Posted By Larry Tolchinsky on June 18, 2013

In Florida, when the mortgage balance is more than the sales price on the home in foreclosure, there is a “deficiency” amount left when the sales proceeds are deducted from the home loan balance due.

That “deficiency” can be the basis for further litigation by the lender against the borrower, and for many years the home owner who had already lost their property to foreclosure had to deal with the real possibility that the bank wasn’t done with him or her.

In fact, many Florida families were shocked to find that years later, after dealing with the financial crisis of foreclosure as well as the emotional burdens that foreclosure places on every family member, the story wasn’t finished.  Lenders had up to FIVE years to try and get that deficiency balance — and a Florida borrower might well have years literally pass before the deficiency claim was demanded by the bank.

We’ve posted on what deficiency claims can do to Florida home owners, for further information see:

• Deficiency Judgments and Past Due Condo Association Payments
• Florida Strategic Defaults: Attitudes Are Changing and Strategic Defaults on Underwater Mortgages May be On the Rise in Florida – Why You Need a Lawyer in a Strategic Default
• Florida Deficiency Judgment Overturned by Florida Court: Bank Loses Deficiency Because it Fails to Provide Valid Evidence of Fair Market Value

 

Florida Deficiency Statute Changed in HB 87:  The Five Year Window Is Gone

When Florida Governor Rick Scott signed the Florida Foreclosure Reform bill into law, many were (and are) of the opinion that the law is unconstitutional and that the courts will find it to be in violation of state and federal constitutional protections against ex post facto (retroactive application) laws.

Today and for the foreseeable future, however, this is a new, valid, recognized statute on the Florida books.  Which means that banks must abide by it, just like home owners.

Under the new law, deficiency claims are addressed as follows:

95.11 Limitations other than for the recovery of real property.—Actions other than for recovery of real property shall be commenced as follows:

(2) WITHIN FIVE YEARS.—

(b) A legal or equitable action on a contract, obligation, or liability founded on a written instrument, except for an action to enforce a claim against a payment bond, which shall be governed by the applicable provisions of paragraph (5)(e), s. 255.05(10), s. 337.18(1), or s. 713.23(1)(e), and except for an action for a deficiency judgment governed by paragraph (5)(h).

(5) WITHIN ONE YEAR.—

(h) An action to enforce a claim of a deficiency related to a note secured by a mortgage against a residential property that is a one-family to four-familydwelling unit. The limitations period shall commence on the day after the certificate is issued by the clerk of court or the day after the mortgagee accepts a deed in lieu of foreclosure.

Section 2. The amendments made by this act to s. 95.11, Florida Statutes, apply to any action commenced on or after July 1, 2013, regardless of when the cause of action accrued.  However, any action that would not have been barred under s. 95.11(2)(b), Florida Statutes 2012, before the effective date of this act must be commenced within 5 years after the action accrued or by July 1, 2014, whichever occurs first.

 

One Year Statute of Limitations on Deficiency Judgments in Florida

What this means is that banks and mortgage lenders in Florida now have much less time to go after borrowers for any amount left due and owing on the home loan if the sale of the foreclosure property does not cover the balance due on the home loan.

Larry Tolchinsky’s Tip:

The new Foreclosure Reform law (HB 87) changes the Florida Statutes so now the Florida statute of limitations period for a mortgage lender to enforce a deficiency judgment that the bank has obtained as part of the foreclosure lawsuit is down from 5 years to 1 year.  However, this only applies to certain foreclosures:

• the limitations deadline of 12 months applies to Florida foreclosure judgments involving real estate defined as 1-family to 4-family dwelling units; and
• it only applies to any deficiency actions from July 1, 2013 forward — doesn’t matter when the foreclosure claim began.

This is good news for Florida home owners.  However, even better news for a Florida home owner would be to negotiate away that deficiency with the lender, as part of a loan modification, short sale, or foreclosure defense strategy.

Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

“I’m happy to take your call.”

No Comments
Tags: Bank of America Foreclosures, BofA Foreclosures, Deficiency Judgments, Florida Real Estate Foreclosures, Foreclosure defense attorney, Foreclosure Help

Posted By Larry Tolchinsky on June 13, 2013

No Comments
Tags: Broward Real Estate, Florida Real Estate

Posted By Larry Tolchinsky on June 11, 2013

Governor Rick Scott sat down at his Governor’s desk on June 7, 2013, picked up his pen and signed lots of bills into law that were sent to him by the Florida Legislature. Rick Scott signed things like the Veteran’s Organizations Bill (SB 390) and the Emergency Medical Services bill (SB 530) into law – good things.

However, Governor Scott also did something that many believe is wrong – and unconstitutional – on that day, when he signed HB 87 into law. Interestingly, Governor Scott sent a letter along with his approval of the legislation, giving his reasons for approving the foreclosure reform law, you can read it here:

 

Among his reasons:  his perception that this law will ”bring more certainty to the housing market…” as “[t]his process will put these homes back onto the housing market and allow Florida families who have experienced a foreclosure to begin working to repair their credit and finances.”

New Florida Foreclosure Reform Law Hurts People

We’ve discussed some of the problems of this proposed legislation in prior posts including:

• Florida House Passes “Foreclosure Reform” Bill HB 87: Travesty of Justice for Florida Home Owners and Florida Borrowers – Here’s Why
•  Florida Legislature Annual Session Begins Today: Proposed Laws That Impact South Florida Home Owners In a Big Way Are on the Table

However, some are going a step further than rallying against the law (like we have along with others like Florida State Senator Darren Soto). There are some that are considering filing a lawsuit to stop this law from being implemented.

Why? What’s wrong here? 

Florida HB 87 Hurts Florida – and Florida Homeowners

It is true that the Florida Legislature (after two years of trying) has passed the Florida Foreclosure Reform Bill and Florida’s Governor has signed it into law.  It is effective as of June 7, 2013 (the date that the governor signed it) and many of its provisions will be valid Florida law in a matter of days (July 1, 2013).

However, the fight is not over — there are constitutional issues to be addressed here, and judicial review of the constitutionality of the new law is inevitable — it’s really a question of what lawsuit is going to bring this argument before a Florida court first.

1. Federal due process violations

The reality is that this new law may be used to force Florida homeowners out of their homes without respecting their constitutionally guaranteed due process. The new law will allow banks to take and keep legal title to property in wrongful foreclosures and prevent the homeowner from getting that family home returned to them.

The home is lost to them forever, despite being victims of a bank’s bad acts, under this new Florida statute.  This would arguably violate the United States Constitution’s prohibition against retroactive application of laws in its Art 1, § 9 and Art. 1 § 10 which provide:

No bill of attainder or ex post facto Law shall be passed….

No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility.

 

2. Florida state constitutional violations

Additionally, one of our colleagues is arguing (and has written Governor Scott on this issue) that the new law arguably violates the Florida Constitution as well, insofar as it is an unconstitutional impairment of contracts , going against Article I, Section 10 of the Florida Constitution, which states:

SECTION 10. Prohibited laws.—No bill of attainder, ex post facto law or law impairing the obligation of contracts shall be passed. 

Larry Tolchinsky’s Tip:

Florida homeowners already suffering from the emotional and financial impact of a Florida foreclosure fight don’t need more stress in their lives — but the reality is that this new law is not going to make things easier for the families facing the loss of their homes.  Now, more than ever, it’s important to recognize that the courtroom may be the true battlefield for justice in these Wild West times of Florida law.  It’s true that the legislative branch and the executive have done their work here, but the judicial branch still exists to check and balance what they’ve done against a constitutional framework.   This fight’s not over.

Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

“I’m happy to take your call.”

No Comments
Tags: Bank of America Foreclosures, BofA Foreclosures, Broward Real Estate, Florida Homestead, Florida Law, Florida Real Estate, Foreclosure defense attorney, Foreclosure Help, Foreclosure Lawsuit, Wrongful Foreclosure

Posted By Larry Tolchinsky on June 6, 2013

No Comments
Tags: Florida Real Estate, Foreclosure Fraud, Property foreclosure

Posted By Larry Tolchinsky on June 4, 2013

In Florida, one result of the past few year’s foreclosure fraud crisis has been chaos for condo associations across the state as Florida condo unit owners have become delinquent in paying assessments. Often, strapped condo owners make arrangements with their lenders regarding deficiency judgments but fail to do the same with their condo associations.  It’s a very risky road to take.

Florida Condo Associations Have the Power to Sue for Past Due Assessments 

Florida Statute 718.103 defines an “assessment” as follows:

“Assessment” means a share of the funds which are required for the payment of common expenses, which from time to time is assessed against the unit owner.

When assessments go unpaid, the Florida Condo Association faces continuing responsibilities for the upkeep and maintenance without having that assessment revenue, which can be very disruptive and create an Association anxious to find ways to fill that void.  More and more, particularly in South Florida, condominiums are the subject of foreclosure and in these situations the condo owner is usually more concerned with the fight over the bank foreclosure than the past due condo assessments.

Meanwhile, since Florida foreclosures are notorious for how long they take to get from start to finish, the condo association cannot set a specific time frame to predict when the foreclosure action, if it has been filed, will be completed and assessments will return.

Accordingly, Condo Associations often try to push foreclosing banks to get things moving, because that Association wants to recoup its past due assessments (along with its legal fees) as soon as possible.

The Condo Association isn’t limited to applying pressure on the foreclosing bank in these situations.  They can sue to get paid.

As we have discussed before, a Florida Condo Association can also file its own lawsuit against the condo owner who has stopped paying their condo assessments.  Additionally, the Association can file a foreclosure action, based upon past due assessments, against a bank who has foreclosed upon a condo unit and failed, as its new owner, to pay the assessments.

Florida Statutes Authorize Condo Owner Association to Pursue Assessments in Court

Florida Statute §718.116 applies in these situations.  This Florida lien law provides that the financial liability of the lender (first mortgagee) is limited by the Condo Owner Association’s covenants, and whether or not the Condo Association can collect will depend upon the documentation applicable to the Condominium Association as well as the language contained in the mortgage and loan documents.

Furthermore, Florida’s Condominium Act (Chapter 718) places the responsibility for payment of all assessments that became due while an individual legally owned a Florida condo upon that person.

From Florida Statute 718.116:

A unit owner, regardless of how his or her title has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable for all assessments which come due while he or she is the unit owner. Additionally, a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title. This liability is without prejudice to any right the owner may have to recover from the previous owner the amounts paid by the owner.

(b)1. The liability of a first mortgagee or its successor or assignees who acquire title to a unit by foreclosure or by deed in lieu of foreclosure for the unpaid assessments that became due before the mortgagee’s acquisition of title is limited to the lesser of:

a. The unit’s unpaid common expenses and regular periodic assessments which accrued or came due during the 12 months immediately preceding the acquisition of title and for which payment in full has not been received by the association; or

b. One percent of the original mortgage debt. The provisions of this paragraph apply only if the first mortgagee joined the association as a defendant in the foreclosure action. Joinder of the association is not required if, on the date the complaint is filed, the association was dissolved or did not maintain an office or agent for service of process at a location which was known to or reasonably discoverable by the mortgagee.

Larry Tolchinsky’s Tip:

Florida condo owners need to know that a Florida Condo Owner Association can sue a condo homeowner for a deficiency judgment and seek recovery against their other assets (bank accounts, stocks, bonds, etc…) if the Association isn’t made whole on past due assessments, regardless of whether the Association is the party filing foreclose on the condo or if the Association is wiped out by a mortgage foreclosure filed by the mortgage lender. In today’s Wild West of Florida real estate law, Condo Associations are gunning to be repaid and condo owners need to be prepared fight against a deficiency judgment lawsuit.

For more information, check out these posts:

• Florida Condo Owners: 3 Things You Should Know About Your HOA Rights as a Member of a Florida Condominium Association
• For Owners, Renters, HOAs, Timeshare and Condo Boards – Alert: 4 New Laws Effective July 2012 for Florida Condos and Florida Timeshares

 

Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

“I’m happy to take your call.”

No Comments
Tags: Condo Law, Condominium Lawyer, Deficiency Judgments, Florida Condo Law, Florida Condominium