There is a case before Florida’s Supreme Court that could have a serious impact on anyone who owns a property that was subject to a foreclosure action. Many people, both homeowners and real estate investors, buy foreclosed properties. You can often pick them up for below market value. You can repair and renovate them, and with all that sweat equity, make a handsome profit at some point in the future. Other people owned, and still own, the property that was foreclosed on. A number of them had the foreclosure action dismissed. Foreclosure actions can be dismissed for different reasons. Examples include:-
- A simple paperwork error
- A failure to properly notify all interested parties
- A failure to correctly file a lis pendens
Whatever the reason, a dismissal is a dismissal right? The owner breathes a sigh of relief and waits for the statute of limitations to run out. The statute of limitations on creditors pursuing a foreclosure in Florida is five years. Many actions during the real estate melt-down of a few years ago took longer than that, so the cases were dismissed.
Everyone who owns a property with this kind of history should give serious thought to what may be lying beneath the surface of the foreclosure file. It is possible that those property owners could face new claims. At that point – or even before that, just to be sure you are prepared – it may be very advisable to discuss the situation with a foreclosure defense attorney.
US Bank v Bartram
The potential problem has resulted from a property owner named Bartram who had a foreclosure action dismissed, but now the creditor has filed another action. Florida’s Fifth Circuit Court upheld the action but has asked the Supreme Court for an opinion. It is generally accepted that the five year statute of limitations rule begins when the lender first accelerates the loan; i.e. demands payment of the outstanding mortgage in full.
The problem is that, in the Bartram case, after the foreclosure lawsuit was dismissed, the property owner kept the property, and much later on the lender filed a second foreclosure notice. The Supreme Court is considering whether the first date stands or whether a new five year clock starts to tick if another notice is served.
How Else Could Property Owners Be Affected?
When the Court does make its decision public, it could have serious implications. Could Florida’s ‘safe harbor’ provision be affected? Owners who fail to pay their mortgages often fail to pay their condo and HOA fees as well. If the Association is named as a defendant, the recipient of the title – the person who still owns the property, or who bought it at a foreclosure auction, for example – cannot be required to pay more than one year’s worth of unpaid fees. If the Association was not properly named in the first action, the owner can be called on to pay the whole amount due. What no one knows yet, is that if the five year clock can be reset, can the one year clock also be reset?
If you own property that was subject to foreclosure, you might find it in your best interests to discuss your file with a foreclosure lawyer. If you are currently being pursued, then please contact us by clicking this link.
