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Florida Supreme Court hears foreclosure statute of limitations case

With Halloween taking place just a few days ago, this is the perfect time for “zombie” foreclosures to re-enter the news. No, we are not talking about dead houses rising from the grave. As we have discussed in the past on this blog, a foreclosure becomes “zombified” when the owner abandons a property that is in the midst of the foreclosure process.

This can cause the foreclosure to stall. It takes an average of 62 months to finalize zombie foreclosures in Florida, according to The Real Deal. State law places a statute of limitations of five years on foreclosures. As our readers have surely already figured out, this means that many cases take longer than five years, and have gotten dismissed on that basis.

But a 2014 court ruling changed the way the statute of limitations is calculated in favor of the banks. That ruling has been appealed, and is now before the Florida Supreme Court. The Court was scheduled to hear oral arguments on Nov. 4.

The case actually began in 2006, when a law firm sued a Ponte Vedra Beach man for foreclosure on behalf of U.S. Bank. The law firm, described by The Real Deal as a “foreclosure mill,” later collapsed. When U.S. Bank subsequently missed a case management conference, the court dismissed the case.

The bank revived the foreclosure, but the homeowner prevailed in 2011, when the court ruled that the statute of limitations had expired. But then, on appeal, the state’s Fifth District Court ruled that the statute of limitations clock had not started until 2011. The court claimed that the 2011 dismissal negated the bank’s invocation of the mortgage’s acceleration clause in 2006. An acceleration clause, which is common in mortgages, gives lenders the right to demand the homeowner pay the balance of the loan immediately.

Confusing? Basically, the question before the Court is whether the statute of limitations can be reset on some properties whose owners defaulted years ago. The implications could be very important, both to banks and homeowners. We will await the Court’s ruling and update our readers when it comes.

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