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The Eradication of Statute of Limitations in a Foreclosure Lawsuit

The Florida Supreme Court finally released its opinion in the long awaiting Bartram decision essentially eradicating the long-standing Statute of Limitations rule to foreclose on a mortgage. Pursuant to Section 95.11, Florida Statutes, “a legal or equitable action on a contract, obligation, or liability founded on a written instrument…” as well as “an action to foreclose a mortgage,” is provided five (5) years within which to commence, or otherwise be deemed void as a matter of law and equity. Fla. Stat. Ann. § 95.11(2)(b)-(c). As such, the law used to hold that lenders would need to file a foreclosure action no later than 5 years after the alleged default. The Supreme Court opinion in Bartram v. US Bank National Association, Case No. SC14-1266 (Fla. 2016) disposed of that notion, essentially holding that acceleration of payments due under a residential note and mortgage with a reinstatement provision in a foreclosure action that was dismissed pursuant to Rule 1.420(b), does not trigger the application of the statute of limitations to prevent a subsequent foreclosure action by the bank based on payment defaults occurring subsequent to the dismissal of the first foreclosure suit, as long as the subsequent default occurred within 5 years of the subsequent foreclosure action. The Court applied a res judicata rationale cited in Singleton v. Greymar Associates, 882 So. 2d 1004 (Fla. 2004) where “Subsequent and separate alleged default created a new and independent right in the mortgagee to accelerate payment on the note in a subsequent foreclosure action.” Singleton, 882 So. 2d at 1008. Justice Lewis wrote a concurring opinion, which means he agreed with the result but not the rationale. Justice Lewis was concerned that applying res judicata to a statute of limitations case failed to consider procedural distinctions. He noted that the decision failed to address evidentiary concerns regarding how to determine the manner in which a mortgage may be reinstated as well as whether a subsequent and separate default occurred. He disagreed with the Majority, that “flatly [held] that the dismissal itself —for any reason—“decelerates” the mortgage and restores the parties to their positions prior to the acceleration” arguing that there was no evidence in the record to show whether there was an agreement to a de facto reinstatement. He believed that banks should be required to put on evidence that the mortgage was actually decelerated and reinstated. He was further concerned that applying an equitable, judicial doctrine to an area of law governed by legislative action may create a separation of powers issue.

Justice Lewis raised a whole host of issues that could and should spawn subsequent legal precedent addressing some of the many flaws and assumptions expressed in the reasoning underpinning the Bartram holding. What is obvious from the ruling, is that the Court did not want to create a windfall for homeowners by allowing them to obtain a “free house” after years of non-payment on their mortgage. The Bartram decision will no doubt create a surge of foreclosure re-filings in Florida for years to come by way of a very questionable and shaky opinion. If you or someone you know is facing a re-filing, it would be best to hire a knowledgeable and aggressive firm to defend against the Bank. There are still ways to raise the Statute of Limitations defense depending on the facts and circumstances of the foreclosure case with the end goal of dismissing the banks lawsuit.