In many foreclosure cases, the strategy of the borrower is simply to delay the case. Typically, the borrower hopes that delay will allow time to either work out a settlement with the lender or find a third party buyer for the mortgage property.
In commercial foreclosures, the foreclosing lender typically includes as defendants the guarantors of the loan. While this allows the lender flexibility in pursuing remedies against the guarantors, it also opens the door for those guarantors to join in the borrower’s efforts to delay the case. In March, however, Florida’s Third District Court of Appeal decided a case that might make it more difficult for guarantors to contribute to the delay tactics.
In Cukierman v. BankAtlantic, a bank sued to foreclose its mortgage and also included a count against the individual guarantor. Again, this is common in commercial mortgage foreclosures. The bank prevailed on its motion for summary final judgment in foreclosure and the property was sold at foreclosure sale. Following the judicial sale, the guarantor moved to set aside the foreclosure sale and also to vacate the final judgment in foreclosure. Had the guarantor been successful, the result would have been significant delay in the case. However, the Court ruled in favor of the bank. The ruling was based on the Court finding that the guarantor had no interest in the foreclosure real property but could only be liable for the debt. The Court went on to hold that the guarantor had no standing to challenge the foreclosure action.
Of course, a guarantor would be able to contest individual liability under the guaranty. The Cukierman case would not prevent efforts by the guarantor to delay a judgment against it under the guaranty. However, I have successfully prevented guarantors from delaying a foreclosure judgment by relying on this case in two recent commercial foreclosure actions. This case should be a good tool for lenders in this regard.