Originally Published: 2/7/2012

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.

Did you find this real estate law content useful, but need actual legal council?

Speak to a real estate attorney!

, , , ,

Singapore Cityscape

Florida State Sales Tax On Commercial Real Property Leases Reduced Beginning January, 2018

Florida is the only state in the United States to impose a sales tax on rents.  The State of Florida has imposed a sales tax on commercial rents since 1969.  Currently, the tax is imposed at the rate of 6 percent in every county except Miami-Dade, which fixes the rate at 7 percent. The tax…

Delinquent HOA Assessments – Who’s Responsible?

Investors of a foreclosed property often ask if they will be liable for delinquent HOA assessments that came due prior to their purchase of the property from the court.  In 2007, the Florida Legislature chimed in on the issue by passing Florida Statute 720.3085, which states (among other things) that “a parcel owner is jointly and severally liable with the…

Fish in the Pool?! A REO Cautionary Tale

Recently, we encountered a transaction where a real estate investor purchased a REO property, and after closing, discovered tens of thousands in code enforcement liens against the property.  The buyer was never told of the liens prior to purchase and was fully responsible to pay the liens.  It turns out the liens were due to…

Foreclosures on the Rise: Clarifying the Statute of Limitations

In 2013, after the Florida legislature significantly overhauled the foreclosure statutes, new foreclosure filings in Florida nearly came to a complete halt.  Now, however, we are seeing an increase in foreclosure filings, as the banks have modified their procedures to comply with the new statutes.  With this influx of foreclosure filings, we are also encountering…

How Long Does a Lender Really Have to File for Foreclosure?

As any person involved in the real estate industry is well aware, there were hundreds (if not thousands) of foreclosure cases filed in 2007 and 2008 which were dismissed due to improper documentation or non-compliance with Florida’s foreclosure statutes.  Recently, many lenders have been re-filing these previously dismissed cases with better legal counsel or more…

FHA “Back to Work Program”

We all know how difficult it is to financially recover from a traumatic financial loss following a property foreclosure, or even a softer loss following a short sale.  In most cases, a homeowner who lost a property to foreclosure may not be able to qualify for a new conventional mortgage for up to seven (7) years after losing a home.  Under Federal Housing Administration…

The New Foreclosure Legislation is Now Law and Affects More Than Just Foreclosures

On July 1, 2013, many revisions to the Florida foreclosure statutes went into effect. While many of the new provisions are technical in nature and primarily effect attorneys practicing foreclosure law, the overall effect is a dramatic change in the foreclosures process and the rights of struggling homeowners. Also, most of the changes are retroactive,…

House Bill 87 And The Impact Of Florida Mortgage Foreclosures

As you may have read, House Bill 87 (H.B. 87) was recently passed by the Florida legislature and proposes to make significant changes with respect to the Florida Statutes regarding mortgage foreclosure actions.  As of now, H.B. 87 will become new law unless Governor Rick Scott decides to exercise his veto power, which seems unlikely…

Navigating a Short Sale – Tips & Reminders

With the extension of deficiency waiver tax relief, we have seen no slowdown with respect to short sales, and do not anticipate a slowdown in the foreseeable future.  With that in mind, we wanted to remind anyone who routinely handles short sales to consider the following: Do not forget about how critical it is to…

Bank of America Process Changes

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…

Deficiency – What is it and How Much Time Does My Bank Have to Sue?

Originally Published: 3/27/2012 When an underwater home is sold in a short sale or a foreclosure, the greatest concern is almost always over the remaining mortgage balance owed by the homeowner (known as a “deficiency balance”) and how long the lender has to try to collect it.  When a property is sold in short sale,…

How Bankruptcy Can Backfire on Homeowners in Foreclosure

Originally Published: 3/12/2012 Many homeowners resort to filing bankruptcy in order to stop an imminent foreclosure on homestead property when no other legal options are available.  While, in most cases, the mortgage holder can still foreclose on the property, it cannot do so until the property is released from the bankruptcy estate.  This can take…

BOA’s Florida Enhanced Short Sale Relocation Assistance Extended to Dec. 12

Published December 2, 2011 Bank of America is still encouraging distressed homeowners to consider a short sale as a viable option for avoiding foreclosure, as the Florida Enhanced Short Sale Relocation Assistance Program has been extended to Dec. 12, 2011. This program offers enhanced relocation assistance to help encourage homeowners to engage with Bank of America on…

Foreclosure Update

As most are painfully aware, Florida foreclosures suffered tremendously last year after the discovery of apparent rampant fraud by both lenders and foreclosure attorneys in prosecuting foreclosure actions. Many existing foreclosure lawsuits came to a sudden halt, and new filings dropped significantly. As a result of this, along with the poor foreclosure practices of many…

Berlin Patten’s Short Sale and Bankruptcy Services

Real Estate professionals are frequently confronted with listing a short sale property encumbered by two or more mortgages and a seller who is strongly considering bankruptcy as its “exit strategy.” We have struggled with that same scenario… working on a short sale for months, and then the seller decides to file for bankruptcy. At that…

Deficiencies and Deficiency Judgements

We spend a great deal of time counseling prospective short sale sellers regarding the advantages of attempting to pursue a short sale rather than allowing their property to go through the foreclosure process. Many people do not realize that the foreclosure process is a two step process. The first step is the sale of the…

Fighting Foreclosure

There are differing opinions concerning homeowners who contest foreclosure proceedings in an effort to continue to stay in their homes without making mortgage payments. A recent article in the Sarasota Herald Tribune offers one perspective. The article titled “Fighting a foreclosure may beat the alternative” written by Tom Lyons reads “Staying, it appears, can be…
Menu