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88 FLORIDA Is the Florida Statute of Limitations Issue a Thing of the Past? All indications point to yes; but it is wise to heed the old adage that you should "never count your chickens before they hatch". By Shaun K. Ramey e Florida Supreme Court (FLSC) ac- cepted certiorari in 2015 from its 5th District Court of Appeal and held oral argument in November to resolve a dispute on the statute of limitation issue plaguing the mortgage industry. e State of Florida is divided into five District Courts of Appeal (DCAs), whose application of law reigns sovereign over their respective districts. e debate stems between the 3rd DCA, which encompasses the populous county of Miami-Dade as well as neighboring Monroe County, and all other DCAs and federal courts throughout Florida which have spoken on the issue of the impact of the statute of limitations on re-filed foreclosure actions. While it is generally understood that ex- tinguishment of a mortgage only occurs when all sums secured are paid off or the mortgage is foreclosed, the 3rd DCA has held that a mortgagee may not have the right to foreclose on a mortgage if a prior foreclosure action was dismissed and a second action was filed within five years after the filing of the first. Five years represents the statute of limitation for foreclo- sure actions in Florida. Consequently, a lucky borrower might get a free house if a mortgagee has, through oversight or inadvertence, had its prior action dismissed -- although there is some debate as to whether the mortgage would still encumber the property for the remaining mortgage term even though the mortgagee can no longer foreclose on it. Indeed, it might be possible that the right to foreclose a mort- gage could be lost even if the mortgagee was not negligent but, instead, had voluntarily dismissed its own action for any reason includ- ing, but not limited to, simply abandoning the action to give the borrower some relief. In order to better understand the debate and the possibility and hope that the is- sue might be coming to an end in Florida in the near future, it is important to analyze both sides of the issue. Beginning with the borrower friendly position, the 3rd DCA in Deutsche Bank Trust Co. Americas v. Beauvais, held that a mortgagee who had not taken any affirmative action to decelerate the underlying debt was barred from refiling a foreclosure action more than five years after the filing date of a prior foreclosure action that had been dismissed without prejudice due to the mortgagee's failure to attend a case management conference. e 3rd DCA said this additional act to decelerate was necessary because the mortgagee's complaint in the first action accelerated the unpaid installments on the loan and, therefore, triggered the statute of limitations not just on the defaulted payments but on the entire balance of the loan. Per the court: Without an adjudication on the mer- its, the acceleration of the debt remained in place, meaning that the entire balance of the debt was and remained immediately due. Without any new payment due there could be no new default, and without a new default there could be no new cause of action. In reaching its decision, the 3rd DCA quoted a Nevada court for the following proposition: "Because an affirmative act is neces- sary to accelerate a mortgage, the same is needed to decelerate. Accordingly, a deceleration, when appropriate, must be clearly communicated by the lender/holder of the note to the obligor. Here, if lender intended to revoke the acceleration of the debt due under the note, it should have done so in a writing documenting the changed status. e voluntary dismissal without prejudice did not decelerate the mortgage because it was not accompanied by a clear and unequivocal act memorial- izing that deceleration. Although not explicitly stated by the 3rd DCA, effective acts of deceleration might include sending a letter of deceleration to the borrower, adding language to the motion to dismiss (if voluntary) of the intent to deceler- ate, or entering into some kind of reinstate- ment, loan modification, or forbearance plan with the borrower. Consequently, as a result of the 3rd DCA's opinion, many foreclosure actions may currently be time barred and mortgagees holding such mortgages can do nothing but sit and wait for a change in the law by either the FLSC or the 3rd DCA. Further, mortgagees might also be holding mortgages that although not time barred yet may still nevertheless require some action on the part of the mortgagee (deceleration) in order to preserve the right to reinitiate foreclosure in the future if necessary. It should also be noted that the impact of Beauvais may be limited to only those cases that were dismissed without prejudice. is is because if the dismissal was with prejudice, then it presumably would act as an adjudica- tion on the merits that the foreclosure was not effective, which in turn means the attempted acceleration was not effective. Indeed, by her questions to counsel for the mortgagees during November's oral argument, Justice Pariente indicated that the distinction between a with or without prejudice dismissal of the prior action may impact her opinion, which might qualify as a partial victory for borrowers as it could result in the time barring of cases whose facts match those of Beauvais. However, if the form of case adjudication truly affects the ability to file subsequent actions, then it can be argued that acceleration can never be deemed effective until the final judgment. is in turn would mean that a case dismissed prior to a final judgment was then never fully accelerated and, thus, the accelerated balance was never subject to the statute of limitations. To para- phrase counsel for the mortgagees during last week's oral arguments, "acceleration is akin to running a 5K; you don't complete it until you cross the finish line." While the 3rd DCA's ruling understand- ably shook the mortgage industry, every other DCA that has been presented with the same MEMBER Adriana M Montes, MBA Juris Doctor Candidate Owner, Real Estate Broker REO, Short Sale, Property Management & Acquisitions Director, Luxury Home Specialist, Multimillion Dollar Producer » Awarded #17 with 203 home sales in 2014 of Top 250 Latino Real Estate Agents in US! » Awarded #17 with 220 home sales in 2013 of Top 250 Latino Real Estate Agents in US! » Awarded #16 with 200 home sales in 2012 of Top 250 Latino Real Estate Agents in US! » Awarded #48 with 120 home sales in 2011 of Top 250 Latino Real Estate Agents in US! www.FloridaDreamsRealty.com 321.689.6258 cell - Adriana@FloridaDreamsRealty.com

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