Palm Beach Post Editorial: Free houses? The banks would deserve it.
The following editorial was originally published in The Palm Beach Post and written by Rhonda Swan for The Post Editorial Board and republished with excerpts by Roy Oppenheim, Oppenheim Law for the South Florida Law Blog.
If Floridians continue to get free houses because of the state’s five-year statute of limitation on debt collection, it could be the kick in the pants lenders need to expedite the more than 300,000 foreclosure cases clogging Florida’s courts.
Too often, banks file foreclosure lawsuits, then let the cases linger. While the houses sit in limbo, homeowner association dues go unpaid and neighbors and neighborhoods suffer. In many cases, the delay is caused by the bank’s inability to prove that it owns the mortgage, because of lost or fraudulent documents.
As The Post’s Kimberly Miller reported, the delays, and in some cases legal missteps, have cost some lenders the very property that served as collateral for the mortgage. Recently, the lender on a Boca Raton waterfront mansion in foreclosure since 2008 voluntarily dismissed the case in Palm Beach County court after the bank improperly tried to introduce a copy of the original mortgage it said had been lost in the initial filing.
Attorney Roy Oppenheim, who represents the homeowner, said the move violated civil procedure because the bank did not amend its pleadings to include the note or notify the borrower and the court that it existed. Florida allows five years to sue on a debt. This common contract law applies to foreclosures.
In the case of the Boca mansion, Mr. Oppenheim says, the bank can’t refile the foreclosure suit becausethe statute of limitations has expired since that initial filing in 2008. The bank wants the dismissal to be reversed. In similar cases, though, courts have ruled against the lender. The owner of the mansion, purchased in 2003 for $8.4 million with a mortgage of $6.8 million, may get the 13,000-square-foot home debt-free.
It’s unclear how many foreclosure cases the statute of limitation affects, but it could be thousands. Palm Beach County has about 1,550 cases that are five years or older.
The statute doesn’t apply automatically. Borrowers must raise it as a defense in court, and most borrowers don’t defend their foreclosures. Even if only a few win their homes debt-free, though, banks will wake up and pay attention.
Rhonda Swan for The Post Editorial Board
Real estate attorney and foreclosure defense attorney, Roy Oppenheim left Wall Street for Main Street, foundingOppenheim Law along with his wife Ellen in 1989 in Fort Lauderdale, Florida, and is vice president of Weston Title and creator of the South Florida Law Blog, named the best business and technology blog by the South Florida Sun-Sentinel. Follow Roy on Twitter at @OpLaw or like Oppenheim Law on Facebook .