A district court of appeal this past week decided that acceleration of a note and mortgage can occur multiple times for different defaults, continuing the decision of sister courts that seems to fly in the face of logical reasoning according to many foreclosure defense attorneys.
In 5D12-3823 U.S. Bank v. Bartram, the 5th District Court of Appeal (one of five second tier appellate courts in the State of Florida), rendered a decision that essentially made the concept of quiet title based upon acceleration of the debt, irrelevant.
THE PROBLEM WITH THE TYPE OF DISMISSAL -
The Bartram case had the bank's foreclosure action dismissed by the trial court judge because the bank failed to appear at a hearing. The Rule 1.420(b) dismissal is a dismissal that is "involuntary" and made by the judge because a party failed to comply with the rules of court or an order of the judge. The order here was a hearing on the status of the case. This dismissal is different than a voluntary dismissal where the bank initiates a dismissal of its own case, or where there is a partial adjudication on the merits of certain facts within the case. Some courts have come to the same conclusion as the 5th District Court of Appeal in this case, but used the concept that the dismissal failed to adjudicate on the merits whether or not there was an acceleration of the note and mortgage, therefore the dismissal created a "deceleration".
THE CONCEPT OF DECELERATION OF MATURITY -
The acceleration of a mortgage is the event of the bank saying because of a default in the note or mortgage (ie: the payment was missed; or the taxes were not paid; or you transferred the property), ALL of the balance of the note is now due. This comes together with the "maturity" of the note and mortgage. The maturity is the stated date upon which all of the unpaid interest and principal is due on the loan. Typically when acceleration is declared, it "advances" the maturity date because of the demand by the bank. The court's decision means that this advancement of maturity does not really happen, as the bank can accelerate multiple and successive times for each subsequent default of payment, or other breach of the note or mortgage.
INTRODUCING THE CONCEPT OF CUT-OFF OF CLAIMS -
The court did introduce the concept of the application of the statute of limitations for the sole purpose of the cut-off of claims. In Florida the statute of limitations (often referred to as SOL - which after this decision puts many homeowners with quiet title asperations "SOL" - I'm sure someone will comment on these initials). This cut-off is that that in Florida the bank cannot go back more than 5 years for unpaid payments. For example, if a $250,000 balance mortgage goes unpaid for 10 years before a foreclosure suit is filed (or a suit on the promissory note) and the interest is 5%, then only 5 years of interest ($62,500) as opposed to $125,000 in back interest, can be awarded to the bank.
IT AIN'T OVER YET -
The 5th Disrict Court of Appeal did recognize that it's decision is in conflict with other prior decisions of appellate courts (although it relies for the most part on a Florida Supreme Court decision that supports the concept of deceleration) and asked the Florida Supreme Court to have the last word on how this all works when it said:
Because we believe the issue we resolve is a matter of great public importance, we certify the following question to the Florida Supreme Court:
Does acceleration of payments due under a note and mortgage in a foreclosure action that was dismissed pursuant to rule 1.420(b), Florida Rules of Civil Procedure, trigger application of the statute of limitations to prevent a subsequent foreclosure action by the mortgagee based on all payment defaults occurring subsequent to dismissal of the first foreclosure suit?
Thus we still have to wait and see for the final final or almost final answer to the quiet title question in Florida is going to be.
© 2014 Richard P Zaretsky, Esq.
Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.
Richard Zaretsky, Esq., THE ZARETSKY LAW GROUP P.A. ATTORNEYS AT LAW, 1615 FORUM PLACE, SUITE 3A, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 -- RPZ99@Florida-Counsel.com
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