In a highly anticipated ruling, the Florida Supreme Court has finally settled the issue of whether the statute of limitations bars a lender from foreclosing a mortgage more than five years in default. In Bartram v U.S. Bank National Association, Case No. SC14-1265, (Fla. November 3, 2016), the high Court was deciding whether to uphold a decision by the Florida Fifth District Court of Appeals that each missed mortgage payment constituted a new default subject to a new five year clock, and, therefore, the lender could proceed with foreclosure.
In 2005, Lewis Bartram was provided a mortgage for $650,000.00. In 2006, Bartram defaulted on that mortgage causing the lender to file foreclosure. In May 2011, the foreclosure was involuntarily dismissed. In 2012, U.S. Bank brought a second foreclosure lawsuit against Bartram. This time, Bartram filed a cross-claim seeking an order cancelling the mortgage due to the five-year statute of limitations having expired prior to the filing of the second foreclosure. The trial court granted Bartram’s motion for a summary judgement, cancelled the note and mortgage, and released the bank’s lien against the property.
On appeal, the Fifth District Court of Appeals certified the following question to the Florida Supreme Court: “Does acceleration of payments due under a residential note and mortgage with a reinstatement provision 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 payment defaults occurring subsequent to dismissal of the first foreclosure suit?” The high Court ruled the lender was not barred from filing a second foreclosure as long as there was a new default by the mortgagee after the first foreclosure lawsuit. In other words, each missed mortgage payment constitutes a new default entitling the lender to foreclose.
The decision has a significant impact on future litigation concerning a lender’s acceleration of a note and mortgage when the lender’s initial foreclosure was dismissed. The five-year statute of limitations will not bar the lender from filing a second foreclosure if standard loan documents are utilized and new defaults occur within the statute of limitations period.