BCML Holding, LLC ("BCML") appeals a final summary judgment in favor of Wilmington Trust, N.A. ("Wilmington") on BCML's counterclaim. For the reasons that follow, we affirm.
On July 11, 2007, Gonzalo and Daniela Malesich ("Malesich") executed a note and purchase money mortgage which conveyed an interest in a condominium unit at the Murano Grande on Miami Beach to MERS, the nominee of the lender, American Brokers Conduit ("ABC"). The mortgage instrument contained a provision in which Malesich "covenants the Borrower is lawfully seised of the estate hereby conveyed and has the right to mortgage, grant and convey the Property...." However, at the time the mortgage was executed, Malesich did not own the subject property; it was owned by RSV Corp. ("RSV").
Five days later, on July 16, 2007, RSV conveyed the property to Malesich via warranty deed. The mortgage and deed
Thereafter, MERS assigned the mortgage to Citibank, N.A. In 2010, the Murano Grande Condominium Association ("Murano") initiated foreclosure proceedings on Malesich's unit due to unpaid condominium assessments. Murano obtained summary judgment in its favor and proceeded to the foreclosure sale, at which Murano was the highest bidder. After the certificates of sale and title were issued to Murano, it sold the property to BCML in 2012.
On April 3, 2013, Wilmington, successor trustee to Citibank, filed a foreclosure complaint against Malesich for default of the July 11, 2007 mortgage. BCML, Murano, and others were also named as defendants in the foreclosure complaint, which alleged a default date of October 1, 2008 (prior to Murano's foreclosure complaint).
BCML answered the complaint, asserting several affirmative defenses, including that Wilmington was estopped from bringing the action. BCML also asserted a two-count counterclaim for declaratory relief and to quiet title, alleging that because Malesich did not own the property on July 11, 2007, when it conveyed an interest in that property, the mortgage was void ab initio.
The parties filed cross-motions for summary judgment on BCML's counterclaim for declaratory relief and to quiet title. Following a hearing, the trial court held that the after-acquired title doctrine applied and granted summary judgment in favor of Wilmington. In its order granting summary judgment, the trial court stated:
The trial court denied BCML's motion for reconsideration, dismissed BCML's counterclaims with prejudice, and entered final judgment in favor of Wilmington on BCML's counterclaims.
Under the doctrine of after-acquired title "if a grantor purports to transfer ownership of real property to which he lacks legal title at the time of the transfer, but subsequently acquires legal title to the property, the after-acquired title inures, by operation of law, to the benefit of the grantee." Ackerman v. Abbott, 978 A.2d 1250, 1254 (D.C.2009). This doctrine
Id. (internal citations omitted). As the Supreme Court of Florida observed in Trustees of Internal Imp. Fund v. Lobean, 127 So.2d 98, 102 (Fla.1961):
While this doctrine has been described as a species of estoppel by deed, it has also been characterized as a doctrine grounded in the covenant or warranty of title made by the grantor when conveying the property. See, e.g., Pitts v. Pastore, 561 So.2d 297 (Fla. 2d DCA 1990) (observing that "a mortgage with covenants of warranty, such as the mortgage involved in this case, permits any title acquired by the mortgagor, after the execution of the mortgage, to inure to the benefit of the mortgagee."). In the instant case, the grantor Malesich, when conveying the property, expressly warranted that he was fully seised of the property at the time of conveyance, and had the right to mortgage, grant and convey the property.
The doctrine of after-acquired title applies to mortgages. See Rose v. Lurton Co., 111 Fla. 424, 149 So. 557, 558 (1933) (noting "[i]t is now undoubtedly well settled in this jurisdiction that when it is appropriately so worded, a mortgage on after-acquired property of the mortgagor will be held valid, and enforceable between the parties to it, by a suit for foreclosure"); Florida Land Inv. Co. v. Williams, 84 Fla. 157, 92 So. 876, 877 (1922) (noting the general doctrine that "where a mortgage upon real estate contains full covenants of warranty, title acquired to the mortgaged property the mortgagor after the execution of the mortgage inures to the benefit of the mortgagee"); Pitts, 561 So.2d at 301 (Fla. 2d DCA 1990) (noting "[i]t is well established that one can enter into a mortgage agreement to create a lien against property which the mortgagor will only acquire in the future. Such a mortgage lien simply fails to attach until the property is purchased" (internal citations omitted)).
BCML argues that the after-acquired title doctrine does not apply as against a non-party to the original mortgage and subsequent purchaser of the subject property. BCML contends it is not a privy or successor in interest and that it cannot be bound by Malesich's covenant or his act in acquiring title after execution of the mortgage. BCML asserts in essence that, as to it, the mortgage was and remains void. We disagree, and conclude that BCML is bound, as a successor in interest, and estopped to deny the existence of title acquired by Malesich after the mortgage was executed.
It has long been settled that:
Moralis v. Matheson, 75 Fla. 589, 79 So. 202, 203-04 (1918) (emphasis added). See also Lobean, 127 So.2d at 102 (holding that the doctrine precludes a party to a deed and his privies from asserting as against others and their privies any right or title in derogation of the deed) (emphasis added); Murray v. Newsom, 111 Fla. 193, 149 So. 387, 388-89 (1933) (holding that the
It is clear from the case law that the after-acquired doctrine "inures to the benefit of the grantee,
BCML also asserts that the doctrine of after-acquired title does not apply because the original transaction was a purchase money mortgage. Under Florida law, a "purchase money mortgage given as part of the transaction in which the premises were purchased is an exception to the general rule that, where a mortgage contains
As the Florida Supreme Court explained in Dwiggins, 149 So. at 614, this exception "is based on the idea that it would be unjust to allow a purchase-money mortgage to be foreclosed on any greater title than the seller had conveyed, merely because it contained a covenant of warranty." In other words, because the mortgagee of the property is also the seller of the property, that individual knows whether he is in fact lawfully seised of the property and able to convey full title. Upon foreclosing, this mortgagee should not be permitted to obtain greater title than he could originally have conveyed. The Dwiggins Court further explained:
Id. (Emphasis added.)
In so holding, Dwiggins cited to Williams, 92 So. at 877, wherein the Court, in discussing after-acquired title, acknowledged "there is a generally recognized exception of purchase-money mortgages given as a part of the transaction in which the premises mortgaged are purchased." (emphasis added). Thus, this exception is limited to those purchase money mortgages involving a simultaneous sale of the property by the mortgagee to the mortgagor. The Court in Williams expounded on the reason for such an exception:
Id. at 877-78.
The doctrine of after-acquired title is predicated on the notion that an uninformed grantee should not be penalized if the grantor did not own the property at the time of the conveyance, yet subsequently acquired it. 23 Am. Jur. 2d Deeds § 278 (2015). Obviously, as in the case of the purchase money mortgage presented in Dwiggins, where the mortgagee is also the one conveying the property to the mortgagor, the mortgagee is fully aware of the nature and extent of the interest being conveyed, and is foreclosed from relying upon the after-acquired doctrine to thereafter acquire greater title than that which it originally conveyed. Such are not the circumstances of the underlying transaction in this case. The original lender, ABC, loaned money to Malesich in exchange for a mortgage on property which Malesich thereafter purchased from a third-party in a subsequent transaction. We conclude that the purchase money mortgage exception to the after-acquired title doctrine does not apply to the instant case.
We hold that the doctrine of after-acquired title applies to the instant case, inuring to the benefit of Wilmington (and against BCML) as successors in interest. We further hold that the exception for purchase-money mortgages is inapplicable given the nature of the original transaction. The trial court was correct in entering summary judgment in favor of Wilmington.