April 11th, 2018


by, Michael W. Leonard, Esq.

Insurance coverage disputes involving both the duty to defend and indemnity necessarily result in the filing of actions seeking declaratory judgments as to both.  The jurisdiction where a party, whether it be the insured or insurer, files for relief matters.  Florida and federal courts have their own respective declaratory judgment statutes and they are not identical.  These differences may likely lead to different timelines in the litigation process.
Florida’s declaratory judgment statute gives both county and circuit courts’ jurisdiction within their respective jurisdictional amounts to declare rights, status and other equitable and legal relations.  §86.011 Florida Statues.  This statute goes on to read in relevant part that: “[T]he court may render declaratory judgments on the existence or nonexistence” of any immunity, power, privilege or right whether it now exists or may arise in the future. Id. (emphasis added).
The federal statute governing declaratory actions provides that: “[I]n a case of actual controversy . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201. (emphasis added).   Although the highlighted differences between the two statutes may seem subtle, how courts have interpreted their respective statutes matters.

The Distinction Between Duty to Defend and the Duty to Indemnify
Before analyzing the differences between the two statutes and the cases interpreting them, it is important to recap the differences between the duty to defend and indemnify.  As we all know, the duty to indemnify is separate and distinct from the duty to defend. Northland Cas. Co. v. HBE Corp., 160 F. Supp. 2d 1348, 1360 (M.D. Fla. 2001). The duty to defend is broader than the duty to indemnify and depends “‘solely on the allegations in the complaint[s] filed against the insured.’” Id. “[T]he duty to indemnify is dependent upon the entry of a final judgment, settlement, or a final resolution of the underlying claims by some other means.” HBE Corp., 160 F. Supp. 2d at 1360; see also Westport Ins. Corp. v. VN Hotel Grp., LLC, 761 F. Supp. 2d 1337, 1348 (M.D. Fla. 2010) (“Except where there is no duty to indemnify for want of a duty to defend, an insurer’s duty to indemnify is dependent on the outcome of a case . . .”). “[W]hereas the duty to defend is measured by the allegations of the underlying complaint, the duty to indemnify is measured by the facts as they unfold at trial or are inherent in the settlement agreement.” HBE Corp., 160 F. Supp. 2d at 1360; see also Stephens v. Mid-Continent Cas. Co., 749 F.3d 1318, 1324 (11th Cir. 2014) (an insurer’s duty to indemnify “is narrower [than the duty to defend] and is determined by the underlying facts adduced at trial or developed through discovery during the litigation.”; “In other words, to determine whether there is a duty to indemnify, one looks at the actual facts, not only those that were alleged in the state court complaint.”).

The Federal Declaratory Judgment Act and Cases Interpreting Same
The Federal Declaratory Judgment Act, since its inception, has been understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants.” Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995). The United States Supreme Court has “repeatedly characterized the Declaratory Judgment Act as an enabling Act, which confers a discretion on the courts rather than an absolute right upon the litigant.” Id. at 286-87.  A district court thus always has discretion whether to entertain an action for a declaratory judgment. Cas. Indem. Exch. v. High Croft Enters., Inc., 714 F. Supp. 1190, 1193 (S.D. Fla. 1989) (citing Brillhart v. Excess Ins. Co., 316 US 491 (1942) and Public Affairs Assocs., Inc. v. Rickover, 369 U.S. 111 (1962)); see also Angora Enters., Inc. v. Condo. Ass’n. of Lakeside Village, Inc., 796 F.2d 384, 387 (11th Cir. 1986) (“the district court could have properly refused to address the merits of the claim by resort to its inherent discretion to decline to entertain a declaratory action.”). The Eleventh Circuit has declared that the Act “only gives the federal courts competence to make a declaration of rights; it does not impose a duty to do so.” Ameritas Variable Life Ins. Co. v. Roach, 411 F.3d 1328, 1330 (11th Cir. 2005).  As such, “[g]ratuitous interference with the orderly and comprehensive disposition of a state court litigation should be avoided.” Id. (citing Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 495 (1942)).

The Federal Declaratory Judgment Act provides that a declaratory judgment may be issued only in the case of an “actual controversy,” which must be immediate, substantial and continuing and must create a “definite, rather than speculative threat of future injury.” 28 U.S.C. §2201 et seq.; Emory v. Peeler, 756 F.2d 1547, 1552 (11th Cir. 1985). The Act is a grant of jurisdiction only as to those rights and liabilities that are immediate and real, or that are certain to arise. See, e.g., Calderon v. Ashmus, 523 U.S. 740, 746-47 (1998).  The “case or controversy” requirement of the Constitution limiting federal court jurisdiction similarly requires that “a plaintiff must have suffered some actual injury that can be remedied or redressed by a favorable judicial decision.” Nat’l Advertising Co. v. City of Ft. Lauderdale, 934 F.2d 283, 285-86 (11th Cir. 1991).  As such, federal courts have broad discretion to either dismiss without prejudice or stay unripe claims. Pro Net Global Ass’n, Inc. v. U.S. Liab. Ins. Co., Nos. 3:02-cv-396-J-32TEM, 3:02-cv-617-J- 32TEM, 2004 WL 6062923, at *2 (M.D. Fla. Mar. 8, 2004) (citing Wilton, 515 U.S. at 288).
Because an insurer’s duty to indemnify generally depends on the outcome of the underlying dispute against the insurer’s insured, federal court courts have held that an insurer’s duty to indemnify is not ripe until the underlying suit is resolved, and thus either dismiss or stay the claim involving the declaration of rights involving indemnity. See, e.g., Summit Contractors, Inc. v. Amerisure Mut. Ins. Co., No. 8:13-CV-295-T-17TGW, 2014 WL 936734 (M.D. Fla. Mar. 10, 2014) (dismissing for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) request for declaration as to a carrier’s duty to indemnify for pending underlying claims as unripe); Allstate Prop. & Cas. Ins. Co. v. Tomlinson, No. 2:14–cv–1940–HRH, 2015 WL 3439129 (D. Ariz. May 28, 2015) (same); Pro Net, 2004 WL 6062923 (dismissing request for declaration as to a carrier’s duty to indemnify until underlying actions are resolved); Mid-Continent Cas. Co. v. Gozzo Dev., Inc., No. 17-CV-80362, 2017 WL 3578846, at *1 (S.D. Fla. July 19, 2017).

For example, in Mid-Continent Cas. Co. v. Nassau Builders, Inc., No. 3:16-CV-921-J-34JRK, 2017 WL 1191383 (M.D. Fla. Mar. 31, 2017), the Middle District of Florida stayed a declaratory action case until the underlying action was resolved. Importantly, the court noted that the duty to indemnify will “necessarily turn on complex factual findings and issues of Florida law which are currently pending in the Underlying Action before the state court.” Id. at *2.

Florida’s Declaratory Judgment Statute
Florida courts, in deciding issues involving the duty to indemnify, have found it important to determine whether the issue of coverage is dependent on the resolution of factual issues in the underlying action.  If the declaratory action was not dependent on the factual issues in the underlying action courts would not abate or dismiss the declaratory action and instead determine the indemnity issue.  For example, in the case of Britamco Underwriters, Inc. v. Central Jersey Invs., Inc., 632 So. 2d 138, 139 (Fla. 4th DCA 1994), the court held that where issue of coverage was not dependent on the resolution of fact issues common to underlying litigation, it was appropriate to determine in declaratory action prior to conclusion of underlying suit.  Likewise, in Travelers Ins. Co. v. Emery, 579 So. 2d 798, 800-02 (Fla. 1st DCA 1991), the issue of coverage under a business pursuits exclusion was appropriate for declaratory action prior to filing of underlying action where resolution of this issue leaves material issues in underlying action unaffected. In Allstate Ins. Co. v. Conde, 595 So. 2d 1005, 1008 (Fla. 5th DCA 1992), the appellate court noted that under unusual circumstances where the underlying complaint alleges two alternative, mutually exclusive theories of liability, a court may look beyond the allegations of complaint and determine facts that will answer the duty to defend issue and also thereby answer the duty to indemnify issue.
As such, when the theories of liability in the underlying action and the factual issues associated with indemnity were intermingled, Florida state courts were more likely to abate or dismiss the indemnity issues and allow the facts to develop in the underlying action.  In Home Insurance Company v. Gephart, 639 So. 2d 179 (Fla. 4th DCA 1994), the insurer was not entitled to a declaration of the duty to indemnify where the case involved some of the same factual questions that were present in the underlying action and where theories of liability were not mutually exclusive.  Marr Investments, Inc. v. Greco, 621 So. 2d 447 (Fla. 4th DCA 1993), is another example.  In Marr, a bar owner sought a declaration obligating its insurer to defend it against claims by a patron.  Id.  On appeal, the court found that the trial court’s finding that there was no coverage was premature and therefore the issue of indemnity was not ripe. Id. at 449.   The appellate court stated that the duty to indemnify should be deferred until liability was decided in the underlying action.  Id.
In 2005, the Florida Supreme Court heard the case of Higgins v. State Farm Fire and Casualty Company, 894 So. 2d 5 (Fla. 2005). The facts of Higgins are relatively simple.   The initial allegation of the complaint filed alleged that while visiting Mrs. Bradley, the estranged wife of Mr. Higgins, Mr. Higgins came to her home and intentionally assaulted Mrs. Ingalls.  Id.  Mrs. Ingalls thereafter field her amended complaint wherein she alleged that the actions of Mr. Higgins were negligent.  Id.  Mr. Higgins demanded that State Farm, the homeowner’s carrier, provide him a defense and indemnity for the claims being asserted.  Id.  State Farm filed a declaratory action as to the duty to defend and indemnify and argued that despite the negligence label, the alleged conduct was still willful and intentional and therefore excluded under the homeowner’s policy.  Id. at 8.  The declaratory action proceeded to trial and the jury found that Higgins actions were intentional.  Id.  On appeal, the Fourth District Court of Appeal found that it was appropriate for the declaratory action to decide whether Higgins’ conduct was excluded under the policy. The appellate court also certified the following question to the Supreme Court:
May the insurer pursue a declaratory action in order to have declared its obligation under an unambiguous policy even if the court must determine the existence or nonexistence of a fact in order to determine the insurer’s responsibility?
Id. at 9.
The Florida Supreme Court agreed with the Fourth District that sections 86.011(2), 86.051, 86.071, and 86.101, Fla. Stat., support the conclusion that an insurer may pursue a declaratory action which requires a determination of the existence or nonexistence of a fact upon which the insurer’s obligations under an insurance policy depend.  The Court went on to state that:
We conclude that it is illogical and unfair to not allow insureds and insurers to have a determination as to whether coverage exists on the basis of the facts underlying a claim against an insurance policy. Why should an insured be placed in a position of having to have a substantial judgment against the insured without knowing whether there is coverage from a policy? Why should an insurer be placed in a position of either paying what it believes to be an uncovered claim or being in jeopardy of a bad faith judgment for failure to pay a claim? These are precisely the issues recognized by this Court in other contexts that are intended to come within the purpose of the declaratory judgment statute’s “relief from insecurity and uncertainty with respect to rights, status, and other equitable or legal relations.
Id. at 15.  The Court thus concluded that the Florida declaratory judgment statutes authorize declaratory judgments in respect to insurance policy indemnity coverage and defense obligations in cases in which it is necessary to resolve issues of fact in order to decide the declaratory judgment action.  Id. at 16.
In light of this holding, some carriers are of the mindset that Florida now permits, in all instances, the filing of a declaratory action in state court which will allow them to determine early on both the issue of defense and indemnity.  However, this reading of Higgins is not accurate. Important to the Supreme Court’s ruling was the fact that depending on the determining of the factual issue, the claims asserted would be either covered or not. In this regard, the Court went on to site to the factors identified in Allstate Insurance Co. v. Conde, 595 So.2d 1005, 1008 (Fla. 5th DCA 1992), which a court should consider when analyzing whether to allow the factual issues of indemnity to be decided ahead of the underlying action.  Id. at 15.  One consideration is what issues are involved in the two actions.  Id.  In Conde, like the Higgins action, the issue was whether all claims against the insured arose from acts which were intentional or negligent (covered or uncovered).  Id.
Another factor which a court should weigh is whether proceeding to a decision as to the insurance indemnity issue will promote settlement and avoid the problem of collusive actions between claimants and insureds in order to create coverage where coverage does not exist under the true facts.  Id. at 16.  As noted by the Conde court, pleadings can create a perfect conspiracy between plaintiff and defendant in the underlying action. Id.   As quoted by the Supreme Court in Higgins, the Conde court went on to state that:
The plaintiff pleads negligence in a case like this because he wants a deep pocket from which to satisfy a judgment or, even better, to obtain a settlement. Normally when a defendant is sued on a theory that is inadequately pleaded, he gets the claim dismissed or, if the claim is invalid under controlling law, he gets a summary judgment. But in cases such as this the normal antidotes for invalid claims do not work. An insured defendant is often totally committed to the negligence pleading of the plaintiff because as long as the negligence claim is included in the complaint, the insured must be provided a defense on the intentional tort claim, a benefit he would not have if the spurious negligence claim were missing.
Id. at 17.
Finally, a court should weigh the fact that that there are cases with insureds who have resources independent of insurance and that it would be immaterial to the claimant whether the insured’s conduct was covered or not covered by indemnity insurance.  Id.  To hit this point home, the Supreme Court stated:
We agree with Judge Diamantis that the resolution of the timing issue in accord with International Surplus Lines Insurance Co. v. Markham, 580 So.2d 251 (Fla. 2d DCA 1991), in which the court indicated that the duty to defend issue should be resolved early but the insurance indemnity action abated until after the underlying tort action is final, may be necessary in some cases. But, for the reasons stated above, we believe that there are factors which weigh in favor of trying the indemnity coverage issue first.
Importantly, the circumstances of each case may dictate where the appropriate jurisdiction is to file a declaratory relief action based on the above case law.

January 22nd, 2014






By Michael W. Leonard, Esquire

Boyle, Gentile, Leonard & Crockett, P.A.


On May 16, 2013, the Florida Supreme Court issued its long-awaited decision relevant to the priority of a city ordinance “superpriority” lien to that of a prior recorded mortgage. The specific issue on appeal to the Supreme Court of Florida was “[w]hether under Article VIII, section 2(b), Florida Constitution,section 166.021, Florida Statutes and Chapter 162, Florida Statutes, a municipality has the authority to enact an ordinance stating that its code enforcement liens, created pursuant to a code enforcement broad order and recorded in the public records of the applicable county, shall be superior in dignity to prior recorded mortgages?” City of Palm Bay v. Wells Fargo Bank, N.A., 114 So. 3d 924 (Fla. 2013).


The City argued that it was permitted to allow its ordinances to have superpriority pursuant to the “broad home rule powers” afforded municipalities. Florida Statute 162.09(3) (2004)provides that certified copies of a code enforcement order imposing a fine, or a fine plus repair costs, may be recorded in the public records and shall thereafter constitute a lien against the land on which the violation exists and upon any other real or personal property owned by the violator. Furthermore, according to Section 2(b), Article VIII of Florida’s Constitution, the legislative body of each municipality has the power to enact legislation concerning any subject matter upon which the state Legislature may act. Some municipalities treated these laws as allowing them to create “superpriority” ordinances which would therefore allow the municipal liens, even when recorded after a mortgage, to take precedence over an earlier recorded mortgage, thereby insuring that these liens would be satisfied, whether by the bank or the successful bidder at foreclosure sale.


However, as noted by the Supreme Court, Florida law determines the priority of interests in real property based, in general terms, as “first in time, first in right”. In other words, generally speaking, those who record their interests first have priority over later recorded interests.


The Supreme Court of Florida agreed with the Fifth District Court and concluded that the superpriority provision of the Palm Bay ordinance was invalid because it conflicted with the state recording statutes. This case demonstrates that municipalities cannot treat code violations, recorded after prior recorded documents, as having priority. Simply stated, provided that the mortgage holder has named the municipality as a defendant for its subsequently recorded liens, these liens may be foreclosed.

October 22nd, 2013



by Michael W. Leonard, Esquire

Boyle & Leonard P.A.


On September 25, 2013, the Second District Court of Appeal rendered its yet-to-be published opinion dealing with a proposition of law which was once thought to be well settled and clearly understood. Focht v. Wells Fargo Bank, N.A., 2013 WL 5338048 (Fla. 2d DCA 2013). The Focht decision centered on the issue of “standing” relevant to a holder of a note and mortgage.  The law of Florida had, until this decision, been quite clear. A party seeking to foreclose a mortgage must possess the note and mortgage prior to filing suit. See Country Place Cmty. Ass’n v. J.P. Morgan Acq. Corp., 51 So. 3d 1176, 1179 (Fla. 2d DCA 2010) and McLean v. J.P. Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). These two recent decisions merely reiterate what lawyers have always understood the concept of “standing” to mean in the foreclosure context.  “Standing” is and has always been thought of as a defect that may not be cured by the acquisition of standing after a case has been filed.Progressive Express Ins. Co. v. McGrath Cmty. Chiropractic, 913 So. 2d 1281, 1284-85 (Fla. 2d DCA 2005); Jeff-Ray Corp. v Jacobson, 566 So. 2d 885, 886 (Fla. 4th DCA 1991).

In the Focht decision, the owner of the property executed and delivered a note and mortgage to BNC Mortgage, Inc.  This loan was allegedly later transferred into a trust, in which Wells Fargo acted as the trustee.  In January of 2008, Wells Fargo, as trustee, filed a foreclosure action, which included a count for a lost note.  Wells Fargo, in July of 2008, filed the original note with the court and thereafter filed the assignment of the note and mortgage in September of 2008.

Ms. Focht raised lack of “standing” as an affirmative defense to the foreclosure action, arguing that the assignment filed in the action evidences that at the time the complaint was filed, Wells Fargo was not the owner of the note and mortgage and therefore had no standing to bring the claim. Wells Fargo argued that the filing of the original note evidences that it had standing. In further support of its argument that it had standing when the action was filed was the fact that the trust in which the Focht note and mortgage were held was created years before Wells Fargo filed the instant foreclosure action.  The lower tribunal granted summary judgment in favor of the lender, and Ms. Focht took appeal.

The appellate court held that there was a genuine issue of material fact; that being whether Wells Fargo possessed the note and mortgage at the time the action was filed, and therefore whether Wells Fargo had standing. Despite the reversal of the lower court’s ruling, the Second District Court of Appeal has requested that the Florida Supreme Court entertain the following certified question as one of great public importance:


It is clear that the foreclosure crisis as well as the inequities of what can amount to a windfall to those who continue to live in their homes for free while contesting the foreclosure action is behind this proposed “standing” exception. In fact, as noted in the concurring opinion of Judge Altenbernd, “trial courts have been overwhelmed by foreclosure filings”. Justice Altenbernd goes on to state that although borrowers may have legitimate affirmative defenses, “the delayed production of the original note and mortgage in a case where the borrower is in default should not justify the dismissal of the legal proceedings”.

Although one can understand the reasoning behind a change in such a long-standing legal precedence, one must pause to determine if the ends justify the means. In other words, what will the effect of a change in the standing requirement be in foreclosure actions? Will it result in even greater recklessness in the lending institutional record-keeping? Will a change in the “standing” standard migrate to other areas of the law? What is the law of unintended consequences?  Time will tell whether the Florida Supreme Court accepts jurisdiction of this certified question and whether the Supreme Court will tinker with the “standing” requirement

August 8th, 2013



(CHAPTER 2013-137) C.S.C.S.H.B. NO. 87

By Michael W. Leonard, Esquire

Boyle & Leonard P.A.

On June 7, 2013, Florida’s Governor, Rick Scott, signed the Committee Substitute for House Bill No. 87 (the “Act”).  Foreclosure—Actions and Proceedings—Complaint, 2013 Fla. Sess. Law Serv. Ch. 2013-137 (C.S.C.S.H.B. 87).  The impact of this House Bill is significant for actions involving foreclosure of Florida real estate, and alters, some would say significantly, Florida’s foreclosure landscape.  The purpose of this article is not to discuss all of the statutory changes, but to highlight some of the changes which this author finds substantial.

Of first importance is the issue of whether these statutory modifications have retroactive impact, and therefore affect pending foreclosure actions or only actions which are filed after the respective statutes’ effective dates.  The first sentence of Section 8 of the Act states that, “[T]he Legislature finds that this act is remedial in nature and applies to all mortgages encumbering real property and all promissory notes secured by a mortgage, whether executed before, on or after the effective date of this act.”  The Act clearly states that it is remedial, and remedial statutes, as a general rule, have retroactive application. The enacting Legislation, however, provides exceptions to this general statement, which exceptions will be discussed below.

Section 95.11, Florida Statutes, relating to Florida’s statute of limitations, now clarifies that as to actions filed after July 1, 2013, a lender which has or is foreclosing on a one to four family dwelling unit must enforce its claim for a deficiency within one year from the date that a certificate of title is issued by the clerk or the day after the lender accepts a deed in lieu of foreclosure.

Additionally, the Governor and the Legislature created Section 702.015, Florida Statutes, which supplements the requirements of lenders relating to claims relating to lost or destroyed instruments.  The creation of this Statute now requires that if the action relates to residential property, the Complaint must affirmatively allege: (a) that at the time of the commencement of the action, the Plaintiff holds the note; (b) the specific factual basis by which the Plaintiff is the entity entitled to enforce the note; (c) if the Plaintiff was delegated authority to file the foreclosure action on behalf of another entity that is the actual owner of the note, the authority of the Plaintiff and the document which grants the Plaintiff such authority, and; (d) if the Plaintiff is in possession of the note, a statement, under penalty of perjury, that the Plaintiff holds the subject note.  Alternatively, if the Plaintiff does not possess the original note, it must provide an affidavit which details the clear chain of custody of the note, the facts showing that the Plaintiff is entitled to enforce the note, together with exhibits of such copies of the note and allonge, or other documents showing receipt of the original note.

Section 702.036, Florida Statutes, was also created which provides that if a party attempts to challenge a foreclosure judgment or the foreclosure sale resulting therefrom, that party’s relief is limited to one of a claim for monetary damages, which relief will not affect the quality or character of the title to the foreclosure property.  This is a significant change for those successful third party bidders acquiring title at foreclosure sale and having to spend substantial resources in proving the validity of their title.

Substantial revisions were likewise made to Section 702.10, Florida Statutes.  Now, a lien holder, which includes not only the Plaintiff lender but also any defendant who holds a valid lien encumbering the subject property, has the right to demand an expedited foreclosure process through an “order to show cause”.  The enactment of this statute applies even to causes of action pending with courts on the effective date.  This legislative enactment is particularly important to both condominium and homeowner’s associations who are often pushing for lenders to timely complete their foreclosure action.

            Finally, Section 702.11, Florida Statutes, was also created as part of the Act, which specifies what is deemed adequate protection for a borrower when the Plaintiff lender is not in possession of the original note.  Adequate protection now includes a written indemnification agreement, a surety bond, a letter of credit, a deposit of cash collateral, or such other security as the court deems just and proper.  Like Section 702.10, this statute applies to actions currently pending in Florida tribunals.

May 21st, 2013


by Michael W. Leonard, Esquire

Boyle, Gentile, Leonard & Crockett, P.A.

As foreclosure actions have moved their way through the courts, some mortgagors and their respective mortgagees have elected to abandon their homes and collateral in favor of saving the additional expenses relevant to the maintenance of the property and the associated ad valorem taxes.  This has resulted in an ever increasing number of tax deed sales in order to pay counties their much needed revenues.   With the ever increasing number of tax deed sales, many purchasers have elected to enter the fray, not for the purpose of holding on to these acquisitions for the long run, but instead, reselling the acquired property in hopes of making a quicker profit.  The purpose of this article is to address the need for a quiet title suit in the event that property is acquired with an eye on reselling the property in the short run.

Title based on a tax deed is considered insurable if: (1) the tax deed has been on record for more than 20 years; (2) all subsequent real estate taxes have been paid by the tax deed grantee and his successors; (3) there has been no adverse claim asserted of record, and; (4) there has been no possession adverse to the tax deed grantee or his successors.  See Fund Title Notes, TN 30.01.02(2).  Provided the above requirements can be proven, then title after the expiration of this 20 year period will be deemed insurable.

Many tax deed purchasers are unwilling to wait the 20 year period in order to have marketable title. In some situations, title underwriters have agreed to insure property acquired via tax deed after 4 years has elapsed since issuance of the tax deed by the Clerk of Court, pursuant to Florida Statute, section 95.191. This statute provides that:

When the holder of a tax deed goes into actual possession of the real property described in the tax deed, no action to recover possession of the property shall be maintained by a former owner or other adverse claimant unless the action commenced is begun within 4 years after the holder of the tax deed has gone into actual possession. When the real property is adversely possessed by any person, no action shall be brought by the tax deed holder unless the action is begun within 4 years from the date of the deed.

As one can see, section 95.191, Fla. Stat. is a two way street. This statute limits the prior owner and anyone under the prior owner from claiming possessory rights if the tax deed purchaser has been in actual possession for a period of 4 years.  Likewise, even if a tax deed purchaser acquires title to the property but does not take actual possession, such tax deed holder is prohibited from instituting an action for possession after the expiration of 4 years.  In either event, the party who is relying on this statute must present competent substantial evidence establishing continuous adverse possession as defined by section 95.16(2), Fla. Stat.  This statute provides:

(2) For the purpose of this section, property is deemed possessed in any of the following cases:

(a) When it has been usually cultivated or improved.

(b) When it has been protected by a substantial enclosure. All land protected by the enclosure must be included within the description of the property in the written instrument, judgment, or decree. If only a portion of the land protected by the enclosure is included within the description of the property in the written instrument, judgment, or decree, only that portion is deemed possessed.

(c) When, although not enclosed, it has been used for the supply of fuel or fencing timber for husbandry or for the ordinary use of the occupant.

(d) When a known lot or single farm has been partly improved, the part that has not been cleared or enclosed according to the usual custom of the county is to be considered as occupied for the same length of time as the part improved or cultivated.

To be able to take advantage of the aforementioned statute, and therefore obtain title insurance for a subsequent sale, evidence must be recorded establishing that neither the prior owner nor anyone claiming under the prior owner retained or remained in possession for a year or more after issuance of the tax deed. Clearly, if one is looking to avoid a quiet title action, and instead rely on the above statutes, it becomes even more important to either remove the prior tenant of the owner or ensure that there is evidence that the prior occupant’s possession is not a continuation of his or her rights under the prior owner’s regime. One way to secure this evidence is by adding language to a new lease with the former tenant that says occupancy is not a continuation of occupancy under a prior ownership, but is instead an express acknowledgement that the occupancy is being undertaken by, through and under the new tax deed holder.

It is important to keep in mind that, even after the expiration of the 4 year period, title underwriters may remain skeptical or be otherwise unwilling to provide title insurance absent confirmation that the tax deed sale process was in conformance with Chapter 197 of Florida Statutes.  As a result, many tax deed purchasers have elected to move forward with the filing of a quiet title action following the tax deed sale purchase.  The filing of a quiet title action has the benefit of ensuring that title insurance can be obtained, following a successful quiet title action.  Another added benefit of a quiet title action involves the situation when purchasers are confronted with hold-over owners or tenants who refuse to vacate the subject property.  Fortunately, Florida Statute, section 197.562, allows the successful bidder to obtain possession of the property which is the subject of the quiet title action.  A successful bidder is entitled to apply for a writ of assistance upon 5 days notice directed to the person refusing to deliver possession.  Unlike actions in foreclosure and the safeguards put in place by the Protection Tenants at Foreclosure Act, there are no similar protections afforded to the occupants holding possession after a tax deed sale.

Unless a purchaser is intending to hold on to property purchased at a tax deed sale for a substantial period of time, the filing of a quiet title action is an excellent way in which to confirm title to the successful bidder and remove unwanted owners and tenants from possession thereof.

December 21st, 2012



by: Michael W. Leonard, Esquire
Boyle, Gentile, Leonard & Crockett, P.A.

On May 20, 2009, President Obama signed into law the “Protecting Tenants at Foreclosure Act of 2009” (the “PTF Act”). The purpose of the PTF Act, at least in part, was to help with the displacement of tenants following the foreclosure sale of residential property. With foreclosure actions already at a crisis level, the government chose to assist those non-owner occupants who had entered into a written lease with the original owner. The PTF Act provided that it would end on December 31, 2012.

The PTF Act, as originally passed, applied to foreclosure actions involving a federally regulated mortgage on any dwelling or residential property, in which the foreclosure action was filed after the PTF Act’s enactment. 12 USCA § 5201, et seq. Additionally, the PTF Act only applied to leases and tenancies legitimately entered into before “notice of foreclosure”. Id. Any successful bidder at a foreclosure sale would take title subject to the lease, with certain exceptions.

If the lease was an oral lease or a written lease that could be canceled at will, the successful foreclosure bidder could terminate the tenant’s occupancy upon a ninety (90) day notice to vacate. Additionally, in order to have the protections under the PTF Act, the lease and tenancy must be considered a “bona fide” lease and tenancy. If so, the successful bidder at foreclosure sale, upon ninety (90) days written notice, had the right to terminate the lease, as long as the purchaser would occupy the property as his primary residence. Id.

To be considered a bona fide lease or tenancy, the PTF Act required that the lease be a result of an arm’s length transaction and that, under the lease, rent must be paid that is not substantially less than fair market rent. Furthermore, the PTF Act specifically excluded as bona fide leases and tenancies, leases from the owner to a child, spouse or parent of the owner.

A critical question left unanswered by the PTF Act was what exactly was considered “notice of foreclosure”. This was important because only leases entered into before the notice of foreclosure had protection under the PTF Act. Many argued that the notice of foreclosure date was the date that the Lis Pendens was recorded in the foreclosure action.

On July 21, 2010, the President signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). 12 USCA § 5301, et seq. The Dodd-Frank Act was quite voluminous and covered many subjects, including amendments to the PTF Act.

One of the changes the Dodd-Frank Act instituted with respect to the PTF Act is that it extended the expiration of the PTF Act by an additional two (2) years to December 31, 2014.

A critical change to the Dodd-Frank Act implemented with respect to the PTF Act was defining “notice of foreclosure”, stating that “notice of foreclosure” means “the date on which complete title to a property is transferred to a successor entity or person as a result of an order of a court or pursuant to provisions in a mortgage, deed of trust, or security deed”. Title XIV, Mortgage Reform and Anti-Predatory Lending Act §1484, 12 USCA § 5301. Essentially, this definition makes it possible for tenants who enter into leases even as late as the date of the Certificate of Title to have protection under the PTF Act. This change likely increases the potential for increased fraudulent leases and tenancies.

Bidders at foreclosure sales should be aware of these changes and the protections that tenants may have under the PTF Act, as amended by the Dodd-Frank Act.

August 13th, 2012



By Michael W. Leonard

Traditionally, it has been generally understood by practitioners that, in order to set aside a foreclosure sale, a complaining party needed to establish that: (1) the foreclosure sale bid was grossly or startlingly inadequate; and (2) the inadequacy of the bid resulted from some mistake, fraud or other irregularity in the sale. See Arlt v Buchanan, 190 So. 2d. 575, 577 (Fla. 1966); see also Blue Star Investments, Inc. v Johnson, 801 So. 2d. 218, 219 (Fla. 4th DCA 2001) and Mody v Cal. Fed. Bank, 747 So. 2d. 1016, 1017-18 (Fla. 3d DCA 1999).

Historically speaking, for a party to be successful in setting aside a foreclosure sale, that party was required to prove each prong described above. With the onslaught of foreclosure filings, it is clear that the pendulum has swung, and this rigid two-prong test has been substantially eroded in both the Second and the Fourth District Courts of Florida.  See Ingorvia v Horton, 816 So. 2d. 1256 (Fla. 2d DCA 2002) and Arsali v Chase Home Finance, LLC, 79 So. 3d. 845 (Fla. 4th DCA 2012).

The Arlt decision, which has been principally relied upon by attorneys and cited by appellate courts for a number of years for the proposition that there must be a showing of both a grossly inadequate foreclosure sales price coupled with some irregularity in the foreclosure sale process, has come under fire by both the Second District Court of Appeals (see Ingorvia) and Fourth District Court of Appeal (see Arsali).  Interestingly enough, a Florida Supreme Court decision issued prior to Arlt, and which Arlt arguably overruled, is the case being cited to support the change in the foreclosure sale test.    See Moran-Alleen Co. v. Brown, 98 Fla. 203, 123 So. 561 (Fla. 1929).

The Ingorvia decision and the Arsali decision, attempt to provide a universe in which both Arlt and Brown can survive.  In reviewing Arsali and Ingorvia, it becomes clear that the basis to allow Brown and Arlt to live in harmony finds its roots in the idea that when inadequacy of a bid price is at issue, a party contesting the sale must prove both test prongs, ala Arlt.  Conversely, when inadequacy of sale price is not an issue, a party need only prove the second prong, meaning some inadequacy in the sale procedure, ala Brown. SeeIngorvia, 816 So. 2d. at 1258.

Respectfully, this distinction, in order to allow both the earlier Brown decision and the subsequent Arlt decision to live in harmony, is a distinction without a significant difference.  In each instance, whether there was an inadequacy of the bid price, a party is still required to show some irregularity in the sale process (mistake, fraud or other irregularity in the sale).  Interestingly enough, although the Ingorvia decision was certified to the Supreme Court by the Second District Court of Appeals, there is no evidence that the Supreme Court ever considered discretionary jurisdiction to decide the case.  However, the most recently decided Arsali decision, which also certified to the Supreme Court the question of whether the test to set forth in Arlt for vacating a foreclosure sale applies when adequacy of the bid price is not an issue, was recently accepted by the Supreme Court. See the unpublished Arsali v Chase Home Finance, 86 So. 3d. 1112 (unpub.op).

Until the Supreme Court resolves this issue, from a practitioner standpoint, the most conservative position, when contesting a foreclosure sale, would be to address both prongs of the foreclosure sale set aside test, when the facts support same.  Alternatively, if there is no evidence of an inadequate foreclosure sales price, at least in the Second and Fourth Districts, a party need only exhibit some irregularity in the foreclosure sales process.







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