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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