In short: In Terant v. Beltway Capital, the Third DCA said a trial court likely erred by ordering a bed-and-breakfast owner to deposit all business revenue into the court registry as “rents.” Guest-room income is not rent under section 697.07. But the owner never preserved the objection, so the order was affirmed.
The Facts
In January 2007 the owners of the European Guest House, a bed-and-breakfast in Miami Beach, signed an $840,000 note and mortgage on the property. The lender used a standard Fannie Mae/Freddie Mac single-family home mortgage form, along with a Family Rider that assigned to the lender all the rents and revenues of the property.
Beltway Capital, the lender’s assignee, filed foreclosure in November 2007. Six years later, in November 2013, it moved for an order under section 697.07 requiring the owners to sequester rents. In January 2014 the trial court ordered the owners to deposit all rents into the court registry within five days of receipt, and declared that all rents, revenue, income and profits from the property counted as rents under the statute.
The owners moved to vacate or amend, arguing they could not comply without destroying the business, and asked that operating expenses be carved out. They appealed. The record did not include the trial court’s order denying that motion.
The Decision
The Third District affirmed. The owners conceded at oral argument that they had not preserved their objection to the broad definition of rents, so they could win only by showing fundamental error. The court held that misreading a contract or statute is generally not fundamental error in a civil case, and the order stood. It also rejected the owners’ argument that Beltway’s six-year delay estopped it, and the owners abandoned their standing argument.
Even so, the court explained in detail why the trial court was likely wrong. Charges hotel guests pay are not rents under section 697.07, a point other Florida and bankruptcy courts had made. The Family Rider did not reach general business receipts either: read as a whole, revenues meant sums a landlord collects from a tenant for things like taxes and utilities, and reading it to cover all business income from a single-family form would lead to absurd results. Lawyers should read this as a strong roadmap that came too late for these owners.
The Law
section 697.07, Florida Statutes, lets a mortgage assign rents as security. The lender’s lien on rents is perfected on recording, and becomes enforceable on default and written demand. In a foreclosure, the court may order the owner to deposit collected rents into the court registry, and may allow some of them to be used first to pay reasonable expenses to protect, preserve and operate the property, including taxes, insurance and association assessments. The statute does not define rents.
Since 2014 the section has been renumbered and amended (most recently by ch. 2023-215). The registry deposit provision the court discussed as subsection (4) now appears in subsection (5). Separately, an unpreserved error in a civil case is reversed only if it is fundamental, meaning it goes to the foundation of the case.
Current law (2026): s. 697.07 has been amended since 2013 (most recently ch. 2023-215). The 2026 text: (4) makes the rent lien enforceable on default and written demand; (5) authorizes the court to order deposit of collected rents into the registry and to allow use for reasonable expenses to protect, preserve and operate the property (taxes, insurance, association assessments), escrows, and payments to the mortgagee. ‘Rents’ remains undefined. The opinion’s references to s. 697.07(4) (2013) correspond to current (5).
Lessons
- Object at the trial level, in writing and at the hearing. A strong argument that is not preserved can lose on appeal.
- Owners of hotels, B&Bs and short-term rentals: guest-room revenue is generally not rent under section 697.07. Push back on orders that sweep in all business income.
- Ask the court to authorize payment of operating expenses before deposit, which section 697.07(5) allows.
- Lenders financing a commercial lodging property on a residential form may find their assignment of rents reaches less than they think.
Source: Terant v. Beltway Capital, LLC, No. 3D14-302 — Fla. 3d DCA (October 1, 2014).
Watch the Oral Argument
This is the recording of the actual oral argument, posted on the channel. What lawyers and judges say at argument is not the ruling; the decision is summarized above.
Foreclosure Court Takes ALL B&B Room Revenue — Are Those “Rents”? | Terant v. Beltway, 3D14-0302
Go Deeper
- The Florida Foreclosure Process, Step by Step
- Florida Foreclosure Trials: Business Records, the Original Note, and Preserving Defenses
Frequently Asked Questions
Can a foreclosure court make me deposit rents into the court registry in Florida?
Yes. Under section 697.07(5), on application in a foreclosure, the court may require the owner to deposit collected rents into the registry while the case is pending. It may also allow the owner to use some of the rents first for reasonable expenses to protect and operate the property, such as taxes and insurance.
Is hotel or bed-and-breakfast room revenue considered rent under section 697.07?
According to the Third DCA in Terant v. Beltway Capital, no. The court noted that revenue a hotel collects from guests is not rent under section 697.07, following an earlier Fifth DCA case and several bankruptcy decisions. It still affirmed the order because the owner had not preserved the objection.
What is fundamental error in a Florida civil appeal?
It is error that goes to the foundation of the case, or an egregious deprivation of a constitutional right. It is the only way to win reversal on an issue that was not raised and preserved in the trial court. Terant holds that a trial court’s misreading of a contract or statute usually does not qualify.
Does a lender's delay in seeking rents bar it from getting them later?
Not on the facts of Terant. The lender waited six years after filing its foreclosure to ask for sequestration of rents. The Third DCA summarily rejected the owner’s argument that the delay estopped the lender, without a written discussion of why.
Talk to a Florida foreclosure defense lawyer
Weidner Law, P.A. has defended Florida homeowners in foreclosure and foreclosure appeals for more than 25 years. If you need a foreclosure defense lawyer, call (727) 954-8752 or email weidner@mattweidnerlaw.com.
Read the law yourself, free: every Florida statute and court rule is on floridarules.net.
This article is general information about Florida law, not legal advice about your situation. Reading it, watching the videos, or contacting the firm does not create an attorney-client relationship. Every case turns on its own facts, and past results do not guarantee a similar outcome. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
