Florida Statute, Section 95.11(2) imposes a five-year statute of limitations to sue for default on: "(b) A legal ... action on a contract, obligation, or liability founded on a written instrument ..." and "(c) An action to foreclose a mortgage." Most people read this statute to mean that if a homeowner defaults on a promissory note and mortgage, the lender has 5 years to file its foreclosure action. If the bank fails to file within the five-year period, it is forever barred from seeking foreclosure. Some argue the date of default is irrelevant because each month's missed payment is a new default, thus setting a new limitations date. Other interpretations provide that the statute of limitations expires five years after the maturity date of the loan, rather than the date of default.
This area has become contested and debated under Florida law. What is the right answer? Two recent cases may shed some light on the analysis:
The first case is Kaan v. Wells Fargo Bank, N.A., 2013 WL 5944074 (S.D. Fla., Nov. 5, 2013). Mr. Kaan signed a note and mortgage on September 6, 2006. He defaulted by failing to make the payment due on July 1, 2007, and subsequent payments. On February 15, 2008, Wells Fargo brought a foreclosure action. For unknown reasons, the bank dismissed the foreclosure voluntarily in September, 2011. In 2013, with no new suit having been filed yet, the borrower filed a lawsuit against the bank alleging that the five-year statute of limitations expired on July 1, 2012, and, therefore, Wells Fargo was unable to bring suit. In dismissing Mr. Kaan's suit the Court said:
The foreclosure action at issue here alleged a default of [Kaan's] July 1, 2007 through February 1, 2008 Note and Mortgage payments. While any claims relating to individual payment defaults that are now more than five years old may be subject to the statute of limitations, each payment default that is less than five years old, i.e., since October, 2008, created a basis for a subsequent foreclosure and/or acceleration action.
The other case is Broward County v. 8705 Hampshire Drive Condominium, Inc., 38 Fla. L. Weekly D2546 (Fla. 4th DCA 2013). Broward County sought to foreclose based on an alleged breach of the mortgage by the condominium association. The county made a written demand on the association in July 2003, but failed to file its lawsuit until October 2009, six years and 3 months after the written demand. In dismissing the lawsuit based on the violation of the five-year statute of limitations, the Court said: "Nevertheless, the reporting requirements are continuing duties under the mortgage, and a subsequent breach of those duties could trigger another demand by the county to cure the default in accordance with the terms of the mortgage or face acceleration."
Both cases stand for the proposition that new default sets a new statute of limitations date. There is some contrary case law which holds that, once the note and mortgage is accelerated by the lender, the statute of limitations date is fixed and if the lender fails to sue within the 5-year period, ALL subsequent lawsuits are barred. This is a highly technical interpretation, and seems to be at odds with the majority of FL case law, including the two cases above. Regardless, the more conservative approach is to utilize the analysis in the line of cases consistent with Kaan and Broward County.
- Shawn M. Yesner, Esq.
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Shawn M. Yesner, Esq., is the founder of Yesner Law, P.L., a Tampa-based boutique real estate law firm that helps clients eliminate debt by providing options, so they can live the lifestyle of their dreams. We assist clients with foreclosure defense, debt settlement, Chapter 7, Chapter 13, bankruptcy, liquidation, reorganization, short sales, and loan modifications, for clients in Westchase, Carrolwood, Tampa, Odessa, St. Petersburg, St. Petersburg Beach, Treasure Island, Medeira Beach, Reddington Beach, Kenneth City, Gulfport, Pinellas Park, Seminole, Clearwater, Clearwater Beach, Oldsmar, Dunedin, Safety Harbor, Palm Harbor, Lutz, Wesley Chapel, New Port Richey, Trinity, Port Richey, and other areas that comprise the greater Tampa Bay area.