Florida lenders cannot foreclose on a residential property without filing a civil lawsuit. The lawsuit must follow all the standard procedural rules of any lawsuit filed in Florida, including meeting the due process requirements of the federal and state constitutions and the prerequisites of the Florida Rules of Civil Procedure.
Parties to the Foreclosure Lawsuit
One of the first requirements for a valid Florida residential foreclosure lawsuit are the lender investigating and determining who should be included as “parties” to the case.
There may be legal entities that must be named as “plaintiffs” alongside the lender, for instance. Most importantly from the perspective of the home owner, the lender must be correct in determining all those that must be named as “defendants” in the foreclosure lawsuit. See, e.g., The Florida Rules of Civil Procedure (1.210) which states:
All persons having an interest in the subject of the action and in obtaining the relief demanded may join as plaintiffs and any person may be made a defendant who has or claims an interest adverse to the plaintiff.
Why is the decision on who is to be named as “plaintiff” and “defendant” in a residential foreclosure action so important? In Florida, if the lender fails to include “indispensable parties” in the case, then the court will not have the authority to render a decision or final judgment.
Indispensable Parties in a Florida Foreclosure Lawsuit
Indispensable parties in a Florida foreclosure are considered to be so crucial to the case that they must be joined in the controversy. The judge cannot order a valid foreclosure without these parties being involved in the litigation.
For instance, a person who holds legal title to mortgaged property is considered to be an indispensable party in a Florida foreclosure lawsuit and must be named as a defendant in the case. The Florida Supreme Court long ago held that the titleholder must be included as a party in order for the trial court to properly adjudicate the matters involved in the foreclosure action. Oakland Prop. Corp. v. Hogan, 96 Fla. 40, 117 So. 846 (1928).
Active or Constructively Before the Court
This does not mean that these indispensable parties must be present in the courtroom. Indispensable parties can be actually present, or constructively before the court. Davanzo v. Resolute Ins. Co., 346 So. 2d 1227 (Fla. 3d DCA 1977).
Necessary But Not Indispensable Parties in a Florida Foreclosure Lawsuit
Conversely, Florida courts have held that any parties that are not considered “indispensable” to the foreclosure lawsuit do not have to be joined in the case in order for the trial court to enter a final judgment granting the foreclosure request.
These “necessary parties” may have a valid interest in the case. Perhaps it would be wise and fair to include them in the case, and name them as parties in the lawsuit. However, if they are considered “necessary” but not “indispensable”, then they do not have to be joined before a final judgment may be rendered. Sudhoff v. Federal Nat. Mortg. Ass’n, 942 So. 2d 425 (Fla. Dist. Ct. App. 2006).
Failure to Join a Necessary Party
The failure, or the calculated decision, of the lender as party-plaintiff to exclude individuals or legal entities that are “necessary” parties to the foreclosure lawsuit will not prevent the judge from ordering the foreclosure to proceed on the home or condo.
It will, however, have no legal impact on the parties who were not joined. If the necessary party is not included in the foreclosure lawsuit, the judge’s final judgement will have no effect on the necessary, but unjoined, party. Sudhoff, 942 So. 2d 425 at 430.
Who Are Indispensable Parties in a Florida Foreclosure Lawsuit?
There is no special Florida law that lists who is considered an “indispensable party” versus who is merely “necessary” in a residential foreclosure lawsuit. Instead, the distinction between the two categories has been determined by the courts in a series of court opinions.
From past case precedent, for example, it has been held that the following are considered to be indispensable parties to a foreclosure action. These parties must be included in the foreclosure lawsuit in order the judge to enter a judgment authorizing foreclosure on the residential property.
1.Spouse Co-Owner
Spouse where spouses are co-owners as tenants by the entirety. Svadbik v. Svadbik, 776 So. 2d 968 (Fla. 3d DCA 2000); Miller v. Washington Mut. Bank, 184 So. 3d 558 (Fla. 4th DCA 2016).
2. True Owner
The true owner of a mortgaged property, or fee simple title holder, or record title owner. English v. Bankers Trust Co. of California, N.A., 895 So. 2d 1120 (Fla. 4th DCA 2005); Citibank, N.A. v. Villanueva, 174 So. 3d 612 (Fla. 4th DCA 2015); Davanzo v. Resolute Ins. Co., 346 So. 2d 1227 (Fla. 3d DCA 1977).
3. Purchaser
The purchaser of a mortgaged property. Holding Elec., Inc. v. Roberts, 530 So. 2d 301 (Fla. 1988).
4. Court-Appointed Receiver
Any receiver appointed by a court who has control over the property sought to be foreclosed. Mantis v. Hinckley, 547 So. 2d 292 (Fla. 4th DCA 1989); In re Receivership of Guarantee Sec. Life Ins. Co., 678 So. 2d 828 (Fla. 1st DCA 1996), on reh’g in part, (Aug. 28, 1996).
5. Land Trust Trustee
A trustee of a land trust is an indispensable party to a foreclosure action. Svadbik v. Svadbik, 776 So. 2d 968 (Fla. 3d DCA 2000).
Confusion with Past Court Precedent
There are several appellate courts that preside over sections of the State of Florida, with the Florida Supreme Court making the final decision when conflicting rulings arise. This means there can be situations where relying upon past court precedent may mean different legal answers on the question of indispensable parties, depending upon which the part of the state the foreclosure action is filed.
For instance, there is no clear answer at the present time regarding whether an owner of fee simple title to a property is indispensable to a foreclosure action related to that residential property. A Florida appeals court in the Fourth District Court of Appeals has ruled that this fee simple title owner is an indispensable party to a foreclosure action. The lender seeking foreclosure in that circuit must include the fee simple title owner in their lawsuit. English v. Bankers Trust Co. of California, N.A., 895 So. 2d 1120 (Fla. 4th DCA 2005).
However, in another circuit, the Florida appeals court ruled that the fee simple title owner is not indispensable, but only a necessary party. The lender here can get a foreclosure judgment without including the fee simple title owner as a party in the case. Lambert v. Dracos, 403 So. 2d 481 (Fla. 1st DCA 1981).
Who Are Necessary Parties in a Florida Foreclosure Lawsuit?
Any individual or legal entity who is materially interested, either legally or beneficially, by the foreclosure lawsuit is considered a necessary party to the foreclosure case. Likewise, anyone (person, company, trust, etc.) who may be directly affected by a foreclosure is a necessary party to the lawsuit.
For instance, when someone owns property and it secures a lien for a lender, then that owner is considered a necessary party to any foreclosure action filed against that property. However, someone who is a guarantor on mortgage note for a residential property but who holds no interest in the property itself is not a necessary party to an action to foreclose on the mortgage.
When a mortgagor’s estranged spouse joined in the mortgage but did not sign the underlying note, that spouse is considered a necessary party to a foreclosure lawsuit.
Proper Parties
Another category of parties are “proper parties.” These are individuals or legal entities (companies, trusts, etc.) that can be legally included in the lawsuit, however it is not error if the party plaintiff choses to exclude them.
Endorsers on a mortgage note who are not parties to the mortgage and have no interest in the residential property are proper parties to the foreclosure lawsuit. They are not considered indispensable or necessary but can participate in the litigation.
Anyone who is not the mortgagee but might have an interest in the proceeds of the mortgage is not considered a necessary party nor an indispensable party. They may be nevertheless be named as proper parties in the foreclosure action if there is a lien at issue, for example.
Foreclosure Lawyer Can Help With Foreclosure Procedure
Getting help from an experienced Florida foreclosure lawyer is important to learn about your legal rights regarding foreclosure lawsuits and the process of being sued for foreclosure under Florida law. Sometimes these issues can be complicated.
- What if you are divorced, and your ex-wife stops making the payments on the beachfront vacation condo you jointly own as part of the divorce settlement? Can the bank foreclose on the condo without your involvement?
- What if you inherited a portion of a family estate and learn that there is a foreclosure lawsuit filed which excludes you as a party?
It may be necessary to litigate your rights regarding the foreclosure lawsuit, or to challenge its validity. In these situations, an investigation of the facts of the cases together with research into longstanding Florida case precedent may be required.
Most foreclosure defense lawyers, like Larry Tolchinsky, will offer a free initial consultation to answer your questions.
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