Tuesday, September 1, 2015

FYI: Fla App Ct (2nd DCA) Rejects Mortgagee's Attempt to Limit Liability for HOA Dues After Foreclosure Completed

The District Court of Appeal of Florida, Second District, recently reversed a trial court's order in a mortgage foreclosure action limiting the liability of a loan servicer who acquired title by foreclosure for past-due condominium assessments, holding that the trial court lacked subject matter jurisdiction because the specific issue of assessments was not litigated or adjudicated by the trial court.


A copy of the opinion is available at:  Link to Opinion


The owner of a condominium unit failed to pay his mortgage loan, resulting in the loan servicer suing to foreclose the mortgage and obtaining title at the foreclosure sale as the highest bidder.


The condominium association sought to collect past-due assessments and related charges from the loan servicer.


One year after the final judgment was entered in the foreclosure, the loan servicer filed a motion to enforce the final judgment or, in alternative, to amend the certificate of title, seeking to clarify how much in past-due assessments it owed to the condominium association.


The association responded to the motion, arguing that the trial court lacked jurisdiction because the order contained only a general reservation of jurisdiction. The trial court disagreed, granted the motion, and limited the servicer's liability to the lesser of the unit's unpaid common expenses and regular periodic assessments which accrued or came due during the 12 months immediately preceding the acquisition of title or one percent of the marginal mortgage debt pursuant to subsection 718.116(1)(b) of the Florida Condominium Act.


Citing an opinion from its sister Third District Court of Appeals, the Appellate Court quickly concluded that the trial court lacked jurisdiction, because entitlement to assessments was neither litigated nor adjudicated and the trial court did not specifically reserve jurisdiction to determine the amount of assessments pursuant to section 718.116(1)(b).


The Second District agreed with the reasoning of its sister court that "[i]n a foreclosure case, after entry of a final judgment and expiration of time to file a motion for rehearing or for a new trial, the trial court loses jurisdiction of the case unless jurisdiction was reserved to address that matter or the issue is allowed to be considered [post-judgment] by statute or under a provision of the Florida Rules of Civil Procedure."


Because the final judgment of foreclosure in the case at bar, like in the case relied upon as precedent, did not address the issue of assessments, but instead established the priority of liens against the subject property and contained only a general reservation of jurisdiction, the Court held that "[o]nce the final judgment of foreclosure was entered and the foreclosure sale took place, there was nothing left for the trial court to enforce."


Accordingly, the order limiting the servicer's liability for assessments was reversed, and the case remanded with instructions to dismiss for lack of jurisdiction.





Ralph T. Wutscher
Maurice Wutscher LLP
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Email: rwutscher@MauriceWutscher.com


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