Originally Published: 4/13/2012

Several Florida legislature bills, including HB 213, are attempting to make Florida a non-judicial foreclosure state, which would allow banks to foreclose on properties in certain instances without filing a lawsuit or otherwise using the judicial process. This may preclude homeowners from the opportunity to defend foreclosure, which many experts believe is a violation of due process. It is important to understand the differences between judicial and non-judicial foreclosure.

Currently, Florida is a judicial foreclosure state. Judicial foreclosures are processed through the courts, beginning with the lender filing a complaint in state court and recording a Lis Pendens against the property. The complaint alleges why the lender is entitled to foreclose on the particular property. The homeowner must be served notice of the complaint and has the opportunity to answer the lawsuit or otherwise defend it and have his/her day in court. The lender is required to fulfill certain requirements to the court before it can foreclose. The most important difference between judicial and non-judicial foreclosures is that in a judicial foreclosure state, the lender cannot foreclose without a court order. This means that a judge will review the lender’s allegations and the documents filed with the court, and may prohibit foreclosure if the lender does not adequately prove its case, even if the homeowner does not defend the suit. This extra layer of protection helps to ensure that the property is not wrongfully sold by a party not entitled to do so, which has been a wide-spread problem in non-judicial foreclosure states.

In contrast, non-judicial foreclosures are processed without court intervention, with the requirements for the foreclosure established by state statutes. When a homeowner defaults on a mortgage, the lender will mail or serve the homeowner with a default letter which declares the loan in default and provides the homeowner a period of time to cure the default. If the homeowner does not cure the default, the lender will send the homeowner a document often called a “Notice of Sale,” which states that the property will be sold at auction on a date certain. This notice will also be published in local newspapers and usually recorded at the county recorder’s office. After the expiration of a time period established under the state law, the property is sold at a public auction. It is important to note that each non-judicial foreclosure state has different procedures. Some do not require a Notice of Default, but start with a Notice of Sale. Others require only the publication of the Notice of Sale to announce the sale, with no direct owner notification required. In most instances, no court order is required for the lender to foreclose.

If Florida becomes a non-judicial foreclosure state, the process of foreclosure will drastically change. Banks prefer non-judicial foreclosures because they generally take far less time than judicial foreclosures. However, many argue that non-judicial foreclosures side-step individual constitutional rights to due process in exchange for this faster process.  For further questions, please contact an attorney.

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