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William B. Esq.
William B. Esq., Attorney
Category: Business Law
Satisfied Customers: 2959
Experience:  I am a civil litigation attorney with experience representing and advising HOAs, businesses, and individuals.
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Is there a Statue of Limitations for filing a foreclosure,

Resolved Question:

Is there a Statue of Limitations for filing a foreclosure, default, remedy, etc. for a Florida Mortgage? The Mortgagor and Mortgagee was the same person, but a Trustee of different Trusts (her husband's Trust and her Trust, and both now are deceased). The Successor Trustee of the Mortgagee wants to collect on the Mortgage that has defaulted one month shy of 6 years ago.
FYI, crazy thing is that the Beneficiaries are the same for both Trusts!
Submitted: 8 months ago.
Category: Business Law
Expert:  William B. Esq. replied 8 months ago.

William B. Esq. :

Thank you for using our service. My name is XXXXX XXXXX I would like to assist you today.

William B. Esq. :

The statute of limitations in Florida is 5 years. For more detail (particularly on the more difficult issue of finding when the statute begins) you can review this publication here: http://www.nolo.com/legal-encyclopedia/florida-foreclosure-statutes-limitations.html

William B. Esq. :

Five year statute of limitations period - applies specifically to mortgage foreclosure actions. § 95.11(2)(c), Fla. Stat. (2010); Farmers & Merch. Bank v. Riede, 565 So. 2d 883, 885 (Fla. 1st DCA 1990).

Customer:

Thank you for your answer. I read the link about start date. There is no complications regarding bankruptcy or sporadic payments. Furthermore, the Mortgage and Security Agreement has a Final Payment due date of Nov 12, 2007.

Customer:

No one is losing any funds in the default since, as I said, the Beneficiaries are the same for both Trusts. The Mortgage was an exercise to reduce Estate Tax which is not a problem now since the exemption is over $5M. In other words, it doesn't matter which pocket pays the Beneficiaries because it's the same pair of pants. I think it's a power grab for the Successor Trustee???

Customer:

So what action should the Trustee of the Mortgagor (or Beneficiaries) take if the Mortgagee tries to collect, foreclosure, etc.?

William B. Esq. :

Florida does not allow "non-judicial foreclosures" this means that in order to have any foreclosure at all, the mortgage holder must file a civil court action to foreclose. The borrower can immediately defend this claim based on the statute of limitations.

William B. Esq. :

Given the unique situation you are in, it may be worthwhile to give additional consideration to litigation and transaction costs in such a matter.

Customer:

It gets even more convoluted. The three Beneficiaries of both Trusts are Co-Trustees of the Mortgagor but only one of them is sole Trustee of the Mortgagee (this is the power grabber). I suggested that it would be better to have both Trusts Probated in lieu of fighting this in court hearings since it is very clear that all three get equal shares.

Customer:

How would you sell the house if there is a Mortgage (although expired) recorded? Can this Mortgage be removed from public records?

William B. Esq. :

The mortgage is still valid (and the mortgagee is still entitled to be paid), they simply lack the ability to enforce the loan through judicial action (so it lacks teeth). What this means for a situation where you are trying to actively transfer or sell the property is that you will need to treat it just as you would treat any other mortgage and plan to pay it in the course of escrow.

Customer:

Really? It can't be removed at all?

William B. Esq. :

The lien is still valid, (just like an unsecured loan, such as a credit card debt, remain due even after the right to collect judicially has passed). The lender has still paid money on behalf of the borrower and is entitled to recover.

Customer:

What if no money actually exchanged from one Trust to the other? The money was used to pay off a Bank Note that was used for a business in the Mortgagee Trust (the House in the Mortgagor Trust was used as collateral for that Bank Note).

William B. Esq. :

The transaction may still be significant from a tax perspective (this is an area I cannot advise you on - I cannot give tax advice through this forum, but transfers such as this where appreciation and transfers of real property do create tax liability and benefits for both sides). The removal of the bank note may have similar repercussions for interest purposes, and it will definitely clear title in the event that it is to be encumbered by future lenders for example

Customer:

Shouldn't be tax liability. When the Mortgage was drafted, the exemption was $625K, now it is over $5M.

Customer:

I suspect that if no real consideration was received, it looses even more teeth. The real beneficiary was the Mortgagee Trust.

Customer:

This is why I suggested the Estate be Probated. Eliminates the personalities of the Trustees/Co-Trustees.

Customer:

Not that I'm suggesting this, but can't you get a court order to remove the mortgage (especially if no money exchanged)?

William B. Esq. :

The tax liability considerations are the biggest considerations in these transactions. As far as specific considerations for your estate, I would recommend a local attorney, but the mortgage itself is rather curious and is somewhat of a "paper tiger" from your description. As far as dealing with the personalities, probate may work, but dissolving trusts can be difficult, and that may create tax liability.


You are correct in this situation - given that all parties would be before the court in probate etc. that the mortgage could be dealt with through Court order.

Customer:

If you can get a court order to remove the Mortgage, then maybe Probate might not be necessary.

Customer:

Is there a Florida Statue that allows homestead to remove a Mortgage?

William B. Esq. :

As long as you have an active case regarding the subject matter with all parties (as properly identified meaning not just the individuals but the entities) before the Court, you can get such an order. (at least the Court has an ability to give the order).

Customer:

Please clarify "not just the individuals but the entities".

William B. Esq. :

Homestead only works to preserve equity in the home. It does not work to remove a secured debt. (Ex. your home is worth $100k, you have a $65k mortgage, the home is sold in bankruptcy for the full value ($100k), you get to keep $35k under the homestead exemption).

William B. Esq. :

You would need both trusts before the Court. Simply having the same trustees and beneficiaries in a dispute or lawsuit is not enough, the trusts themselves must both be parties (anyone with an ownership interest that has an interest in the mortgage - this could get a little complicated, but it looks from your pattern that it would just be the 2 trusts).

Customer:

Correct, only two Trust.

Customer:

I didn't mean to use Homestead as a way to eliminate the debt (remember, in you example there was actually $65K given to the home owner; in the situation, no monies were actually given to the Mortgagor Trust).

William B. Esq. :

I'm not sure how the homestead would help in your situation. Unless the mortgagee trust actually foreclosed (which is time barred), or the mortgagor trust declared bankruptcy, it would not "kick in". Unless the trust is a revocable trust (in which the assets are considered the property of the trustees during their lifetime) the homestead exemption does not apply. If it does apply, and bankruptcy is used, the bankruptcy trustee will sell the property, pay off the mortgagee trust, and return the remainder to the mortgagor trust. (This ignores any other assets, debts, or any other issues associated with bankruptcy, including trustee's costs and fees).

Customer:

Told you this was convoluted. Simpler if the whole Estate is Probated (probably cheaper and quicker than the potential litigation). Thanks for your answers.

William B. Esq., Attorney
Category: Business Law
Satisfied Customers: 2959
Experience: I am a civil litigation attorney with experience representing and advising HOAs, businesses, and individuals.
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