Editor: David Reiss
Brooklyn Law School

March 2, 2013

Florida Appellate Court Holds That if MERS was Holder and Owner of Note, it Would Have Standing to Foreclose

By Max Feder

In MERS v. Azize, 965 So.2d 151 (2007), the Second District Court of Appeal of Florida reversed the trial court’s dismissal of a foreclosure action with prejudice and remanded because lack of ownership of the beneficial interest in a note does not deprive MERS of standing to foreclose.

In 2004, Azize (“Borrower”) executed a note in favor of Aegis Lending Corporation (“Aegis”).  The mortgage identified MERS as mortgagee, and further identified MERS as nominee for Aegis.

In February 2005, MERS filed a complaint seeking to reestablish the note and to foreclose the mortgage.  In the complaint, MERS alleged it was the owner of the note and the note had been lost or destroyed after MERS acquired it.  MERS argued that because the note was in its possession when it was lost, MERS was entitled to enforce it.  The complaint did not allege how MERS came into possession of the note, but Borrower did not contest the allegation and the trial court’s decision was not based on that issue.  Instead, the trial court dismissed the complaint with prejudice for failure to state a claim because MERS lacked standing to foreclose since it did not own the beneficial interest in the note.  The trial court’s decision was also based on the premise that one corporation cannot serve as the agent for another.  MERS appealed.

The Court reversed and remanded.  Under Florida Law, the holder of a note has standing to seek enforcement of the note, and standing is broader than simply ownership of the beneficial interest.  The Court noted that if MERS could establish a prima facie case that it was the owner and holder of the note and mortgage, it would have standing to foreclose.  Furthermore, the Court noted that the trial court’s conclusion that MERS further lacked standing because “one corporation cannot serve as the agent for another corporation” is incorrect.

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