Statute of Limitations on Mortgage Analyzed by Florida Federal Court

In St. Louis Condo. Ass’n, Inc. v. Nationstar Mortg. LLC, 14-21827-CIV, 2014 WL 6694780, at *2 (S.D. Fla. 2014) the Southern District of Florida analyzed the statute of limitations and statute of repose for enforcement of a mortgage and concluded that the statute of limitations had not expired.



On October 25, 2006, Franco and Lourdes Escudero (the “Escuderos”) executed a note (“Note”) and mortgage (“Mortgage”) on a property in Miami–Dade County, Florida. The Note and Mortgage contain an express maturity date of November 1, 2036. In 2007, the Escuderos defaulted, prompting Defendant’s predecessor in interest, U.S. Bank National Association on April 15, 2008, to exercise its right to accelerate all payments due under the Note and Mortgage and to file a foreclosure action in the Eleventh Judicial Circuit in and for Miami–Dade County (the “State Court”).
While the foreclosure action was pending, Plaintiff purchased the property. The State Court subsequently dismissed the foreclosure action without prejudice.On April 15, 2014, Plaintiff filed an action against Defendant in the State Court, asking the court to void the Note and Mortgage on statute of limitations grounds and to bar Defendant from commencing any later foreclosure actions. Plaintiff contends that the Note and Mortgage are no longer enforceable due to the expiration of the statute of limitations after the initial default and acceleration. 
The court concluded otherwise stating:
Plaintiff claims that the expiration of the statute of limitations bars Defendant from enforcing the Note and Mortgage. The Court finds Plaintiff s application of the statute of limitations contrary to well-established Florida law.
Florida Statute § 95.11(2)(b-c) creates a five-year statute of limitations for mortgage foreclosure actions. See Fla. Stat. § 95.11(2)(b-c). The limitations period begins to run either when the last payment of the mortgage is due or, as in this case, when the mortgagee exercises a right to accelerate the total debt because of a default. See Greene v. Bursey, 733 So.2d 1111, 1114–5 (Fla. 4 th DCA 1999). Section 95.11(2)(c) does not change the life of the lien or cancel the debt. Rather, it “merely precludes an action to collect on the debt after five years.” See Espinoza v. Countrywide Home Loans Servicing, L.P., Case No. 14–20756–CIV–Altonaga, 2014 WL 3845795, at *3 (S.D.Fla. Aug.5, 2014) (quoting Houck Corp. v. New River, Ltd., 900 So.2d 601, 603 (Fla. 2d DCA 2005). Indeed, Florida Statute § 95.281(1), a statute of repose, governs the duration of a mortgage lien and provides that the lien terminates five years after the date of maturity of the obligation secured by the mortgage. See Fla. Stat. § 95.291(1). “A ‘statute of limitations‘ is a procedural statute that prevents the enforcement of a cause of action that has accrued … Conversely, a ‘statute of repose’-like that of § 95.291(1)-establishes an ultimate date when the lien or mortgage terminates and is no longer enforceable whether a claim has accrued by that date or not.” Matos v. Bank of New York, et al., Case No. 14–21943–CIV–Moreno, 2014 WL 3734578 at *3 (S.D.Fla. July 28, 2014) (noting that a ‘statute of limitations‘ is a shield that may be used as an affirmative defense; a ‘ statute of repose’ is a sword that may terminate a lien); see also Espinoza, 2014 WL 3845795 at *3 (holding that the duration of a lien is governed by a statute of repose). The express maturity date of the Note and Mortgage is November 1, 2036. See Compl. at Ex. B. Accordingly, the Mortgage lien will not terminate until 2041 and Plaintiff’s quiet title action is without merit.
St. Louis Condo. Ass’n, Inc. v. Nationstar Mortg. LLC, 14-21827-CIV, 2014 WL 6694780, at *2 (S.D. Fla. 2014)

Florida court holds that Truth in Lending Claim Not Time Barred

There is a time limit for bringing a Truth in Lending Claim under Florida law.  However, when the claim is raised as an affirmative defense to a mortgage foreclosure action (as opposed to the borrower filing a lawsuit against the lender), it is possible to avoid this time limit which is what the Fourth District Court of Appeals held in Vidal v. Liquidation Props., Inc., 38 Fla. L. Weekly D116 (Fla. 4th DCA 2013).

The Vidals executed 2 notes and mortgages in favor of Option One Mortgage Corporation for the purchase of their home. On February 5, 2009, Liquidation filed a complaint for foreclosure on one of the mortgages, to enforce a lost note, and to reestablish a lost mortgage. The Vidals answered and raised fifteen affirmative defenses. Subsequently, the affirmative defenses were amended down to seven. In the amended affirmative defenses, the Vidals alleged Liquidation lacked standing to foreclose. They asserted equitable estoppel and fraud barred the complaint due to the lender’s placing false income and other financial information on the mortgage application. They also alleged, for the first time, violations of the federal Truth in Lending Act and related regulations, seeking rescission of the mortgage and recoupment of damages based on the lender’s failure to comply with federal disclosure requirements, for misrepresenting that the loan terms were fixed, and for failing to disclose the actual payment terms.

The trial court held the affirmative defense of violations of the Truth in Lending Act was legally insufficient because the statute of limitations under that Act had run. Federal law imposes a three-year statute of limitations from the consummation of the transaction on any action for rescission under the Truth in Lending Act. 15 U.S.C. § 1635(f) (2006); Dove v. McCormick, 698 So.2d 585, 587 (Fla. 5th DCA 1997). A one-year statute of limitation from the date of violation of the Act applies to actions for recoupment. 15 U.S.C. § 1640(e).
On appeal the Fourth District held  that “when recoupment and setoff are raised as a defense, the one-years tatute of limitations does not apply. Title 15 U.S.C. 1640(e) states:
This subsection does not bar a person from asserting a violation of this subchapter in an action to collect the debt which was brought more than one year from the date of the occurrence of the violation as a matter of defense by recoupment or set-off in such action, except as otherwise provided by State law.

The Vidals’ affirmative defense seeking recoupment damages and set-off for Truth in Lending violations was not barred by thestatute of limitations set forth in the Truth in Lending Act.”


Fourth District Holds that Truth in Lending Act Defense Not Barred by the 1 yr S/L

The Fourth District recently held that the one-year statute of limitations for violations of the Truth in Lending Act did not apply to mortgage foreclosure action in which recoupment and setoff were raised as a defense. Truth in Lending Act, § 130(e), 15 U.S.C.A. § 1640(e).

The court observed that when recoupment and setoff are raised as a defense, the one-year statute of limitations for violations of the Truth in Lending Act does not apply. Truth in Lending Act, § 130(e), 15 U.S.C.A. § 1640(e).

The claim would have been barred if it had been asserted affirmatively in a complaint as opposed to having been raised defensively.

See Vidal v. Liquidation Props., Inc., 4D10-3358, 2012 WL 5347964 (Fla. 4th DCA Oct. 31, 2012)

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