Fifth DCA Calculates Five-Year Statute of Limitations Period for Foreclosure Actions from Default Date, Not Acceleration Date

The Fifth District Court of Appeals recently affirmed a lower court’s dismissal, with prejudice, of a foreclosure action finding the bank filed the action outside the five-year statute of limitation period established by § 95.11(2)(c) of the Florida Statutes. Ventures Trust 2013-I-NH v. Johnson, No. 5D16-1020, 2017 Fla. App. LEXIS 7176 (Fla 5th DCA May 19, 2017). In Johnson, the borrower defaulted on September 1, 2010, but the bank did not initiate the foreclosure action until October 27, 2015.

The Court relied on a recent Florida Supreme Court case, concluding dismissal was warranted because “the accrual of the cause of action for each missed monthly installment payment accrues the day after each is due to be paid, not the date of the acceleration of the entire balance.” Johnson, citing Bartram v. U.S. Bank Nat’l Ass’n, 211 So. 3d 1009 (Fla. 2016). The bank can still file another foreclosure action, but the new action must be based on a subsequent default that occurred within five years of the filing of the new lawsuit. Bartram, 211 So. 3d at 1020-21. Additionally, since the Court dismissed the case with prejudice, the subsequent default may need to be after the dismissal date of the initial foreclosure. Bartram, 211 So. 3d at 1020. The Court in Bartram explained:

Whether the dismissal of the initial foreclosure action by the court was with or without prejudice may be relevant to the mortgagee’s ability to collect on past defaults. However,…each subsequent default accruing after the dismissal of an earlier foreclosure action creates a new cause of action, regardless of whether that dismissal was entered with or without prejudice. – Bartram, 211 So. 3d at 1020.

The Johnson opinion is not yet final as the bank filed a timely motion for rehearing which is currently pending. Provided the Court denies rehearing and the order becomes final, the counties affected by this ruling are as follows:

  • Citrus, Hernando, Lake, Marion, and Sumter Counties (Florida’s 5th Circuit)
  • Flagler, Putnam, St. Johns, and Volusia Counties (Florida’s 7th Circuit)
  • Orange and Osceola Counties (Florida’s 9th Circuit)
  • Brevard and Seminole Counties (Florida’s 18th Circuit)