WEST PALM BEACH — Florida’s five-year deadline to foreclose on a home is ticking on thousands of aging cases statewide, giving lucky borrowers a shot at a free house and catching banks with muddled files unaware.
The statute is common contract law that says a person has five years to sue on a debt, with the right to collect that money expiring at the end of the time period.
But its application to foreclosures is unsettled. A very specific set of circumstances must be in play for a homeowner to walk away a jackpot winner, and without clear case law or a high court’s ruling, its impact on foreclosures filed between 2007 and 2009 is hazy.
Still, a few prominent judgments in favor of owners, including a multi-million-dollar waterfront mansion in Boca Raton, have presented another surreal twist in Florida’s lengthy foreclosure fiasco.
“At some point there has to be an end to the dispute, and if a bank sits on its rights for five years, or they try once and fail and don’t bother to try again, then they abandon their right to go after someone,” said foreclosure defense attorney Michael Wasylik. “You either pull the trigger or you don’t, and you get five years to do it.”
No one knows how many foreclosure cases the deadline could affect, but estimates range from several hundred to thousands.
In Palm Beach County, 30,100 foreclosures were filed in 2008. There are about 1,550 still in the system that are five years old or older.
But it’s not just age that determines whether the statute of limitations will grant a free house.
The most common scenario in Florida: The bank filed the initial foreclosure, then dismissed it for whatever reason and failed to refile during the five-year period. It is possible that cases currently in the system, and older than five years, could get dismissed and then can’t be refiled because the allotted time has run out.
It’s also critical to know when the clock started ticking. Most attorneys agree it’s at the time of “acceleration” — when the bank decides after a series of missed payments that the entire loan amount is due. That typically happens when the foreclosure is filed with the court. Continue reading