CARTERET SAVINGS BANK, PETITIONER,
v.
CITIBANK MORTGAGE CORP., RESPONDENT
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Only the portion of a mortgage loan used for purchasing property and existing improvements is entitled to priority as a purchase money mortgage; sums advanced for improvements do not receive priority.
The case involved a dispute over the priority of a mortgage loan used for both purchasing property and constructing improvements. A general judgment c…
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OVERTON, Justice.
We have for review Citibank Mortgage Corp. v. Carteret Savings Bank, 612 So. 2d 599, 602 (Fla. 4th DCA 1992), in which the district court certified the following question as one of great public importance:
WHERE A THIRD PARTY MORTGAGE LOAN IS USED NOT ONLY FOR THE PURPOSE OF PURCHASING PROPERTY, BUT IN ADDITION, FOR CONSTRUCTING IMPROVEMENTS ON THE PROPERTY, IS THE ENTIRE AMOUNT OF THE MORTGAGE ENTITLED TO PRIORITY AS A PURCHASE MONEY MORTGAGE OVER A GENERAL JUDGMENT CREDITOR OF THE MORTGAGOR?
After the district court certified this question and we accepted jurisdiction, the parties in this case reached a settlement. Consequently, we need not answer the certified question for purposes of resolving the dispute at issue here. However, this is a question of first impression in Florida that is likely to arise in the future, and the states that have addressed the definition of a purchase money mortgage in this context are divided. Therefore, we choose to answer the question in the negative and adopt, in full, the opinion of the district court, holding.that only the portion of a mortgage loan extended for the purpose of purchasing property and existing improvements is entitled to priority as a purchase money mortgage; priority in favor of a purchase money mortgage does not extend to sums advanced for the improvement of real property.
It is so ordered. BARKETT, C.J., and McDONALD, SHAW, GRIMES, KOGAN and HARDING, JJ., concur.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Cited By
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Bancflorida v. Hayward, 689 So. 2d 1052 (Fla. 1997)…rtgage loan, the property would not have been acquired. However, purchase money protection applies only to the amount of the proceeds actually used to acquire the property and its existing improvements. Carteret Sav. Bank v. Citibank Mortgage Corp., 632 So. 2d 599 (Fla.1994). When these principles are applied to the instant case, it is clear that the court below erred in holding that the claims of the contract purchasers were superior to the bank’s purchase money mortgages. That court relied heavily upon the…
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Bancflorida v. Hayward, 659 So. 2d 1329 (Fla. 3d DCA 1995)…a is a purchase money mortgagee but it is also a subsequent creditor with notice of the contract purchasers’ equitable claims against the property. Two cases epitomize the tension between the two theories: Carteret Sav. Bank v. Citibank Mtg. Corp., 632 So. 2d 599 (Fla.1994) and Caribank v. Frankel, 525 So. 2d 942 (Fla. 4th DCA 1988). In Caribank, contract purchasers paid a $60,000 deposit to a developer for the purchase and construction of a home. The developer thereafter obtained a purchase money mortgage f…
Authorities Cited
- Citibank Mortg. Corp. v. Carteret Sav. Bank, 612 So. 2d 599 (Fla. 4th DCA 1992)