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Is there a time limit the banks have to foreclose?

Fort Walton Beach, FL |

It has been 4 years and 2 months since we made a payment on our home in Okaloosa County Florida. We have attempted 5 short sales that have all been unsuccessful since our 2nd mortgage holder demands payment in full to release the lien. We moved out of the property over 5 years ago and thus it is no longer our primary residence. The property has sat empty since.

In 2008 we received a lis pendens from the court. In Oct 2010 we received a Judgement of Dismissal for Lack of Prosecution. According to our primary mortgage holder, there is no foreclosure sale date listed.

We would like to move forward with our lives and rebuild our credit, and eventually purchase another home. Is there a time limit the banks have to foreclose? Is there anything we can do to move forward?

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Attorney answers 3

Posted

When it has been five years since the default on your mortgages, you may be able to bring an action to quiet title and have the mortgages wiped out. You shoulod consult an experienced foreclosure defense lawyer in your area for advice and guidance.

Disclaimer: This answer is provided for informational purposes only, does not constitute legal advice, and does not create an attorney-client relationship. Actual legal advice can only be provided after completing a comprehensive consultation in which all of the relevant facts are discussed and reviewed.

Posted

The statute of limitations is 5 years. Therefore, once it is more than five years after the date of default, an action against you is time-barred. That does not mean however that the purported creditor will not try to do something, it is a frequent problem that debt collectors take action to collect time-barred debts, and that the debtors, not realizing they have this defense, waive it.

In addition, if there never was a completed foreclosure, you still own the house, and so are entitled to use it, to rent it, to live in it, and once the statute of limitations runs, if no new action has been commenced to foreclose or to collect, you can bring an Action to Quiet Title to remove the lien from the property. If successful, you would then own it free and clear. However, this is not something you would be able to do yourself, and you could do a great deal of harm if not done correctly.

Please note that the above is not intended as legal advice, it is for educational purposes only. No attorney-client relationship is created or is intended to be created hereby. You should contact a local attorney to discuss and to obtain legal advice.

Posted

I disagree that the statute of limitations on the entire note and mortgage is five years from the date of default. In Florida the statute of limitations is five years, however that is five years from the date each installment payment comes due. So, to the extent installments have not come due within the past five years, the statute has not run as to those. This all changes however, if the note has an acceleration clause and it is exercised by the lender. That means they have elected, in writing to accelerate the balance and now the entire debt is due. The date of the acceleration letter, if there is one, becomes the critial date for determining when the five year statute bars the entire debt. If you mess this up, and file a quiet title action too soon, then the formerly sleeping lender will wake up and counterclaim to forecolose the debt. He may have lost the right to collect a few installments but he can still go after the lions share.

Margery Ellen Golant

Margery Ellen Golant

Posted

As I say frequently, this is an area of law that contains little precedent and so there is a great deal of uncertainty surrounding it all. Prior to the lending crisis and then the foreclosure crisis, there was little in the way of litigation. So, there is a very small amount of pre-crisis case law, and most of what there is is very old and not oriented to the way things work today. There is a disagreement of opinion regarding what event causes the limitations period to begin to run. My opinion and that of others I respect is that it runs from the date the cause of action accrues, which is the date of default. While acceleration is a necessary condition precedent to actual foreclosure, and while there may be judges who will agree that the date of acceleration is the date to count from, there are others who will agree that it is the date the cause of action accrued, which is the date of default. By definition, every complaint in foreclosure will assert that the plaintiff has accelerated the debt, and usually they will claim that they sent a notice of acceleration prior to commencing the action. If a borrower has the option of waiting and counting from the date of acceleration, it certainly does no harm, and can only help, since that eliminates the issue altogether. However, it is not always possible to control the timing, and no matter what, it is important to understand that there is a 5 year statute of limitations, and the soonest it can run is the date of default, unless the court in question agrees that it is the date of acceleration.

Margery Ellen Golant

Margery Ellen Golant

Posted

As I say frequently, this is an area of law that contains little precedent and so there is a great deal of uncertainty surrounding it all. Prior to the lending crisis and then the foreclosure crisis, there was little in the way of litigation. So, there is a very small amount of pre-crisis case law, and most of what there is is very old and not oriented to the way things work today. There is a disagreement of opinion regarding what event causes the limitations period to begin to run. My opinion and that of others I respect is that it runs from the date the cause of action accrues, which is the date of default. While acceleration is a necessary condition precedent to actual foreclosure, and while there may be judges who will agree that the date of acceleration is the date to count from, there are others who will agree that it is the date the cause of action accrued, which is the date of default. By definition, every complaint in foreclosure will assert that the plaintiff has accelerated the debt, and usually they will claim that they sent a notice of acceleration prior to commencing the action. If a borrower has the option of waiting and counting from the date of acceleration, it certainly does no harm, and can only help, since that eliminates the issue altogether. However, it is not always possible to control the timing, and no matter what, it is important to understand that there is a 5 year statute of limitations, and the soonest it can run is the date of default, unless the court in question agrees that it is the date of acceleration.

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