An important issue that arises for lenders when pursuing foreclosure actions is determining when the statute of limitations begins to run. Florida Statutes provide that a party has five years to foreclose a mortgage, but determining when the five years begins to run has proven to be a topic of legal debate. Lenders who find themselves potentially beyond the statute of limitations after an unsuccessful first attempt to foreclose may find hope in the recent decision by the Florida Fifth District Court of Appeals in U.S. Bank National Association v. Bartram.
In Bartram, the bank initially brought a foreclosure action in 2006, accelerating the debt. However, the bank did not actively participate in the action, resulting in an involuntary dismissal in 2011. In the meantime, the borrower and his wife divorced, and the borrower was required in the divorce to execute a note and mortgage in favor of his ex-wife. In 2011, the ex-wife filed her own foreclosure action, naming the bank. In her foreclosure, the borrower filed a counterclaim seeking a declaratory judgment against the bank, arguing that the statute of limitations now barred the bank from enforcing its rights under the loan documents. The trial court entered summary judgment for the borrower, rejecting the bank’s argument that it was not barred from bringing a subsequent foreclosure action, and that the five-year statute of limitations did not bar the payments that were missed within the five-year period.
Relying on the analysis of the 2004 Florida Supreme Court decision Singleton v. Greymar Assocs., the appellate court agreed with the bank, and reversed summary judgment. The Bartram court concluded that “a default occurring after a failed foreclosure attempt creates a new cause of action for statute of limitations purposes, even where acceleration had been triggered and the first case was dismissed on its merits.” Furthermore, the court certified the following question to the Florida Supreme Court:
Does acceleration of payments due under a note and mortgage in a foreclosure action that was dismissed pursuant to rule 1.420(b), Florida Rules of Civil Procedure, trigger application of the statute of limitations to prevent a subsequent foreclosure action by the mortgagee based on all payment defaults occurring subsequent to dismissal of the first foreclosure suit?
If the Florida Supreme Court answers in the negative, it may provide new hope to lenders who have been unsuccessful in an initial action in which the debt was accelerated, allowing them to pursue a subsequent foreclosure action.