Florida Supreme Court dismisses motion for rehearing in case concerning Florida Statute of Limitations

by K.K. MacKinstry

Last week a Manhattan court ruled in Costa v. Deutsche Bank that Deutsche Bank had failed to foreclose within the six year window and was therefore barred from collecting the debt.  In the same week, the Florida Supreme Court denied a motion for rehearing in Bartram v. U.S. Bank regarding the statute of limitations in foreclosure cases, therefore ruling that there is no statute of limitation on mortgage debt in Florida.

In the 2016 Bartram opinion the court ruled that if there is an involuntary dismissal of a foreclosure in a foreclosure case, a follow-up foreclosure action can be filed. This decision allows a lender to “correct” issues in litigation and refile until they can successfully foreclose on a homeowner and is likely unconstitutional.  Bartram ruled that a follow-up filing could be done to accelerate the debt involved in a mortgage foreclosure again and again.

The decision is an especially important one for lending institutions in Florida who fought tooth and nail for the decision.   Banks are allowed to file foreclosure even in circumstances when previous foreclosure actions have been attempted.  For exampl,e if a bank loses because they came to court with an unendorsed note, this decision tells the bank exactly what issue to cure before they file to foreclose again.  The banks have deep pockets and can file an unlimited number of lawsuits, while the homeowner will be forced to defend against foreclosure again and again until the bank can successfully foreclose.

This ruling affects all Floridians.  There is no other state in America where a bank receives a second, third, fourth, fifth or sixth time (or more) to successfully foreclose.  In theory, a homeowner could spend decades in litigation before the bank finally wears them down or bankrupts them while defending their home.

Statute of limitations are important in debt collection because people should not be pursued for decades of their lives- especially by a bank that can’t prove standing without forging and fabricating documents to “perfect” its illusion of being a holder.

This is likely a final decision and a terrible decision at that.  The Florida Supreme Court is no longer bothering to hide its bias for the banks.

A statute of limitations sets a time limit for initiating a legal claim. In the context of home foreclosure, the statute of limitations for written contracts (that is, mortgages) is usually the applicable statute or there may be a specific statute that addresses foreclosures, as is the case in New Jersey. If the foreclosure is initiated after the statute of limitations has expired, the lender’s claim is invalid and the lender is not entitled to foreclose.

Raising the Statute of Limitations as a Defense to Foreclosure

If the relevant time period for a foreclosure statute of limitations has run out, then this is an affirmative defense to foreclosure. The statute of limitations defense must be asserted by the homeowners to defeat the lender’s claim. If the homeowners do not assert the statute of limitations defense, then this defense is deemed waived. Therefore, it is extremely important for borrowers to be aware of the statute of limitations for foreclosures in their state because it could mean a quick end to a foreclosure if the time limit has expired.

On the other hand, if the statute of limitations runs out after the foreclosure process has already started, then the statute of limitations will not be a defense to the foreclosure. This means that even if a foreclosure takes years to complete and the time period under the statute of limitations covering foreclosures runs out while the foreclosure is in process, this will not prevent the foreclosure from going through. For instance, if the lender files a foreclosure lawsuit in January, 2017, but the statute of limitations runs out in June, 2017 while the foreclosure is pending, a statute of limitations defense is not available. In order to comply with a statute of limitations, the lender must simply begin the foreclosure before the time period expires.

However, in most states,  if the foreclosure is cancelled or dismissed (perhaps due to a procedural error by the lender), then the statute of limitations will still apply to any subsequent foreclosure. The lender could restart the foreclosure, but the restart would have to occur within the time period provided for in the statute of limitations. In the example above, if the foreclosure was dismissed in April, 2017, the lender would need to restart the action prior to June, 2017 to fall within the statute of limitations. It is important to note that if the borrower makes a payment in the interim, this will reset a statute of limitations in most cases.

How to Determine the Statute of Limitations in Your State

Each state has its own set of statutes of limitations. Generally, for a written contract, including mortgages, the statute of limitations will vary from three years to 15 years, though this differs from state to state with most falling within the three-to-six-year range. Most states have a statute of limitations of six years covering foreclosures.

The statute of limitations clock for a mortgage foreclosure usually starts when the default occurs–that is, when the borrowers stop making mortgage payments. It is usually calculated from the date of the last payment or from the due date of the first missed mortgage payment. Again, this depends on your state’s particular statute.  If you have the misfortune of living in Florida, every time you miss a payment, the statute of limitations begins all over again.

Bartram Affirmed: Florida Supreme Court Provides Guidance For Filing a Successive Foreclosure Action Post Dismissal


Baker Donelson

Nearly a year after hearing oral argument on the matter, the Supreme Court of Florida affirmed the decision of the Fifth District Court of Appeal in Bartram v. U.S. Bank, N.A., SC14-1265 (Fla. Nov. 3, 2016), holding that a lender is not barred from filing a subsequent foreclosure action based on a payment default after a first foreclosure action is involuntarily dismissed, provided that the subsequent default occurred within five years of the newly-filed action. The court limited its holding to cases that were involuntarily dismissed and where the mortgage at issue contains a clause granting the mortgagor the right to reinstate after acceleration. However, the court determined that whether the initial foreclosure action was dismissed with or without prejudice was immaterial to its conclusion. Id. at 20.

In reaching its conclusion, the court analyzed and reaffirmed its prior holding in Singleton v. Greymar Associates, 882 So. 2d 1004 (Fla. 2004), where the court held that res judicata did not bar a second foreclosure action which alleged a subsequent and separate default from that alleged in first foreclosure action. The court analyzed the subsequent Florida appellate court and federal court opinions applying Singleton to statute of limitations cases. The court found it significant that the mortgage at issue contained a provision entitling the borrower to reinstate after acceleration of the debt at any time before a foreclosure judgment. Quoting the Third District Court of Appeal, the Bartram court stated “despite acceleration of the balance due and the filing of an action to foreclose, the installment nature of a loan secured by such a mortgage continues until a final judgment of foreclosure is entered and no action is necessary to reinstate it via a notice of ‘deceleration’ or otherwise.” Bartram at 21–22 (quoting Deutsche Bank Trust Co. Americas v. Beauvais, 188 So. 3d 938, 947 (Fla. 3d DCA 2016)).

The court ultimately concluded that “[t]he Fifth District properly extended our reasoning in Singleton to the statute of limitations context in a mortgage foreclosure action.” Bartram at 25. The court reasoned that “the dismissal returned the parties back to ‘the same contractual relationship with the same continuing obligations.'” Id. “Therefore, the Bank’s attempted prior acceleration in a foreclosure action that was involuntarily dismissed did not trigger the statute of limitations to bar future foreclosure actions based on separate defaults.” Id.

The decision leaves open whether this holding applies to cases that are voluntarily dismissed. However, just yesterday, the court accepted jurisdiction of a statute of limitations case where a prior foreclosure was voluntarily dismissed by the mortgagee. Bollettieri Resort Villas Condo. Ass’n, Inc. v. Bank of New York Mellon, 198 So. 3d 1140 (Fla. 2d DCA 2016), review granted, SC16-1680 (Fla. Nov. 2, 2016). Additionally, the decision leaves unclear how to allege a separate default in a subsequent foreclosure action. The opinion seems to contradict itself as to the effect of the dismissal on the outstanding installment payments. On one hand, it seems to hold that the mortgage loan is reinstated by the involuntary dismissal such that all installment payments that came due up to the time of the dismissal are wiped clean, and the borrower can resume making monthly mortgage payments as of the date of dismissal (Bartram at 23). While later in the opinion, it states that the parties are restored to their pre-foreclosure complaint status, which would suggest that the borrower must cure all past defaults less than five years old to reinstate the loan (Id. at 24). Finally, the opinion draws a distinction between involuntary dismissals with and without prejudice in relation to the “mortgagee’s ability to collect on past defaults.” Id. at 20. Therefore, when a post-dismissal cause of action for foreclosure accrues and what past payments are at issue in it are open questions.

Industry Impact: What It Means for Servicing

The Bartram decision is not final until the time to file a motion for rehearing expires, or if one is filed, it is ruled upon. Assuming this is the final decision, mortgage servicers may immediately file new foreclosure actions on any loans that are in default where there was a prior foreclosure action that was involuntarily dismissed and the mortgage at issue contains a clause permitting reinstatement after acceleration. This will likely result in the initiation of a round of new foreclosure actions, reigniting an industry which has slowed down significantly over the past few years with thousands of loans that had been in a holding pattern due to prior dismissals. Servicers should consult counsel to determine what default date to allege in their complaint given that the opinion is unclear as to when a new cause of action accrues and what past defaults will be at issue in the new action.


Each Subsequent Default Restarts the Clock in Foreclosure Cases

Specifically, the Supreme Court revisited its decision in Singleton v. Greymar Associates, 882 So. 2d 1004 (Fla. 2004), and analyzed its progeny.  As you will recall, the Supreme Court held in Singleton that each “subsequent and separate alleged default created a new and independent right in the mortgagee to accelerate payment on the note in a subsequent foreclosure action.” 882 So. 2d at 1008.  The court recognized that each separate default presented a distinct issue and therefore res judicata did not apply.  Since the decision in Singleton, both state and federal courts in Florida have applied the court’s reasoning in Singleton to the statute of limitations.

Yesterday, the Supreme Court confirmed that the Singleton analysis applies equally to the statute of limitations.  Therefore, with each subsequent default, the statute of limitations runs from the date of each new default, providing the mortgagee the right, but not the obligation, to accelerate all sums then due under the note and mortgage.  As a result, lenders/servicers are not precluded by the statute of limitations from filing a subsequent foreclosure action based on default dates that occurred after the dismissal of the first foreclosure action, provided that the alleged default occurred within five years of the filing of the subsequent foreclosure action.

The Supreme Court took its analysis one step further and confirmed that the type of dismissal of a previous foreclosure action (whether with or without prejudice) is irrelevant.  Indeed, the court reiterated that after any dismissal, the parties are simply placed back in the same contractual relationship as before, where the residential mortgage remained an installment loan, and the acceleration of the residential mortgage declared in the unsuccessful foreclosure action is revoked or decelerated.

This decisions means that lenders/servicers will still be able to foreclose in those cases where the initial foreclosure action was dismissed due to foreclosure moratoriums or foreclosure firms that went out of business.  Whether the dismissal was with or without prejudice may be relevant only as to the ability to collect on past defaults.  For instance, in those cases where the dismissal was without prejudice, the lender/servicer would be allowed to file a new foreclosure action premised on the same default date as long as the action was brought within five years of the default.  However, in any case, any subsequent default creates a new cause of action and starts the statute of limitations running.


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