Four days later, on January 26, 2021, Avant executed a promissory note and mortgage in favor of its law firm, Peckar & Abramson, P.C., to secure unpaid legal fees. The mortgage was recorded that same day.
On May 25, 2022, Aquastar executed on its judgment and purchased all of Avant’s “estate, right, title and interest” in the property at a sheriff’s sale for $300. On June 3, 2022, Peckar filed a foreclosure action against Aquastar, arguing that its mortgage remained valid and seeking attorney’s fees under the mortgage agreement. Aquastar responded that it had acquired the property free of Peckar’s mortgage and was not a party to the contract, and therefore not liable for fees.
The trial court ruled in favor of Peckar, finding that Aquastar purchased the property subject to all liens of record, or alternatively, that Peckar’s mortgage had priority because Aquastar’s original judgment lacked execution language and an interest rate, which were only added through an amendment recorded in October 2021. The court also awarded Peckar attorney’s fees.
On appeal, the Third District Court of Appeal reversed. The court found that Aquastar’s January 22, 2021 recording created a valid judgment lien that had priority over Peckar’s later mortgage. It also ruled that the October 2021 amendment correcting clerical errors in the judgment related back to the original entry and did not affect the lien’s priority. As a result, the court held that the mortgage was extinguished when Aquastar purchased the property at the sheriff’s sale, which transferred title subject only to encumbrances existing at the time the lien was recorded.
The appellate court further concluded that Aquastar could not be held liable for attorney’s fees because it was not a party to the mortgage and had not assumed its obligations. The award was reversed accordingly.