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Failure of a Mortgagee to File a Statement of Claim in a Deceased Borrower’s Probate Voids Right to Collect a Deficiency, discusses the essentiality that a mortgagee files a claim to preserve entitlement to impose liability on the estate due to an existing or potential deficiency. While it was the Florida Supreme Court that set this precedent in 1940, it was the United States Supreme Court’s decision in Pope that provided clarity 48 years later regarding the importance of notice to creditors against the backdrop of the Fourteenth Amendment.
Failure of a Mortgagee to File a Statement of Claim in a Deceased Borrower’s Probate Voids Right to Collect a Deficiency
It is well settled law that a mortgagee’s lien is an exception to Statute of Nonclaim set forth in Florida Statute, section 733.710, which bars any claim regardless of notice after two years from the date of the decedent’s death. Florida Statute 733.710(3) provides that a duly recorded mortgage remains intact and fully enforceable notwithstanding the lienholder’s failure to file a claim in the probate.
Why then should a mortgagee file a claim in a deceased borrower’s probate action?
The answer to this question is best answered by way of review of a Florida Supreme Court decision, In re Comstock’s Estate, dating all the way back to 1940.
In response to Hurricane Ian, PLG has closed its Tampa, Florida office effective Wednesday, September 28 until further notice for the safety of our employees. At this time, the firm’s Florida operations remain unimpacted and general business continues uninterrupted via our office in Tallahassee and remote work authorization for potentially impacted employees. PLG's servers are protected, operational, and data redundant per our Business Continuity Plan. At this time, the firm anticipates remaining fully operational and available for client interfacing with little to no impact on day-to-day operations.
PLG is also monitoring court closures in response to the hurricane and will update clients as needed regarding rescheduled hearings, trials, sales, and other delays related to the impact of Hurricane Ian. Click here to see a list of current closures provided by our vendor Provest. Everyone impacted and those in the path of Hurricane Ian are in our thoughts and prayers.
Padgett Law Group (“PLG”) through its attorney, Seth J. Greenhill, Esq., successfully obtained a rare win for creditors in Federal Court by obtaining sanctions against a pro se litigant who filed a frivolous appeal. This aggressive advocacy on behalf of PLG’s client was necessary to put an end to this vexatious litigation and contributes to building case law that will assist other creditors’ rights attorneys in defense of their clients.
“The key takeaway is that it is critical to establish the record in the original litigation. This provides notice to the pro se appellant,” said Mr. Greenhill. He continued, “This is a requirement in order to have sanctions imposed. In addition, it is vital to review the appellant brief in order to determine if the issues have already been disposed of.”
The Ohio Legislature is currently considering Senate Bill 334, titled (in short) “Grant certain bidders rights – foreclosed residential property,” which seeks to amend section 2329.27 and to enact sections 2329.261 and 2329.313 of the Revised Code to grant tenants and certain other eligible bidders rights relating to the purchase of residential property sold through the process of foreclosure. The Bill applies to foreclosure sales of one to four family residential properties, and requires the selling officer, whether sheriff or private selling officer, to include in its sale advertisement, the following notice:
"NOTICE TO TENANTS AND OTHER ELIGIBLE BIDDERS: You may have a right to purchase this property after the sale pursuant to R.C. 2329.313. If you are an "eligible-tenant buyer," you can purchase the property if you match the successful bid placed at the sale. If you are an "eligible bidder," you may be able to purchase the property if you exceed the successful bid placed at the sale. There are three steps to exercising this right of purchase. First, two calendar days after the date of the sale, you can call [telephone number for information regarding the sale], or visit this web site [web site address for information regarding the sale], using the file number assigned to this case [case file number] to find the date on which the sale was held, the amount of the successful bid, and the address of the person who conducted the sale. Second, you must send a written notice of intent to place a bid so that the person who conducted the sale receives it not more than fifteen days after the date of the sale. Third, you must submit a bid so that the person who conducted the sale receives it not more than forty-five days after the date of the sale. If you think you may qualify as an "eligible tenant-buyer" or "eligible bidder," you should consider contacting an attorney or appropriate real estate professional immediately for advice regarding this potential right to purchase.”
In an opinion affirming in part and reversing in part, Florida's Second District Court of Appeal found that a Trial Judge’s Order went too far when it forbade the borrower in a foreclosure case, who had surrendered the real property at issue in an earlier bankruptcy, to contest the foreclosure “in any manner” due to that bankruptcy surrender. In reversing in part, the Court of Appeal held that there are circumstances where a borrower may be allowed to challenge some aspects of a foreclosure case; for example, in the amounts due and owing, or other limited circumstances that may have arisen post-bankruptcy. Importantly, however, in affirming, the Second District Court of Appeal also ruled that surrender in a bankruptcy case means that in a subsequent foreclosure case a borrower is not entitled to challenge the lender’s own entitlement to foreclose. “Because the debtor’s interest has been surrendered, the debtor is no longer entitled to challenge the entitlement to foreclose the debtor’s former legal interest.” Note that this opinion is not final yet.
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