The Florida Fifth District Court of Appeal, in Central Florida, has published a holding that effectively allows parties other than the foreclosing lender to set the foreclosure sale on the property that is subject to the mortgage foreclosure. According to this decision, this can occur over the objections of the foreclosing lender. This ruling can be used to assist many community associations previously frustrated by lengthy lender delays in the foreclosure process including the many lender cancelled foreclosure sales.
In the case of LR5A-JV, ETC., v. LITTLE HOUSE, LLC, ET AL., Case No. 5D09-3857, December 6, 2010, LR5A-JV (the lender) had been pursuing a foreclosure on certain vacant property in Flagler County. A property owners association was named in the foreclosure as a defendant by LR5A-JV, to foreclose any claim of the Association for unpaid assessments and a final judgment was obtained by LR5A-JV. Due to certain unrelated appeals, the original foreclosure sale was cancelled. When the 5th DCA ruled on the initial appeal, the matter was sent back to the Trial Court with instructions “to proceed to foreclose” on the mortgage. The Association then filed a motion in the Trial Court to have the sale reset, over the objections of LR5A-JV, which the Trial Court granted. LR5A-JV appealed that ruling, stating that as the judgment holder, it should have the right to control when, if at all, a foreclosure sale takes place.
In denying the appeal of LR5A-JV, the 5th DCA ruled that Section 45.031(1) of Florida Statutes, which provides for judicial sales procedures, identifies the authority of the trial court judge to set the date for the judicial sale, at the discretion of the judge. The trial court judge may include equitable principles of fairness to all of the parties in making that decision. The 5th DCA recognized in its opinion that the Association has an interest in the property being foreclosed, so that it could again start receiving lawful assessments.
The Appellate Court also cited to the Final Report & Recommendations on Residential Mortgage Foreclosure Cases from the Florida Supreme Court Task Force on Residential Mortgage Foreclosure Cases (available athttp://www.floridasupremecourt.org/pub_infro/documents/Filed_8-17-2009_Foreclosure_Final_Report.pdf), which was published in August 2009. Among the points raised in the Report is for the courts to encourage the prompt resolution of foreclosure proceedings when possible, due to the severe impact of undue delay on community associations. The Court also acknowledged, as a basis for its decision, the recommendation of the Report and the amendments to the Rules of Civil Procedure adopted by the Florida Supreme Court in February 2010, that limit the ability of a foreclosing lender to cancel foreclosure sales without good cause and leave the sales in limbo without promptly rescheduling them.
The impact of this case on community associations is that it now creates a sufficient legal authority to rely upon when seeking relief from the circuit or county courts, in trying to deal with a foreclosure case in the Community that has been lingering for an extended period. In order to use the principles of this case, there will need to be an existing foreclosure judgment in favor of the lender, with a foreclosure sale that has either been cancelled and not reset, or not set by the lender at the time of the judgment. There are likely many such cases for which this type of relief is available.
One potential problem in attempting to compel a lender sale that the lender is otherwise delaying is the issue of the allegedly faulty foreclosures that are currently under investigation by a large number of the foreclosing lenders. Many foreclosure sales were cancelled due to the possibility that the documentation used in the foreclosure process was flawed and it is possible that a lender will use this issue as a defense against such a motion made by an association trying to force the completion of the foreclosure.
Each case should be reviewed based upon its own facts and circumstances prior to an association making the attempt to force the scheduling of the foreclosure sale. If there are questions regarding this issue and the process to be followed, please contact this office.
