There is a rule of Civil Procedure that exists which bars successive lawsuits after 2 tries, often referred to as the “two dismissal rule” under Rule 1.420. The 1st DCA recently held that this rule does not apply to foreclosures. Based upon the reasoning in Bartram that each monthly payment not made was its own default which warranted a new foreclosure action, the Court held that Rule 1.420 did not bar a third foreclosure action. Forero v. Green Tree Servicing, LLC, No. 1D16-2151 (Fla. 1st DCA July 14, 2017)
In regards to the statute of limitations, the 4th DCA joined the 2nd DCA in finding that continuous defaults occurred each month that payment was not made under the Bartram line of reasoning, and that the complaint may allege the same default date (or one beyond 5 years old) as long as there is also alleged a continuous state of default for each payment since. Kebreau v. Bayview Loan Servicing, LLC et al., No. 4D16-2010 (Fla. 4th DCA July 12, 2017)
Some new revisions to the Florida condo laws, contained in Chapter 718 of the Florida Statutes, have become effective as of July 1, 2017. A few of the notable changes are:
- 718.111(12)(c)(1) – A unit renter has a right to inspect and copy the association’s bylaws and rules.
- 718.111(12)(c)(3)(g)(1) – by July 1, 2018, an association with 150 or more units (which does not manage timeshare units) must post digital copies of the required documents on its website.
- 718.116(8) – The association must issue an estoppel certificate within 10 business days of receipt of a written or electronic request for said certificate.
- 718.116(8)(a) – Any condominium estoppel certificate must contain specific assessment information, such as the regular periodic assessment and frequency; an itemized list of all assessments, special assessments and other moneys scheduled to become due; if there is a capital contribution fee, resale fee or other fee due and what the amount is; if there is a right of first refusal provided to the association or the members; and contact information for all insurance maintained by the association, among other things.
- 718.116(8)(b) – The estoppel certificate (sent via hand delivery or electronically) has a 30-day effective period (35-days if sent by regular mail).
- 718.116(8)(d) – If a requested estoppel certificate is not delivered within 10 business days, a fee may not be charged for the preparation and delivery of that estoppel letter.
- 718.116(8)(f) – The association may charge a reasonable fee for preparation and delivery of an estoppel certificate that may not exceed $250.00; if the certificate is requested on an expedited basis and delivered within 3 business days after the request, however, the association may charge an additional $150.00; an additional fee of up to $150.00 may also be charged for an estoppel certificate on a unit if a delinquent amount is owed.
The 3rd DCA recently held, along with the 4th in De Sousa v. JP Morgan Chase, N.A., 170 So. 3d 928 (Fla. 4th DCA 2015), that when a purchaser of a property via deed or foreclosure sale takes title after the senior/first mortgage records its lis pendens the purchaser has no standing to contest the foreclosure case.
The court reasoned that the lis pendens the bank files with it’s foreclosure complaint is “to notify third parties of pending litigation and protect its proponents from intervening liens that could impair or extinguish claimed property rights.” As such, the purchaser via deed from the owner, or association/junior mortgage foreclosure sale, takes title with notice of the pending bank foreclosure lawsuit. Thus, the purchaser’s remedy is the right of redemption, or to pay the foreclosing bank what is owed, but not to intervene in the foreclosure case as a party and defend.
This should be a lesson to all investors to do your homework and obtain a title search and hire real estate counsel before buying property at HOA/condo auction, or taking a deed to property from an owner. Once the damage is done, as shown above, the court system is not going to help remedy the investor’s lack of due diligence.
Full opinion here.
The 5th DCA recently ruled that the trial court erred in distributing surplus to a 3rd party purchaser. FL Statute 45.033, states that surplus foreclosure proceeds are generally disbursed to owner of record (except in certain limited circumstances). Surplus proceeds are that which a bidder bids over the final judgment amount owed to the bank; those excess funds are called surplus funds of the auction. They typically go to the owner of record on the date that the lis pendens was filed/recorded; after any junior liens (2nd mortgage, association assessments due, etc) are paid off, if any exist.
There has been an increase in illegal claims by 3rd party bidders themselves to foreclosure surplus when they are not entitled to such. They are essentially getting a refund of their money for making a poor business decision. The 5th DCA here put a stop to this practice holding that it is contrary to Florida law.
The 5th DCA recently issued Klebanoff v. Bank of N.Y. Mellon, and the 2nd DCA Huntington National Bank v. Watters, which clarify the pleadings requirements for lenders filing subsequent foreclosure actions.
Previously, the Court ruled in Hicks v. Wells Fargo Bank, N.A., 178 So. 3d 957 (Fla. 5th DCA 2015) that the bank could not foreclose as it alleged a default date more than 5 years before the new complaint was filed, and thus under Bartram, could not prevail. But the 5th DCA said not so fast. The Court stated that Hicks can only be looked at upon its very specific set of facts, as after all, and appeal can only review the law based upon the facts at the trial court level; and sometimes this leads to broad generalizations that do not apply to other sets of facts. Here, the bank has specifically stipulated to proceed to trial only upon the initial default date (that was more than 5 years prior to the re-filing of the case). Based on that fact alone, the bank could not prevail as the default date alleged was beyond the statute of limtations.
The Court clarified in Klebanoffi and Watters finding that as long as the bank alleged the prier default date AND that every mortgage payment from that default date onward was due, then the bank had met the statute of limitations. This is because under Bartram, each missed monthly payment is a new default the bank can allege and use as a basis for foreclosure.
So as long as the bank alleged the old default and all subsequent payments were due, a continuous default including defaults withing the statute of limitations period, the bank satisfies its requirement that there is still a present default within the statute of limitations. And the bank must prove this continuous default at trial or summary judgment to prevail.
These cases will surely make it easier for banks to foreclose upon old cases and defaults as all it must allege now is the old default date and all subsequent payments have not been made; a continuous state of default; as typically borrowers have not made payments or cured the default. This should put some clarity into the pleadings requirements the bank must follow when alleging old default dated in a new foreclosure action.
The U.S. Supreme Court recently ruled in Henson v. Santander Consumer USA Inc. that a purchaser of a debt is not a debt collector as defined by the Fair Debt Collection Practices Act (“FDCPA”) if it is regularly collecting debts that it owns. This includes if the debts were originated by a third party and purchased after default; as long as the party collecting owns the debt and collecting on its own behalf.
In doing do the Court held that a debt buyer must be collecting debts owned by/owed to a third party in order to be considered a “debt collector” and therefore subject to the FDCPA.
This new opinion curbs many debt collection lawsuits brought by consumers under the FDCPA for debt collection practices as the ONLY time a consumer now has a cause of action under the FDCPA is if a debt collector is collecting a debt on behalf of another party/creditor. ANY debt owned by that creditor that it is attempting to collect on itsof behalf takes the matter out of the FDCPA definition of a “debt collector” and a consumer cannot sue under that statute.
An estoppel certificate provides an overview of the assessments and fees that a seller may owe to their HOA/condo association to date and is provided by the association when a property is being sold. Prior to these new laws, Florida law allowed associations to charge a “reasonable” fee to prepare an estoppel certificate; without any guidance as to what was a “reasonable” amount.
HB 483/SB 398 cap the fees that can be charged for estoppel certificates at $250 for unit owners who are current in their assessments. An additional $100 can be charged for “expedited” estoppel certificates (delivered within three business days), and another $150 can be charged for owners who are delinquent in their assessments. This is a maximum of $500 for an expedited, delinquent estoppel certificate.
HB 483/SB 398 also require certificates to be valid for 30 days and provide for a standard estoppel certificate form to ensure the same information is provided to owners across Florida.
This will likely put an end to over-inflated estoppel fees changes by associations and law firms alike.
Florida lawmakers passed a bill this week placing oversight on condo boards that imposes criminal penalties for some board violations.
This bill was drafted upon recommendations of a Miami-Dade grand jury and Florida’s DBPR after the uncovering of massive condo board fraud by various news outlets in 2016.
To become law, the bill, CS/CS/HB 1237, still needs Gov. Scott’s signature. If signed, it becomes effective on July 1, 2017.
CS/CS/HB 1237 covers a number of condo oversight rules, but high-profile ones include:
- If a condo association has more than 150 units, it must publish its financial reports on a password-protected web page.
- If owners are denied documents and if fraud is proven, the people responsible for the fraud could face felony charges after July 2018.
- Condo board directors are limited to eight years unless they get a super-majority of votes in later elections.
- Directors can’t receive payments from the condo association, nor can they hire relatives.
Following the 5th DCA and 3rd DCA recently discussed here, the 4th DCA in Nationstar Mortgage LLC v. Glass, No. 4D15-4561, similarly held that when a borrower successfully argues that the lender did not have standing to foreclosure, that borrower is not entitled to prevailing party attorney’s fees.
The 4th DCA used a similar rationale that if the lender had no standing to foreclose, there was not a contract between that lender and borrower. The borrower moved for attorney’s fees as the prevailing party i the lawsuit pursuant to Fla. Stat. § 57.105(7), which allows reciprocity of a one sided attorney’s fee provision in a contract; the mortgage contract provides attorney’s fees to the lender to enforce the contract.
To be entitled to attorney’s fees under Fla. Stat. § 57.105(7), the party moving to get fees must be the prevailing party and the parties to the suit must also be parties to the contract containing the fee provision. And if the named lender in the foreclosure lawsuit was not the proper lender to enforce the contract and it could not enforce the contract/mortgage and foreclosure, then the contract clause regarding attorney’s fees to the prevailing party did not apply against the named lender.
On March 16, 2017, the FL Supreme Court denied all pending motions for rehearing made by the borrowers and other groups who filed briefs on behalf of homeowners in the landmark Bartram case, thus making the opinion issued in November 2016 official and final (as all pending motions for rehearing were denied).
This finalizes the state of the law in Florida with regard to the statute of limitations as foreclosure. The Florida Supreme Court’s opinion in Bartram now officially holds that the involuntary dismissal of a prior foreclosure action, with or without prejudice, does not prevent the filing of a new foreclosure action based on new, and continuing, monthly defaults in payment.
This will surely start a whole new wave of foreclosure filings as many banks were awaiting Bartram to become final before proceeding with many old foreclosures that were dismissed for one reason or another and the borrower(s) still in default since.