Statute of Limitations – The 5 Year Rule

Most homeowners are aware of the term “statute of limitations” and have heard that if the bank does not foreclose on their property within five years then they get the property free and clear. The courts are still sorting out how to interpret Florida Statute 95.11(2)(c) and relevant case law, which states that a party seeking foreclosure of a mortgage must bring the suit within five (5) years of the alleged default date. Each court interprets the statute differently and unfortunately, many courts throughout Florida have held that homeowners are not absolved of all liabilities even if the lender does not bring the foreclosure action within five years of the date of acceleration.

In U.S. Bank v. Bartrum, the cased was dismissed and five years had passed since the original default date. Bartrum argued that the bank could not bring another foreclosure action due to the statute of limitations. However, the Fifth DCA held that the lender was permitted to bring a new foreclosure action based on the theory that every missed payment after the date of dismissal was a ‘new’ default date and created a new cause of action. This case is currently pending before the Florida Supreme Court and will be heard later in the year. Unfortunately, many counties have followed the ruling in Bartrum and agree with the idea that each new default date creates a new cause of action.

The potential good news for homeowners is that the Third DCA recently held in Deutsche Bank Trust Co. Americas v. Beauvais that the lender is barred by the statute of limitations when a case is dismissed without prejudice and five years has passed since the original default date. This means that the lender cannot keep foreclosing on the same property after the five years is up. The bad news is that the Third DCA, possibly doubting its own ruling, granted a Motion for Rehearing, which will be heard in the coming months and may lead to a reversal of its prior decision.

As for now, most courts continue to side with Bartrum and its predecessors, which hold that after a dismissal, each subsequent default creates a new cause of action. Clearly this nullifies the statute of limitations and leaves many wondering the relevance of even having a statute of limitations. We will just have to wait and see what the Third DCA decides and more importantly, what the Florida Supreme Court decides in the Bartrum.