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The Process
In Florida, mortgages must be foreclosed by filing a
lawsuit in court. As in any lawsuit, the borrower must be served with notice of
the lawsuit and must be given an opportunity to appear and defend his or her
rights. The lender will try to show that the borrower is in default, and that
foreclosure is therefore necessary under Florida equity law. Florida is unusual
in that the legislature has passed very few statues regulating foreclosures.
Most of the law on the subject of foreclosures in Florida is found scattered in
dozens of cases. The basic statue, chapter 702.01 reads as follows:
All mortgages shall be foreclosed
in equity. In a mortgage foreclosure . . .
action, the court shall server for separate trial all
counterclaims against the foreclosing mortgage. The foreclosure claim shall, if
tried be tried to the court without a jury.
Counterclaims by a borrower may be tried to a jury, but
they must be tried separately from the main foreclosure lawsuit.
In Florida because the lawsuit to foreclose on a
borrower is a suit in equity, it is impossible to obtain an injunction to stop
what is, in essence, a court ordered sale. In addition, the court can order the
sale at a low price. A sale can be set aside if there is an error in the
procedure to foreclose; however, it cannot be set aside due to the low sale
price. The court order commanding foreclosure will specify how the foreclosure
must take place, and the foreclosure must take place on those terms.
After the sale takes place, the sale terms must be
confirmed by the court that ordered the sale. If the terms of the sale order
are met, title in the buyer’s name can become complete by filing a
certificate of title. At the discretion of the court, junior lien holders can
redeem the property, up to the time of the confirmation of the sale. The equity
of redemption is cut off when the sale is confirmed, but it exists prior to
that time, which means the borrower can save the property from foreclosure by
coming up with the money before confirmation.
Deficiency
A separate action for a deficiency must be filed within
four years after the foreclosure sale. |
