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REDEMAND NOT NECESSARY EVEN AFTER BANK ACCEPTS PARTIAL PAYMENTS | Key Points

  1. The Fourth DCA reversed a judgment entered in favor of two mortgagors in a Broward County foreclosure action brought by Bank of New York Mellon (“the Bank”) finding the lower court erred when it concluded the bank failed to satisfy conditions precedent. Bank of New York Mellon, etc. v. Withum, 204 So. 3d 136 (Fla. 4th DCA 2016). In Withum, after a bench trial the lower court found the Bank’s acceptance of three partial payments after sending the initial demand notice necessitated redemand before the Bank could file its foreclosure complaint.
  2. The DCA disagreed and explained that the purpose of a demand notice was to inform the borrower of what must be done “to bring the loan out of default.” The Court elaborated that such a notice “need only substantially comply with a mortgage’s condition precedent. The Court explained that the Bank’s “initial breach letter expressly informed Borrowers that if they sent less than the full amount due, Bank could keep the payment, apply it to the outstanding debt, and still proceed to foreclosure.” This notice was adequate to inform the borrowers of their rights.
  3. The Court elaborated there was no dispute the borrowers remained in constant default since receiving the initial demand letter and that the partial payments the borrowers made did not cure the default. The Court concluded the notices “could not retroactively alter the sufficiency” of the demand notice. The DCA remanded the matter with directions to enter a judgment of foreclosure for the Bank. The key take-away from this decision is the importance of the language in the demand letter, mortgage and any communications sent to the borrowers. A foreclosure is an action based in contract and the court is required to enforce the terms of the parties’ agreement – as written. As long as consistent, clear language is used in the contract and communications with the borrower, the parties’ respective rights will be protected and enforced.

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