If you are being sued for foreclosure here in Florida, or you suspect you may be facing foreclosure in your future, then you need to know about this month’s Bartram ruling by the Florida Supreme Court.
1. Why is the Bartram Case so Important?
Opinions issued by the supreme court are the law in our state. They are just as powerful as any law passed by the legislature. There’s no appealing their decision to a higher court (exception: federal constitutional arguments which can proceed in federal court).
Which means, the Bartram case applies to everyone in Florida. And, it’s not good news for those fighting against a foreclosure in our state.
This ruling is a victory for the very same banking industry that caused our foreclosure crisis with robo-signing and all the other fraud. Learn more about Florida Foreclosure Fraud in our free 2011 e-book, “The Non-Lawyer’s Guide to Foreclosure Fraud 2011.”
2. What was the Ruling in the Bartram Case?
The official Florida Supreme Court case is Bartram v. US Bank National Association, No. SC14-1265 (Fla. Nov. 3, 2016). (Click the link to read the entire case in Google Scholar.)
In Bartram, the Florida Supreme Court reviewed the ruling of the Florida Fifth Circuit Court of Appeal. Specifically, it reviewed their decision that a lender can file a second, third, fourth, etc., foreclosure action even if there has been an acceleration of a loan and an involuntary dismissal of the first foreclosure lawsuit.
Two bites of the apple? Yes, said the lower court.
The Fifth Circuit held the bank could foreclose AGAIN if (1) there was another default within 5 years of the new foreclosure lawsuit and (2) the mortgage had language that allowed a right to reinstate the mortgage after acceleration.
Lewis Bartram, the losing homeowner in that case, appealed the decision to the Florida Supreme Court.
Surely the bank can’t keep coming back to foreclose after a Florida court has dismissed the case?
Yes, the Florida Supreme Court ruled. Yes, the bank can foreclose a second time.
What about the statute of limitations? Doesn’t that block the bank from filing a new lawsuit?
No, said the Florida Supreme Court.
Looking at its earlier case Singleton v. Greymar Associates, 882 So. 2d 1004 (Fla. 2004), the Supreme Court ruled the limitations deadline doesn’t block the second foreclosure.
That’s because the statute of limitations deadline starts to run on the date of the subsequent default. It doesn’t keep running from the date of the default stated in the first foreclosure lawsuit.
“… [t]he dismissal returned the parties back to ‘the same contractual relationship with the same continuing obligations…. 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.”
3. What Happened in the Bartram Case?
So, what happened here? Let’s look at the facts of the case.
Lewis Bartram Stops Making Payments on his Mortgage after his Divorce
Lewis Brooke Bartram, the borrower and a Florida home owner, stopped making payments on his $650,000 residential mortgage (and promissory note).
His story began years ago after he and his wife Patricia bought a home in Ponte Vedra Beach, getting a loan from U.S. Bank’s predecessor.
Like most marriages these days, the Bartrams got divorced. Lewis bought his ex-wife’s interest in the Ponte Vedra Beach property as part of their divorce. He signed a note and mortgage to Patricia.
Afterwards, Lewis decided not to pay anyone anything. He made no payments to the bank, or to Patricia, or to the homeowner’s association. So, the bank filed a foreclosure action against Mr. Bartram based upon his non-payment default.
Time passed. Almost five years, in fact.
Bank Foreclosure Gets Dismissed by Trial Court
In May 2011, the trial court dismissed the bank’s 2006 foreclosure case against Mr. Bartram. It did so for two reasons. It seems the bank didn’t show up at a case management conference, plus it was four years over the court’s time standards for foreclosure actions.
The bank appealed this dismissal to the appellate court, and won. Then Mr. Bartram appealed that decision to the Florida Supreme Court.
It reviewing the case, it is important to know some other basic facts about Mr. Bartram (these facts are important to note because sometimes bad facts make bad law):
Mr. Bartram didn’t make his mortgage payments before the bank sued for foreclosure. He also didn’t make any payments to the bank after their foreclosure lawsuit was dismissed.
He lived in his home for years without making a payment.
Five years passed between the time that he stopped making payments and the filing of the SECOND foreclosure action.
4. What the Bartram Case Means to Borrowers
Until this case, many in Florida believed that if the bank failed to pursue its foreclosure action as required by the 5-year statute of limitations then the bank had a problem. If a foreclosure was dismissed, involuntarily, then the bank was barred (under a statute of limitations theory) from bringing a later foreclosure action. Meaning, the defaulting homeowner was no longer obligated to repay the loan.
With this new Supreme Court opinion, that is not how the law works in Florida.
It doesn’t matter that Florida homeowners suffered, in many instances, from years of bank bureaucracy (submitting and resubmitting of paperwork, losing paperwork. etc.) and dealing with lenders (or servicers, MERS, holders of the note, etc) who did nothing to help or who intentionally misled them (offering mortgage modifications and then not following through).
This ruling means that delinquent borrowers cannot assume their fight with their lender ends even if the bank’s foreclosure lawsuit is dismissed by the trial court.
Or, as some may explain it: no more “free houses” for defaulting Florida home owners.
5. What the Bartram Case Means to Lenders
The Bartram case is an important victory for mortgage lenders here in Florida. Until this opinion was released, many argued that a bank had to foreclose within 5 years of the borrower’s first mortgage default, where the bank accelerated the mortgage, or they would be barred by the statute of limitations deadline.
Now, the bank can still foreclose even after an acceleration demand is made.
The Statute of Limitations Does Not Bar All Subsequent Foreclosure Lawsuits
Banks are not barred by the statute of limitations deadline if their first foreclosure action is involuntarily dismissed by a trial court.
Under Bartram, banks can file a second foreclosure lawsuit based upon a defaulted payment that happened after the date of the first foreclosure’s dismissal.
The underlying theory is each time the borrower fails to make a loan payment, it is a new default. Each new mortgage default can be the basis for a new foreclosure action.
The five year limitation time period begins to run on the date of that new default.
From a lender’s viewpoint, based upon the court’s explanation, the mortgage may be an “installment loan” but acceleration of that loan isn’t effective until final judgment is entered. So, if the first foreclosure action is involuntarily dismissed, there was never an acceleration of the installment loan.
What is the Impact of the Ruling?
This case leaves a lot of questions unanswered. Many seasoned Florida real estate lawyers agree. For one thing, decelaration isn’t a defined term or behavior under most residential mortgages. How does it work?
Plus, the ruling doesn’t deal with other important issues in foreclosure cases. It ignores other banking industry problems, like lenders who refuse to take a mortgage payment when it is offered by the borrower. Mortgage lenders are notorious for refusing a payment after they assert there has been a “default” — or where a bank offers a modification but then refuses to honor the deal they offered.
What About the Other Foreclosure Defense Arguments?
There are still arguments to be made by borrowers here in Florida, even after the Bartram ruling. The Bartram opinion does not address every foreclosure defense. It’s a decision based solely upon Florida’s statute of limitations law.
One of biggest issues or arguments that remains is standing. All too often banks file foreclosure lawsuits without standing (the authority or right) to do so.
For details on the standing argument, read about our recent victory against Bank of America on this issue in Barnett v. U.S. Bank Nat. Ass’n, 186 So. 3d 585 (Fla. Dist. Ct. App. 2016).
What Should You Do?
If you are facing a foreclosure in Florida, a good piece of advice is to talk with an experienced Florida real estate lawyer. 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.
Foreclosure Defenses still exist after Bartram.
Related: Florida Foreclosure Appeals
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