Wednesday, June 19, 2013

FYI: Florida Enacts Extensive Changes to Its Foreclosure Laws

As widely reported, Florida recently enacted extensive changes to its foreclosure laws. 


The text of the new legislation (CS/CS/HB 87, now Chapter No. 2013-137) is available at:


Among other things, the changes include:

Actions to Enforce Deficiency (Sections 95.11, 702.06, F.S.).  The statute of limitations for actions for a deficiency judgment on a residential foreclosure action is now 1 year from the day after the foreclosure certificate is issued by the court, or the day after the mortgagee accepts a deed in lieu of foreclosure.  In addition, for owner-occupied residential property, the amount of the deficiency may not exceed the difference between the judgment amount, or in the case of a short sale, the outstanding debt, and the fair market value of the property on the date of sale.


Pleading Standing (Section 702.015, F.S.).  For residential foreclosures, the complaint must plead the plaintiff's standing to foreclose.  For all foreclosures, "the complaint shall describe the authority of the plaintiff and identify, with specificity, the document that grants the plaintiff the authority to act on behalf of the person entitled to enforce the note."  In addition, for all foreclosures, "[i]f the plaintiff is in possession of the original promissory note, the plaintiff must file under penalty of perjury a certification with the court, contemporaneously with the filing of the complaint for foreclosure, that the plaintiff is in possession of the original promissory note."  These provisions do not apply to foreclosures as to timeshare interests.


Lost, Stolen or Destroyed Notes (Section 702.015, F.S.).  For all foreclosures, if the plaintiff seeks to enforce a lost, destroyed, or stolen instrument, a detailed affidavit executed under penalty of perjury and contained specific defined content must be attached to the complaint.


Finality of Mortgage Foreclosure Judgments (Section 702.036, F.S.).  Challenges to a completed foreclosure will be treated as solely as a claim for monetary damages, if:  (a) the party seeking relief was properly served;  (b) a final judgment of foreclosure was entered; (c) the time to appeal has run; and  (d) the collateral was sold to an unaffiliated third-party without a lis pendens or other such notice having been recorded.  In addition, in actions involving lost, stolen or destroyed notes, the Act cuts off claims to the collateral by persons entitled to enforce the instrument following conveyance of the collateral to an unaffiliated third party.


Adequate Protections for Lost, Destroyed, or Stolen Notes in a Mortgage Foreclosure (Section 702.11, F.S.).  The Act specifies what constitutes "reasonable means of providing adequate protection" under Section 673.3091, which is the statutory provision relating to the enforcement of a lost, destroyed or stolen instrument, in a foreclosure action involving such an absent instrument. 


Any security given must be on terms and in amounts set by the court, must run through the applicable statute of limitations for enforcement of the note, and must indemnify the maker of the note against any loss or damage that might occur by reason of a claim by another person to enforce the note. Recovery of damages and costs and attorney fees may be sought against the person who wrongly claims to be the holder of a lost, stolen, or destroyed note or against the adequate protections described above.  The Act also clarifies that the actual holder of the note need not also pursue recovery against the maker of the note or any guarantor.


Alternative Foreclosure Procedure (Section 702.10, F.S.).  The amendments to Section 702.10 create an alternative procedure that is designed to speed up the foreclosure process in uncontested cases or cases where there is no legitimate defense.


The following is a brief outline of this alternative foreclosure process:

         After a complaint has been filed, the plaintiff may request an order to show cause for the entry of final judgment and the court must immediately review the complaint.

         If the court finds that the complaint is verified, and alleges a proper cause of action, the court must issue an order directing the defending the show cause why a final judgment should not be entered.

         The order must set a date and time for the hearing, not sooner than 20 days after the service of the order to show cause, or 30 days if service is obtained by publication, and no later than 45 days after the date of service.

         The defendant can file defenses by a motion or by sworn or verified answer or appear at the hearing.  If the defendant raises a genuine issue of material fact which would preclude the entry of summary judgment or otherwise constitute a legal defense to foreclosure,  the expedited judgment will not be available.

         The court need not hold a hearing for determination of reasonable attorney fees if the requested fees do not exceed 3% of the principal owed on the note at the time of filing.

         The court may enter a final judgment if the defendant has waived the right to be heard or has not shown cause why a final judgment should not be entered.


Additionally, if the property is not owner-occupied residential real estate, the plaintiff may request a court order directing the defendant to show cause why an order to make payments during the pendency of the proceedings or an order to vacate the premises should not be entered.


         The order must set a date and time for the hearing, not sooner than 20 days after the service of the order, or 30 days if service is obtained by publication.

         The defendant can file defenses by a motion or by sworn or verified answer or appear at the hearing, which prevents entry of a final judgment.

         The court may enter an order requiring payment or an order to vacate if the defendant has waived the right to be heard.

         If the court finds that the defendant has not waived the right to be heard, after reviewing affidavits and evidence, the court can determine if the plaintiff is likely to prevail in the foreclosure action, and enter an order requiring the defendant to make the payments or provide another remedy.

         The court order must be stayed pending final adjudication of the claims if the defendant posts bond with the court in the amount equal to the unpaid balance of the mortgage.


The Act also requests that the Supreme Court amend the Rules of Civil Procedure to provide for expedited foreclosure proceedings and related forms in conformity with Section 702.10, F.S.


Effective Dates:


The act was approved by the Florida Governor on June 7, 2013.  Many of the provisions were given retroactive effect. 

However, new Section 702.015 (elements of a foreclosure complaint; lost, destroyed or stolen note affidavit) applies to cases filed on or after July 1, 2013.  In addition, the amendments to Section 702.10 (order to show cause; entry of final judgment of foreclosure; payment during foreclosure), and new Section 702.11 (adequate protections for lost, destroyed, or stolen notes in mortgage foreclosure) "apply to causes of action pending on the effective date of this act." 



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
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