Another important victory for Florida community associations occurred during the 2013 Florida Legislative Session! HB 87 - Mortgage Foreclosures by Representative Kathleen Passidomo (R - Naples) has passed the Legislature by a 36 to 13 vote! The third time must be the charm as this year finally saw the passage of this much-needed relief after failing two years in a row.
Far too many associations have been held in limbo waiting for banks to foreclose on delinquent properties in their communities. HB 87 will give associations a new tool in the form of an Order to Show Cause to force banks to proceed expeditiously with their foreclosure actions unless they can produce a compelling reason they cannot do so. Of course, if an association is already renting out property to which it took title and does not wish to speed up the bank's foreclosure, it should not avail itself of this new Order to Show Cause tool. However, for the vast majority of associations who cannot rent out delinquent properties in their community either because they have not taken title to those properties or those properties are not in rent-able condition, this bill will provide an ability to speed up the bank's foreclosure action.
The highlights of this bill include:
- Reduces the time period within which a lender can seek a deficiency judgment from the current 5 years to 1 year.
- Requires that the lender's complaint disclose certain facts and confirm the availability of certain documentation supporting the lender's right to foreclose in order to ensure that the foreclosure can be successfully prosecuted.
- Makes it harder for parties seeking to set aside or challenge a final judgment of foreclosure in order to safeguard the quality or character of the title to the property.
- In the case of an owner-occupied residential property, the amount of a deficiency judgment 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.
- A condominium association, cooperative association or homeowner's association may request an order to show cause for the entry of a final judgment in the bank's foreclosure action in chambers and without a hearing.
- The order to show cause shall set the date and time for a hearing to show cause and that hearing date 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.
- The order to show cause shall state that the court may enter an order of final judgment of foreclosure at the hearing and order the clerk of the court to conduct a foreclosure sale.
- The court may enter a default against the lender if it fails to appear at the hearing to show cause, fails to file defenses by a motion or by a verified or sworn answer or files an answer which does not contest the foreclosure.
- Allows for the granting of attorney's fees for the order to show cause if the mortgage provides for reasonable attorney's fees and the requested fees do not exceed 3% of the principal amount owed at the time of filing the complaint.
- The provisions of this bill apply to "all mortgages encumbering real property and all promissory notes secured by a mortgage, whether executed before, on, or after the effective date of this act." However, the order to show cause provisions "apply to causes of action pending on the effective date of this act."
- HB 87 takes effect upon becoming law which means that the date when the Governor signs it or lets it pass into law without his signature is the effective date of the foregoing provisions.
The mortgage defense attorneys and their clients have already mounted an effort to urge the Governor to veto this bill. We have been waiting a long time to give associations a greater say in the mortgage foreclosure actions that have been pending, in some cases, for years. We are in the homestretch with relief on the way. If you would like to send a message to the Governor about this bill you may email him at: firstname.lastname@example.org.