Extraordinary Florida Foreclosure Remedies

by Baker Donelson

When servicers or lenders think of having to foreclose on commercial property in the State of Florida, what immediately comes to mind is a lengthy judicial foreclosure process, and difficulty in enforcing rights provided in their loan documents. While it is true that the economic crisis created a bottleneck in Florida's judicial systems, all hope is not lost. This post will examine some of the unique remedies that are available with respect to the enforcement of commercial loan documents in Florida courts.

Assignment of Rents

Florida is fairly unique in that it has codified the manner in which to enforce an assignment of rents provision contained in either a mortgage or stand-alone assignment of rents document. See Fla. Stat. § 697.07 (the "Rents Statute"). The Rents Statute was enacted into law in Florida 1987 to remedy the situation in which a lender needed to have a receiver appointed to collect rents if the borrower refused to voluntarily tender them to a lender. However, under the Rents Statute, only a default and written notice is required to enforce the remedies provided by an assignment of rents provision. Specifically, the Rents Statute provides that an "assignment of rents shall be enforceable upon the mortgagor's default and written demand for the rents made by the mortgagee to the mortgagor, whereupon the mortgagor shall turn over all rents in the possession or control of the mortgagor at the time of the written demand or collected thereafter (the “collected rents”) to the mortgagee less payment of any expenses authorized by the mortgagee in writing." Therefore, it is crucial in Florida that a default letter or separate correspondence contain a written demand for rents, as an assignment of rents provision is not enforceable until this written demand is made. While is it true that a borrower may very well ignore that written demand, the statute also provides for the entry of an order that requires that borrower to account for collected rents from the date the written demand was first made. If a borrower disregards the court order, while not ideal for the lender, such action will provide excellent grounds for the appointment of a receiver, as will be discussed in the next section

Appointment of a Receiver

Appointment of a receiver as a remedy attendant to a commercial loan default is not unique to Florida.  However, as many lenders know, appointment of a receiver in Florida can be more difficult than in other states.  Initially, simply because the loan documents state that the lender is entitled to the appointment of a receiver upon the occurrence of an event of default does not mean that the court must appoint one. Relying on case law which developed almost a century ago, Florida courts continue to hold that the right of a lender to obtain the appointment of a receiver must be balanced against the owner's right of possession. Over the years, however, courts have identified factors that will cut in favor of appointment of a receiver, such as likelihood of success in a foreclosure action, physical waste, economic waste, lack of equity in the property, the ability of a receiver to maintain value, non-payment of taxes, and failure to maintain insurance. However, more recently, courts have held that if a borrower refuses to obey a rents order, a court should appoint a receiver unless the borrower proves there is equity in the property (note that demonstrating equity is the borrower's burden of proof). Although there has been no outright pronunciation of a trend in judicial opinions, many practitioners have observed that receivers have been appointed in more cases recently than in the past, perhaps owing to the unique circumstances created by the Great Recession.

Orders to Show Cause for Judgment and Payments During Foreclosure

Although the judicial foreclosure process in Florida may be protracted, particularly in counties with a backlog of foreclosure cases such at Miami-Dade, Broward and Palm Beach counties, in commercial foreclosure cases, the Florida legislature has provided commercial lenders with some relief in the form of Section 702.10 of the Florida Statutes (the "Section 702.10").

Section 702.10 was recently amended to permit a portion of it to apply to non-owner occupied residential properties, but both remedies provided by Section 702.10 have always applied to commercial properties. However, certain provisions of Section 702.10 were also tweaked to make them more favorable to commercial lenders.

Subsection (1) of Section 702.10 permits a mortgage-holder to request the entry of an "Order to Show Cause" directing a borrower and other defendants to show cause why a foreclosure judgment should not be entered at the hearing scheduled by the Order to Show Cause. If a defendant fails to appear at the hearing, or appears and fails to assert any defenses by motion, a verified or sworn answer, affidavits, or other papers, the court will enter a foreclosure judgment at that hearing. However, if a defendant asserts any viable defenses, the hearing will be used to address their validity. In that case, it is unlikely that a foreclosure judgment will be entered, but it is still possible if the court rejects the defenses as not creating genuine issues of fact. This is a change from the previous version of Section 702.10(1), which previously stated that if any defenses were asserted prior to the Order to Show Cause Hearing, regardless of their viability, a foreclosure judgment could not be entered, thus limiting Section 702.10(1)'s practical use. Given this recent lender-friendly amendment, lenders should be more inclined to attempt to obtain a quick foreclosure judgment under Section 702.10(1).

Even if a lender is not able to obtain an immediately foreclosure judgment under Section 702.10(1), it should also seek an "Order to Show Cause" requiring a borrower to show cause why it should not be required to make payments to the lender during the pendency of the foreclosure action. Even if a rents order has or will be entered, this relief is "in addition to any other relief that the court may award" under Section 702.10(2). The standard under Section 702.10(2) is a little more relaxed than that in Section 702.10(1), in that a lender is only required show that it is likely to prevail in the foreclosure action, not necessary that all the defenses raised, if any, are meritless. If it does make such a showing, the court will order the borrower to make the same payments required by the loan documents and at the same intervals (e.g., the normal monthly payment), retroactive to the date the motion for an Order to Show Cause under Section 702.10(2) was filed. If the borrower fails to make the required payments or post a bond in the total amount of the debt, the order requiring payments will also provide that the lender will be entitled to "possession of the premises." Possession is not defined in Section 702.10(2), but presumably means that a lender could have a receiver appointed or otherwise take control of the property.


Although Florida is admittedly not one of the more lender-friendly states in which to foreclose on commercial property, the somewhat unique remedies described above can alleviate some issues lenders may encounter as a result of clogged dockets or dilatory tactics utilized by borrowers.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Baker Donelson | Attorney Advertising

Written by:

Baker Donelson

Baker Donelson on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.