Within the past year there has been a lot of buzz regarding the foreclosure statute of limitations. In Florida, it requires that a foreclosure lawsuit be filed within five years of the borrower’s default. It’s been largely understood by the courts that the dismissal of a foreclosure case, technically resets the statute of limitations upon the subsequent default following the dismissal. In other words, each time a payment is missed, the five-year period to file a foreclosure is reset. Under this theory, the bank would never run out of time to file a new suit. However, a recent case brought to the Third District Court of Appeals challenges this theory, thus the issue will need to be heard before the Florida Supreme Court in 2015.
Earlier this year, two notable cases were brought to the appellate court. The first was in the Fifth District Court of Appeal, U.S. Bank v. Bartram, which held that the statute of limitations is activated by the acceleration documents. Acceleration documents are triggered by defaulting on the mortgage payment, so each month that the payment is missed is a new opportunity for the bank to file acceleration documents. Shortly thereafter, the Fourth District Court of Appeal in Evergrene v. Citibank concurred with the Bartram decision.
These issues were not brought up before because very few of the foreclosure cases had reached maturity prior to this past year. Many peers in the foreclosure defense community are not satisfied with this decision because it allows the lender an infinite amount of time to file foreclosure on a home. If the state allows this to continue, it will be much more difficult for Florida to recover from the housing collapse.
This December, the Third District Court of Appeal chimed in with their decisions in Deutsche Bank v. Beauvais. The Third DCA disagreed with the two aforementioned decisions, stating that the court’s dismissal of the initial foreclosure “did not by itself negate, invalidate or otherwise decelerate the lender’s acceleration of the debt in the initial action.” Since the bank didn’t take any action to reinstate the loan pursuant to the dismissal, the statute of limitations remains initiated by the original date of acceleration.
Of course, this decision also has clear ways around it. By attempting to reinstate the mortgage loan after the dismissal, the lender can protect themselves. However, the decision seems to be going in the right direction, by bringing more focus towards a resolution between the lender and the homeowner. The Graham Legal team is highly interested in the decision to be made by the Florida Supreme Court, we will be observing this quite closely throughout 2015.