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Unfortunately in Florida, foreclosure lawsuits still fill the civil trial dockets and some homeowners are still fighting some of the same foreclosure issues that has plagued our real estate industry for years.  Fortunately, the appellate court has been helping homeowners with some of these issues by finding the banks have gone too far.

Read: Florida Foreclosure Appeal on The Issue of Standing

An interesting case from the Fifth Circuit Court of Appeals on Service of Process

This brings us to a recent case out of the Fifth District Court of Appeals. The court’s ruling in this case is something that should concern all residential property owners in Florida, especially those fighting foreclosure or those fretting that they may fall behind in their mortgage payments.

This is because this case illustrates that without personal notice to the borrower, the bank could foreclose on the property.

March 31, 2017 Opinion in Archer v. U.S. Bank

In early 2017, the Fifth District Florida Court of Appeals decided that it could not review an order made by a trial court relating to US Bank failing to meet statutory prerequisites for notice.  The homeowner believed his rights were violated because the bank served him by publication rather than by personal service.

The result of the appeal was that the appeals court said it lacked jurisdiction to hear the issue related to a “nonfinal” order.

The full text of this Orange County case can be read online as Archer v. US Bank National Association, No. 5D16-1970 (Fla. Dist. Ct. App. Mar. 31, 2017).

Paul Archer fights foreclosure; there is a substituted bank

The case began when the lender filed a foreclosure lawsuit in Orange County naming Paul Archer as defendant.  Mr. Archer executed a mortgage with this lender and failed to make his required mortgage payments.

At some point, as happens in so many Florida foreclosures, one bank substituted for another. In this case, U.S. Bank National Association (US Bank) substituted in the lawsuit as the party plaintiff.

It wasn’t long before US Bank ran into problems with locating Mr. Archer personally, so US Bank opted to serve him with the requisite notice by publication.

Eventually, Mr. Archer learned of the foreclosure proceeding and hired a foreclosure defense lawyer.  Thereafter, a motion to quash the constructive service by publication was filed by Archer with the trial court.

Motion to Quash Notice as Failing Florida Statutory Requirements

In this motion, Archer argued that US Bank had not done enough to track him down and notify him of the foreclosure lawsuit filed against him.

Specifically, the borrower argued that the bank had failed to meet the notice requirements of Florida Statute  49.031 and Florida Statute 49.041.

The trial court denied the motion to quash the notice.  So, Mr. Archer appealed the trial court’s decision to deny his motion and the appeals court ruled against him, too.

The appellate court opinion was that:Because the nonfinal order did not determine personal jurisdiction over Archer, it is not appealable under Florida Rule of Appellate Procedure 9.130(a)(3)(C)(i), and this Court lacks jurisdiction. We therefore dismiss the appeal.”

Constructive Notice and Service by Publication

When US Bank filed its foreclosure lawsuit, it was required to let the borrower know that the suit had been filed.

According to Florida law, every plaintiff must serve the defendant with an official notice that a lawsuit has been filed.  This is true for every case that is filed in Florida, not only for foreclosure actions.

There are different ways to accomplish this official notice to the defendant.  One of them is through “constructive service” or “constructive notice.”

“Service by publication” is a form of constructive service and is done in foreclosure cases as well as quiet title actions, paternity actions, and more.  See Florida Statute 49.011.

Basically, the Bank, as plaintiff, served the defendant, Archer, with the lawsuit by publishing the notice.

Personal Jurisdiction of the Court

Personal jurisdiction is the courts power, or authority, to bring a person before it to decide issues related to that person.

In order to exercise jurisdiction over a person, the law must be followed closely, including proper notice.

Of course, the requirement of personally serving someone creates a temptation for that person to hide from a lawsuit. That’s why there are procedural rules for service in ways other than personal service of a lawsuit on a party.

Can The Constructive Notice Procedure Be Abused By Banks?

There is a temptation to use constructive notice and move forward in a case without making every effort to track down a defendant in a foreclosure lawsuit.

That’s why there are all sorts of steps that need to be followed by a plaintiff who serves notice by publication. For example, a sworn statement is required under Florida Statute 49.041.  That sworn statement has to explain how a “diligent search” was made to try and locate the defendant in order to serve him or her with the complaint.

In many foreclosure cases, the property is abandoned.  The borrower has moved on, and has accepted that the bank will get a foreclosure judgment and repossess the home.  So, there is no defense to the lawsuit and thus, the borrower doesn’t hire a lawyer and fight against it.

In these cases, the bank often serves the homeowner using constructive notice simply because the borrower has moved outside the state and cannot be found.

The concern with the ruling in Archer v. U.S. Bank is this:  Mr. Archer wanted to defend against the foreclosure lawsuit. It didn’t matter that the bank didn’t use its best efforts to try and locate him.

In Rem versus Personal Jurisdiction

According to the appeals court in this decision, a distinction is made between jurisdiction over the borrower (Archer) and over the property itself.

The court ruled that constructive notice conferred “in rem” jurisdiction for the trial court over the property.  Not jurisdiction over the person of Mr. Archer. – See: Milanick v. State, 147 So. 3d 34, 35 (Fla. 5th DCA 2014); Bedford Computer Corp. v. Graphic Press, Inc., 484 So. 2d 1225, 1227 (Fla. 1986).

In Florida foreclosure lawsuits, the court held that the bank only needs “in rem” jurisdiction because the court only needs authority over the property to file a foreclosure lawsuit. See: NCNB Nat’l Bank of Fla. v. Pyramid Corp., 497 So. 2d 1353, 1355 (Fla. 4th DCA 1986); Also see: Florida Statute 49.011(1).

Can The Bank Get A Deficiency Judgment?

Personal jurisdiction is required by a bank in order to obtain a deficiency judgment against the homeowner.  However, constructive (published) notice is enough for a Bank to foreclose on real property. This was not a deficiency action to collect money owed by the homeowner, it was just an action to foreclose on real property.

What should You Do?

This appellate decision allows a substituted bank to foreclose on property despite a challenge on whether or not it followed the statutory requirements for personally notifying the homeowner of the filing of a foreclosure lawsuit.  After all, notice and the opportunity to be heard are fundamental rights that are enumerated in our constitution.

If you are facing a foreclosure in Florida and you believe you weren’t properly served with the foreclosure lawsuit, a good piece of advice is to talk with an experienced Florida real estate lawyer to learn about the legal defenses that are available to you. 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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