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Florida: Changes to Foreclosure Laws

Posted By USFN, Thursday, August 01, 2013
Updated: Monday, November 30, 2015

August 1, 2013

 

by Roger D. Bear
Florida Foreclosure Attorneys, PLLC
USFN Member (Florida)

On June 7, 2013, Florida’s governor signed into law legislation that makes numerous changes to Florida’s laws relating to mortgage foreclosures. Among the changes are these:

1. Statute of limitations for deficiency judgments
— The law revised Florida Statute 95.11, to reduce from five years to one year the statute of limitations for an action to enforce a claim of a deficiency related to a note secured by a mortgage against residential property that is a one-family to four-family dwelling unit. The limitations period begins on the eleventh day after a foreclosure sale or the day after the mortgagee accepts a deed-in-lieu of foreclosure.

2. Allegations in mortgage foreclosure complaint as to original note or lost note
— The law created a new Florida Statute 702.015. It provides that every complaint in a foreclosure proceeding on residential real property designed principally for one to four families must contain affirmative allegations expressly made by the plaintiff that the plaintiff is the holder of the original note or must allege with specificity the factual basis by which the plaintiff is a person entitled to enforce the note. If the plaintiff is not the holder of the note, the complaint must describe the authority of the plaintiff and identify the document that grants the plaintiff the authority to file the complaint on behalf of the holder of the note.

If the plaintiff is in possession of the original note, it must file a certification with the court with the filing of the complaint, under penalty of perjury. The certification must set forth the location of the note, the name and title of the individual giving the certification, the name of the person who personally verified such possession, and the time and date on which the possession was verified. Correct copies of the note and all allonges to the note must be attached to the certification. The original note and the allonges must be filed with the court before the entry of any judgment of foreclosure or judgment on the note.

If the plaintiff claims that the note is lost, destroyed, or stolen, the complaint must contain an affidavit. The affidavit must: (a) Detail a clear chain of all endorsements, transfers, or assignments of the promissory note that is the subject of the action; (b) Set forth facts showing that the plaintiff is entitled to enforce a lost, destroyed, or stolen instrument pursuant to s. 673.3091. Adequate protection as required under s. 673.3091(2) shall be provided before the entry of final judgment; and (c) Include as exhibits to the affidavit such copies of the note and the allonges to the note, audit reports showing receipt of the original note, or other evidence of the acquisition, ownership, and possession of the note as may be available to the plaintiff.

3. Finality of foreclosure judgment — The law created a new Florida Statute 702.036, which provides for finality of mortgage foreclosure judgments. This provision protects bona fide purchasers of a property at a foreclosure sale and ensures the validity of the title where a party seeks to set aside, invalidate, or challenge the validity of a final judgment or to establish or reestablish a lien. Under this statute, as long as the party seeking relief was properly served, final judgment was entered, and the appeal period has run as to the final judgment with no appeal having been filed, and the purchaser was not affiliated with the foreclosing lender or owner, the party may recover monetary damages, but may not disturb the title, thus protecting the innocent purchaser and providing security in title. The law does not limit the right to other forms of relief that do not adversely affect the ownership of title.

The new law also provides that after foreclosure of a mortgage based on a lost, destroyed, or stolen note, a person who was not a party to the foreclosure action but claims to be the actual holder of the note has no claim against the property after it is conveyed to a bona fide purchaser for valuable consideration who is not affiliated with the foreclosing lender or owner. However, the actual holder may pursue recovery from any adequate protection as required by the UCC. The actual holder may also pursue damages from the party who wrongfully claimed to be the owner or holder of the promissory note, from the maker of the note, or any other person against whom the actual holder may have a claim.

4. Adequate protection required for enforcement of lost note
— The law created a new Florida Statute 702.11. It establishes a means of providing adequate protection under Florida Statute 673.3091, which is the statutory provision relating to the enforcement of a lost, destroyed, or stolen instrument. As it relates to a mortgage foreclosure, adequate protection would include: (1) a written indemnification agreement by a person reasonably believed to be sufficiently solvent to honor such an obligation; (2) a surety bond; (3) a letter of credit issued by a financial institution; (4) a deposit of cash collateral with the clerk of the court; or (5) such other security as the court may deem appropriate under the circumstances.

Any security given must be on terms and in amounts set by the court and must run through the applicable statute of limitations for enforcement of the note. The security also must indemnify the maker of the note against any loss or damage that might occur by reason of a claim by another person to enforce the note. Recovery of damages and costs and attorneys’ fees may be sought against the person who wrongly claims to be the holder of a lost, stolen, or destroyed note or against the adequate protections described above. The actual holder of the note need not pursue recovery against the maker of the note or any guarantor.

5. “Show cause” order on non-owner occupied residential real estate for payments to be made during the pendency of foreclosure proceedings or an order to vacate the premises
— Florida Statute 702.10 was revised to provide that if the property is not owner-occupied residential real estate, the plaintiff may request a court order directing the defendant to show cause why an order to make payments during the pendency of the proceedings or an order to vacate the premises should not be entered. The statute specifies:


1. The order must set a date and time for the hearing, not sooner than 20 days after the service of the order, or 30 days if service is obtained by publication.
2. The defendant can file defenses by a motion or by sworn or verified answer or appear at the hearing, which prevents entry of a final judgment.
3. The court may enter an order requiring payment or an order to vacate if the defendant has waived the right to be heard.
4. If the court finds that the defendant has not waived the right to be heard, after reviewing affidavits and evidence, the court can determine if the plaintiff is likely to prevail in the foreclosure action, and enter an order requiring the defendant to make the payments or provide another remedy.
5. The court order must be stayed pending final adjudication of the claims if the defendant posts a bond with the court in the amount equal to the unpaid balance of the mortgage.


6. “Show cause” order to speed up the foreclosure process in uncontested cases or cases where there is no legitimate defense — Florida Statute 702.10 was revised to create an alternative procedure that is designed to speed up the foreclosure process in uncontested cases or cases where there is no legitimate defense. This is the basic process:


1. After a complaint has been filed, the plaintiff may request an order to show cause for the entry of final judgment and the court must immediately review the complaint.
2. If the court finds that the complaint is verified, and alleges a proper cause of action, the court must issue an order directing the defendant to show cause why a final judgment should not be entered.
3. The order must set a date and time for the hearing, not sooner than 20 days after the service of the order, or 30 days if service is obtained by publication, and no later than 60 days after the date of service.
4. The defendant can file defenses by a motion or by sworn or verified answer or appear at the hearing. A defense filed as a response to an order to show cause pleading must raise a genuine issue of material fact that would preclude the entry of a summary judgment or otherwise constitute a valid legal defense to foreclosure.
5. The court need not hold a hearing for determination of reasonable attorneys’ fees if the requested fees do not exceed 3 percent of the principal owed on the note at the time of filing.
6. The court may enter a final judgment if the defendant has waived the right to be heard or has not shown cause why a final judgment should not be entered.


At the time of the enactment of this legislation, Florida had the third longest average foreclosure timeline in the nation — trailing only New York and New Jersey — at 853 days. Although some of the legislative changes may delay the initial filing of new cases, it is hoped that this legislation will substantially shorten the time required to complete an average Florida foreclosure action.

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