Update: The State of Florida Deficiency Judgments in 2014

Wed Mar 12, 2014 by on Florida Law News

The following article is written for the South Florida Law Blog by Oppenheim Law attorney Roy Oppenheim.

Deficiency judgements and short sales 2014

 Florida has remained in the top three of states with the highest foreclosure rate since the housing market collapsed in late 2007. Even scarier for distressed homeowners is the fact that Florida is a recourse state, permitting lenders to seek deficiency judgments for unsatisfied debts. A “deficiency” is the difference between the amount owed by the borrower and the foreclosure sales price.  This occurs when a home is foreclosed on and the total outstanding balance owed on the mortgage, or in some cases multiple mortgages, exceeds the sale price at the foreclosure. This is commonly referred to as being “underwater” or “upside down.”

In Florida, lenders also have the right to pursue a deficiency after a short sale. In those circumstances, the bank may go after the borrower for the amount the bank comes up short after the sale. A deficiency judgment may be avoided only if the borrower has negotiated prior to the short sale that the lender will waive any rights to a deficiency. If this has not occurred, the borrower is still vulnerable to a deficiency judgment.

The Florida Fair Foreclosure Act

On June 7, 2013, Governor Rick Scott signed HB 87, The Florida Fair Foreclosure Act into law.  The Act makes significant changes to how residential foreclosures and short sales must be conducted in Florida.

One of the most important changes to the process is the change in the Statute of Limitations for bringing actions for deficiency judgments. A Statute of Limitation creates a finite period of time within which a person may bring a lawsuit. If a lawsuit is brought outside of that time period, the suit may be dismissed, as the claim is forever barred. Before the Act was passed, the Statutes of Limitation allowed a party to bring an action for a deficiency judgment at any point up to five years from the date a certificate of sale was issued by the Clerk following a foreclosure sale. After its passing, that time limit has shrunk to one year for deficiencies created by foreclosure sales or deeds in lieu of foreclosure. However, this change is limited to actions commenced on or after July 1, 2013.

Upside for homeowners facing potential deficiency judgments Deficiency judgements and short sales

Although actions brought before that date are still subject to the old statute, there is an upside for homeowners facing potential deficiency judgments.  Any action put into motion before July 1, 2013 only remains valid until July 1, 2014.  For example, if the five-year time period will expire after July 1, 2014 under the old law, the new law shortens the lender’s right to pursue a deficiency judgment to July 1, 2014.

Revised statue of limitations

Oddly enough, the revised Statute of Limitation does not explicitly address short sales; however, it may be construed as included under that one-year threshold. There is room for interpretation and litigation as the Act specifically limits the amount the lender can recover in a deficiency judgment from a short sale.  In the case of an owner-occupied residential dwelling, the recoverable amount is limited to the difference between the remaining debt from the short sale and the fair market value of the property at the time of sale.  The new statute also limits attorneys fees and costs the lender can charge when collecting the deficiencies.


Tags: deed in lieu of foreclosure, Florida deficiency judgements, Foreclosure Sales, Gov. Rick Scott, judgments, mortgage loan, revised statute of limitations, Short Sales, The State Of Florida, Underwater Housing

29 responses to “Update: The State of Florida Deficiency Judgments in 2014”

  1. dsmith78 says:

    I had a foreclosure happen in April 2013 and then the home was sold in July 2013. If I am understanding you correctly, the bank only has until July 2014 to bring a case against me for the deficiency? After that, it is a barred action (meaning they can try, but it would be dismissed?)

    • OppenheimLaw says:

      Every case is different and the laws are changing in Florida. I’d suggest you call my office and speak to Keri. Hopefully, we can be of assistance to you. 954-384-6114. Thank You.

  2. maxefforts says:

    dsmith78 correct

  3. FLRESIDENT says:

    My condo in Miami was foreclosed in June and was sold in October of 2013. I was never personally served, could the lender still pursue deficiency judgment? They have served someone at my old address, the guy just signed off without questioning it. I received a notice from the FNMA that I am in default of the promissory note, and they ( collection company) is pursuing the collection. Should I contact the collection agency or wait until one year from the certificate of sale.

  4. maxefforts says:

    When did this person sign?

  5. FLRESIDENT says:

    FLRESIDENT , back in 2012, not sure that month, and that was for the Notice of Lis Pendens.

  6. FLRESIDENT says:

    They have never served me with anything else.

  7. ftmyercondo says:

    I owned rental w. 3 people which was foreclosed on last month.  We were seeking a deed in lieu of foreclosure but had to get a non-paying tenant out before lender would submit file for  “deed in lieu” consideration. Then we were told that files we had submitted could not be found.  Finally, the tenant moved one week before scheduled sale.  At that point, the lender requested a cancellation of the foreclosure auction to consider deed in lieu, but court would not cancel the auction. 

    Is there a way for us to find out if the bank is going to sue for deficiency?  How is the amount of deficiency determined?  Is it based upon the sales price the bank gets when they sell asset?  When unrelated parties are owners how does the bank determine how much is filed against each owner.

  8. sigmarecovery says:

    I feel we may see more amendments to this law.

  9. abdeljimenez says:

    Dear ftmyercondo I have a client that was recently sued for a deficiency judgment by the bank’s insurer pursuant to a Mortgage Guaranty Policy.  The bank’s insurer paid a claim to the bank and now the bank’s insurer is suing my client for the amount of the claim which is much less than the actual deficiency.  Look to see when was the certificate of sale was issued in your case and calculate a year from that date.  If they have not sued you by then, you should be ok.  Now, if they do sue you, then you have a good defense based on the statute of limitations.  That’s what I arguing on behalf of my client. 

  10. jellobean says:

    Hello, we completed a short sale October 2012.  The subordinate lender received 6K and we just received a notice we are being sued for the defficiency of 54K on Dec. 1, 2014.  Would this new law be in affect for our situation?
    Thank you,

  11. RosieWilsonCampbell says:

    i was forclosed on Jan 2010 and the certificate of sale was Feb 2010, does the statue of limitation go in affect for us, we were in court 3/31/2015 and the judge advised us to get an attorney because we were in court 5 years later for the deficiency of Judgement

  12. jellobean says:

    RosieWilsonCampbell I’m pretty sure your in the clear.  I think the deadline was July 2014 the latest they could come after you.  I would consult an attorney just to be 100 percent.  Good luck Jill

  13. RosieWilsonCampbell says:

    jellobean RosieWilsonCampbell 
    Thank you, i am getting an attorney, they filled back in june 2014 and our court date was 3/31/2015 and the judge told us to get a lawyer due to the fact of statue of limitations.

  14. lostout says:

    I completed a short sale in September 2012. The first mortgage holder waived the deficiency. The second accepted the short sale funds but refused our funds to complete a previously arranged settlement and saying recovery would contact us. Since then there has been no communication. The three credit bureaus were all reflecting the second as a zero balance settled for less than full balance. Now as we were preparing to close on a new home, the bureaus have been changed to reflect the original deficiency causing our credit scores to drop like a rock and the mortgage company has backed out. While it appears the statue of limitations has run, can they just change the bureau reporting to make it look like a fresh past due charge off and restart the time period for this debt to drop off the bureau? I thought FCRA prevented these types of games by creditors?

  15. sigmarecovery says:


    From my understanding, accounts can not be “Re-aged”, I would probably dispute with the CRAs.


  16. holdinghope says:

    Can the bank sell the debt to someone else and then they pursue the deficiency after the one year is up?

  17. iamtitanium says:

    I short saled a condo in 2012 in Ft. Lauderdale, the debt from the second lien holder PNC sold the debt to RCS Recovery,  PNC would not accept the amount at close they allowed us to sell and accepted 9500 but reserved the right to go after the deficiency balance and we were really stuck and had to sell for a variety of reasons.  RCS filed a suit in January of this year, we attempted to have it dismissed with the new statute of limitations however the judge said that short sales were not covered under that statue and that this was a delinquency not a deficiency even though PNC specifically refers to it as a deficiency.  This is also a HELOC so the judge said it was revolving credit, however it was only ever used to purchase my primary residence and it was a secured loan.  I am just curious what others have experienced specifically in Broward.

  18. iamtitanium says:

    lostout I am curious who was your second with?

  19. sunshine2354 says:

    I had a first mortgage with Wells and a 2nd with Chase.  In June 2014, we lost a court case and a judgment was enter in favor of Wells for 100K.  In July 2014 our home was foreclosed.  We received from both lenders 1099A in 2014. .  In Sept 2015 Chase sent us a letter trying to collect on the HELOC.  Does the 1 yr SOL apply in this case?

  20. iamtitanium says:

    In our case we filed a motion to dismiss based on the new SOL law and the judge threw it out stating that the new statute didn’t specifically apply to short sales.

  21. iamtitanium says:

    sunshine2354 n our case we filed a motion to dismiss based on the new SOL law and the judge threw it out stating that the new statute didn’t specifically apply to short sales.

  22. Just surviving says:

    I had a foreclosure in 2008 I was given a 1099A and I also filed chap 13. i recently 2015 looked at my public records and it shows a deficiency judgement from that mortgage but the bank never sued me or sent me any letters. How long is that judgement good for?

  23. Just surviving says:

    I had a foreclosure in 2008 I was given a 1099A and I also filed chap 13. i recently 2015 looked at my public records and it shows a deficiency judgement from that mortgage but the bank never sued me or sent me any letters. How long is that judgement good for? And will I get a 1099c from them to pay taxes

  24. adviceplease says:

    i had a house foreclosed in 2009 in florida. it was sold for much less in 2011. its 2016 now,  and public records shows its been re-opened last month and its a deficiency judgment.  can they do this?

  25. Jtminero says:

    Any updates with this Rose? I am in a similar situation just don’t have the money to hire a lawyer was thinking of fighting it thru credit bureau instead.

  26. Jtminero says:

    From the sounds of this post no, I am in a similar situation as well. I am thinking of fighting it thru the credit bureaus since I can’t afford a lawyer. Have you tried seeking any clarification on this besides here?

  27. maxefforts says:

    They cannot, it’s a headache and I’ll take some time but you should be able to get that off your credit report.

  28. maxefforts says:

    No, limitations is up. It’s over. What I’m finding here and there is that collection agencies are trying to scare people that’s about it.
    They actually tried that with me in 2012 I quickly had them stop sending me letters after I showed clearly that they were wrong and the statue limitations apply to them as well even if they bought the so-called debt.
    The bank had its chance to do that against me, they ran out of time is really what it came down to. Just like they did with most people, they went after the big debts not the little ones it seems they were overwhelmed.
    And that’s exactly what a few attorneys told me as wel,l when I was sent the collection letter years ago.
    You don’t not even need to hire an attorney just know your rights. Collection agencies can cause you a headache and worry. But again if you know you’re right you’ve nothing to sweat.