ASSOCIATED SCHOOLS, INC., A FLORIDA CORPORATION, APPELLANT,
v.
DADE COUNTY, A POLITICAL SUBDIVISION OF THE STATE OF FLORIDA, AND WOODMEN OF THE WORLD LIFE INSURANCE SOCIETY, APPELLEES
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This case addresses whether a mortgagee is entitled to a prepayment penalty when the mortgaged property is taken by eminent domain. The appellate court reversed the trial court's decision, holding that the mortgagee is only entitled to the principal and accrued interest, not a prepayment penalty.
No, the mortgagee is not entitled to a prepayment penalty in this situation. The mortgagee is only entitled to the principal amount of the loan and the interest accrued up to the date of distribution.
“Involved in this appeal is whether or not the holder of a note secured by a mortgage, which note and mortgage provided a penalty for prepayment is entitled to the prepayment penalty when the property encumbered by the mortgage is taken by eminent domain proceedings.”
This quote states the central issue of the appeal.
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Join FLexlaw to unlock all legal intelligenceDade County initiated eminent domain proceedings and took property encumbered by a mortgage held by Woodmen of the World Life Insurance Society. The m…
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Involved in this appeal is whether or not the holder of a note secured by a mortgage, which note and mortgage provided a penalty for prepayment is entitled to the prepayment penalty when the property encumbered by the mortgage is taken by eminent domain proceedings. The trial court held that the mortgagee was entitled to his prepayment penalty from the funds on deposit in the registry of the court, pursuant to an order of taking under § 74.051, Fla.Stat., F.S.A. We reverse.
The Supreme Court of Florida, in Shavers v. Duval County, Fla.1954, 73 So.2d 684, held that where there was no right to prepayment a mortgagee was not entitled to receive an amount from the proceeds of a condemnation proceedings which would equal the interest for the term remaining on a note and mortgage after taking and distribution, holding that a mortgagee was only entitled to the return of its principal and accrued interest. If this be true as to unearned interest, it certainly should be *490true as to prepayment penalties. Therefore, we hold that all the mortgagee was entitled to in this situation was the return of its principal and interest accrued until the date of distribution.
The order under review is reversed, and the cause is remanded for further proceedings not inconsistent herewith.
Reversed and remanded with directions.