Thursday, January 29, 2015

FYI: Fla App Ct (2nd DCA) Rules Foreclosure Not Time-Barred, As Maturity Date Not Ascertainable on Face of Recorded Mortgage

The District Court of Appeal of Florida, Second District, recently reversed a trial court’s dismissal of a foreclosure complaint as time-barred, as the trial court erred in applying a five-year statute of repose, rather than the applicable twenty-year statute of repose.


The Second DCA determined that where the maturity date of the obligation being sued upon cannot be determined by reviewing the public records, then the applicable time limit on filing suit to foreclose is twenty years.  Accordingly, the Second DCA opined that trial court erred in finding the foreclosure complaint barred by Florida’s 5-year statute of repose.


The Second DCA also reversed the dismissal, as the recorded mortgage contained a provision that waived the statute of limitations or repose as a defense.  


In sum, even though the obligation sued upon matured outside of the statute of limitations and the unit owners being sued were not a party to the original mortgage, the recorded mortgage contained a provision waiving the statute of limitations as a defense and Florida law does not allow a subsequent purchaser to challenge the validity of a prior recorded mortgage, the Second DCA determined that the trial court erred in dismissing the foreclosure complaint as barred by the statute of limitations. 


A copy of this opinion is available at:,%202015/2D13-5286.pdf


By way of background, the mortgagee was a servicing agent for a group of lenders that financed a $29 million condominium project in 2005.  The original mortgagor, the developer of the condominium project, signed a promissory note that was secured by a mortgage that was subsequently recorded on December 16, 2005.  The note had a maturity date of November 30, 2009, and this date was also set forth in the recorded mortgage.


However, in addition to the note and mortgage, the mortgagor also signed a separate loan agreement containing additional terms and conditions.  This loan agreement was to mature “twelve months after the Mortgage is recorded.”  The terms of the loan agreement were incorporated by reference into the recorded mortgage, yet the recorded mortgage did not identify the maturity date of the loan agreement.  Based upon the date the mortgage was recorded, the loan agreement’s maturity date was December 16, 2006.


The loan agreement required that the original mortgagor pay the mortgagee a “release fee” when each condominium unit was sold to a residential buyer. For some time, the original mortgagee complied with this requirement, however “as to forty-five of the units sold by [the original mortgagor], [the mortgagee] did not receive the release fee from either [the original mortgagor] or the purchasers.” 


The original mortgagor went into bankruptcy at an unknown point, and after extended bankruptcy proceedings, the mortgagee filed the subject foreclosure complaint in March of 2013 against the unit owners of the forty-five units at issue.  Six of these unit owners moved to dismiss the complaint, and the trial court, citing to Florida’s five-year statute of limitations (Fla. Stat. §95.11(2)(c)) and the purportedly applicable five-year statute of repose (Fla. Stat. §95.281(1)(a)), dismissed the complaint as barred under the applicable statutes.


However, in its opinion reversing the dismissal of the foreclosure action as to the six moving unit owners, the Second DCA first addressed the statute of limitations issue.  As you may be aware, section 95.11(2)(c) “provides that an action to foreclose a mortgage must be commenced within five years from when the right to foreclose accrues.”  See, e.g., Travis Co. v. Mayes, 36 So. 2d 264 (Fla. 1948).  If, as here, “the default is based on the failure to make the final payments, the limitations period runs from the maturity date of the note.” 


In this action, “the maturity date of the note was November 30, 2006” and the maturity date of the loan agreement was December 16, 2006, meaning that the “limitations period expired as to these obligations no later than December 16, 2011.”  Given that the mortgagee’s foreclosure complaint was not filed until March 15, 2013, the Second DCA indicated that “it initially appear[ed] that [the mortgagee’s] action [was] barred by the statute of limitations.”


That said, the recorded mortgage explicitly “waiv[ed] the statute of limitations as a defense to a foreclosure action.”  Notably, Florida law expressly estops a subsequent purchaser of real property from challenging the validity of a prior recorded mortgage encumbering said property.  See, e.g., Eurovest, Ltd. V. Segall, 528 So. 2d 482 (Fla, 3d DCA 1988). Accordingly, as “the complaint alleges that the unit owners took title to their units subject to the prior recorded mortgage, and the recorded mortgage waives the statute of limitations as a defense,” the Second DCA ruled that the trial court erred in dismissing the foreclosure complaint as barred by the statute of limitations.


In addition, the Second DCA also addressed the trial court’s dismissal of the foreclosure complaint on the basis of Florida’s statute of repose. 


The Appellate Court noted that the difference between a statute of limitations and a statue of repose is that the latter is substantive, barring both accrued and unaccrued causes of action brought or perfected beyond the period set forth in the statute.  See, e.g., WRH Mortgage, Inc. v. Butler, 684 So. 2d 325 (Fla. 5th DCA 1996). “The purpose of a statute of repose is to set a definitive time limitation on a valid cause of action even if there are circumstances that would make it difficult to discover.” Nehme v. Smithkline Beecham Clinical Labs., Inc. 863 So. 2d 201, 208 (Fla. 2003).


Originally, the trial court had applied the five-year statute of limitations found in section 95.281(1)(a), Florida Statutes, which applies “[i]f the final maturity of an obligation secured by a mortgage is ascertainable from the record of it[.]” “A maturity date is ‘ascertainable from the record of it’ if the maturity date can be determined by reading the public records.”  See, e.g., Layton v. Bay Lake Ltd. P’ship, 818 So. 2d 552 (Fla. 2d DCA 2002). 


The Appellate Court held that, here, the maturity date of an obligation could not be ascertained from the face of the recorded mortgage, and therefore that the twenty-year statute of repose set forth in section 95.281(1)(b) applies (calculated from the date of the mortgage, rather than the maturity date).


The Appellate Court explained that “there were two obligations secured by the mortgage – the note and the loan agreement.”  Whereas the maturity date of the loan agreement was not identified in the recorded mortgage, the Second DCA opined that because the maturity date of “all of the obligations secured by the recorded mortgage was not ascertainable from the face of the record of the recorded mortgage,” the twenty-year statute of repose, not the five-year statute, applied to the foreclosure complaint.


Accordingly, the Second DCA reversed the trial court’s dismissal of the foreclosure complaint and remanded for further proceedings.





Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874


Admitted to practice law in Illinois





NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.

Our updates are available on the internet, in searchable format, at: