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Last Update: 08/01/16

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In Florida, when the mortgage balance is more than the sales price of a home in foreclosure, there is a “deficiency” – stated another way – the deficiency is the amount due the lender when the sale proceeds in a short sale are not enough to pay the loan balance.

That “deficiency” can be the basis for further litigation by the lender against the borrower, and for many years home owners, those who were already dealing with the loss of 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:


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:


(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).


(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.

[Read: July 2014 Deadline for Older Foreclosure Deficiency Judgments – Small South Florida Banks and Credit Unions Increasingly Aggressive on Deficiency Collection Efforts]

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.

A good piece of advice if you are faced with a deficiency action is to at least speak with an experienced Florida real estate lawyer to learn about your rights. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.


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Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

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