Florida Supreme Court Provides Additional Clarity on Statute of Limitations
In the last few years, Florida district courts have published several written opinions addressing the statute of limitations and its application in the context of a mortgage foreclosure action. Most recently, Judge Lawson of the Florida Supreme Court weighed in on the issue in a special concurring[i] opinion wherein he explained there was “a widespread and fundamental misunderstanding, in Florida, regarding how the statute of limitations, § 95.11(2)(c), Fla. Stat. (2017), operates vis-à-vis a long-term note (and mortgage).” Bollettieri Resort Condominium Assoc., Inc. v. The Bank of New York, Case No. SC16-1680. Specifically, Judge Lawson explained the Second and Fifth DCA’s finding that “a foreclosure action must be based on a [missed payment] default that occurred within the five-year statute of limitations period[ii]” was erroneous.
We discussed several of those holdings in our July e-Blast.
Judge Lawson cited to the Florida Supreme Court’s earlier holding in Kipnis[iii] and elaborated that a missed payment “is a non-event for statute of limitations purposes” because the statute of limitations does not begin to run until the cause of action accrues. In the foreclosure context, a cause of action “on a thirty-year note does not accrue until thirty years after signing—when the full balance is due—unless the lender accelerates and declares the full balance due earlier.” This is premised on the additional condition that the note contains an optional acceleration provision.iv The Court went on to explain: “Lenders cannot and do not sue to collect missed payments. Rather, the lender must bring suit for all amounts due under the note.” The Court concluded:
The borrower who agreed that its default did not require suit any earlier has no contractual or other legal basis to bar a lender’s suit based upon the lender’s forbearance…
The Court noted its concurring opinion had “no precedential value,” but invited the district courts to “reconsider the issue.” It is likely Florida district courts will accept Judge Lawson’s invitation and use his well-reasoned opinion to preclude, or, at least limit the circumstances under which a borrower can rely on the statute of limitations as a defense to a foreclosure action. Notably, this limitation applies to a traditional note and mortgage which contains an optional acceleration provision.
[i] The portion of the opinion which addressed the statute of limitations was included in a concurring opinion, so it holds no binding, precedential value.
[ii] Bollettieri Resort Villas Condo. Ass’n v. Bank of N.Y. Mellon, 198 So. 3d 1140, 1142 (Fla. 2d DCA 2016); Hicks v. Wells Fargo Bank, N.A., 178 So. 3d 957, 959 (Fla. 5th DCA 2015).