Florida’s New Foreclosure Law and its Effect on the Statute of Limitation for Deficiency Judgments

On Friday, June 7, 2013, Governor Rick Scott signed The Florida Fair Foreclosure Act, which made many substantive changes to how foreclosures must be conducted in the state.  One of those changes affected the statute of limitation regarding the bank/lender’s ability to pursue deficiency judgments after a home is sold through a foreclosure auction.

What is a deficiency judgment in a mortgage foreclosure? It is a personal money judgment for the difference between what the property sold for at or after the foreclosure auction and the total amount owed to the lender in the final judgment of foreclosure. For example, if you owed $400,000.00 to the lender and the property sold at auction for $100,000.00, you could be liable to a personal money judgment in the amount of $300,000.00.

What is a Statute of Limitations? A Statute of Limitation creates a definite period of time within which a party may bring a lawsuit. If a lawsuit is brought outside of that time period, the suit may be dismissed, as the claim is forever barred.

Before the Florida Fair Foreclosure Act was passed, the Statutes of Limitation allowed a party to bring an action for a deficiency judgment at any point up to five years from the date a certificate of sale was issued by the Clerk following a foreclosure sale. After the Act passed, that time limit has shrunk to one year for deficiencies created by foreclosure sales or deeds in lieu of foreclosure. However, this change is limitation to actions commenced on or after July 1, 2013.

Although actions filed before July 1, 2013 are still subject to the old statute, there is a silver lining for homeowners facing a potential deficiency judgment.  Any action put into motion before July 1, 2013 only remains valid until July 1, 2014.  For example, if the five-year time period will expire on August 1, 2016 under the old law, the new law shortens the lender’s right to pursue a deficiency judgment to July 1, 2014.

If you are facing a potential deficiency judgment, we can help! We can consider your situation and help you determine your rights. Contact us today at (407) 426-7222 for a consultation to discuss your specific situation.