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In Ark Real Estate Services, Inc. v. 21st Mortgage Corp., No. 4D20-122, a purchaser of real property at a foreclosure sale sued 21st Mortgage Corp., a mobile home lender that repossessed the mobile home from the land after the sale. The purchaser claimed that the foreclosure judgment extinguished the lender’s lien on the mobile home. On July 29, 2020, the Fourth DCA held that the mobile home lender’s lien survived the foreclosure sale and that the circuit court properly entered judgment against the purchaser on its claims of conversion and civil theft.
On appeal, Ark argued that the mobile home became part of the land. It contends that the mobile home was permanently affixed to the real estate and was captured by the mortgage’s “after-acquired” property clause. Therefore, Ark argued that 21st Mortgage’s security interest in the mobile home was extinguished by the final judgment of foreclosure. The Fourth DCA rejected Ark’s argument for two reasons: 1) under Florida law, the issue of priority is established by statute, so the mobile home’s status as a fixture does not impact the validity of the security interest on the mobile home; and (2) the foreclosure action only extinguished competing interests in the land, not any interest in the mobile home. Accordingly, the first mortgagee’s foreclosure action did not impact 21st Mortgage’s security interest in the mobile home, and 21st Mortgage was well within their rights to repossess the mobile home from the subject property.
On July 29, 2020, the Florida Governor issued an Executive Order extending the foreclosure moratorium until Sept. 1, 2020, but also made some significant carve-outs which will allow for foreclosure files to be initiated and progress through the system. The moratorium now only prohibits the “final action” in a mortgage foreclosure actions, and only applies to single-family mortgages where non-payment is due to the COVID pandemic. It is Padgett Law Group’s reading of the amended moratorium that it would not apply to loans where the default occurred prior to the issuance of the state of emergency in Florida. Additionally, we expect different counties/judges to interpret “final action” to be either sale, certificate of title, or eviction. In summary, absent an investor restriction, a mortgage foreclosure may be initiated and moved all the way to “final action” under the amended moratorium, and in some circumstances through the sale and eviction stage. Click the image below to access our comprehensive COVID-9 response blog for additional moratorium updates and information.
The Florida Legislature passed a new law relating to drafting errors in deeds that went into effect on July 1, 2020. Florida Statute Section 689.041 provides a procedure to cure scrivener’s errors in deeds instead of these issues having to be addressed through litigation. The statute allows for specific errors to be resolved by preparing and recording a “curative notice”. The types of issues that can be corrected with the curative notice are specifically outlined in detail in the statute. The issues that can be fixed include errors or omission in the lot or block information of the property, errors or omissions in the unit, building, or phase identifications of a condo unit, and errors or omissions in a directional call or fraction of a section, township or range in the legal description. However, the statute only applies where there is a “single error” in the legal description. It seems the intent was to limit the number of errors that can be corrected using the curative notice, so deeds with multiple errors may not be able to rely on the statute’s remedy.
On July 9, 2020, the United States Bankruptcy Court for the Middle District of Florida entered
Administrative order FLMB 2020-7 Proscribing Procedures for Chapter 13 Cases Filed on or After August 1, 2020 and Revised Model Chapter 13 Plan, effective August 1, 2020.
What has changed?
One of the most fundamental changes that will impact creditors is paragraph 10 (ten) titled
Reimposition of the Automatic Stay. It reads as follows: “If Debtor files an amended or modified Plan
that includes payments to a secured creditor or lessor in the Plan payments, the automatic stay is
reimposed as to that secured creditor or lessor automatically upon the filing of the amended or
modified Plan unless the secured creditor or lessor has concluded its state law foreclosure or
repossession remedies. Debtor must serve the amended or modified Plan upon the affected creditor or lessor.”
On July 1, 2020, Uniform Commercial Real Estate Receivership Act (UCRERA) became effective under Chapter 714 of the Florida Statutes. The UCRERA codifies existing Florida common law regarding commercial foreclosures as a remedy to stakeholders and provides much needed uniformity. This is huge for Commercial Foreclosures in Florida, specifically, Fla. Stat. 714. 06, cited below. Prior to the enactment of this statute, there was not a statute that addressed the process for commercial real estate disputes. Of interest, is the fact that the statute states that the Court may condition the appointment of a receiver without prior notice of a hearing, on the giving of security by the person seeking the appointment for the payment of damages, reasonable attorney fees, and costs incurred.
Today, the Supreme Court of the United States, in Collins v. Mnuchin, U.S Department of Treasury, et.al., Docket Number 19-422 and in Mnuchin, Secretary of the Treasury v. Collins, Docket Number 19-563, granted the Petition for Writ of Certiorari, and will be hearing oral arguments on the consolidated cases.
The questions presented in both cases as they have been consolidated into Collins v. Mnuchin are as follows:
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