In Florida, lenders may foreclose on a mortgage in default by using the judicial foreclosure process. This is commenced by filing a lawsuit in the Circuit Court in the county where the property being foreclosed is located. Again, this is a judicial process – there is not a non-judicial foreclosure process in the State of Florida.
As in any lawsuit, the borrower must be served with notice of the lawsuit and must be given an opportunity to appear and defend his or her rights. The lender will try to show that the borrower is in default, and that foreclosure is therefore necessary under Florida equity law. The Florida legislature has passed very few statues regulating foreclosures. The legislature's mortgage foreclosure effort may be viewed Florida Statutes, Chapter 702.01, which is the statutory scheme that regulates mortgage foreclosures in Florida. Most of the law on the subject of foreclosures in Florida is found within cases that have been decided before Florida's judges. Some of the highlights of both the Florida Statutes and judicial decisions are set forth as follows:
- An Equitable Action. In Florida, all mortgages shall be foreclosed in equity, not at law. This means that the foreclosure claim shall be tried to a judge – Florida residents are not entitled to a jury trial in a mortgage foreclosure action. As such, if any counter-claims are filed by the borrower-homeowner, the court shall server for separate trial all counterclaims against the foreclosing mortgage. The foreclosure claim shall, be tried before the court without a jury. Counterclaims brought by a borrower-homeowner may be tried to a jury, but they must be tried separately from the main foreclosure lawsuit.
- No Injunctive Relief for Borrower-Homeowner. In Florida, because the lawsuit to foreclose on a borrower is a suit in equity, it is impossible to obtain an injunction to stop a court ordered sale. A sale can be set aside if there is an error in the procedure to foreclose. The sale, however, cannot be set aside due to a low sale price. The court order commanding foreclosure will specify how the foreclosure must take place, and the foreclosure must take place on those terms.
- Mortgage and Note. When you purchased your home you signed many documents at closing. Two of those documents were the Mortgage and the Note. The Mortgage pledges the property as security for the debt which is owed to the bank. The debt is determined pursuant to the terms of the Note. In other words, the Note is basically your promise to pay. The Mortgage is the tool the bank uses to take back the property in the event you do not pay.
- The Notice of Default. As a borrower, you have promised to make your mortgage payments, pay your taxes and insurance, and pay your homeowner association fees. If you fail to do so, pursuant to the terms of the Note and Mortgage, your lender may declare you in default of your Mortgage. Declaring that you are in default is the beginning of the foreclosure process.
- Disputing the Validity of the Debt.
- Opportunity to Cure.
Foreclosure Litigation Timeline
- The Filing of the Lis Pendens. The first legal action taken by the lender is to file a Lis Pendens at the county courthouse. The term "Lis Pendens" means "litigation pending" and puts the public on notice that a law suit has been filed against you. Your lender has declared you in default and is demanding that the note be paid in full immediately. The Clerk of Court records the Lis Pendens in the Public Records and then you are served with a Summons, commencing the lawsuit against you and giving you time to Answer.
- The Summons and Service of Process (10 to 20 days). After the Lis Pendens and Complaint have been filed, a process server (typically a County Sheriff) will deliver to you a copy of the Complaint filed against you, the Lis Pendens and the Summons. The Summons is the document that details your rights and responsibilities associated with the lawsuit that has just been filed against your for breach of contract (promissory note) and the Mortgage Foreclosure. It is not advisable to "hide" from the Sheriff. There are alternative ways that the lender may obtain sufficient service of process other than handing it to you (i.e., publication in local paper after diligent search).
The Answer (20 days). In response to the Lis Pendens and the Complaint, you have 20 days from receipt of your Summons to file your Answer with the Clerk of the Circuit Court. An Answer is a legally sufficient response to the allegations that have been alleged against you in the Complaint. An Answer is not "I've been laid off from work and cannot make my payments." In the lender's (and Court's) eyes, this is an insufficient excuse and does not justify your lack of payment. Instead, an Answer might be, "I never had a mortgage with this lender. They have confused me with someone else." Alternatively, "I have made all my payments and am not in Default" would also be an adequate answer and potential defense. It is an opportunity to show why you shouldn't be foreclosed upon.
And Answer may be filed by you or by your Attorney. If you file an Answer (and it is usually a good idea to do so) a hearing date is set. At the hearing the lender's attorney will be present and you may tell the judge the reason for your Default. By filing an Answer, you have insured that a Clerk's Default and a Default Judgment will not be entered against you without an opportunity to be heard.
The Preliminary Hearing. You may present your case at the hearing and the judge will decide what to do next. If you have a valid Answer, the judge may require the lender to give you a reasonable amount of time to work things out. If you simply haven't made your payments, however, the judge will rule in favor of the lender and the foreclosure will go forward.
The good thing about the hearing is that it sometimes takes some extra time to be scheduled. And, let's say you are trying to use a short sale to save your credit, this extra time may be important.
If you do not file an Answer within the 20 day period or if the judge rules against you at the hearing and doesn't allow you more time, the lender's attorney will file a Motion for a Summary Judgment Hearing. This is another hearing which will be scheduled before the judge. It could take place in a few days or weeks depending on how busy the judge is and how aggressively the Lender's attorney acts.
- The Summary Judgment Hearing (45 days). At the Summary Judgment hearing, the Lender's attorney will present the case against you. You may give testimony if you are present to try and create dispute as to a material fact in the case. More times than not, providing proof of payment is the alleged defense that would provide you the greatest likelihood for success at this hearing. Without such evidence, the judge will most likely rule against you and find you in default of the mortgage and will grant the lender the right to foreclose the Mortgage and sell your property. The Final Summary Judgment will show the amount you owe the lender including principal, interest, attorney fees, expense, and court costs.
- Foreclosure Sale Date (75 days). After Final Summary Judgment is entered, next the Judge will set a foreclosure sale date which is usually 30-45 days after the entry of the Judgment. This is when the property will be sold on the Courthouse steps. This date is sometimes extended due to legal holidays or by agreement of your lender.
- Redemption by Junior Lien Holders. At the discretion of the court, junior lien holders can redeem the property, up to the time of the confirmation of the sale. The equity of redemption is cut off when the sale is confirmed, but it exists prior to that time, which means the borrower can save the property from foreclosure by coming up with the money before confirmation.
- Judicial Sale, Advertisement and Certificate of Title. The court order of foreclosure will specify how the foreclosure must take place, and the foreclosure must take place consistent with those terms. Whenever a legal advertisement, publication, or notice relating to a foreclosure proceeding is required to be placed in a newspaper, it is the responsibility of the lender or their representative to place such advertisement, publication, or notice. After the sale takes place, the sale terms must be confirmed by the court that ordered the sale. If the terms of the sale order are met, title in the buyer's name can become complete by filing a certificate of title.
- Deficiency Judgment.The lender may sue to obtain a deficiency judgment in Florida. A separate action for a deficiency must be filed within four years after the foreclosure sale.