2-32 Florida Real Estate Transactions - 32.80

2-32 Florida Real Estate Transactions 32.
80
Florida Real Estate Transactions > PART V FINANCING, LIENS AND TAXES > CHAPTER 32 REAL
PROPERTY SECURED TRANSACTIONS > PART I. LEGAL BACKGROUND > F. Remedies on
Default
32.80 Foreclosure
[1]
Overview
In Florida, foreclosure is the method whereby the mortgaged property is sold under a court order [see
32.80[2][b] below (judicial sale)]. The proceeds are then applied to the payment of the mortgage
debt. The primary purpose of foreclosure is to subject the mortgaged property to the payment of the
debt [Bobby Jones Garden Apartments, Inc. v. Connecticut Mut. Life Ins. Co., 202 So. 2d 226 (Fla.
DCA 2d 1967); see 702.01, Fla. Stat.].
In accordance with the terms in the mortgage and the note, the obligation of the mortgagor to pay and
the right of the mortgagee to foreclose is absolute. The right does not hinge on the personal
circumstances impacting on the mortgagors ability to pay [First Wisconsin Nat. Bank of Milwaukee
v. Roose, 348 So. 2d 610 (Fla. DCA 4th 1977)]. For example, a bank had the right to foreclose on a
mortgage securing the mortgagors home equity line of credit because the mortgagors defaulted under
the terms and conditions of the note and mortgage by failing to make payments when due. The fact that
the mortgagors were in the midst of a dissolution proceeding and had each attempted to close the credit
account did not justify the trial courts finding that there had been a novation of the equity line of credit
agreement. Instead, the district court noted that the mortgagors had consumed the full amount of the
line of credit secured by the mortgage and held that the bank was entitled to a judgment of foreclosure
[see Carteret Sav. Bank, F.A. v. Weiner, 601 So. 2d 1310 (Fla. 4th DCA 1992)]. The mortgagors
default in payments gives rise to the mortgagees claim to foreclosure [see, e.g., First Wisconsin Nat.
Bank of Milwaukee v. Roose, 348 So. 2d 610 (Fla. DCA 4th 1977)].
The remedy of foreclosure assumes the existence of a mortgage. Foreclosure was not available for a
creditor under a recorded instrument acknowledging a debt and evidencing the parties agreement that
the debt would be payable upon the sale of specifically described property. The court held that the
instrument was not a mortgage that could be foreclosed when the subject property was conveyed to a
third party. The instrument was more in the nature of an assignment of proceeds from the sale of the
described property. Nothing in the terms of the instrument indicated that the property could be subject
to foreclosure. The instrument merely established the due date of the debt and provided the funds to
apply toward the debt. The court found that, although there was evidence that the parties intended that
the instrument secure the debt, there was no evidence that they intended that the real estate, as opposed
to the proceeds from the sale of the real estate, secure the debt [see Secretary of Vet. Affairs v. Roma
Food Enters., 840 So. 2d 1066 (Fla. 5th DCA 2003)].
As a general rule in the event of default, a mortgagor is permitted to pursue both an action on the note
and an action to foreclose the mortgage. The remedies are not inconsistent and are each available to
2-32 Florida Real Estate Transactions 32.80
satisfy the underlying obligation evidenced by the note [Mellor v. Goldberg, 658 So. 2d 1162, 1163
(Fla. 2d DCA 1995)]. However, the parties may provide in the note and mortgage that, in the event of
default, the mortgagor will not be personally liable on the note and that the mortgagees only remedy
is foreclosure with no deficiency judgment. Such a provision should be carefully drafted, however, to
avoid any latent ambiguity that could result in later dispute over the parties original intent [see, e.g.,
Mellor v. Goldberg, 658 So. 2d 1162, 1163 (Fla. 2d DCA 1995)]. Similarly, a suit on a guaranty and
a foreclosure action are not inconsistent remedies, and therefore pursuit of either without satisfaction
is not a bar to the pursuit of the other [Fort Plantation Invs., LLC v. Ironstone Bank, FSB, 85 So. 3d
1169, 1170 (Fla. 5th DCA 2012); Gottschamer v. August, Thompson, Sherr, Clark & Shafer, P.C., 438
So. 2d 408, 409 (Fla. 2d DCA 1983)]. Thus, when a mortgage holder did not receive complete
satisfaction in a foreclosure action, it was entitled to demand the remaining indebtedness from the
guarantor of the original note [see LPP Mortg. Ltd. v. Cacciamani, 924 So. 2d 930, 931 (Fla. 3d DCA
2006)]. When there is a money judgment entered against a guarantor prior to a foreclosure sale, the
guarantor should be allowed to demonstrate that the foreclosure sale reimbursed the mortgagee to the
extent that the sale would render enforcement of the guaranty inequitable, either in whole or in part
[Mullins v. Sunshine State Serv. Corp., 540 So. 2d 222, 224 (Fla. 5th DCA 1989)].
When mortgaged property sustains an insured loss before foreclosure, the mortgagee is the owners
creditor at the time of loss and has an election as to how to satisfy the secured debt. He or she may
either (1) turn to the insurance company for payment as mortgagee and recover the mortgage debt up
to the policy limits, or (2) foreclose on the property. If the mortgagee elects to pursue the insurance
company for payment of the debt, then the debt is fully satisfied and the mortgagee does not have any
additional recourse against the mortgagor. If the mortgagee elects to foreclose and the foreclosure sale
does not bring the full amount of the mortgage debt, then the mortgagee may recover the deficiency
under the insurance policy as owner [Lenart v. OCWEN Financial Corp., 869 So. 2d 588, 591 (Fla.
3d DCA 2004)].
A mortgagor may successfully contend that its default was waived by the mortgagee. Waiver of a
default requires action by the mortgagee that misleads the mortgagor so that the mortgagor acts in a
way that it would not have acted if the mortgagor had known that the mortgagee would require
performance under the strict terms of the mortgage agreement [Flagler Center Bldg. Loan v. Chemical
Realty, 363 So. 2d 344, 347 (Fla. 3d DCA 1978)]. A mortgagor may also have valid equitable defenses
to a foreclosure action [see David v. Sun Federal Sav. & Loan Assn, 461 So. 2d 93, 96 (Fla. 1984)].
For example, when a mortgagors residence was severely damaged by hurricane, the mortgagors
alleged in defense to foreclosure that the mortgagees (1) defrauded the trial court at an ex parte hearing
where one of the mortgagees was appointed receiver of the property, (2) interfered with construction
contracts to restore the property, and (3) misused insurance proceeds. In reversing summary judgment
for the mortgagee, the appellate court noted that the allegations were supported by competent evidence
on the record and that, taken as true, they could provide the mortgagors with valid equitable defenses
to the foreclosure action [Lamb v. Pike, 659 So. 2d 1385 (Fla. 3d DCA 1995); see Star Lakes Estates
Assn v. Auerbach, 656 So. 2d 271, (Fla. 3d DCA 1995)]. Unclean hands also may be asserted as an
equitable defense to foreclosure [Quality Roof Servs. v. Intervest Nat. Bank, 21 So. 3d 883, 885 (Fla.
4th DCA 2009); Lamb v. Pike, 659 So. 2d 1385, 1387 (Fla. 3d DCA 1995)]; provided the conduct
constituting the unclean hands is connected to the matter being litigated [Marin v. Seven of Five Ltd.,
921 So. 2d 699, 700 (Fla. 4th DCA 2006)].
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[2]
Procedure
[a]
Foreclosure Action
[i]
In General.
In Florida, all mortgages must be foreclosed in equity [ 702.01, Fla. Stat.; see Blatchley v.
Boatmans Nat. Mortg., Inc., 706 So. 2d 317 (Fla. 5th DCA 1997)]. If tried, the foreclosure claim
must be tried without a jury [ 702.01, Fla. Stat.]. However, in its discretion, a court may, for
equitable reasons, refuse to grant prayer for a foreclosure [Creamer v. Aultman, 445 So. 2d 382
(Fla. 1st DCA 1980)]. Because a mortgage foreclosure is an equitable proceeding, the court is
permitted to reform instruments to reflect the parties true intent [Huntington Nat. Bank v.
Merrill Lynch, 779 So. 2d 396, 398 (Fla. 2d DCA 2000); but see Taylor v. First Nat. Bank of
Chicago, 908 So. 2d 565, 566567 (Fla. 4th DCA 2005) (courts restructuring of mortgage
obligation that was not requested in pleadings or agreed to by parties was improper modification
of parties contractual agreement)].
As foreclosure is an equitable action, equitable defenses are appropriate [see Cross v. Federal
Nat. Mortg. Assn App., 359 So. 2d 464 (1978); Howdeshell v. First Nat. Bank of Clearwater,
369 So. 2d 432 (1979); see also Consortion Trading Intern. v. Lowrance, 682 So. 2d 221 (Fla.
3d DCA 1996) (summary judgment reversed when defendants properly pled affirmative
defenses sounding in waiver, estoppel, and bad faith)]. Fraud can be a valid defense in a
foreclosure action [Lake Regis Hotel Co. v. Gollick, 110 Fla. 324, 149 So. 204 (1933)
(misrepresentation of amount of acreage); Norris v. Paps, 615 So. 2d 735, 737 (Fla. 2d DCA
1993)]. Fraud may also be raised as a counterclaim. In some, if not all, cases, fraud in the
inducement of a mortgage is a compulsory counterclaim to an action to foreclose the mortgage
[Norris v. Paps, 615 So. 2d 735, 737 (Fla. 2d DCA 1993); Yost v. American Nat. Bank, 570 So.
2d 350, 353 (Fla. 1st DCA 1990)].
A foreclosure action is a local action and must be brought in the county in which the property
is located [Georgia Cas. Co. v. ODonnell, 109 Fla. 290, 292, 147 So. 267, 268 (1933); Hudlett
v. Sanderson, 715 So. 2d 1050, 1052 (Fla. 4th DCA 1998)]. If mortgaged property lies in more
than one county, however, a foreclosure action may be brought in any one of them [ 702.04,
Fla. Stat.; see Frym v. Flagship Cmty Bank, 96 So. 3d 452, 453 (Fla. 3d DCA 2012); Penton v.
Intercredit Bank, N.A., 943 So. 2d 863, 864 (Fla. 3d DCA 2006) ( 702.04, Fla. Stat. applies to
both contiguous and non-contiguous properties lying in more than one county)].
It is axiomatic that foreclosure depends on a debt being owed pursuant to a secured note. In an
unusual case, a single promissory note was secured by two mortgages on separate properties.
After the debtors default on the note, the mortgagee foreclosed on one of the properties, seeking
to recover half of the amount due under the note. A judgment of foreclosure was entered, and
the mortgagee purchased the property at public sale. Later, the mortgagee filed a foreclosure
action on the second property seeking the other half of the amount due under the note. In
defense, the mortgagor asserted that no deficiency had been sought in the first proceeding and
claimed that the value of the property sold in the first foreclosure proceeding exceeded the total
amount due under the note. The trial court granted partial summary judgment for the mortgagee.
Page 3 of 44
In its judgment, the court acknowledged that a genuine issue of material fact existed as to the
value of the property sold in the first proceeding. Nonetheless, the court found that the
mortgagor remained liable to the mortgagee under the mortgage sought to be foreclosed in the
second proceeding, but the only issue to be determined was the amount of that liability. The
District Court of Appeal noted the inconsistency between the trial courts acknowledgment of
a genuine issue of fact as to the value of the first property foreclosed and the finding that the
mortgagor remained liable on the note. The court concluded that the trial judge must have found
that the value of the first property was less than the amount secured by the mortgage at the time
of the foreclosure sale. The appellate court, observing that absolutely nothing in the record
justifies this finding, reversed the partial summary judgment and remanded for further
proceedings to determine the value of the property sold in the first proceeding [see Robaina v.
Benn, 632 So. 2d 91, 9293 (Fla. 5th DCA 1994)].
A mortgagees right to foreclose on the security for a mortgage depends on its compliance with
the terms of the mortgage contract, and it cannot foreclose until it has proven compliance
[DiSalvo v. Suntrust Mortg., Inc., 115 So. 3d 438, 439 (Fla. 2d DCA 2013); see F.A. Chastain
Constr., Inc. v. Pratt, 146 So. 2d 910, 913 (Fla. 3d DCA 1962)]. For example, when the terms
of the mortgage contract required the lender to give a default notice to the borrower before
accelerating the loan, the mortgagee failed to prove that it complied with this requirement when
it submitted an unauthenticated copy of a default notice. The submitted notice did not constitute
admissible evidence on which to base a grant of summary judgment for the mortgagee [see
DiSalvo v. Suntrust Mortg., Inc., 115 So. 3d 438 (Fla. 2d DCA 2013)]. When a mortgagor
asserted an affirmative defense that the bank failed to comply with notice of default and right
to cure provisions of the promissory note, the banks offer of a letter attached to its initial
complaint notifying the mortgagor that all sums due has already been accelerated did not
indicate that the mortgagor had been provided with the requisite notice or been informed of the
right to cure the default. Thus, the letter did not show that the bank had complied with the terms
of its agreement with the mortgagor; nor did it refute the mortgagors affirmative defense and
other denials of the banks factual allegations [Harper v. HSBC Bank USA, 148 So. 3d 1285,
1287 (Fla. 1st DCA 2014)].
The rights of a senior lienor are not affected by foreclosure of a junior lien; thus the senior lienor
is not a proper party to the junior lienors foreclosure action. In Wells Fargo Bank v. Rutledge,
Wells Fargo sought foreclosure of a note and mortgage against the mortgagors home. While that
action was pending in circuit court, a homeowners association filed a second foreclosure action
in county court to foreclose a lien on the same property. Wells Fargo was named as a defendant
and junior lienholder in the second action, but did not participate and a default was entered
against it in the county court. The homeowners association obtained summary judgment and the
property was sold at public auction to Rutledge. Rutledge filed a certificate of title and joined
the circuit court foreclosure case as a party. Thereafter, the circuit court granted summary
judgment for Rutledge, finding that, although Wells Fargo was improperly joined as a party to
the homeowners associations foreclosure proceeding, the bank had slept on its rights by not
participating in the county court case and was barred by laches and equitable estoppel from
asserting its rights in the circuit court case. The county court granted Wells Fargos subsequent
motion to vacate the county court foreclosure judgment, holding that the banks mortgage
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interest was superior to that of the homeowners association and that thus, the bank was not a
proper party and not required to litigate its interest in the associations foreclosure action. On
appeal, the district court found that, as the superior lien holder, Wells Fargo was not a property
party to the associations action and, because the bank was not required to participate in the
county court foreclosure action, its failure to participate could not form the basis of a laches
argument [Wells Fargo Bank N.A. v. Rutledge, 148 So. 3d 533, 534535 (Fla. 2d DCA 1024)
citing Citimortgage v. Henry, 24 So. 3d 641, 643 (Fla. 2d DCA 2009); see U.S. Bank Natl Assn
v. Bevans, 138 So. 3d 1185, 1187 (Fla. 3d DCA 2014); Garcia v. Stewart, 906 So. 2d 1117, 1120
(Fla. 4th DCA 2005)].
Because foreclosure is an equitable action, a judgment creditor who cross-claims in a
mortgagees foreclosure action must allege that it has exhausted its legal remedies, such as
execution or attachment, in order to invoke the courts powers in equity. Failure to do so
deprives the court of jurisdiction [Decubellis v. Ritchotte, 730 So. 2d 723, 724725 (Fla. 5th
DCA 1999)].
When a second and separate action for foreclosure is sought for a default that involves a separate
period of default from the one alleged in the first action, the case is not necessarily barred by
res judicata, regardless of whether or not the mortgagee sought to accelerate payments on the
note in the first suit. This seeming variance from the traditional law of res judicata rests on a
recognition of the unique nature of the mortgage obligation and the continuing obligations of the
parties in that relationship. If res judicata prevented a mortgagee from acting on a subsequent
default even after an earlier claimed default could not be established, the mortgagor would have
no incentive to make future timely payments on the note. The adjudication of the earlier default
would essentially insulate him or her from future foreclosure actions merely because he or she
prevailed in the first action. The ends of justice require that the doctrine of res judicata not be
applied so strictly so as to prevent mortgagees from being able to challenge multiple defaults on
a mortgage [Singleton v. Greymar Associates, 882 So. 2d 1004, 10061008 (Fla. 2004)
disapproving Stadler v. Cherry Hill Developers, Inc., 150 So. 2d 468 (Fla. 2d DCA 1963)].
If a foreclosure involves a high-cost loan and is therefore governed by the Florida Fair Lending
Act, the mortgagee must, prior to proceeding with foreclosure, notify the mortgagor of his or her
right under the Act to reinstate the loan [see 494.00794, Fla. Stat.; see also 32A.44 [1] [a],
below].
A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure
must demonstrate that it has standing to foreclose [American Home Mortgage Servicing, Inc. v.
Bednarek, 132 So. 3d 1222, 1223 (Fla. 2d DCA 2014) citing McLean v. JP Morgan Chase Bank
N.A., 79 So. 3d 170, 172 (Fla. 4th DCA 2012); see Verizzo v. Bank of N.Y., 28 So. 3d 976, 978
(Fla. 2d DCA 2010)]. To establish standing, the party seeking foreclosure must present evidence
that it owns and holds the note and mortgage [Richards v. HSBC United States, 91 So. 3d 233,
234 (Fla. 5th DCA 2012); Servedio v. US Bank Natl Assn, 46 So. 3d 1105 (Fla. 4th DCA 2010);
see Khan v. Bank of Am., N.A., 58 So. 3d 927, 928 (Fla. 5th DCA 2011); BAC Funding
Consortium, Inc. ISAOA/ATIMA v. Jean-Jacques, 28 So. 3d 936, 938 (Fla. 2d DCA 2010)]. If
the note does not name the plaintiff as the payee, the note must bear an endorsement in favor
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of the plaintiff or a blank endorsement. Alternatively, the plaintiff may submit evidence of an
assignment from the payee to the plaintiff or an affidavit of ownership to prove its status as a
holder of the note [Lyttle v. Bankunited, 115 So. 3d 425, 426 (Fla. 5th DCA 2013) citing
Richards v. HSBC United States, 91 So. 3d 233, 234 (Fla. 5th DCA 2012); see Richards v. HSBC
Bank USA Gee v. U.S. Bank Natl Assn, 72 So. 3d 211, 213 (Fla. 5th DCA 2011)].
Because a promissory note is a negotiable instrument and because a mortgage provides the
security for repayment of the note, the person having standing to foreclose a note secured by a
mortgage may be either the holder of the note or a nonholder in possession of the note who has
a holders rights [Taylor v. Deutsche Bank Natl Trust Co., 44 So. 3d 618, 622 (Fla. 5th DCA
2010); see Pennington v. Ocwen Loan Servicing LLC, 151 So. 3d 52, 53 (Fla. 1st DCA 2014);
Wells Fargo Bank, N.A. v. Morcom, 125 So. 3d 320, 321322 (Fla. 5th DCA 2013); American
Home Mortgage Servicing, Inc. v. Bednarek, 132 So. 3d 1222, 1223 (Fla. 2d DCA 2014); Stone
v. BankUnited, 115 So. 3d 411, 413 (Fla. 2d DCA 2013); Mazine v. M&I Bank, 67 So. 3d 1129,
1131 (Fla. 1st DCA 2011); see also 673.3011, Fla. Stat.]. A plaintiff alleging standing as a
holder must prove it is a holder of the note and mortgage both as of the time of trial and also
that the (original) plaintiff had standing as of the time the foreclosure complaint was filed
[Kiefert v. Nationstar Mortgage LLC, 153 So. 3d 351, ___, 2014 Fla. App. LEXIS 20315 (Fla.
1st DCA 2014); Rigby v. Wells Fargo Bank N.A., 84 So. 3d 1195, 1196 (Fla. 4th DCA 2012)].
Such a plaintiff must prove not only physical possession of the original note but also, if the
plaintiff is not the named payee, possession of the original note endorsed in favor of the plaintiff
or in blank (which makes it bearer paper) [Kiefert v. Nationstar Mortgage LLC, 153 So. 3d 351,
___, 2014 Fla. App. LEXIS 20315 (Fla. 1st DCA 2014); see Focht v. Wells Fargo Bank N.A., 124
So. 3d 308, 310311 (Fla. 2d DCA 2013); Green v. JPMorgan Chase Bank N.A., 109 So. 3d
1285, 1288 (Fla. 5th DCA 2013)]. If the foreclosure plaintiff is not the original named payee,
the plaintiff must establish that the note was endorsed (either in favor of the original payee or
in blank) before the complaint was filed in order to prove standing as a holder [see Ryan v. Wells
Fargo Bank N.A., 142 So. 3d 974, 975 (Fla. 4th DCA 2014); Focht v. Wells Fargo Bank N.A.,
124 So. 3d 308, 310311 (Fla. 2d DCA 2013)].
Attaching a copy of a note and an undated allonge to the note containing an endorsement in
blank, has been held sufficient to establish as a matter of law that a bank had standing to bring
a foreclosure action [see Clay County Land Trust etc. v. JP Morgan Chase Bank, 152 So. 3d 83,
___, 2014 Fla. App. LEXIS 19070 (Fla. 1st DCA 2014); see also Wells Fargo Bank N.A. v.
Morcom, 125 So. 3d 320, 322 (Fla. 5th DCA 2013); U.S. Bank Natl Assn v. Knight, 90 So. 3d
824 (Fla. 4th DCA 2012)]. When a lender alleged in its unverified complaint to foreclose a
mortgage that it was the holder of the note and mortgage, but the copy of the note attached to
the complaint contradicted that allegation, the lender lacked standing to bring the action as a
matter of law [see Khan v. Bank of America, N.A., 58 So. 3d 927, 928 (Fla. 5th DCA 2011)]. A
bank lacked standing to maintain a foreclosure action when the bank failed to establish that it
was the holder of the note and the mortgage. The name shown as the holder on both the note
and the mortgage differed from the name of the bank that brought the action, and a witness for
the bank testified that the two names, while very similar, referred to two different entities [see
Mazine v. M&I Bank, 67 So. 3d 1129, 1131 (Fla. 1st DCA 2011)]. An alleged assignee of a
mortgage note had standing to maintain a foreclosure action as holder of the note regardless of
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any recorded assignments when the note was indorsed in blank, and the assignee was in
possession of the original note, which it had deposited with the circuit court [Harvey v. Deutsche
Bank Natl Trust Co., 69 So. 3d 300, 304 (Fla. 4th DCA 2011)].
While it is clear that the best evidence rule requires the plaintiff to be the holder of the original
note as it is a negotiable instrument [Deutsche Bank Natl Trust Co. v. Clarke, 87 So. 3d 58,
6061 (Fla. 4th DCA 2012) citing Ehrhardt, Florida Evidence 953.1 (2011 ed.); see Bennett
v. Deutsche Bank Natl Trust Co., 124 So. 3d 320, ___ (Fla. 4th DCA 2013); Riggs v. Aurora
Loan Servs., LLC, 36 So. 3d 932, 933 (Fla. 4th DCA 2010) (endorsement on note was
self-authenticating pursuant to 90.902(8), Fla. Stat.); see also 90.953(1), Fla. Stat.], if the
plaintiff does not hold the original mortgage, a duplicate of the mortgage is sufficient to confer
standing. Unlike the note, the mortgage is neither a negotiable instrument, a security, or any
other writing that evidences a right to the payment of money; thus, in the absence of the original
mortgage, a duplicate mortgage will satisfy the best evidence rule [Deutsche Bank Natl Trust
Co. v. Clarke, 87 So. 3d 58, 6063 (Fla. 4th DCA 2012) citing Perry v. Fairbanks Capital Corp.,
888 So. 2d 725, 726727 (Fla. 5th DCA 2004) and distinguishing Fair v. Kaufman, 647 So. 2d
167, 168 (Fla. 2d DCA 1994)]. One court found that, because the plaintiff is the owner and
holder of the note for which the mortgage is the security, it is not necessary that the mortgage,
itself, be transferred prior to the initiation of the foreclosure suit. The court held that to have
standing, an owner or holder of a note, indorsed in blank, need only show that he or she
possessed the note at the institution of a foreclosure suit; the mortgage necessarily and equitably
follows the note [U.S. Bank Natl Assn v. Knight, 90 So. 3d 824, 826 (Fla. 4th DCA 2012)].
In Wells Fargo Bank, N.A. v. Bohatka, Wells Fargo filed suit to foreclose the mortgage on
property owned by Bohatka. In its initial complaint, the bank alleged that it was the owner and
holder of the promissory note and mortgage encumbering the subject property. However, the
copy of the note and the copy of the mortgage attached to the complaint both identified Option
One Mortgage as the lender. Bohatka moved to dismiss the complaint asserting that the bank
lacked standing because of the inconsistency as to who was the true owner of the note. At the
hearing on the motion to dismiss, counsel for Wells Fargo provided the court with a photocopy
of an Allonge to Note, which specifically endorsed the note to Wells Fargo Bank, N.A., as
Trustee. The bank argued that the allonge established its standing to pursue payment on the
note because the bank was specifically identified in it. The banks counsel explained that the
original allonge had been sent to the clerks office, which had not yet received it. Bohatkas
counsel objected to consideration of the allonge because it was outside the record for purposes
of a motion to dismiss and that he had no opportunity to rebut it on such short notice. Then the
trial judge undertook a physical examination of the original note and found no evidence that an
allonge had ever been attached to the note. The complaint was dismissed with prejudice based
on the courts opinion that the initial complaint could not be amended to state a claim for which
the bank had standing [see Wells Fargo Bank, N.A. v. Bohatka, 112 So. 3d 596, 597600 (Fla.
1st DCA 2013)]. On appeal, the First District held that dismissal with prejudice was
inappropriate; rather, the complaint should have been dismissed without prejudice in order to
allow the bank to amend its complaint to address the discrepancy in ownership of the note and
mortgage and to fortify its allegations and attachments with the allonge, among other things
subsequently produced by the bank. Noting that [l]iberality in amendment to the banks initial
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complaint was plainly required [Wells Fargo Bank, N.A. v. Bohatka, 112 So. 3d 596, 601 (Fla.
1st DCA 2013); see U.S. Bank Natl Assn v. Knight, 90 So. 3d 824, 826 (Fla. 4th DCA 2012);
Deutsche Bank Natl Trust Co. v. Lippi, 78 So. 3d 81, 85 (Fla. 5th DCA 2012)], the district court
found that the trial court had before it the documents upon which the bank would likely rely for
an amended complaint. The court also found that the trial courts physical examination of the
original note, which resulted in the spontaneous adjudication of disputed facts based on that
examination, was improper because it by-passed the ordinary means by which the authenticity,
relevancy, and admissibility of documents is determined in accordance with the Florida
Evidence Code. Thus, the trial courts conclusion that no allonge could have existed and been
affixed to the note before the banks complaint was filed was a misstep that is inconsistent with
due process [Wells Fargo Bank, N.A. v. Bohatka, 112 So. 3d 596, 601602 (Fla. 1st DCA
2013)].
The plaintiff must prove that it had standing to foreclose at the time the complaint was filed
[McLean v. JP Morgan Chase Bank N.A., 79 So. 3d 170, 172173 (Fla. 4th DCA 2012); see
American Home Mortgage Servicing, Inc. v. Bednarek, 132 So. 3d 1222, 1223 (Fla. 2d DCA
2014); Lindsey v. Wells Fargo Bank, N.A., 139 So. 3d 903, 906 (Fla. 1st DCA 2013); Gonzalez
v. Deutsche Bank Natl Trust, 95 So. 3d 251, 253254 (Fla. 2d DCA 2012); Rigby v. Wells Fargo
Bank, N.A., 84 So. 3d 1195, 1196 (Fla. 4th DCA 2012); Beaumont v. Bank of N.Y. Mellon, 81
So. 3d 553, 555 (Fla. 5th DCA 2012); Country Place Cmty. Assn v. J.P. Morgan Mort.
Acquisition Corp., 51 So. 3d 1176, 1179 (Fla. 2d DCA 2010)]. The plaintiffs lack of standing
at the inception of the case is not a defect that may be cured by the acquisition of standing after
the case is filed. Thus, he or she may not establish the right to maintain an action retroactively
by acquiring standing after the action has been filed [Progressive Exp. Ins. Co. v. McGrath Cmty.
Chiropractic, 913 So. 2d 1281, 12851286 (Fla. 2d DCA 2005); see Focht v. Wells Fargo Bank,
N.A., 124 So. 3d 308, 311312 (Fla. 2d DCA 2013)]. A bank was unable to establish standing
where the record showed that the mortgage was assigned to the bank three days after the
foreclosure complaint was filed. While the original note contained an undated special
endorsement in the banks favor, the affidavit filed in support of summary judgment did not state
when the endorsement to the bank was made. Additionally, the affidavit, which was dated after
the suit was filed, did not specifically state when the bank became the owner of the note; nor
did it indicate that the bank was the owner of the note before suit was filed [McLean v. JP
Morgan Chase Bank N.A., 79 So. 3d 170, 173 (Fla. 4th DCA 2012); see Hall v. REO Asset
Acquisitions, LLC, 84 So. 3d 388 (Fla. 4th DCA 2012)].
The owner of the fee simple title is an indispensable party to a foreclosure action; thus, a
judgment in an action to which the fee simple owner is not a party is void because the action
had no effect on the legal title to the property [see English v. Bankers Trust Co. of California,
895 So. 2d 1120, 1121 (Fla. 4th DCA 2005)].
Every complaint in a foreclosure proceeding, filed on or after July 1, 2013, that involves
residential real property, including individual units of condominiums and cooperatives, designed
principally for occupation by from one to four families, must contain affirmative allegations
expressly made by the plaintiff that the plaintiff is the holder of the original note or must allege
with specificity the factual basis by which the plaintiff is a person entitled to enforce the note.
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If the plaintiff is not the holder of the note, the complaint must describe the plaintiffs authority
and identify the document that grants the plaintiff the authority to file the complaint on behalf
of the note holder [ 702.015(2), Fla. Stat.; see Fla. Laws ch. 2013-137, 8]. The plaintiff must
file either the original promissory note or certification that the plaintiff is in physical possession
of the original note, unless it is lost, destroyed, or stolen [ 702.015(3), Fla. Stat.]. If the
plaintiff is in possession of the original note, he or she must file a certification with the court
when the complaint is filed, under penalty of perjury [ 702.015(4), Fla. Stat.]. If the plaintiff
claims that the note is lost, destroyed, or stolen, the complaint must include an affidavit that
details a clear chain of all assignments or endorsements of the promissory note, set forth facts
showing that the plaintiff is entitled to enforce the note, and include exhibits providing
protection to the plaintiff under the Uniform Commercial Code (UCC) [ 702.015(4), Fla. Stat.;
see 673.3091, Fla. Stat. (enforcement of lost, destroyed, or stolen instruments under UCC)].
These rules do not apply to foreclosure proceedings involving timeshare interests [ 702.015(7),
Fla. Stat.].
Under the UCC, a person seeking to enforce a lost, destroyed, or stolen note must prove the
terms of the note and his or her right to enforce it. The court may not enter judgment in favor
of the person seeking enforcement unless it finds that the person required to pay the instrument
is adequately protected against loss that might occur by reason of a claim by another person to
enforce the instrument. Adequate protection may be provided by any reasonable means
[ 673.3091(2), Fla. Stat.; see Boumarate v. HSBC Bank USA, N.A., 109 So. 3d 1239, 1240 (Fla.
5th DCA 2013); Correa v. U.S. Bank, N.A., 118 So. 3d 952, 954955 (Fla. 2d DCA 2013)]. In
connection with a mortgage foreclosure, reasonable means of providing adequate protection
may consist of [ 702.11(1), Fla. Stat.]:
A written indemnification agreement by a person reasonably believed sufficiently

solvent to honor the obligation;
A surety bond;
A letter of credit issued by a financial institution;
A deposit of cash collateral with the clerk of the court; or
Any other security that the court deems appropriate under the circumstances.
Any security given must be on terms and in amounts set by the court for a time period through
the running of the statute of limitations for enforcing the underlying note. It must be conditioned
to indemnify and hold harmless the maker of the note against any loss or damage that might
occur due to a claim by another person to enforce the note [ 702.11(1), Fla. Stat.; see
702.11(2), Fla. Stat. (consequences for wrongfully claiming entitlement to enforce lost,
destroyed, or stolen note)].
A corporate nominee that is the holder of a note secured by a mortgage has standing to bring
a foreclosure action for the corporate beneficial owner of the note. Further, if the note is lost,
the nominee should be permitted to demonstrate this fact and to reestablish the note
[Mortgage Electronic Registration v. Azize, 965 So. 2d 151, 153154 (Fla. 2d DCA 2007); see
Cooperativa De Seguros Multiples v. Cintron, 44 So. 3d 623 (Fla. 5th DCA 2010)]. In agreeing
Page 9 of 44
with the Second Districts decision in Azize, a Third District panel opined that, [t]o the extent
that courts have encountered difficulties with the question [of the standing of a nominee of a
beneficial owner of a note to bring a foreclosure action] the problem arises from the difficulty
of attempting to shoehorn a modern innovative instrument of commerce into nomenclature and
legal categories which stem essentially from the medieval English land law [citation omitted].
Because, however, it is apparentand we so holdthat no substantive rights, obligations or
defenses are affected by the use of the [nominee] device, there is no reason why mere form
should overcome the salutary substance of permitting the use of this commercially effective
means of business. [Citation omitted] [Mortgage Electronic Registration v. Revoredo, 955 So.
2d 33, 34 (Fla. 3d DCA 2007)].
One of the purposes of the Servicemembers Civil Relief Act [50 U.S.C. 501 et seq.] is to
provide the temporary suspension of judicial and administrative proceedings and transactions
that may adversely affect the civil rights of servicemembers during their military service. As
such, the Act allows a servicemember on military duty to move to stay a foreclosure proceeding
initiated against his or her property or to move to stay the execution of a judgment of foreclosure
entered against him or her [see 50 U.S.C. 522, 524]. At any stage before final judgment in
a foreclosure proceeding, a court may, on its own motion, and must, on the application by the
servicemember, stay the proceeding not less than 90 days if the servicemember satisfies two
requirements. The servicemember must submit a letter or other communication setting forth
facts stating the manner in which current military duty requirements materially affect the
servicemembers ability to appear and stating a date when the servicemember will be available
to appear [50 U.S.C. 522(b)(2)(A)]. The servicemember must also submit a letter or other
communication from the servicemembers commanding officer stating that the servicemembers
current military duty prevents appearance and that military leave is not authorized for the
servicemember at the time of the letter [50 U.S.C. 522(b)(2)(B)]. The Act is to be liberally
construed in favor of servicemembers serving on active duty [Boone v. Lightner, 319 U.S. 561,
575, 63 S. Ct. 1223, 87 L. Ed. 1587 (1943)]. Given that fact and the equitable nature of
foreclosure proceedings, an active duty servicemember won a reversal of a final judgment of
foreclosure in favor of a homeowners association for nonpayment of association fees despite the
facts that he did not submit the required letter or other communication from his commanding
officer. He did submit multiple letters, which among other things, informed the trial court of his
active duty military status, advised the court regarding the Acts protections, and attached a copy
of his military orders, which required him to be in Pennsylvania two weeks before the scheduled
summary judgment hearing [see Higgins v. Timber Springs Homeowners, 126 So. 3d 394 (Fla.
5th DCA (2013)].
[ii]
Statute of Limitations.
Generally, a foreclosure action must be filed within five years of the date of maturity of the note
secured by the mortgage [ 95.281(1)(a), Fla. Stat.]. While most courts describe 95.281(1)(a),
Fla. Stat. as a statute of limitations (hence that terminology is employed here), some courts have
pointed out that it is more properly labeled a statute of repose, which prescribes the enforceable
life of a mortgage lien. A statute of repose operates substantively to prevent a cause of action
from arising after its time limitation, whereas a statute of limitations operates procedurally to
Page 10 of 44
prevent the enforcement of a cause of action that has accrued [see American Bankers Life Assur.
v. 2275 West, 905 So. 2d 189, 191192 (Fla. 3d DCA 2005) and Houck Corp. v. New River, Ltd.,
Pasco, 900 So. 2d 601, 603 (Fla. 2d DCA 2005); see also Razak v. Marina Club of Tampa
Homeowners, 968 So. 2d 616, 618619 (Fla. 2d DCA 2007)].
The statute of limitations on a mortgage foreclosure action does not begin to run until the last
payment is due unless the mortgage contains an acceleration clause [Monte v. Tipton, 612 So.
2d 714, 716 (Fla. 2d DCA 1993); Conner v. Coggins, 349 So. 2d 780 (Fla. 1st DCA 1977)]. In
the case of a mortgage secured by a balloon note, the period begins to run on the notes stated
maturation date [see also Razak v. Marina Club of Tampa Homeowners, 968 So. 2d 616,
618619 (Fla. 2d DCA 2007)]. If the mortgage contains an acceleration clause, the statute of
limitations begins to run at the time the mortgagee exercises the right to accelerate [see Monte
v. Tipton, 612 So. 2d 714, 716 (Fla. 2d DCA 1993)].
If the final maturity of an obligation secured by a mortgage cannot be ascertained from the
record of it, a foreclosure action must be filed within 20 years of the maturity date of the note
secured by the mortgage [ 95.281(1)(b), Fla. Stat.]. The fact that a mortgage includes an
advance clause does not automatically extend the maturity date of the original note by this
20-year period. In such a situation, the 20-year term prescribed by 95.281(1)(b) relates to
future advances that are made after the execution of the mortgage, not to the initial promissory
note that was secured by the mortgage, and the statute creates the lien only for advances that are
actually made [Razak v. Marina Club of Tampa Homeowners, 968 So. 2d 616, 619 (Fla. 2d DCA
2007)].
If the maturity date of a note secured by a mortgage is extended as evidenced by a recorded
extension agreement and the final maturity is ascertainable from the record, a foreclosure action
must be filed within five years after the maturity date as determined by the extension
[ 95.281(2)(a), Fla. Stat.]. As is the case with any instrument concerning real property, to
entitle it to be recorded, the execution must be acknowledged by the party executing it, proved
by a subscribing witness, or legalized or authenticated by a civil-law notary or notary public [see
695.03, Fla. Stat.; American Bankers Life Assur. v. 2275 West, 905 So. 2d 189, 192 (Fla. 3d
DCA 2005); see also 27.03[2][a][i]]. If the notes maturity date is extended and the extension
agreement is recorded, but the final maturity date is not ascertainable from the record, a
foreclosure action must be filed within 20 years after the maturity date specified in the extension
[ 95.281(2)(b), Fla. Stat.]. An otherwise valid extension agreement that is not recorded will not
operate to extend the time within which a mortgagee may institute foreclosure proceedings
against an original mortgagors successor-in-interest with no actual notice of the extension
[Zlinkoff v. Von Aldenbruck, 765 So. 2d 840, 842843 (Fla. 4th DCA 2000)].
Under certain circumstances, the doctrine of equitable estoppel or equitable tolling may
preclude the mortgagor from raising the statute of limitations as a defense to a foreclosure
action. Equitable tolling will be applied if the plaintiff has been misled or lulled into inaction
and has in some extraordinary way been prevented from asserting his or her rights [Alachua
County v. Cheshire, 603 So. 2d 1334, 1337 (Fla. 1st DCA 1992)]. Thus, a mortgagor is estopped
from raising the statute of limitations if his or her conduct has induced the mortgagee to forbear
Page 11 of 44
suit within the applicable limitations period. For example, in one case, the mortgagee held a
mortgage on property that was acquired by the federal government through forfeiture
proceedings. Government agents informed the mortgagee that he did not need to do anything to
protect his lien, and that he would be paid by the ultimate recipient of the property. Eventually,
in order to expedite the settling of the lien, the mortgagee filed an action to foreclose his
mortgage after the statute of limitations had run. In the interim, the federal government executed
a quitclaim deed for the parcel to Alachua County. Alachua County defended against the
foreclosure action on the ground that the statute of limitations had run. Under these
circumstances, the court found that the county was estopped to raise the statute of limitations
defense [Alachua County v. Cheshire, 603 So. 2d 1334, 1337 (Fla. 1st DCA 1992)].
When the federal government is the mortgagee, there is no statute of limitations that applies to
foreclosure, because the federal government has sovereign immunity for state statutes of
limitations and the federal statute of limitations does not apply to actions to establish title to real
property [LLP Mortg. Ltd. v. Cravero, 851 So. 2d 897, 898 (Fla. 4th DCA 2003) citing United
States v. Summerlin, 310 U.S. 414, 60 S. Ct. 1019, 84 L. Ed. 1283 (1940) and 28 U.S.C.
2415(c)]. An assignee of the federal government enjoys the same protection from the statute
of limitations based on the rationale that an assignee stands in the shoes of, and has all the rights
enjoyed by, the assignor [LPP Mortgage Ltd. v. Tucker, 48 So. 3d 115, 116117 (Fla. 3d DCA
2010); LLP Mort. Ltd., v. Cravero, 851 So. 2d 897, 898 (Fla. 4th DCA 2003)].
[iii]
Jurisdiction and Service of Process.
A person who owns, uses, or possesses real property within Florida or who holds a mortgage or
other lien on the property is subject to the jurisdiction of the Florida courts for the purpose of
a mortgage foreclosure proceeding [ 48.193(1)(c), Fla. Stat.]. Mortgagors who have conveyed
to other parties all rights and interests in and to the mortgaged property, however, are neither
necessary nor proper parties to a foreclosure proceeding [Dennis v. Ivey, 134 Fla. 181, 185, 183
So. 624, 626 (Fla. 1938); Mitchell v. Fed. National Mortgage Assn, 763 So. 2d 358 (Fla. 4th
DCA 2000)].
A guarantor of a mortgage note who has no interest in the mortgaged property, although a proper
party, is not a necessary party to an action to foreclose the mortgage. Generally, guarantors are
included in foreclosure actions to facilitiate enforcement of the guaranty if the sale of the
collateral is insufficient to satisfy the debt [Cukierman v. Bank Atlantic, 89 So. 3d 250, 252 (Fla.
3d DCA 2012); see L.A.D. Prop. Ventures, Inc. v. First Bank, 19 So. 3d 1126, 1127 (Fla. 2d DCA
2009)].
A homeowner who had been in possession of property under color of title during a banks
foreclosure action but who was not served with a summons or named as a party to that action,
was denied due process because he did not have adequate notice of the foreclosure proceedings.
Thus, the banks writ of possession, which was obtained through the foreclosure action, was
void as to the homeowner, regardless of whether or not the homeowners deed to the property
was void as asserted by the bank [see Hutchison v. Chase Manhattan Bank, 922 So. 2d 311, 315
(Fla. 2d DCA 2006)].
Page 12 of 44
Unless the foreclosing mortgagee can show good cause for any delay, service of process on the
mortgagor must be made within 120 days of the date the foreclosure complaint is filed [Fla. R.
Civ. P. 1.070(i); see Docktor v. McCrocklin, 669 So. 2d 1129 (Fla. 4th DCA 1996)]. If possible,
service should be made personally [see 48.031(1), Fla. Stat.; see also Heck v. Bank Liberty,
86 So. 3d 1281 (Fla. 1st DCA 2012)]. If the party resides outside the state, service may be made
by sending the original process, the initial pleading, and any order to show cause by registered
mail to the person to be served [ 48.194(2), Fla. Stat.]. Service by registered mail is considered
to be obtained when the person allowed by law to be served signs the return receipt
[ 48.194(2)(c), Fla. Stat.].
If service is made personally and the process servers return of service is regular on its face,
service is presumed valid [Telf Corp. v. Gomez, 671 So. 2d 818 (Fla. 3d DCA 1996); Florida
Natl Bank v. Halphen, 641 So. 2d 495 (Fla. 3d DCA 1994); see Heck v. Bank Liberty, 86 So.
3d 1281, 1284 (Fla. 1st DCA 2012)]. The presumption may be rebutted, however, by clear and
convincing evidence that the summons was not served [Burns v. Bankamerica Nat. Trust Co.,
719 So. 2d 999, 1001 (Fla. 5th DCA 1998); Telf Corp. v. Gomez, 671 So. 2d 818 (Fla. 3d DCA
1996); see Myrick v. Walters, 666 So. 2d 249 (Fla. 2d DCA 1996)]. The presumption was
successfully rebutted when a mortgagor presented his estranged wifes deposition testimony and
documentary evidence establishing that, when the process server left the summons and
complaint with the mortgagors wife at the address of the family residence, the mortgagor did
not live at the address; rather that he was residing out of state. The evidence showed that the
parties had separated two months earlier, and a petition for dissolution of their marriage was
pending [see Heck v. Bank Liberty, 86 So. 3d 1281, 1284 (Fla. 1st DCA 2012)].
If personal service or service by registered mail is not possible, the defendant in a foreclosure
proceeding may be served by publication [ 49.021, Fla. Stat.], provided there is strict
compliance with the statutory procedures for service by publication [Shepheard v. Deutsche
Bank Trust Co., 922 So. 2d 340, 343 (Fla. 5th DCA 2006)]. Failure to strictly comply will render
a subsequent judgment voidable [Floyd v. Fed. Natl Mortg. Assn, 704 So. 2d 1110, 1112 (Fla.
5th DCA 1998); see Martins v. Oaks Master Prop. Owners Assn, ___ So. 3d ___, ___, 2014 Fla.
App. LEXIS 18683 (Fla. 5th DCA 2014)]. The procedures include submission of a sworn
statement showing, among other things, that diligent search and inquiry have been made to
discover the name and residence of the person being served [ 49.041(1), Fla. Stat.; see Martins
v. Oaks Master Prop. Owners Assn, ___ So. 3d ___, ___, 2014 Fla. App. LEXIS 18683; Godsell
v. United Guar. Residential Ins., 923 So. 2d 1209, 12131215 (Fla. 5th DCA 2006); Shepheard
v. Deutsche Bank Trust Co., 922 So. 2d 340, 343 (Fla. 5th DCA 2006)]. Even though an affidavit
may be facially sufficient, the facts underlying an affidavit of diligent search must show that a
diligent search was, in fact, made [Lewis v. Fifth Third Mortg. Co., 38 So. 3d 157, 160161 (Fla.
3d DCA 2010); Demars v. Village of Sandalwood Lakes Homeowners Assn, 625 So. 2d 1219,
1224 (Fla. 4th DCA 1993); see First Home View Corp. v. Guggino, 10 So. 3d 164, 165 (Fla. 3d
DCA 2009); Giron v. Ugly Mortg., Inc., 935 So. 2d 580, 582 (Fla. 3d DCA 2006)]. The plaintiff
must prove that it made an honest and conscientious effort, reasonably appropriate to the
circumstances, to acquire the information necessary to fully comply with the controlling
statutes [Gans v. Heathgate-Sunflower Homeowners Assn, 593 So. 2d 549, 551552 (Fla. 4th
DCA 1992); Lewis v. Fifth Third Mortg. Co., 38 So. 3d 157, 160161 (Fla. 3d DCA 2010); Dor
Page 13 of 44
Cha, Inc. v. Hollingsworth, 876 So. 2d 678, 680 (Fla. 4th DCA 2004)]. While there is no
bright-line rule for what constitutes a diligent search, generally, the test is whether the
complainant reasonably employed the knowledge at his or her command, made diligent inquiry,
and exerted an honest and conscientious effort appropriate to the circumstance to acquire the
information necessary to effect personal service on the defendant [Canzoniero v. Canzoniero,
305 So. 2d 801, 803 (Fla. 4th DCA 1975) cited in Peysina v. Deutsche Bank Natl Trust Co., 118
So. 3d 237, 238 (Fla. 3d DCA 2013)]. Depending on the circumstances, a diligent search and
inquiry may include getting out of the office, finding the property, inquiring of persons in
possession of the property, or talking with neighbors, relatives, or friends [see Floyd v. Federal
Natl Mortgage Assn, 704 So. 2d 1110, 1112 (Fla. 5th DCA 1998) cited in Godsell v. United
Guar. Residential Ins., 923 So. 2d 1209, 1214 (Fla. 5th DCA 2006)]. If an affidavit is found to
be insufficient to support valid service by publication, the court has no authority to enter
judgment of foreclosure [Shepheard v. Deutsche Bank Trust Co., 922 So. 2d 340, 343 (Fla. 5th
DCA 2006); Batchin v. Barnett Bank of S.W. Florida, 647 So. 2d 211, 213 (Fla. 2d DCA 1994)].
It is the petitioners responsibility, either through his or her attorney or personally if acting pro
se, to place the publication in a newspaper [ 702.035, Fla. Stat.].
A mortgagor must contest the sufficiency of the service of process at the inception of a case
either by motion or responsive pleading challenging service [Fla. R. Civ. P. 1.140; DeArdila v.
Chase Manhattan Mortg. Corp., 826 So. 2d 419, 420 n. 2 (Fla. 3d DCA 2002); Lennar Homes,
Inc. v. Gabb Constr. Servs., 654 So. 2d 649, 651 (Fla. 3d DCA 1995); but see Opella v. Bayview
Loan Servicing, LLC, 48 So. 3d 185 (Fla. 3d DCA 2010)]. The defense will be waived if it is
not raised at the first opportunity [Thomas v. Bank of New York, 7 So. 3d 574 (Fla. 1st DCA
2009); see Romellotti v. Hanover Amgro Ins. Co., 652 So. 2d 414, 414 (Fla. 5th DCA 1995)
quoting M.T.B. Banking Corp. v. Bergamo Da Silva, 592 So. 2d 1215, 1215 (Fla. 3d DCA
1992)]. Filing a responsive pleading without challenging service will waive any defense to a
foreclosure action based on insufficiency of service [Re-Employment Servc., Ltd. v. Natl Loan
Acquisitions Co., 969 So. 2d 467, 470 (Fla. 5th DCA 2007)]. However, no waiver occurs if the
initial motion to dismiss is amended to include the defense before the motion is heard [see
Waxoyl, A.G. v. Taylor, Brion, Buker & Greene, G.P., 711 So. 2d 1251, 1254 (Fla. 3d DCA 1998),
Astra v. Colt Indus. Operating Corp., 452 So. 2d 1031, 1032 (Fla. 4th DCA 1984)].
[iv]
Alternative Procedure for Uncontested Cases.
There is an alternative procedure designed to speed up the foreclosure process in uncontested

cases and in cases where there is no legitimate defense. In such cases, a lienholder may request
an order to show cause for the entry of final judgment. (Lienholder includes the plaintiff and
any defendant to the action who holds a lien encumbering the property or any defendant who,
by virtue of its status as a condominium association, cooperative association, or homeowners
association, may file a lien against the real property subject to foreclosure.) When the request
is filed, the court must immediately review both the request and the courts file in chambers
without a hearing. If, upon examination of the file, the court finds that the complaint is verified,
complies with 702.015, Fla. Stat. [see [i], above], and alleges a cause of action to foreclose
on real property, the court must promptly issue an order directed to the other parties named in
the action to show cause why a final judgment of foreclosure should not be entered [ 702.10(1),
Fla. Stat.].
Page 14 of 44
The order to show cause must set the date and time for hearing on the order. The date for hearing
may not occur sooner than the later of 20 days after service of the order to show cause or 45
days after service of the initial complaint. When service is obtained by publication, the date for
the hearing may not be set sooner than 30 days after the first publication [ 702.10(a)1., Fla.
Stat.]. The order must also state the following [see 702.10(1)(a)2.7., Fla. Stat.]:
(1) The time within which service of the order to show cause and the complaint must be
made on the defendant.
(2) That the filing of defenses by a motion, a responsive pleading, an affidavit, or other
papers before the hearing to show cause that raise a genuine issue of material fact which
would preclude the entry of summary judgment or otherwise constitute a legal defense
to foreclosure will constitute cause for the court not to enter final judgment.
(3) That the defendant has the right to file affidavits or other papers before the hearing to
show cause and may appear personally or by way of an attorney at the hearing.
(4) That, if a defendant files defenses by a motion, a verified or sworn answer, affidavits,
or other papers or appears personally or by way of an attorney at the time of the hearing,
the hearing time will be used to hear and consider whether the defendants motion,
answer, affidavits, other papers, and other evidence and argument as may be presented
raise a genuine issue of material fact that would preclude the entry of summary
judgment or otherwise constitute a legal defense to foreclosure.
(5) That the court may enter an order of final judgment of foreclosure at the hearing and
order the clerk to conduct a foreclosure sale.
(6) If a defendant either (a) fails to appear at the hearing to show cause, (b) fails to file
defenses by a motion or by a verified or sworn answer, or (c) files an answer not
contesting the foreclosure, that defendant may be considered to have waived the right
to a hearing, in which case the court may a default against that defendant and, if
appropriate, enter a final judgment of foreclosure ordering the clerk to conduct a
foreclosure sale.
(7) If the mortgage provides for reasonable attorneys fees and the requested fees do not
exceed three percent of the principal sum owed at the time the complaint was filed, it
is unnecessary for the court to hold a hearing or adjudge reasonableness of the
attorneys fees requested.
A copy of the proposed final judgment of foreclosure which the movant requests the court to
enter at the hearing on the order to show cause must be attached to the request [ 702.10(1)(a)8.,
Fla. Stat.].
The party seeking final judgment must serve a copy of the order to show cause on the other
parties. If a party has been properly served with the complaint and original process, or the other
party is the plaintiff in the action, service of the order to show cause on that party may be made
in accordance with the Florida Rules of Civil Procedure. If a defendant has not been properly
served with the complaint and original process, the order to show cause, together with the
summons and a copy of the complaint, must be served on that defendant in the same manner as
required for service of original process [ 702.10(1)(a)9., Fla. Stat.].
Page 15 of 44
A defendant waives the right to be heard at the hearing to show cause if, after being duly served
with the order to show cause, he or she fails to file defenses by a motion or by a sworn or
verified answer, affidavits, or other papers or fails to appear personally or by way of an attorney
at the hearing to show cause. If the defendant files defenses by a motion, a verified answer,
affidavits, or other papers or presents evidence at or before the hearing, which raise a genuine
issue of material fact that would preclude entry of summary judgment or otherwise constitute
a legal defense to foreclosure, the court may not enter a final judgment at the hearing to show
cause [ 702.10(1)(b), Fla. Stat.; see Barrnunn, LLC v. Talmer Bank & Trust, 106 So. 3d 51, 53
(Fla. 2d DCA 2013)].
If the court finds that all defendants have waived the right to be heard, the court must promptly
enter a final judgment of foreclosure without need for further hearing; provided the plaintiff has
shown that he or she is entitled to a final judgment, and has either (1) filed the original note with
the court, (2) satisfied the conditions for establishing a lost note, or (3) shown that the obligation
to be foreclosed is not evidenced by a promissory note or other negotiable instrument
[ 702.10(1)(d), Fla. Stat.].
If the court finds that a defendant has not waived the right to be heard on the order to show
cause, the court must determine whether there is cause not to enter a final judgment. If the court
finds that cause has not been shown, a judgment of foreclosure must be promptly entered. If the
time allotted for the hearing is insufficient, the court may announce at the hearing a date and
time for the continued hearing. Only the parties who make an appearance at the initial hearing
must be notified of the date and time of the continued hearing [ 702.10(1)(d), Fla. Stat.].
When a final judgment of foreclosure has been entered and the note or mortgage provides for
the award of reasonable attorneys fees, it is not necessary for the court to hold a hearing or
adjudge the requested attorneys fees to be reasonable if the fees do not exceed three percent of
the principal amount owned on the note or mortgage at the time of filing, even if the note or
mortgage does not specify the percentage of the original amount that would be paid as liquidated
damages [ 702.10(1)(c), Fla. Stat.].
[v]
Order to Make Payments or Vacate Premises.
In any action for foreclosure, other than owner-occupied residential real estate, in addition to
any other relief that court may award, the plaintiff may request that the court enter an order
directing the defendant to show cause why an order to make payments during the pendency of
the foreclosure proceedings or an order to vacate the premises should not be entered
[ 702.10(2), Fla. Stat.]. (For these purposes, there is a rebuttable presumption that a residential
property for which a homestead exemption for taxation was granted before the foreclosure
action was filed is an owner-occupied residential property [see 702.10(2)(i), Fla. Stat.].)
The order must set the date and time for hearing on the order to show cause. The date for hearing
may not be set sooner than 20 days after the order is served. If service is by publication, the date
for the hearing may not be set sooner than 30 days following the first publication
[ 702.10(2)(a)1., Fla. Stat.]. The order must also state the following [see 702.10(2)(a), Fla.
Stat.]:
Page 16 of 44
(1) The time within which service of the order to show cause and the complaint must be
made on each defendant.
(2) That, if a defendant has the right to file affidavits or other papers at the time of the
hearing and may appear personally or by way of an attorney at the hearing.
(3) If a defendant fails to appear at the hearing to show cause and fails to file defenses by
a motion or verified or sworn answer, the defendant may be deemed to have waived the
right to a hearing, in which case the court may enter an order to make payment or vacate
the premises.
The moving party must serve a copy of the order to show cause on the defendant. If a defendant
has not been served with the complaint and original process, the moving party must serve the
defendant with the order to show cause, the summons, and a copy of the complaint in the same
manner as for original process [ 702.10(2)(a)5.b., Fla. Stat.]. If a defendant has already been
served with the complaint and original process, the moving party may serve the order to show
cause in the manner provided in the Florida Rules of Civil Procedure [ 702.10(2)(a)5.a., Fla.
Stat.].
A defendant waives the right to be heard at the hearing to show cause if, after being duly served
with the order to show cause, he or she fails engages in conduct that clearly shows that the
defendant has relinquished the right to be heard on the order. A defendants failure to file
defenses by a motion or by a sworn or verified answer or to appear at the hearing to show cause
presumptively constitutes such conduct [ 702.10(2)(b), Fla. Stat.]. If the court finds that the
defendant has waived the right to be heard, the court may promptly enter an order requiring
payment or an order to vacate [ 702.10(2)(c), Fla. Stat.].
If the court finds that the defendant has not waived the right to be heard on the order to show
cause, the court must, at the hearing on the order to show cause, consider the affidavits and other
showings made by the parties and determine the probable validity of the plaintiffs claims and
the defendants defenses [ 702.10(2)(d), Fla. Stat.].
If the court determines that the plaintiff is likely to prevail in the foreclosure action, the court
must enter an order requiring the defendant to make payments to the plaintiff as provided for
in the mortgage instrument before acceleration or maturity. The obligation to make payments
commences from the date the plaintiff filed the motion for order to show cause. The order may
be stayed pending final adjudication of the claims of the parties if the defendant files with the
court a written undertaking executed by an approved surety in an amount equal to the unpaid
balance of the lien being foreclosed [ 702.10(2)(d), (e), Fla. Stat.]. The order requiring
payments must be served on the defendant no later than 20 days before the first payment is due.
The order may permit but may not require the plaintiff to take all steps necessary to secure the
premises during the pendency of the foreclosure proceedings [ 702.10(2)(e), Fla. Stat.]. In
general, the order must also provide that the plaintiff is entitled to possession of the premises
if the defendant fails to make the required payments. However, the court may order some other
method of enforcing its order if the court finds good cause to do so at the hearing on the order
to show cause [ 702.10(2)(f), Fla. Stat.].
Page 17 of 44
The payments that the defendant makes pursuant to the court order are credited against the lien
obligation. However, the payments do not cure any default or waiver and are not a defense to
the lien foreclosure action [ 702.10(2)(g), Fla. Stat.].
If the court orders the defendant to vacate the premises and the defendant fails to do so, the
plaintiff may enforce the order by filing an affidavit with the clerk of the court, stating that the
premises have not been vacated pursuant to the order. The clerk must then issue to the sheriff
a writ for possession [ 702.10(2)(h), Fla. Stat.; see 83.62, Fla. Stat. (writs of possession)].
Against a challenge that Section 702.10(2), Florida Statutes, discussed above, is unconstitutional
because it fails to protect the mortgagors due process rights and impermissibly conflicts with
Florida Rule of Civil Procedure 1.610(b), the Florida Supreme Court upheld the constitutionality
of the statute and also found that it does not conflict with Rule 1.610(b) [see Caple v. Tuttles
Design-Build, Inc., 753 So. 2d 49 (Fla. 2000); see also Fla. Laws, ch. 2013-137, 9]. (Section
702.10(2) requires the mortgagor in default on a mortgage encumbering nonresidential property
either to make payments or to vacate the property. Rule 1.610(b) prohibits entry of a temporary
injunction unless a bond is posted by the party seeking the injunction.) In upholding the
constitutionality of Section 702.10(2), the Florida Supreme Court reversed a decision of the
Third District in which the district court held that, in order to protect the mortgagors due
process rights, the statute should either provide for a creditor bond to protect the debtor from
mistaken repossession or payment, or require, at a minimum, that mortgage payments be made
into the court registry to safeguard the mortgagors funds pending resolution of the foreclosure
action. The Florida Supreme Court also reversed the district courts holding that the statute was
in direct conflict with Rule 1.610(b). The district courts conclusion was based on its finding that
an order requiring payment of funds before a judgment is entered is, in effect, an order granting
an injunction [see Tuttles Design-Build, Inc. v. Caple, 712 So. 2d 1213 (Fla. 3d DCA 1998)
reversed in Caple v. Tuttles Design-Build, Inc., 753 So. 2d 49 (Fla. 2000)]; see also Fla. Laws,
ch. 2013-137, 9].
On the due process issue, the Florida Supreme Court applied a totality test, which basically
requires a court to determine whether, as a whole, the statute under scrutiny adequately protects
the parties interests [see Mitchell v. W.T. Grant Co., 416 U.S. 600, 610, 94 S. Ct. 1895, 40 L.
Ed. 2d 406 (1974); see also Gazil, Inc. v. Super Food Services, Inc., 356 So. 2d 312 (Fla. 1978)].
Applying this test, the Florida Supreme Court found that Section 702.10(2) adequately protects
the parties due process rights in that [Caple v. Tuttles Design-Build, Inc., 753 So. 2d 49, 53
(Fla. 2000)]:
(1) The mortgagee is required to serve a copy of the order to show cause on the mortgagor
in a prescribed and protective manner;
(2)
The mortgagor has the right to appear at the show cause hearing prior to any
deprivation and to file affidavits or other papers, including affirmative defenses;
(3) The trial judge is authorized to order the mortgagor to continue payments only on a
finding that the mortgagee is likely to prevail in the foreclosure action;
(4) The mortgagor has the ability to stay an order to continue payments or repossession of
the property by posting a bond.
Page 18 of 44
Regarding the issue that Section 702.10(2), Florida Statutes conflicts with Florida Rule of Civil
Procedure 1.610(b), the Florida Supreme Court found that the statute creates a substantive
righti.e., the mortgagees right to petitionand establishes the grounds on which the petition
may be granted. Because it creates a substantive right and any procedural provisions are directly
related to defining those rights, the Florida Supreme Court held that Section 702.10(2) does not
infringe on the courts rulemaking authority [Caple v. Tuttles Design-Build, Inc., 753 So. 2d 49,
5355 (Fla. 2000); see VanBibber v. Harford Accident & Indem. Ins. Co., 439 So. 2d 880, 883
(Fla. 1983); see also Fla. Laws, ch. 2013-137, 9].
[vi]
Judgment in Uncontested Proceedings.
In uncontested foreclosure proceedings in which the mortgagee waives the right to recover any
deficiency judgment, the court must enter final judgment within 90 days from the date of the
close of pleadings. For these purposes, a foreclosure proceeding is uncontested if the mortgagor
has filed an answer not contesting the foreclosure, or the court has entered a default judgment
[ 702.065(1), Fla. Stat.].
[vii]
Counterclaims.
A trial court may, in its discretion, sever a counterclaim from the foreclosure action [see Norris
v. Paps, 615 So. 2d 735, 737 (Fla. 2d DCA 1993)]. However, it is an abuse of discretion to sever
a counterclaim and affirmative defenses without staying the foreclosure action if the severance
precludes the trier of fact in the foreclosure action from considering facts inextricably woven
with the issues presented by the affirmative defenses and counterclaim [Plantation Village Ltd.
v. Aycock, 617 So. 2d 729 (Fla. 2d DCA 1993)]. Likewise, severing a counterclaim from the
foreclosure action and affirmative defenses is likely to prejudice a party, particularly if the
counterclaim is compulsory, if the legal issues raised by the counterclaim must be tried by jury,
or if the evidence supporting the severed counterclaim and an affirmative defense is interrelated
[Norris v. Paps, 615 So. 2d 735, 737 (Fla. 2d DCA 1993)]. When possible, the better practice
is to try the foreclosure and any counterclaim together and to set-off any damages for recovery
under one claim against the other [see Tolin v. Doudov, 626 So. 2d 1054, 1056 (Fla. 4th DCA
1993) (reversal and remand for set-off of foreclosure damages against damages for breach of
contract)].
Whether a counterclaim is compulsory is judged by the logical relationship test adopted by the
Florida Supreme Court in Londono v. Turkey Creek, Inc. A claim has a logical relationship to
the original claim if it arises out of the same aggregate of operative facts as the original claim,
that is, either [Londono v. Turkey Creek, Inc., 609 So. 2d 14, 1920 (Fla. 1992); see Callaway
Land & Cattle v. Banyon Lakes C., 831 So. 2d 204, 207 (Fla. 4th DCA 2002); see also Fla. R.
Civ. P. 1.170(a) (compulsory counterclaims)]:
(1) the same aggregate of operative facts serves as the basis of both claims; or
(2) the aggregate core of facts on which the original claim rests activates additional legal
rights in a party defendant that would otherwise remain dormant.
In a case certified for review to the Florida Supreme Court by the Eleventh Circuit, the court
applied this test to determine that defendants, who were not obligors on the original note and
Page 19 of 44
mortgage in an in rem foreclosure action, were not required to bring, as compulsory

counterclaims, tort claims arising out of the foreclosure action. The tort claims asserted that the
foreclosing bank interfered with the defendants business relationship with the obligor and were
based on a loan extension agreement between the foreclosing bank and the obligor. The
extension agreement was an unrecorded instrument signed two years after the mortgage
agreement and was not mentioned in or attached to the banks foreclosure complaint [see
Aguilar v. Southeast Bank, N.A., 728 So. 2d 744 (Fla. 1999); see also Aguilar v. Southeast Bank
N.A., 177 F.3d 1226 (11th Cir. 1999)].
[viii]
Courts Power to Set Aside Foreclosure Decree Before Sale.
A circuit court may set aside a decree of foreclosure at any time before the judicial sale, and
dismiss the foreclosure proceeding on payment of all court costs [ 702.07, Fla. Stat.]. Once a
foreclosure decree has been set aside and the proceeding has been dismissed, the mortgage,
together with its lien and the debt secured by that lien, will be completely restored to the status
as it existed before the foreclosure proceeding was initiated [ 702.08, Fla. Stat.]. In this
context, mortgage includes any written instrument securing the payment of money or
advances. It also includes liens to secure payment of condominium and cooperative assessments,
and liens created pursuant to the recorded covenants of a homeowners association [ 702.09,
Fla. Stat.; see 712.01(4), 720.301(7), Fla. Stat. (homeowners association defined)].
The fact that 702.07, Fla. Stat. permits a circuit court to set aside a foreclosure decree prior
to sale does not deprive the same court of jurisdiction to, on proper motions, set aside or
reconsider a foreclosure judgment once the sale has been held [Maule Indus., Inc. v. Seminole
Rock & Sand Co., 91 So. 2d 307, 309310 (Fla. 1956); Taylor v. Day, 102 Fla. 1006, 136 So.
701, 703 (1931); Sterling Factors v. U.S. Bank Nat. Assn, 968 So. 2d 658, 662665 (Fla. 2d
DCA 2007)].
While 702.07 grants a circuit court the jurisdiction, power, and authority to rescind, vacate,
and set aside a decree of foreclosure, the section does not set forth the grounds on which a court
may do so. Thus, the statute must be read in conjunction with Fla. R. Civ. P., Rule 1.540(b),
which specifies the bases upon which a court may grant relief from a judgment, decree, or order
[Toler v. Bank of Am. N.A., 78 So. 3d 699, 702704 (Fla. 4th DCA (2012)]. Under the Rule, a
party must demonstrate one of the following [Fla. R. Civ. P. Rule 1.540(b)]:
Mistake, inadvertence, surprise, or excusable neglect [see Yale Mortg. Corp. v. Blot,
107 So. 3d 1181, 1182 (Fla. 3d DCA 2013); Gascue v. HSBC Bank, 97 So. 3d 263, 264
(Fla. 4th DCA 2012); Lazcar Intl, Inc. v. Caraballo, 957 So. 2d 1191, 1192 (Fla. 3d
DCA 2007)];
Newly discovered evidence which by due diligence could not have been discovered in
time to move for a new trial or rehearing;
Intrinsic or extrinsic fraud, misrepresentation, or other misconduct of an adverse party;
That the judgment is void; or
That the judgment has been satisfied, released, or discharged, or a prior judgment on
which it is based has been reversed or otherwise vacated, or it is no longer equitable that
the judgment should have prospective application.
Page 20 of 44
[b]
Judicial Sales Procedure

[i]
Final Judgment.
After the foreclosure has been allowed [see [a], above], the trial court has discretion in setting
the terms of the sale [Coombes v. Wheeler, 131 Fla. 593, 179 So. 785, 786 (1938); Randall v.
Bisbee-Baldwin Corp., 995 So. 2d 1004, 1005 (Fla. 1st DCA 2008)]. For purposes of a judicial
sale, the court must, in the order or final judgment, direct the clerk to sell the property at public
sale [ 45.031(1)(a), Fla. Stat.; see Bankers Trust Co. v. Edwards, 849 So. 2d 1160, 1162 (Fla.
1st DCA 2003); First Nationwide Sav. v. Thomas, 513 So. 2d 804, 805 (Fla. 4th DCA 1987)].
If the mortgage being foreclosed is secured by several parcels of real property, and the total
value of all the parcels would more than satisfy the amount owed on the foreclosed mortgage,
the court may order the parcels sold one at a time rather than ordering a sale en masse; provided
such a serial sale is practical and equitable to all parties [Randall v. Bisbee-Baldwin Corp., 995
So. 2d 1004, 1005 (Fla. 1st DCA 2008); Applefield v. Fid. Fed. Sav. & Loan Assn of Tampa,
137 So. 2d 259, 261262 (Fla. 2d DCA 1962)].
The court must specify a date for the sale that is at least 20 days, but no more than 35 days, after
the date of the court order [ 45.031(1)(a), Fla. Stat.]. While the matter of fixing the time for
a judicial sale is set by statute, the trial court has reasonable discretion within the statutory
framework to set or reset the sale date [ LR5A- JV v. Little House, LLC, 50 So. 3d 691, 693694
(Fla. 5th DCA 2010)]. However, if the mortgagee or the mortgagees attorney consents to it, a
sale may be held more than 35 days after the date of the final judgment or order. The fact that
a sale is held more than 35 days after the final judgment or order does not affect the validity or
finality of either the judgment or the sale [ 45.031(1)(b), (c), Fla. Stat.; see Bankers Trust Co.
of Cal. v. Weidner, 688 So. 2d 453 (Fla. 5th DCA 1997)].
While, generally speaking, the trial court has discretion to grant a continuance or a
postponement of the sale, granting a one-month continuance on the ground of benevolence
and compassion to allow the defendants to explore the possibility of arranging for payment of
the underlying debt was an abuse of that discretion; particularly since such a continuance
contravened the statutory requirement that a sale must take place no more than 35 days after the
court order [see Republic Federal Bank, N.A. v. Doyle, 19 So. 3d 1053, 10541055 (Fla. 3d DCA
2009)].
The final judgment must contain the following statement in conspicuous type [ 45.031(1)(a),
Fla. Stat.]:
IF THIS PROPERTY IS SOLD AT PUBLIC AUCTION, THERE MAY BE ADDITIONAL
MONEY FROM THE SALE AFTER PAYMENT OF PERSONS WHO ARE ENTITLED
TO BE PAID FROM THE SALE PROCEEDS PURSUANT TO THIS FINAL JUDGMENT.
IF YOU ARE A SUBORDINATE LIENHOLDER CLAIMING A RIGHT TO FUNDS
REMAINING AFTER THE SALE, YOU MUST FILE A CLAIM WITH THE CLERK NO
LATER THAN 60 DAYS AFTER THE SALE. IF YOU FAIL TO FILE A CLAIM, YOU
WILL NOT BE ENTITLED TO ANY REMAINING FUNDS.
Page 21 of 44
If the property being foreclosed on has qualified for the homestead tax exemption, the final
judgment must also include the following statement [ 45.031(1)(b), Fla. Stat.]:
IF YOU ARE THE PROPERTY OWNER, YOU MAY CLAIM THESE FUNDS
YOURSELF. YOU ARE NOT REQUIRED TO HAVE A LAWYER OR ANY OTHER
REPRESENTATION AND YOU DO NOT HAVE TO ASSIGN YOUR RIGHTS TO
ANYONE ELSE IN ORDER FOR YOU TO CLAIM ANY MONEY TO WHICH YOU
ARE ENTITLED. PLEASE CHECK WITH THE CLERK OF THE COURT, [Insert
information for applicable court] WITHIN TEN (10) DAYS AFTER THE SALE TO SEE
IF THERE IS ADDITIONAL MONEY FROM THE FORECLOSURE SALE THAT THE
CLERK HAS IN THE REGISTRY OF THE COURT.
IF YOU DECIDE TO SELL YOUR HOME OR HIRE SOMEONE TO HELP YOU CLAIM
THE ADDITIONAL MONEY, YOU SHOULD READ VERY CAREFULLY ALL PAPERS
YOU ARE REQUIRED TO SIGN, ASK SOMEONE ELSE, PREFERABLY AN
ATTORNEY WHO IS NOT RELATED TO THE PERSON OFFERING TO HELP YOU,
TO MAKE SURE THAT YOU UNDERSTAND WHAT YOU ARE SIGNING AND THAT
YOU ARE NOT TRANSFERRING YOUR PROPERTY OR THE EQUITY IN YOUR
PROPERTY WITHOUT THE PROPER INFORMATION. IF YOU CANNOT AFFORD TO
PAY AN ATTORNEY, YOU MAY CONTACT [name of local or nearest legal aid office and
telephone number] TO SEE IF YOU QUALIFY FINANCIALLY FOR THEIR SERVICES.
IF THEY CANNOT ASSIST YOU, THEY MAY BE ABLE TO REFER YOU TO A LOCAL
BAR REFERRAL AGENCY OR SUGGEST OTHER OPTIONS. IF YOU CHOOSE TO
CONTACT [name of local or nearest legal aid office] FOR ASSISTANCE, YOU SHOULD
DO SO AS SOON AS POSSIBLE AFTER RECEIPT OF THIS NOTICE.
The clerk must furnish, by first class mail, a copy of the final judgment to the last known address
of every party to the action, or his or her attorney of record. However, any irregularity in the
mailing or the failure to include these statements in the final order or judgment will not affect
the validity of either the judgment or order, or the sale [ 45.031(1)(c), Fla. Stat.].
In one case, a foreclosure judgment did not cut off the mortgagors right to convey a leasehold
interest in the subject property when the judgment creditors accepted a quitclaim deed instead
of letting the foreclosure sale take place. The judgment only gave the judgment creditor the right
to have the property sold and the proceeds applied against the judgment. When no foreclosure
sale ever took place, the mortgagors right to convey a leasehold interest in the property was
never cut off and the rights the judgment creditors acquired when they subsequently accepted
the quitclaim deed were subject to the lease of which the creditors had prior notice [Morris v.
Osteen, 948 So. 2d 821, 826827 (Fla. 5th DCA 2007)].
A trial court did not deny a mortgagor procedural due process by entering final judgment in
favor of the mortgagee, including an award of reasonable attorneys fees, after an evidentiary
hearing, even though the foreclosure action was never set for trial. The mortgagor was aware
that a hearing was scheduled, received a witness and exhibit list, and even appeared at the
hearing without invoking Fla. R. Civ. P. Rule 1.440, which requires a case to be set for trial [see
Zumpf v. Countrywide Home Loans Inc., 43 So. 3d 764, 766767 (Fla. 3d DCA 2010)].
Page 22 of 44
In any action or proceeding in which a party seeks to set aside, invalidate, or challenge the
validity of a final judgment of mortgage foreclosure, or to establish or reestablish a lien or
encumbrance on the property in abrogation of the final judgment of a mortgage foreclosure, the
court must treat the request solely as a claim for monetary damages and may not grant relief that
adversely affects the quality or character of the title to the property provided [ 702.036(1)(a),
Fla. Stat.]:
The party seeking relief from the final judgment was properly served in the foreclosure
proceeding;
The final judgment was entered;
All applicable appeals periods as to the final judgment have run with no appeals having
been taken or any appeals having been resolved; and
The property has been acquired for value by a person who is not affiliated with the
foreclosing lender or the foreclosed owner, at a time in which no lis pendens regarding
the suit to set aside, invalidate, or challenge the foreclosures appears in the official
records of the county in which the property was located.
This does not limit the right to pursue any other relief to which a person may be entitled,
including compensatory, punitive, statutory, or consequential damages, injunctive relief, or fees
and costs; provided the relief sought does not adversely affect ownership of the title to the
property as vested in the unaffiliated purchaser for value [ 702.036(1)(b), Fla. Stat.]. Persons
considered to be affiliated with the foreclosing lender include, without limitation [ 702.036(2),
Fla. Stat.]:
1.
The foreclosing lender or any loan servicer for the loan being foreclosed;
2.
Any past or present owner or holder of the loan being foreclosed;
3.
Any maintenance company, holding company, or foreclosure services company under

contract with regard to the loan being foreclosed;
4.
Any law firm under contract to any company listed in 1.3., above with regard to the
loan being foreclosed;
5.
Any parent entity, subsidiary, or other person who directly, or indirectly through one
or more intermediaries, controls or is controlled by, or is under common control with,
any entity listed in 1.3.
After foreclosure of a mortgage based on the enforcement of a lost, destroyed, or stolen note,
a person who is not a party to the underlying foreclosure action but who claims to be the person
entitled to enforce the note secured by the foreclosed mortgage has no claim against the
foreclosed property after it is conveyed for valuable consideration to a person who is not
affiliated with the foreclosing lender or the foreclosed owner [ 702.036(3), Fla. Stat.]. This
does not preclude a person claiming to be the actual holder of the note from pursuing recovery
from any adequate protection as required by the UCC [ 702.036(3), Fla. Stat.; see 673.3091,
Fla. Stat. (enforcement of lost, destroyed, or stolen instruments under UCC); see also 702.11,
Fla. Stat. (adequate protection for lost, destroyed, or stolen notes)]. A person claiming to be the
Page 23 of 44
actual holder may also pursue damages from (1) the party who wrongfully claimed to be the
owner or holder of the note, (2) the maker of the note, or (3) any other person against whom the
actual holder may have a claim [ 702.036(3), Fla. Stat.].
[ii]
Notice of Sale.
Notice of the sale must be published once a week for two consecutive weeks in a newspaper of
general circulation published in the county where the sale is to be held [ 45.031(2), Fla. Stat.;
see 702.035, Fla. Stat. (placing notice for publication is petitioners responsibility)]. The
second publication must be at least five days before the sale. The notice must contain the
following information [ 45.031(2), Fla. Stat.]:
(1) A description of the property to be sold.
(2) The time and place of sale.
(3) A statement that the sale will be made pursuant to the order or final judgment.
(4) The caption of the action.
(5) The name of the clerk making the sale.
(6) A statement that any person claiming an interest in the sale surplus, if any, other than
the property owner as of the date of the lis pendens must file a claim within 60 days
after the sale.
The court may change or extend the time of sale. However, notice of the changed time of sale
must be published as noted above [ 45.031(2), Fla. Stat.; but see Blatchley v. Boatmans Nat.
Mortg., Inc., 706 So. 2d 317 (Fla. 5th DCA 1997) (appellate court upheld trial courts denial of
mortgagees motion to vacate sale when advertised sale date was changed but not readvertised;
trial court extended mortgagees right to redeem to compensate for changed date)].
[iii]
Conduct of Sale.
The sale must be conducted by public auction at the time and place set forth in the final
judgment [ 45.031(3), Fla. Stat.]. Before the sale, the clerk is entitled to receive from the
plaintiff a $60 service charge for services rendered in making, recording, and certifying the sale
and title [ 45.031(3), 45.035(1), Fla. Stat.]. At the time of the sale, the successful high bidder
must post with the clerk a deposit equal to five percent of the final bid. The deposit must be
applied to the sale price at the time of payment. If final payment is not made within the
prescribed period, the clerk must readvertise the sale as set forth above and must pay all costs
of the sale from the deposit. Any remaining funds must be applied toward the judgment
[ 45.031(3), Fla. Stat.].
If the sale is conducted by electronic means, electronic proxy bidding will be allowed and the
clerk may require bidders to advance sufficient funds to pay the five percent deposit required
for a sale that is not conducted electronically. The clerk must provide access to the sale by
computer terminals open to the public at a designated location, and must accept an advance
credit proxy bid from the plaintiff of any amount up to the maximum allowable credit bid of the
Page 24 of 44
plaintiff. The clerk may receive sale-related electronic deposits and payments [ 45.031(10),
Fla. Stat.].
A losing bidder has standing to complain that a particular bid is not valid because he or she has
a direct financial interest by virtue of the bidders own bid. However, that standing is confined
to the issue of whether the amount of the bid exceeds the bidders own and whether payment
in accordance with the successful bid is forthcoming. In the absence of fraud in the bidding, a
stranger to the foreclosure action does not acquire standing to complain of supposed defects in
the foreclosure proceedings [Jagodinski v. Washington Mut. Bank, 63 So. 3d 791, 792793 (Fla.
1st DCA 2011) and REO Properties Corp. v. Binder, 946 So. 2d 572, 574 (Fla. 2d DCA 2006)
citing Heilman v. Suburban Coastal Corp., 506 So. 2d 1088, 1090 (Fla. 4th DCA 1987)].
[iv]
Post-Sale Procedures.
The amount of the bid for the property at the time of sale is conclusively presumed to be
sufficient consideration for the sale [ 45.031(8), Fla. Stat.]. Once the sale is completed, the
clerk must promptly file a certificate of sale and serve a copy of the certificate on all of the
parties not in default [ 45.031(4), Fla. Stat.; see 32.250 (sample form)]. Within 10 days after
the clerk files the certificate of sale, any party may serve an objection to the amount bid. If
timely objections to the bid are served, the objections must be heard by the court; however,
service of objections to the amount of the bid does not in any manner affect or cloud title of the
purchaser of the property [ 45.031(8), Fla. Stat.]. In order to hear any objections on the
amount bid, the court must provide both notice and an opportunity for any interested party to
address those objections [Shlishey the Best v. Citifinancial Equity, 14 So. 3d 1271, 12751276
(Fla. 2d DCA 2009) (entry of order granting motion to vacate foreclosure sale and certificate of
sale without notice to purchaser violated purchasers procedural due process rights].
In U.S. Bank National Association v. Bjeljac, a mortgagee filed a motion to cancel and
reschedule the sale based on allegations that the bid price was inadequate and the mortgagee
mistakenly failed to send a representative to the sale. The trial court summarily denied the
motion without affording the mortgagee notice and an opportunity to be heard. The district court
recognized that the specific parameters of the notice and opportunity to be heard required by
procedural due process should be evaluated by the requirements of the particular proceeding.
Consequently, the court refused to hold that a court may only hear objections to a foreclosure
sale at an in-court proceeding with counsel physically present. Nonetheless, the court stated its
belief that the question of whether the mortgagees failure to have a representative present at the
sale was the result of a mistake is inherently a factual question that requires a hearing before the
court. Thus, the court held that, because the trial court summarily denied the motion to set aside
the sale without a hearing, the record was devoid of anything that would support or refute the
mortgagees allegation of mistake and that due process required more. The court reversed the
trial courts order denying the motion to set aside the foreclosure sale and ordered a return of
the funds to the third-party purchasers and remanded the case for further proceedings [see U.S.
Bank Nat. v. Bjeljac, 43 So. 3d 851, 853 (Fla. 5th DCA 2010)].
If the case is one in which a deficiency judgment may be sought and application is made for a
deficiency, the court may consider the amount bid at the sale as one of the factors in determining
Page 25 of 44
a deficiency under the usual equitable principles [ 45.031(8), Fla. Stat.; see 32.80[3] below
(deficiency)]. However, when a mortgagee purchases the foreclosed property by bidding the full
amount of the final judgment of foreclosure, the mortgagees judgment is satisfied in full and
a deficiency judgment is not possible [Warehouses of Florida, Inc. v. Hensch, 671 So. 2d 885,
887 (Fla. 5th DCA 1996); Patron v. American Nat. Bank of Jacksonville, 382 So. 2d 156, 158
(Fla. 5th DCA 1980); Provident Nat. Bank v. Thunderbird Associates, 364 So. 2d 790, 795B797
(Fla. 1st DCA 1978)].
If no objections to the sale are filed within 10 days after the certificate of sale has been filed,
the clerk must file a certificate of title and serve a copy of it on each party [ 45.031(5), Fla.
Stat.; see 32.251 (sample form)]. However, if an objection is timely filed, the clerk has no
authority to issue a certificate of title [Opportunity Funding I v. Otetchestvennyi, 909 So. 2d 361,
362 (Fla. 4th DCA 2005)]. Instead, the objection must be heard by the court [ 45.031(8), Fla.
Stat.]. For the court to hear objections, it must provide both notice and an opportunity for any
interested party to address those objections. Further, it is reversible error for the trial court to
deny a party an evidentiary hearing [Regner v. Amtrust Bank, 71 So. 3d 907, 907908 (Fla. 4th
DCA 2011); see U.S. Bank Natl Assn v. Bjeljac, 43 So. 3d 851, 853 (Fla. 5th DCA 2010);
Avi-Isaac v. Wells Fargo Bank, N.A., 59 So. 3d 174, 177 (Fla. 2d DCA 2011)].
When the certificate of the title is filed, the sale stands confirmed. Title to the property passes
to the purchaser named in the certificate without the necessity of any further proceedings or
instruments. The clerk must record the certificate of title [ 45.031(6), Fla. Stat.].
[v]
Disbursement of Sale Proceeds; Certificate of Disbursements.
On filing a certificate of title, the clerk must disburse the proceeds of the sale in accordance with
the order or final judgment [ 45.031(7)(a), Fla. Stat.; see Hochstadt v. Gerl, 678 So. 2d 1310
(Fla. 4th DCA 1996) (final judgment must adjudicate all issues properly raised in proceeding so
court may complete justice between the parties); see also Wells Fargo Bank, N.A. v. Aristo
Mortgage LLC, 110 So. 3d 99, 101 (Fla. 3d DCA 2013); Golindano v. Wells Fargo Bank, 913
So. 2d 614, 615 (Fla. 3d DCA 2005) (prior to disbursement of surplus proceeds, court must
determine priorities and amounts due junior lienholders)]. The clerk must also file a report of
the disbursements and serve a copy of it on each party and on the Department of Revenue if it
was a named defendant in the action [ 45.031(7)(a), (b), Fla. Stat.; see 69.041(4), Fla. Stat.;
see also 32.252 (sample form)]. If no objections to the report are served within 10 days after
it is filed, the disbursements by the clerk stand approved as reported [ 45.031(7)(c), Fla. Stat.].
If there are funds remaining after payment of all disbursements required by the final judgment
and shown on the certificate of disbursements, the surplus must be distributed as described in
[b.1], below [ 45.031(7)(d), Fla. Stat.; see 45.03245.034, Fla. Stat.].
Unlike a junior lienholders security interest, which is transferred from the property to the
surplus fund on foreclosure [Waybright v. Turner, 129 Fla. 310, 176 So. 424, 428 (1937); see JP
Morgan Chase Bank v. U.S. Bank Nat., 929 So. 2d 651, 653 (Fla. 4th DCA 2006); Household
Finance v. Bank of America, 883 So. 2d 346, 348 (Fla. 4th DCA 2004)], a senior lienors security
interest remains with the property. Because of this, a senior lienors rights are unaffected by
Page 26 of 44
foreclosure, and a senior lienor has no right to share in any surplus produced by the foreclosure
of a junior mortgage [Garcia v. Stewart, 906 So. 2d 1117, 11201121 (Fla. 4th DCA 2005); see
Cone Bros. Const. Co. v. Moore, 141 Fla. 420, 193 So. 288, 290 (1940); Citimortgage, Inc. v.
Henry, 24 So. 3d 641, 643 (Fla. 2d DCA 2009); Restatement (Third) of Prop., Mortgages 7.4
(1997)].
When surplus proceeds were wrongfully distributed from the court registry to a senior lienor, the
lienor was required to pay interest on those proceeds until they were disbursed to their rightful
owner [see Garcia v. Stewart, 961 So. 2d 1025, 1027 (Fla. 4th DCA 2007)].
[b.1]
[i]
Disposition of Surplus Funds

Presumption in Favor of Owner of Record.
The common law rule that surplus proceeds in a foreclosure case are the property of the owner
of the property on the date of the foreclosure sale has been abrogated [ 45.032(2), Fla. Stat.]
Rather, the owner of record on the date a lis pendens is filed is rebuttably presumed to be entitled
to any surplus funds remaining after payment has been made to subordinate lienholders who
have filed timely claims [ 45.032(2), Fla. Stat.; see Suarez v. Edgehill, 20 So. 3d 410, 411 (Fla.
3d DCA 2009)]. The presumption may be rebutted by a person claiming a legal right to the
surplus as a transferee or assignee of the owner of records rights [see 45.033, Fla. Stat.; see
also [iii], below].
In this context, the owner of record is the person or persons who appear to be the owner of
the subject property on the date the lis pendens is filed [ 45.032(1)(a), Fla. Stat.; see Suarez
v. Edgehill, 20 So. 3d 410, 411 (Fla. 3d DCA 2009)]. In making this determination, a person may
rely on the plaintiffs allegation of ownership in the foreclosure complaint [ 45.032(1)(a), Fla.
Stat.]. Surplus funds are those funds remaining after all disbursements that are required by the
final judgment and shown on the certificate of disbursements have been made [ 45.032(1)(c),
Fla. Stat.]. A subordinate lienholder is the holder of a subordinate lien shown on the face of
the pleadings as an encumbrance on the property. It includes, but is not limited to, a subordinate
mortgage, judgment, tax warrant, assessment lien, or construction lien. The lien held by the
party filing the foreclosure complaint is not a subordinate lien; neither is the holder of a
subordinate lien deemed a subordinate lienholder if he or she was paid in full from the sale
proceeds [ 45.032(1)(b), Fla. Stat.].
[ii]
Disbursement Procedure.
During the 60 days following the issuance of the certificate of disbursements, the clerk must
hold the surplus funds pending a court order [ 45.032(3), Fla. Stat.]. If the owner of record
claims the surplus during the 60-day period and there is no subordinate lienholder, the clerk will
deduct any applicable service charges and pay the remainder of the surplus to the owner
[ 45.032(3)(a), Fla. Stat. (includes suggested claim form)].
If, during the 60-day period, any person other than the owner of record claims an interest in the
proceeds but acknowledges one or more other persons may be entitled to part or all of the
Page 27 of 44
surplus, the court must set an evidentiary hearing. At the hearing an equity assignee has the
burden of proving that he or she is entitled to some or all of the surplus funds. The court may
grant summary judgment to a subordinate lienholder before the hearing. When hearing a claim
that any person other than a subordinate lienholder or the owner of record is entitled to surplus
funds, the court must consider specific factors [ 45.032(3)(b), Fla. Stat.; see 45.033(2), Fla.
Stat.; see also [iii], below].
If no claim is filed during the 60 day period, the clerk must appoint a surplus trustee from a list
of qualified persons [see 45.031(1)(d), Fla. Stat.; National Equity Recovery v. Midfirst Bank,
8 So. 3d 406, Fla. 4th DCA 2009); see also 45.034, Fla. Stat.]. The surplus trustees job is to
locate the owner of record. If the trustee is unable to locate the owner within one year after
appointment, the appointment will terminate. Thirty days after the termination, the clerk will
treat the remaining funds as unclaimed property [ 45.032(3)(c), (4), Fla. Stat.; see 717.001
et seq., Fla. Stat. (Florida Disposition of Unclaimed Property Act)].
The proceedings to determine rights to surplus funds do not in any manner affect or cloud the
title of the purchaser at the foreclosure sale [ 45.032(5), Fla. Stat.].
[iii]
Sale or Assignment of Rights to Surplus Funds.
As stated in [i], above, there is a rebuttable presumption that the owner of record on the date of
the filing of a lis pendens is the person entitled to funds remaining after payment has been made
to subordinate lienholders who have timely filed claims [ 45.031(2), 45.033(1), Fla. Stat.].
The presumption may be rebutted by the grantee or assignee is a grantee or assignee by virtue
of an involuntary transfer or assignment of the right to collect the surplus. An involuntary
transfer or assignment may be as a result of inheritance or appointment of a guardian
[ 45.033(2)(b), Fla. Stat.; see Suarez v. Edgehill, 20 So. 3d 410, 411412 (Fla. 3d DCA 2009)].
The presumption also may be rebutted by the grantee or assignee of a voluntary transfer or
assignment if [ 45.033(2)(a), (3) Fla. Stat.]:
1. The transfer or assignment is in writing and the instrument satisfies the requirements
described below;
2. The transfer or assignment is filed with the court on or before 60 days after the certificate of
disbursements was filed;
3. There are funds available to pay the transfer or assignment after timely filed claims of
subordinate lienholders have been filed;
4. The transferee or assignee is qualified as a surplus trustee, or could qualify as one [see
45.034, Fla. Stat.]; and
5. The compensation to the transferee or assignee does not exceed 12 percent.
If the written instrument establishing a voluntary transfer or assignment [see 1., above] was
executed before the foreclosure sale, it must include (a) a financial disclosure that specifies the
Page 28 of 44
assessed value of the property, (b) a statement that the assessed value may be lower than the
propertys actual value, (c) the approximate amount of any debt encumbering the property, and
(d) the approximate amount of any equity in the property. If the instrument was executed after
the foreclosure sale, it must also specify the foreclosure sale price and the amount of the surplus
[ 45.033(3)(a)1., Fla. Stat.]. Regardless of when the instrument was executed, it must also
include a statement that the owner does not need an attorney or other representative to recover
surplus finds; and it must specify all forms of consideration paid for the rights to the property
or the assignment of the rights to any surplus funds [ 45.033(3)(a)2., 3., Fla. Stat.].
A voluntary transfer or assignment that does not satisfy these requirements may nevertheless be
allowed by the court if the court finds that the instrument was procured in good faith and with
no intent to defraud the former owner [ 45.033(5), Fla. Stat.]. For example, despite the fact that
a property owner assigned it rights to a surplus trustee after expiration of the 60-day holding
period following the filing of the certificate of disbursements, the court had discretion to award
surplus trustee fees to the property owners assignee when the court found that the assignment
was made in good faith and with no intent to defraud [see National Equity Recovery v. Midfirst
Bank, 8 So. 3d 406, 408 (Fla. 4th DCA 2009)].
A person who has executed a voluntary transfer or assignment that does not conform to the
requirements described above has the right to petition the court to set aside the nonconforming
transfer or assignment. If the transfer or assignment is set aside, the owner of record will be
entitled to the surplus funds after payment of timely filed claims of subordinate lienholders; but
the other party may, in a separate proceeding, seek rescission of contract and appropriate
damages [ 45.033(6), Fla. Stat.].
The requirements for establishing a transfer or assignment of the right to collect surplus funds
do not apply to a deed, a mortgage, or deed in lieu of foreclosure, unless a person other than the
owner of record is claiming that a deed or mortgage entitles the person to surplus proceeds.
Neither do the requirements for establishing a transfer or assignment of rights to surplus funds
affect either the title or marketability of the subject real property, or the validity of a lien
evidenced by a mortgage [ 45.033(7), Fla. Stat.].
[b.2]
Regulation of Foreclosure-Related Rescue Services and Transactions
In the recognition that homeowners who are in default on their mortgages, already in foreclosure,
or at risk of losing their homes due to nonpayment of taxes, may be vulnerable to fraud, deception,
and unfair dealings with foreclosure-rescue consultants or equity purchasers [see 2008 Leg. Sess.
House of Rep. Staff Analysis of CS/HB 643, pg. 3], the legislature enacted 501.1377, Fla. Stat.
to, among other things, (1) provide a homeowner with information necessary to make an informed
decision regarding the sale or transfer of his or her home to an equity purchaser; (2) require that
foreclosure-related rescue services agreements be in writing; (3) provide a cooling-off period for
homeowners who enter into contracts for services related to saving their homes from foreclosure or
preserving their rights to possession of their homes; (4) afford homeowners a reasonable and
meaningful opportunity to rescind sales to equity purchasers; and (5) preserve and protect
homeowners equity in their homes [ 501.1377(1), Fla. Stat.]. The legislation went into effect on
October 1, 2008 [2008 Fla. Laws ch. 2008-79, 2].
Page 29 of 44
The legislation regulates foreclosure-related rescue services and foreclosure-related rescue

transactions. The former consists of any good or service related to, or promising assistance in
connection with [ 501.1377(2)(c), Fla. Stat.]:
Stopping, avoiding, or delaying foreclosure proceedings concerning residential real

property; or
Curing or otherwise addressing a default or failure to timely pay with respect to a

residential mortgage loan obligation.
A foreclosure-related rescue transaction is a transaction [ 501.1377(2)(d), Fla. Stat.]:
By which residential real property in foreclosure is conveyed to an equity purchaser [see

501.1377(2)(a), Fla. Stat.] and the homeowner maintains a legal or equitable interest in
the property conveyed, including a lease option interest, an option to acquire the property,
an interest as beneficiary or trustee to a land trust, or other interest in the property; and
That is designed or intended by the parties to stop, avoid, or delay foreclosure proceedings
against a homeowners residential real property.
In the course of offering or providing foreclosure-related rescue services, a foreclosure rescue

consultant [see 501.1377(2)(b), Fla. Stat.] is prohibited from [ 501.1377(3), Fla. Stat.]:
Engaging in or initiating foreclosure-related rescue services without first executing a

written agreement for those services; or
Soliciting, charging, receiving, or attempting to collect or secure payment, directly or

indirectly, for foreclosure-related rescue services before successfully completing or
performing all services contained in the agreement.
The written agreements required for foreclosure-related rescue services and transactions must
conform to requirements specified by statute including disclosures designed to inform the
homeowner of his or her rights under the agreement, which include a three-day right to cancel, and
possible consequences that might flow from signing, which in the case of a foreclosure-related
rescue transaction agreement includes sale of the homeowners home [see 501.1377(4), (5), Fla.
Stat.; see also 501.137 7(6), Fla. Stat. (transaction agreement involving repurchase agreement,
such as a lease option, is rebuttably presumed to be a mortgage)].
Violators are guilty of an unfair deceptive trade practice under the Deceptive and Unfair and Trade
Practices Act and subject to the penalties imposed under that Act, including a monetary penalty of
up to $15,000 per violation [ 501.1377(7), Fla. Stat.; see 501.2075, Fla. Stat.].
[b.3]
[i]
Protecting Tenants in Residential Properties Undergoing Foreclosure

Protecting Tenants at Foreclosure Act of 2009 (PTFA).
The Protecting Tenants at Foreclosure Act of 2009 (PTFA) [see 12 U.S.C. 5201 et seq. (P. L.
111-22, 701704)], which went into effect on May 20, 2009, and applies to foreclosures
pursuant to which title has passed after that date, provides protection from immediate eviction
for residential tenants when landlords lose rented premises through foreclosure on a
Page 30 of 44
federally-related mortgage loan [see 12 U.S.C. 2602(1)] or on any dwelling or residential

property. Under PTFA, (1) bona fide month-to-month tenants, (2) bona fide tenants with leases
that are terminable at will, and (3) bona fide tenants without formal leases but with a verifiable
rent payment history, must be given a minimum 90-day pre-eviction notice by the landlords
successor in interesti.e., the entity that takes clear legal title after foreclosure. Tenants
whose lease has more than 90 days to run are entitled to stay until the lease terminates, unless
the landlords successor intends to use the premises as a primary residence [12 U.S.C.
5220(a)].
The PTFA was originally scheduled to expire on December 31, 2012, but the Dodd-Frank Act
extended the expiration to December 31, 2014 [see P.L. 111-203, 1484].
Bona Fide Lease or Tenancy Defined.
[ii]
The PTFA limits protections to bona fide leases or tenancies. A lease or tenancy is considered
bona fide only if [12 U.S.C. 5220(b)]:
The tenant is not the mortgagor, the mortgagors child, spouse, or parent;
The lease or tenancy is the result of an arms-length transaction; and
The rent due under the lease or tenancy is not substantially less than fair market rent,
unless the rent is reduced by a federal, state, or local subsidy [see, e.g., 42 U.S.C.
1437f(o)(7)].
[iii]
Tenants Rights When PTFA Does Not Apply.
Prior to May 20, 2009, the effective date of the PTFA, and after it is repealed on December 31,
2012, a residential tenants interest under a lease or tenancy was, and presumably will be,
terminated when title passes pursuant to foreclosure of the landlords interest in the subject
property [see Sher v. Countrywide Home Loans, Inc., 848 So. 2d 1246 (Fla. 4th DCA 2003);
Redding v. Stockton, Whatley, Davin & Co., 488 So. 2d 548, 549 (Fla. 5th DCA 1986)].
[c]
Bankruptcy Proceedings
A mortgagor may file a bankruptcy petition to delay a foreclosure sale in order to gain extra time
to market or refinance the property. Once a mortgagor in foreclosure files a petition for bankruptcy,
an automatic stay is imposed and the foreclosing mortgagee may not proceed any further in state
court [11 U.S.C. 362]. The mortgagee has the following options at this point:
(1) elect to do nothing and thereby rely on the security;
(2) file a secured claim in bankruptcy court and await disposition of the action; or
(3) move for relief from the stay or, if warranted, for dismissal of the bankruptcy petition
[see Nemours Foundation v. Gauldin, 601 So. 2d 574 (Fla. 5th DCA 1992)]. The mortgagee most
frequently moves to lift the stay. To obtain an order lifting the stay, the mortgagee must persuade the
court that the debtors equity in the property is either non-existent or in an amount that will be of
Page 31 of 44
no benefit to the debtors estate. If the mortgagee is successful, it will avoid the loss of interest,
accumulation of unpaid ad valorem taxes, and the usual decline in the condition of the security
during the time the debtors estate is being administered in the bankruptcy court [see Nemours
Foundation v. Gauldin, 601 So. 2d 574 (Fla. 5th DCA 1992)].
If the promissory note and mortgage provide that the mortgagee is entitled to all reasonable costs
and expenses of foreclosure in the event of a default, the mortgagee may be entitled to any costs
incurred in the process of having the stay lifted [see Nemours Foundation v. Gauldin, 601 So. 2d 574
(Fla. 5th DCA 1992)].
When a bankruptcy proceeding, filed after commencement of foreclosure proceedings, is subsequently
dismissed (as opposed to discharged) the prior foreclosure proceeding is reinstated as though the
bankruptcy had not intervened. Thus, a mortgagee was to be entitled to an award of statutory interest
from the date of the original judgment of foreclosure, not from the date of the mortgagors second
default, which occurred after dismissal of the bankruptcy petition [see Abrams v. Moore, 858 So. 2d
1116, 1117 (Fla. 3d DCA 2003); see also In re Bateman, 331 F. 3d 821, 834 (11th Cir. 2003)].
A successful third-party bidder at a foreclosure sale that was subsequently set aside because the
debtor had filed a voluntary petition in bankruptcy the day before the sale, was unable to recover
its costs incurred in the foreclosure sale plus interest. The sale had taken place because the notice
of the bankruptcy was not filed with the circuit court until after the sale. The district court reversed
the circuit courts award of costs to the successful third-party bidder because there was no statute
or contract authorizing such an award, and the court could not base an award of costs on its equity
jurisdiction in the absence of a showing of bad faith [see Citibank Federal Savings Bank v.
Covington, 810 So. 2d 1083 (Fla. 4th DCA 2002)].
[d]
Setting Aside Judicial Sale
In Arsali v. Chase Home Finance LLC, the Florida Supreme Court observed that, contrary to the
perception of the District Courts, there is no presumption that a single equitable factor (i.e., grossly
inadequate bid price) or a specific combination of other equitable factors (e.g. mistake, accident,
surprise, fraud, misconduct, or irregularity) must be applied by the trial courts in order to set aside
a judicial foreclosure sale [Arsali v. Chase Home Finance LLC, 121 So. 3d 511, 517 (Fla. 2013); see
Chase Fin. Servs, LLC v. Edelsberg, 129 So. 3d 1139, ___ (Fla. 3d DCA 2013)]. In that case the
Court made it clear that inadequate bid price need not be alleged and proven on order to set aside
a judicial foreclosure sale. In fact, the Court noted that a judicial sale may, on a proper showing, be
vacated and set aside on any or all equitable grounds, including mistake, accident, surprise, fraud,
misconduct or irregularity, and inadequacy of price [Arsali v. Chase Home Finance LLC, 121 So. 3d
511, 514515 (Fla. 2013)].
In Ingorvaia v. Horton [816 So. 2d 1256 (Fla. 2d DCA 2002)], which was decided 11 years before
the Supreme Courts decision in Arsali and which involved vacating a judicial sale based on
defective notice when adequacy of the bid price was not an issue, the Second District noted an
apparent conflict between Arlt v. Buchanan [190 So. 2d 575 (Fla. 1966)], which had been interpreted
as requiring that some other ground, such as mistake, accident, surprise, fraud, misconduct, or
irregularity, in addition to inadequacy of price, must be proven to set aside a foreclosure sale, and
Page 32 of 44
Moran-Alleen Co. v. Brown [98 Fla. 203, 123 So. 561 (1929)], which had been interpreted as
requiring proof of one of these grounds (inadequate price, surprise, accident, mistake, or
irregularity) alone to justify setting aside a foreclosure sale. Citing Brown, the Second District panel
affirmed the trial court decision vacating the sale and stated that to hold that a trial court may
not vacate a foreclosure sale absent a grossly inadequate bid price would deprive the courts of their
equitable powers and their duty to protect and preserve the integrity of the judicial sale process
[Ingorvaia v. Horton, 816 So. 2d 1256, 12581259 (Fla. 2d DCA 2002); see Josecite v. Wachovia
Mrtg., 97 So. 3d 265, 266 (Fla. 5th DCA 2012)]. In Arsali, the Supreme Court clarified and corrected
any misunderstanding on the part of the District Courts that its decisions in Arlt and Brown are in
conflict by (1) noting that in Arlt, the Court did not intentionally overrule its decision in Brown sub
silento nor had it ever recognized that a conflict existed between Brown and Arlt; and (2) concluding
that analyses of the Fourth District in Arsali and the Second District in Ingorvaias, purporting to
reconcile Brown and Arlt, were unnecessary and improper [Arsali v. Chase Home Finance LLC, 121
So. 3d 511, 516 (Fla. 2013)]
In Action Realty and Investments v. Grandison, the district court refused to issue an order to vacate
a foreclosure sale despite the mortgagors contention that a lender failed to provide a title company
that was handling the mortgagors own sale of the property to a third party with payoff information
for the underlying loan until the day before the foreclosure sale, which resulted in the mortgagors
loss of her equity of redemption. The mortgagor had notice of the sale and apparently failed to
provide the company with the information, and the title company failed to note the final judgment
setting the sale when it performed a title search on the property. The court distinguished the Second
Districts decision in Ingorvaia on the basis that in Ingorvaia, the irregularity was in the sale itself;
but Action Realty there were no defects in the sale process [see Action Realty and Investments v.
Grandison, 930 So. 2d 674, 677678 (Fla. 4th DCA 2006); see also Esque Real Estate Hold. v. C.H.
Consulting, 940 So. 2d 1185, 11861187 (Fla. 4th DCA 2006) (mortgagees failure to timely provide
estoppel letter requested pursuant to 701.04(1), Fla. Stat. was not defect in sale process and
therefore not a property basis for challenging sale itself)].
Whether the complaining party has made the showing necessary to set aside a sale is a discretionary
decision by the trial court, which may be reversed only when the court has grossly abused its
discretion [Palacios v. Florida Funding Trust, 32 So. 3d 167, 170 (Fla. 2d DCA 2010); Phoenix
Holding, LLC v. Martinez, 27 So. 3d 791, 792 (Fla. 3d DCA 2010); United Companies Lending v.
Abercrombie, 713 So. 2d 1017, 1018 (Fla. 2d DCA 1998); see Esque Real Estate Hold. v. C.H.
Consulting, 940 So. 2d 1185, 11861187 (Fla. 4th DCA 2006); Aames Capital Corporation v.
Boswell, 713 So. 2d 1074 (Fla. 5th DCA 1998)].
A foreclosure judgment and sale that was set aside because the trial judge did not think it [was] fair
did not constitute a lawful, cognizable basis for granting relief to one side to the detriment of the
other [Phoenix Holding, LLC v. Martinez, 27 So. 3d 791, 793 (Fla. 3d DCA 2010)]. In deciding
whether to set aside a judicial sale, a court must consider the relative equities of the judgment debtor
and the purchaser [Bennett v. Ward, 667 So. 2d 378, 381 (Fla. 1st DCA 1995); Subsaro v. Van
Heusden, 191 So. 2d 569, 570 (Fla. 3d DCA 1966)]. In deciding that a sale should be set aside, one
court noted the following factors in balancing the equities of the parties. On the foreclosed
mortgagors side, the court noted that he did not receive adequate notice of the sale, was not present
when the property was sold in 1992 for $100, and was never served with copies of the certificate
Page 33 of 44
of sale, certificate of title, or certificate of disbursements. On the purchasers side, the court noted
that several years had passed since the sale, substantial improvements had been made to the property
since the sale, and her husband, who handled the couples business affairs, had passed away
sometime in the year following the sale. In reversing the trial courts denial of a motion to set the
sale aside, the appellate court noted that the purchasers husband had died well after the mortgagor
filed his motion for relief from judgment, and the record did not show whether the improvements
were made before the mortgagor filed for relief. The court also noted that there was no testimony
or evidence regarding the costs of the improvements. On the lack of adequate notice issue, the court
acknowledged that the failure to give adequate notice does not automatically require a sale to be set
aside, but the failure may effectively deprive the mortgagor of the right to redeem. Even if the
mortgagor is financially unable to redeem, he or she still had an interest in seeing that prospective
purchasers are at the sale since the proceeds may reduce the mortgagors indebtedness and the size
of any deficiency judgment [Bennett v. Ward, 667 So. 2d 378, 381382 (Fla. 1st DCA 1995)].
To conduct a fair foreclosure sale, the correct amount needed to pay off the foreclosing first
mortgagee must be known to all potential bidders, be they outsiders or junior lien holders. This is
so each bidder can assess the situation corresponding to that bidders individual circumstance and
decide what the bidder is willing to pay to protect his or her interest [see Palacios v. Florida Funding
Trust, 32 So. 3d 167, 169170 (Fla. 2d DCA 2010)].
A defect in a notice of hearing to a second mortgagee on a motion for summary judgment on the first
mortgagees complaint to foreclose its mortgage did not render the resulting summary judgment
void. Thus, Fla. R. Civ. P. Rule 1.540, which permits relief from judgment if the judgment is void,
was not available to the second mortgagee as a means of setting aside the judgment [Sterling Factors
v. U.S. Bank Nat. Assn, 968 So. 2d 658, 665667 (Fla. 2d DCA 2007)].
Property owners were entitled to have a default judgment of foreclosure and judicial sale vacated
when the judgment was based on [see Decubellis v. Ritchotte, 730 So. 2d 723 (Fla. 5th DCA 1999)]:
(1)
deficiencies in the foreclosing judgment creditors pleadings (i.e., failure to allege

exhaustion of remedies at law);
(2) lack of notice to the owners of the foreclosure proceedings;

(3) defects in the foreclosing judgment creditors lien; and
(4) lack of notice to the owners of the entry of the default judgment.
As illustrated by the following decisions, when a mistake is unilaterally committed by the
complaining party, the district courts have focused on three factors. The first is a deference to the
discretion of the trial court whose decision is under review; the second is whether the complaining
party was present at the judicial sale; and the third is whether or not the successful bidder was acting
in good faith. In one case, the trial courts decision to set aside a judicial sale was upheld when the
mortgagees agent mistakenly failed to attend the sale with the result that property worth over
$50,000 was sold for $100 [see Fernandez v. Suburban Coastal Corp., 489 So. 2d 70 (Fla. 4th DCA
1986) (district court emphasized that reversal requires showing that trial court grossly abused its
discretion); see also Van Delinder v. Albion Realty & Mortgage, Inc., 287 So. 2d 352 (Fla. 3d DCA
1973) (trial court had discretion to set aside $50 sale when owners attorney was not present at sale
Page 34 of 44
due to inadvertence or mistake)]. In another case, the district court affirmed the trial courts refusal
to set aside the judicial sale when:
(1) the foreclosure judgment was in excess of $200,000;
(2) the mortgagees representative at the sale mistakenly bid $15,500$100,000 less than her
instructions; and
(3) the property was sold to a good faith bidder for $20,000.
The district court distinguished other cases that involved unilateral mistake by the complaining
partys agent on the basis that the complaining parties were not represented at the sale, and the
prevailing bid was essentially nominal. The district court also noted that, as in the case before it, the
other courts upheld the trial courts exercise of discretion [see Wells Fargo Credit Corp. v. Martin,
605 So. 2d 531 (Fla. 2d DCA 1992) (distinguishing Fernandez and Van Delinder)]. This emphasis
on the wide breadth of the trial courts discretion to weigh the equities of individual cases when
deciding whether to set aside judicial sales has been reiterated by another Second District panel
interpreting the Wells Fargo decision [see United Companies Lending v. Abercrombie, 713 So. 2d
1017, 1019 (Fla. 2d DCA 1998)].
Relying on the Wells Fargo decision, a mortgagor whose agent underbid at a foreclosure sale by
$100,000 sought to have the sale set aside. The underbid was caused by a mistake in communications
between the mortgagor and its agent. After an evidentiary hearing, the motion to set aside was
granted. On appeal, the Fourth District noted that the case was factually on all fours with Wells
Fargo, but nonetheless upheld the lower courts decision to set aside the sale, finding that the buyers
did not carry their burden of demonstrating that the trial court abused its discretion when it granted
the motion. In so holding, the appellate court stated that a lower courts decision to set aside a
foreclosure sale will only be interfered with in a clear case of injustice. [Alberts v. Federal
Home Loan Mortg. Corp., 673 So. 2d 158, 159 (Fla. 4th DCA 1996)]. Such an injustice was found
when the conditions imposed by the court clerk at a foreclosure sale directly conflicted with the
policy of the clerks office and the clerk acknowledged the error. The trial courts refusal to set aside
the sale was reversed and termed a gross abuse of discretion [Tex. Commerce Bank Nat. Assn v.
Nathanson, 763 So. 2d 1107, 1109 (Fla. 4th DCA 1999)]. The burden of showing a gross abuse of
discretion was met when a trial court denied a mortgagees motion to vacate a certificate of title
issued after a foreclosure sale that the mortgagee had attempted to cancel. The trial court based its
decision on the fact that the mortgagees objection to the sale was date stamped after the clerk had
issued the certificate of title. The district court reversed, however, because at the hearing on the
motion to vacate, the mortgagee submitted a tracking form from an overnight delivery service that
established that the mortgagees objection to the issuance of the certificate of title was received by
the clerks office before the certificate was issued. The district court found that the trial courts
reliance on the filing date stamp rather than the tracking form exalted form over substance, an
exaltation that would work a substantial injustice given the unique facts of the case [see Opportunity
Funding I v. Otetchestvennyi, 909 So. 2d 361, 362 (Fla. 4th DCA 2005)].
A trial courts decision to set aside a foreclosure sale was upheld when:
(1) the foreclosure judgment was in excess of $86,000 and the high bid was $5,000,
(2) the mortgagees representative failed to appear at the sale due to excusable error, and
Page 35 of 44
(3) the only two bidders at the sale, who apparently had considerable real estate experience and
knowledge of foreclosure sale procedures, cooperated on the high bid, rather than
competing with each other.
Noting the misconduct or irregularity on the part of the parties connected with [the] sale, the
district court refused to find that the trial court was guilty of a gross abuse of discretion when it set
aside the foreclosure sale [see RSR Invest. v. Barnett Bank of Pinellas, 647 So. 2d 874, 875 (Fla. 2d
DCA 1994) (citing Fernandez; Quince, J. dissenting)].
If a foreclosure sale is set aside, the unsuccessful purchaser is entitled to a refund of the amount of
its bid and the documentary transfer stamps paid; however, the clerk of the court is not required to
refund to the unsuccessful purchaser any registry and sales fees paid in connection with the sale. The
clerk is mandated by statute to collect the fees and is considered to have earned them when the
judicial sale takes place and the funds are received in the court registry. That the sale is later
invalidated through no fault of the clerk is of no consequence in determining whether or not the clerk
is entitled to collect his or her administrative costs. Rather than seeking to have the fees refunded
by the clerk, the unsuccessful purchaser should ask the court to exercise its discretion and require
any party that the court determines to be culpable to reimburse the forfeited sales and registry fees
[Wilken v. North County Co., Inc., 670 So. 2d 181, 182 (Fla. 4th DCA 1996) (sale invalidated when
mortgagor/debtor, prior to sale and without written notice to clerk, filed suggestion of bankruptcy
in federal court); see Palm Beach Horizons, Inc. v. Washington Mutual Bank, 744 So. 2d 1074, 1075
(Fla. 4th DCA 1999); Bauer v. Resolution Trust Corp., 621 So. 2d 521 (Fla. 4th DCA 1993) (sale
set aside when RTCs counsel misunderstood RTCs instruction for bidding at sale); 28.24,
45.035, Fla. Stat. (authority for collecting registry and sales fees, respectively)].
[e]
Appointment of Receiver
It is not uncommon for a mortgage on commercial property to preserve the status quo, preserve the
property, and collect and apply rents and profits to the payment of the mortgage [United States Bank
Natl Assn v. Cramer, 113 So. 3d 1020, 1023 (Fla. 2d DCA 2013)].The appointment of a receiver,
as an equitable remedy, is not a matter of right even if the mortgage provides for a receiver to be
appointed and contains an assignment of rents clause [Seasons Partnership v. Kraus-Anderson, 700
So. 2d 60, 61 (Fla. 2d DCA 1997); see Alafaya Square v. Great Western Bank, 700 So. 2d 38, 40
(Fla. 5th DCA 1997)]. Appointment of a receiver is an extraordinary remedy that must be granted
with caution since it is in derogation of the legal owners fundamental right to possession [United
States Bank Natl Assn v. Cramer, 113 So. 3d 1020, 1023 (Fla. 2d DCA 2013)]. However, in
proceedings involving foreclosure on commercial property, circumstances may justify appointment
of a receiver to protect the security pending conclusion of the foreclosure proceedings. The ground
might be the mortgagors failure to maintain the property or the mortgagors refusal to assign rents
and profits to the mortgagee (when rents and profits are expressly made part of the security for the
underlying note). In the former situation, the burden is on the mortgagee to establish the mortgagors
failure to maintain the property. In the latter situation, the court should appoint a receiver unless the
mortgagor makes it clear that the property covered by the mortgage will sell for enough to pay the
debt and charges due to the mortgagee [Alafaya Square v. Great Western Bank, 700 So. 2d 38 (Fla.
5th DCA 1997); see Barnett Bank v. Steinberg, 632 So. 2d 233, 234235 (Fla. 1st DCA 1994), citing
Carolina Portland Cement Co. v. Baumgartner, 99 Fla. 987, 128 So. 241, 249 (1930)]. It is also not
Page 36 of 44
uncommon for the mortgage to provide for appointment of a receiver in the event of default [see,
e.g., United States Bank Natl Assn v. Cramer, 113 So. 3d 1020, 1023 (Fla. 2d DCA 2013); Rescom
Investments v. Strategic Consulting, 635 So. 2d 1061, 1062 (Fla. 2d DCA 1994); Howell v. Gaines,
608 So. 2d 64 (Fla. 3d DCA 1992)]. In deciding whether to enforce a mortgage provision to appoint
a receiver, the trial court must balance the mortgagors right to own and possess its property against
the interests of the mortgagee in protecting its security [Seasons Partnership v. Kraus-Anderson, 700
So. 2d 60, 61 (Fla. 2d DCA 1997)].
The role of a receiver in a foreclosure action is only to preserve the propertys value. In the absence
of a specific provision authorizing a receiver to sell the property, the appointment of a receiver does
not, itself, confer any of the owners power or authority to sell the property. In the absence of such
a provision, a general interim power of a receiver to sell the property would contravene the
mortgagors statutory right of redemption [Shubh Hotels Boca v. Federal Deposit Ins., 46 So. 3d
163, 166167 (Fla. 4th DCA 2010)].
To be entitled to the appointment of a receiver prior to the entry of a final judgment of foreclosure,
the movant must show that [the] property is subject to a serious loss, and that the movant has a
clear legal right to the property [Plaza v. Plaza, 78 So. 3d 4, 6 (Fla. 3d DCA 2011) quoting
Apalachicola N.R. Co. v. Sommers, 79 Fla. 816, 85 So. 361, 361 (1920); see United States Bank
Natl Assn v. Cramer, 113 So. 3d 1020, 1023 (Fla. 2d DCA 2013)]. However, after the entry of a
final judgment, the considerations dictating a cautious approach to the appointment of a receiver
may carry less weight [see Warshall v. Price, 617 So. 2d 751, 752 (Fla. 4th DCA 1993)]. When it
appears that to protect the interests of all parties the foreclosure sale should be postponed, and when
the terms of the mortgage foreclosed specifically provide for the appointment of a receiver by the
court, the movant should be entitled to appointment of a receiver pending execution of the final
decrees to the end that the rights of all parties may be protected and to avoid waste or depreciation
of the security [Fed. Land Bank of Columbia v. Evans, 106 Fla. 560, 143 So. 403, 404 (Fla. 1932)
cited in United States Bank Natl Assn v. Cramer, 113 So. 3d 1020, 1023 (Fla. 2d DCA 2013)]. In
United States Bank Natl Assn v. Cramer, appointment of a receiver after entry of final judgment
and before sale was ordered because the mortgage provided for appointment of a receiver, and the
evidence established that the mortgaged property could not receive a requisite environmental
clearance until a receiver could be appointed to oversee the remediation of the environmental issues
that would permit the issuance of the clearance [see United States Bank Natl Assn v. Cramer, 113
So. 3d 1020, 10251026 (Fla. 2d DCA 2013)].
A lease provision that authorizes appointment of a receiver on foreclosure does not give a trial court
the discretion to impose a less restrictive condition on the mortgagors use of its operating funds in
lieu of a receivership, with the court exercising some supervision over use of those funds. This type
of relief is only available when specifically requested and awarded in the form of an injunction, on
a showing that there is no adequate remedy at law [see Were Associates VI Ltd. v. Curzon Dev., 738
So. 2d 440 (Fla. 4th DCA 1999)].
When the mortgagee is primarily concerned about protecting its security interest in the property, an
alternative to seeking appointment of a receiver is to invoke Section 697.07, Florida Statutes to
enforce the assignment of rents clause in the mortgage, which would require the mortgagor to
Page 37 of 44
deposit the rents and profits into the registry of the court [see Alafaya Square v. Great Western Bank,
700 So. 2d 38 (Fla. 5th DCA 1997); Williams v. First Union Nat. Bank, 591 So. 2d 1137 (Fla. 4th
DCA 1993); see also 32.82; but see Isra Homes, Inc. v. Appley, 78 So. 3d 724, 725726 (Fla. 2d
DCA 2012) (applying 373.3011, Fla. Stat., which applies to commercial transactions, court
determined appellees only held partial interest in note and mortgage and therefore were not entitled
to enforce assignment of rent provisions in those instruments)].
If a receiver is appointed, the court may require the party seeking the appointment to provide a bond
that is sufficient in amount to protect the opposing party from any losses sustained should it
ultimately be concluded that appointing the receiver was improvident, unless exceptional
circumstances are shown that preclude the need or ability to furnish a bond [Comprop Inv.
Properties, Ltd. v. First Texas Sav. Assn, 534 So. 2d 418, 418 (Fla. 2d DCA 1988); see Rescom
Investments v. Strategic Consulting, 635 So. 2d 1061, 1062 (Fla. 2d DCA 1994) (amount of bond
was insufficient)]. If a receiver is appointed, court approval of the receivers significant decisions
should be required [see, e.g., Dinas Discount, Inc. v. Lowell, 658 So. 2d 564 (Fla. 3d DCA 1995)
(litigation arose over shopping center receivers decision to enter into lease with new tenant that
allegedly violated noncompetition provision in existing tenants lease)].
For a mortgage provision giving the mortgagee the option of applying to the court for appointment
of a receiver in the event of foreclosure, see 32.243.
[3]
Deficiency Decrees
[a]
In General
If a mortgagee purchases the foreclosed property by bidding the full amount of the final judgment
of foreclosure, the mortgagees judgment is satisfied in full and a deficiency judgment is not possible
[Warehouses of Florida, Inc. v. Hensch, 671 So. 2d 885, 887 (Fla. 5th DCA 1996); Patron v.
American National Bank of Jacksonville, 382 So. 2d 156, 158 (Fla. 5th DCA 1980); Provident
National Bank v. Thunderbird Associates, 364 So. 2d 790, 795797 (Fla. 1st DCA 1978)].
In all suits for foreclosure of a mortgage, the court has discretion to enter a deficiency decree for
any portion of a deficiency that exists [ 702.06, Fla. Stat.; see Grace v. Hendricks, 103 Fla. 1158,
140 So. 790 (1932); Beach Cmty. Bank v. First Brownsville Co., 85 So. 3d 1119, 1122 (Fla. 1st DCA
2012)]. In the case of an owner-occupied residential property, however, the amount of the deficiency
may not exceed the difference between the judgment amount, or in the case of a short sale, the
outstanding debt, and the fair market value of the property on the date of sale. For these purposes,
there is a rebuttable presumption that a residential property for which a homestead exemption for
taxation was granted before the foreclosure action was filed, is an owner-occupied residential
property. The complainant also has the right to sue at common law to recover any deficiency, unless
the court in the foreclosure action has granted or denied a claim for a deficiency judgment [ 702.06,
Fla. Stat.]. The remedies are not inconsistent and are each available to satisfy the underlying
obligation [Mellor v. Goldberg, 658 So. 2d 1162 (Fla. 2d DCA 1995); see De Las Cuevas v. National
Enterprises, Inc., 927 So. 2d 41, 4445 (Fla. 3d DCA 2006 (construing 702.06 to allow
post-foreclosure action to recover balance due on note when court did not adjudicate deficiency
issue)]. Because of the time and cost of separate discovery involved in executing on the underlying
Page 38 of 44
note, at least one court has expressed its opinion that the preferred procedure is to pursue a
foreclosure deficiency hearing before executing on the money judgment; then, if the deficiency
amount is insufficient to satisfy the underlying debt, to proceed with discovery and apply any
monies awarded in the foreclosure and deficiency proceedings against the judgment on the note [see
Century Group v. Premier Financial Serv., 724 So. 2d 661, 662 (Fla. 2d DCA 1999) (dicta)].
Legislation passed in 2013 reduced the limitation period for an action to enforce a claim of
deficiency related to a note secured by a mortgage on a one-family to four-family residential
property from five years, as formerly prescribed by 95.11(2)(b), Fla. Stat., to one year as now
prescribed by 95.11(5)(h), Fla. Stat. The one-year period commences on the day after the clerk of
the court issues the certificate of sale or the day after the mortgagee accepts a deed in lieu of
foreclosure [ 95.11(5)(h), Fla. Stat.]. The one-year limitation period applies to any action
commenced on or after July 1, 2013, regardless of when the cause of action accrued. However, any
action that would not have been barred under the five-year limitation period of 95.11(2)(b) before
June 7, 2013, must be commenced within five years after the action accrued or by July 1, 2014,
whichever occurs first [Fla. Laws ch. 2013-137, 2].
Generally speaking, the granting of a deficiency judgment is the rule rather than the exception,
unless there are facts and circumstances creating equitable considerations calling for the trial court
to exercise its discretion to deny a deficiency judgment [Thomas v. Premier Capital, Inc., 906 So.
2d 1139, 1140 (Fla. 3d DCA 2005); Residential Funding Corp. v. Barrera, 762 So. 2d 948, 949 (Fla.
3d DCA 2000); Ahmad v. Cobb Corner, Inc., 762 So. 2d 944, 946 (Fla. 4th DCA 2000); Edwards
v. FDIC, 746 So. 2d 1157 (Fla. 4th DCA 1999); see Chidnese v. McCollem, 695 So. 2d 936, 938 (Fla.
4th DCA 1997); see also McCollem v. Chidnese, 832 So. 2d 194, 196 (Fla. 4th DCA 2002)].
An assignee of a mortgage is invested with all the powers and interests of the original mortgagee,
and the amount an assignee paid the mortgagee for an otherwise enforceable debt is legally
irrelevant to the issue of whether the assignee is entitled to a deficiency judgment. Furthermore, a
mortgagees assignee who holds guarantees as additional collateral securing the obligation is entitled
to recover the entire contract amount of the guaranteed obligation from any and all available sources.
He or she is not limited to recovery based on his or her investment in the obligation [Ahmad v. Cobb
Corner, Inc., 762 So. 2d 944, 946947 (Fla. 4th DCA 2000); Thomas v. Premier Capital, Inc., 906
So.2d 1139, 1141 (Fla. 3d DCA 2005) (citing Ahmad)].
[b]
Determining Amount of Deficiency
The correct formula for calculating a deficiency judgment is the total debt, as secured by the final
judgment of foreclosure (which, in addition to the principal indebtedness, generally includes all
interests and costs of the foreclosure proceeding), minus the fair market value of the property, as
determined by the court [Kahn v. Simkins Industries, Inc., 687 So. 2d 16, 18 (Fla. 3d DCA 1996);
Morgan v. Kelly, 642 So. 2d 1117 (Fla. 3d DCA 1994); see Beach Cmty. Bank v. First Brownsville
Co., 85 So. 3d 1119, 1122 (Fla. 1st DCA 2012); Residential Funding Corp. v. Barrera, 762 So. 2d
948, 949 (Fla. 3d DCA 2000)]. Thus, if there is a remainder balance due to the mortgagee after
foreclosure, the mortgagee may apply for a deficiency judgment for the remaining proceeds. The
entry of a deficiency decree is within the sound judicial discretion of the court [ 702.06, Fla. Stat.],
and the exercise of that discretion allows the court to inquire into the reasonable and fair market
Page 39 of 44
value of the property, the reasonableness of the price at the foreclosure sale, and other equitable
considerations [see FDIC v. Hy Kom Dev. Co., 603 So. 2d 59 (Fla. 2d DCA 1992)].
The date at which fair market value is fixed for purposes of calculating a deficiency judgment is the
date of the foreclosure sale [Empire Developers Group, LLC v. Liberty Bank, 87 So. 3d 51, 53 (Fla.
2d DCA 2012); Estepa v. Jordan, 678 So. 2d 876, 878 (Fla. 5th DCA 1996); Community Bank of
Homestead v. Valois, 570 So. 2d 300, 301 n.1 (Fla. 3d DCA 1990)].
In determining fair market value, the court must consider the amount of any unpaid ad valorem taxes
on the property and the impact that may have on the fair market value because the property is worth
that much less than it would have been if the taxes were not owed [Chidnese v. McCollem, 696 So.
2d 879 (Fla. 4th DCA 1997), citing First Union v. Goodwin Beach Partnership, 644 So. 2d 1361,
1362 (Fla. 5th DCA 1994), rev. denied, 659 So. 2d 271 (Fla. 1995); see Edwards v. FDIC, 746 So.
2d 1157 (Fla. 4th DCA 1999); Warehouses of Fla., Inc. v. Hensch, 671 So. 2d 885, 887 (Fla. 5th
DCA 1996)].
If the fair market value of the property on the date of the foreclosure sale is greater than the debt
owed, the court may deny a deficiency judgment [Howell v. Gaines, 608 So. 2d 64 (Fla. 3d DCA
1992) (parties stipulated that fair market value equaled or exceeded amount of foreclosure
judgment)]. However, a deficiency decree should generally be granted unless there are equitable
circumstances justifying the denial of the deficiency [see FDIC v. Hy Kom Dev. Co., 603 So. 2d 59
(Fla. 2d DCA 1992)]. The granting of a deficiency judgment must be based on the application of
legal principles to specific facts in the record supporting the courts decision [see Ahmad v. Cobb
Corner, Inc., 762 So. 2d 944, 946 (Fla. 4th DCA 2000); Kornfeld v. Diaz, 634 So. 2d 799, 800 (Fla.
4th DCA 1994); Coral Gables Federal Savings and Loan Association v. Whitewater Enterprises,
Inc., 614 So. 2d 682 (Fla. 5th DCA 1993)]. Once the mortgagee seeking a deficiency introduces
evidence of the foreclosure sale price, the burden is on the mortgagor to present evidence concerning
the fair market value of the property. In the absence of such evidence, the trial court has the power
to act on the assumption that the sale price reflects the fair market value [Sullivan v. Federal Deposit
Insurance Corp., 634 So. 2d 794 (Fla. 3d DCA 1994), quoting Fara Mfg. Co. v. First Federal S. &
L. Assn, 366 So. 2d 164, 165 (Fla. 3d DCA 1979)].
For example, a final judgment of foreclosure in favor of the mortgagee was entered in the amount
of $808,579. The property was purchased by an independent third party at the foreclosure sale with
a $225,000 bid. The mortgagor then sought a deficiency judgment. At the evidentiary hearing, three
expert witnesses estimated the propertys fair market value in amounts ranging from $265,000 to
$500,000. These estimates were based on a recent zoning enactment restricting the propertys
density to one unit per acre. Evidence was also presented that, assuming that the propertys highest
and best use was the 48-unit condominium that had been planned under the prior zoning, the
propertys sale-date value was $1,728,000. The trial court valued the property at $1 million based
on its finding that at least nine units could be built on the property, and denied a deficiency decree.
The district court reversed, holding that the trial court erred in basing its finding as to the propertys
sale-date value on expert testimony that declared what the propertys highest and best use should be,
rather than what it was in fact. The district court also noted that there was no relationship between
the mortgagee and the successful bidder and that the trial court had failed to set forth any equitable
Page 40 of 44
considerations supporting its finding that the property was valued at $1 million [FDIC v. Hy Kom
Dev. Co., 603 So. 2d 59 (Fla. 2d DCA 1992)].
Once the mortgagee has introduced evidence to prove that the propertys fair market value is less
than the total debt determined by the final judgment and the mortgagor has had an opportunity to
offer evidence to refute the mortgagees contention, the court has the discretion to determine
whether there are any equitable considerations that warrant a reduction of the actual deficiency. It
is an abuse of the courts discretion to deny the mortgagee the right to a deficiency judgment before
ascertaining either what price the property will fetch on sale or the propertys fair market value [see
Chidnese v. McCollem, 695 So. 2d 936 (Fla. 4th DCA 1997) (trial court abused its discretion when
it refused to reserve jurisdiction to assess deficiency judgment prior to foreclosure sale without
stating specific equitable considerations on which it claimed to rely)].
It is not uncommon for a mortgage on commercial property to provide for appointment of a receiver
in the event of foreclosure, to collect rents and profits derived from the subject property pending the
outcome of the foreclosure proceeding. In such a situation, if there is a deficiency, the deficiency
may be paid from rents collected and held by the receiver during the pending foreclosure action [see
Howell v. Gaines, 608 So. 2d 64 (Fla. 3d DCA 1992)]. If there is no deficiency, the rents that accrued
before the title passed to the mortgagee belong to the mortgagor, after the receiver has collected its
fee and the mortgagee is satisfied [Howell v. Gaines, 608 So. 2d 64 (Fla. 3d DCA 1992)]. For further
discussion of appointing a receiver in a mortgage foreclosure case, see 32.80[2][e] above.
[c]
Procedure for Obtaining Deficiency
The mortgagee has the option to sue in the foreclosure proceeding and to sue at common law for the
deficiency [ 702.06, Fla. Stat.]. If a deficiency decree is requested and granted in the foreclosure
action, the mortgagee may not bring a new action based on the same promissory note [see Cragin
v. Ocean & Lake Realty Co., 133 So. 569 (Fla. 1931); Capital Bank v. Needle, 596 So. 2d 1134 (Fla.
4th DCA 1992)]. Likewise, the mortgagee may not bring a new action on the note if the court
actually considers the mortgagees claim for a deficiency decree and denies the deficiency on the
merits [see Scheneman v. Barnett, 53 So. 2d 641 (Fla. 1951); Capital Bank v. Needle, 596 So. 2d
1134 (Fla. 4th DCA 1992)]. However, if the court does not actually consider the mortgagees claim
for a deficiency decree, the mortgagee may bring a new action for any sums due on the note [see
Reid v. Miami Studio Properties, 139 Fla. 246, 190 So. 505 (Fla. 1939); Capital Bank v. Needle, 596
So. 2d 1134 (Fla. 4th DCA 1992)]. For example, in one case, the mortgagees action for foreclosure
and a deficiency decree was dismissed with prejudice. The district court found that the trial court
could not have actually considered the plaintiffs request for a deficiency decree, because there must
be an adjudication of foreclosure before the court may consider a request for a deficiency decree.
Therefore, the court held that the plaintiff was entitled to bring a separate action on the promissory
note, despite the dismissal with prejudice of the foreclosure action [see Capital Bank v. Needle, 596
So. 2d 1134 (Fla. 4th DCA 1992)].
It is generally not necessary for the party seeking a deficiency decree to institute a new service of
process on the mortgagor since the law contemplates that the deficiency proceeding is a continuation
of the original foreclosure proceeding [L.A.D. Property Ventures v. First Bank, 19 So. 3d 1126, 1127
(Fla. 2d DCA 2009); Timmers v. Harbor Fed. Sav. & Loan Assn, 548 So. 2d 282, 283 (Fla. 1st DCA
Page 41 of 44
1989)]. In most cases, notice sent to the mortgagors attorney of record will allow the deficiency
proceeding to go forward [see Estepa v. Jordan, 678 So. 2d 876, 878 (Fla. 5th DCA 1996)].
Assuming the mortgagee has the right to bring a separate action for a deficiency, the action may be
brought against one who was not made a party to the foreclosure suit [PMI Mortg. Ins. Co. v.
Cavendar, 615 So. 2d 710, 711712 (Fla. 3d DCA 1993)]. Thus, a mortgagee may bring an action
for a deficiency against the original mortgagors who were not made parties to a foreclosure action
against the subsequent owners [PMI Mortg. Ins. Co. v. Cavendar, 615 So. 2d 710, 711712 (Fla. 3d
DCA 1993)].
Post-trial proceedings in a mortgage foreclosure action when the trial court has retained jurisdiction,
such as a motion for deficiency, are subject to dismissal for failure to prosecute under Florida Rule
of Civil Procedure 1.420(e) [Frohman v. Bar-Or, 660 So. 2d 633, 636 (Fla. 1995)]. The rule
provides that all actions in which it appears on the face of the record that no activity has occurred
for a period of one year must be dismissed by the court on its own motion or on the motion of any
interested person, whether that person is a party to the action or not, after reasonable notice to the
parties, unless:
(1) a stipulation staying the action is approved by the court,
(2) a stay order has been filed, or
(3) a party shows good cause in writing at least five days before the hearing on the motion why
the action should remain pending.
Mere inaction for a period of less than one year is not sufficient cause for dismissal under the rule
[Fla. R. Civ. P. 1.420(e)]. Before the rule can be applied post-judgment, the following events must
occur [Frohman v. Bar-Or, 660 So. 2d 633, 636 (Fla. 1995)]:
(1) Final judgment must be entered;
(2) The foreclosed property must be sold pursuant to the judgment;
(3) A certificate of title for the property must be issued; and
(4) The trial court must reserve jurisdiction for later determination of any deficiency.
The one-year period is measured backwards from the time preceding the filing of the motion to
dismiss for lack of prosecution, rather than forwards from the entry of final judgment. Before
dismissal can be ordered, the trial court must determine whether the party opposing dismissal had
good cause for failing to prosecute during the preceding year. If no good cause is shown for the lack
of record activity, the motion should be granted. If a deficiency cannot be determined within one
year after the certificate of title has been issued, then the plaintiff is always free to file for a stay of
proceedings under the rule [Frohman v. Bar-Or, 660 So. 2d 633, 636 (Fla. 1995), citing Chrysler
Leasing Corp. v. Passacantilli, 259 So. 2d 1, 34 (Fla. 1972)].
The five-year statute of limitations for a separate action seeking a post-foreclosure deficiency
judgment runs from the date of the foreclosure judgment and/or sale, not from the date of default
on the underlying mortgage note [Chrestensen v. Eurogest, Inc., 906 So. 2d 343, 345346 (Fla. 4th
DCA 2005)]. This logically flows from the fact that, before a cause of action for deficiency can
Page 42 of 44
accrue, there must be a final judgment of foreclosure and a sale of the assets to be applied to the
satisfaction of the judgment [see Singleton v. Greymar Assocs., 882 So. 2d 1004 (Fla. 2004);
Chrestensen v. Eurogest, Inc., 906 So. 2d 343, 345 (Fla. 4th DCA 2005)].
[4]
Reforeclosure
The foreclosure proceeding has no effect on a junior mortgagee or inferior encumbrancer if that party
was not properly joined or if the partys interest was not otherwise effectively eliminated [see Quinn
Plumbing Co., Inc. v. New Miami Shores Corp., 100 Fla. 413, 129 So. 690 (1930); Abdoney v. York,
903 So. 2d 981, 983 (Fla. 2d DCA 2005)]. The junior mortgagees interest continues unaffected until
otherwise removed [Abdoney v. York, 903 So. 2d 981, 983 (Fla. 2d DCA 2005); see Posnansky v.
Breckenridge Estates Corp., 621 So. 2d 736, 738 n.3 (Fla. 4th DCA 1993) (interest of junior vendees
lien not affected by foreclosure of senior mortgage when junior interest was not joined in foreclosure
proceeding); Raskin v. Otten, 273 So. 2d 433 (Fla. 3d DCA 1973)].
The partys interest may be removed by a reforeclosure proceeding. The purchaser at the foreclosure
sale, and the grantees claiming under the purchaser, are subrogated to the rights of the mortgagee to
proceed against the unaffected junior lienor [see, e.g., Raskin v. Otten, 273 So. 2d 433 (Fla. 2d DCA
1973); Polster v. General Guar. Mortgage Co., 180 So. 2d 484 (Fla. 1st DCA 1965)]. Therefore, such
a purchaser may bring a new foreclosure proceeding and eliminate the interests of the junior
mortgagee. A leasehold interest, like a lien, may also be reforeclosed [Commercial Laundries v. Tiffany
Square, 605 So. 2d 116 (Fla. 5th DCA 1992)]. The fact that the mortgagee was aware of the lienors
or tenants interest at the time of the initial foreclosure does not preclude the purchaser from bringing
the reforeclosure action [Commercial Laundries, Inc. v. Tiffany Square, 605 So. 2d 116 (Fla. 5th DCA
1992)].
In a reforeclosure proceeding, the plaintiff may bring an action de novo against the omitted lienor and
obtain relief by ordinary foreclosure and sale. However, this is not necessarily the plaintiffs only
remedy. Although strict foreclosure is not available in Florida, in the case of reforeclosures, there is
authority to the effect that analogous proceedings are authorized [see Quinn Plumbing Co., Inc. v. New
Miami Shores Corp., 100 Fla. 413, 129 So. 690 (1930)]. Under the proceedings, the purchaser at the
foreclosure sale would direct the action only against those junior lienors who were not effectively
eliminated at the original foreclosure. The decree sought would be an order that the party exercise his
or her right of redemption within a designated time or be forever barred. If no defense to the action
is interposed, the decree would appear proper [see Quinn Plumbing Co., Inc. v. New Miami Shores
Corp., 100 Fla. 413, 129 So. 690 (1930); Abdoney v. York, 903 So. 2d 981, 983984 (Fla. 2d DCA
2005) (only remedies of purchaser at foreclosure sale against omitted junior mortgagee are moving to
compel redemption or reforeclosure in a suit de novo)].
A foreclosure action against a mortgagor that resulted in a judgment and foreclosure sale was void
because, prior to the foreclosure, the property had been transferred to a new owner who was not a party
to the foreclosure action. Thus, a subsequent foreclosure in which the new owner was joined with the
mortgagor was not a reforeclosure. Rather, the second action was an initial foreclosure as to the fee
simple owner who was an indispensable (but not joined) party to the first action [English v. Bankers
Trust Co. of California, 895 So. 2d 1120, 1121 (Fla. 4th DCA 2005)].
Florida Real Estate Transactions
Page 43 of 44
Copyright 2015, Matthew Bender & Company, Inc., a member of the LexisNexis Group.
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2-32 Florida Real Estate Transactions 32.

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

A written indemnification agreement by a person reasonably believed sufficiently

A letter of credit issued by a financial institution;

A deposit of cash collateral with the clerk of the court; or

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

Jurisdiction and Service of Process.

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

Alternative Procedure for Uncontested Cases.

There is an alternative procedure designed to speed up the foreclosure process in uncontested

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

Order to Make Payments or Vacate Premises.

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

Judgment in Uncontested Proceedings.

2-32 Florida Real Estate Transactions 32.80

mortgage in an in rem foreclosure action, were not required to bring, as compulsory

Courts Power to Set Aside Foreclosure Decree Before Sale.

Intrinsic or extrinsic fraud, misrepresentation, or other misconduct of an adverse party;

That the judgment is void; or

2-32 Florida Real Estate Transactions 32.80

Judicial Sales Procedure

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

Any past or present owner or holder of the loan being foreclosed;

Any maintenance company, holding company, or foreclosure services company under

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

2-32 Florida Real Estate Transactions 32.80

Disbursement of Sale Proceeds; Certificate of Disbursements.

2-32 Florida Real Estate Transactions 32.80

Disposition of Surplus Funds

2-32 Florida Real Estate Transactions 32.80

Sale or Assignment of Rights to Surplus Funds.

2-32 Florida Real Estate Transactions 32.80

Regulation of Foreclosure-Related Rescue Services and Transactions

2-32 Florida Real Estate Transactions 32.80

The legislation regulates foreclosure-related rescue services and foreclosure-related rescue

Stopping, avoiding, or delaying foreclosure proceedings concerning residential real

Curing or otherwise addressing a default or failure to timely pay with respect to a

A foreclosure-related rescue transaction is a transaction [ 501.1377(2)(d), Fla. Stat.]:

By which residential real property in foreclosure is conveyed to an equity purchaser [see

In the course of offering or providing foreclosure-related rescue services, a foreclosure rescue

Engaging in or initiating foreclosure-related rescue services without first executing a

Soliciting, charging, receiving, or attempting to collect or secure payment, directly or

Protecting Tenants in Residential Properties Undergoing Foreclosure

2-32 Florida Real Estate Transactions 32.80

federally-related mortgage loan [see 12 U.S.C. 2602(1)] or on any dwelling or residential

The lease or tenancy is the result of an arms-length transaction; and

Tenants Rights When PTFA Does Not Apply.

2-32 Florida Real Estate Transactions 32.80