the issuer of the payoff statement is prohibited from reserving the right to modify the figures therein once distributed.
Previously, estoppel letters often contained qualifying language such as, “The noteholder reserves the right to adjust these figures and refuse or accept any funds which are insufficient to satisfy the full indebtedness for any reason.” Under the changes made to the statute, the above-mentioned language would be prohibited, as the Legislature found that such language does not allow parties in a real estate transaction to rely on payoff figures with certainty.
Please note that the statute is not unique to Florida. Similar legislation regarding payoff statements has been made in Wisconsin (Wisconsin Statute §708.15), Texas (Tex. Fin. Code §343.106(e)) and North Carolina (North Carolina Statute §45-36.7(g)).
It is crucial to be aware of this change to ensure compliance with the law as any estoppel letter or payoff statement including such language will be considered void and unenforceable.
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