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New Florida Foreclosure Law Speeds Process

Eric Lanigan, a partner with Lanigan and Lanigan, P.L., has been practicing Florida law since 1976. Eric Lanigan and Roddy Lanigan have seen a massive increase in foreclosures since the economy crashed in 2007.

Eric explains the law on the Lanigan&Lanigan YouTube Channel in a video called,

While the foreclosure process in Florida is the lengthiest in the U.S.–nearly three years on average in the courts–a new law is going to be signed by that will greatly shorten the Florida foreclosure process.

The pending signature by the governor on house bill 87 will change the way that homeowners deal with foreclosure. The best plan if you are expecting a foreclosure letter is to make an appointment with an attorney experienced in real estate law.

Winter Park, Florida, real estate and foreclosure attorney Eric Lanigan explains the new foreclosure procedures law which has passed both houses of the Florida Legislature. It’s still subject to the Governor’s signature or veto, but at this point most expect that this law will be signed by the Governor and will go into effect. 

The Order to Show Cause Procedure

There are three primary points about the law that Eric wants to go over briefly. The first is the order to show cause procedure. The order to show cause is a concept that has been around in our law literally for hundreds of years. Where a court will issue an order for one side or the other to come in and show good cause why certain reliefs should not be granted to their opponent.

In this situation, the law has been designed so that if the lender has met certain specific criteria in their filing of the complaint, then they can request that the court issue an order to show cause for the homeowner the borrower to come in and show why the case should not immediately go to judgment in favor of the lender.

Overcoming an order to show cause should not be difficult in any case where someone has some valid defenses. So the reality is that it’s not really going to be a big burden in those cases where the individual has defenses to show cause why the case should not go straight to judgment.

One of the interesting things about the order to show cause in this particular law is that it allows any party to seek an order show cause. And there’s been much that’s been written that basically homeowners association’s lobbied to get this provision in there because they wanted to be able to speed up the foreclosure process in those cases where the banks were just dragging their feet and not getting anything done. 

Two Key Points Re Order to Show Cause

So two points that I would make in regards to this order to show cause procedure: One is that you pay your HOA fees regularly so that they stay out of the loop and they don’t have any vested interest in getting the foreclosure done.

The other is get prepared early. The days of getting prepared and having months and months and months before you finally get serious about putting your defenses before the court is no longer going to be there. When you know you’re going to go into foreclosure or that you’ve just been served with foreclosure papers, that’s the time to get proactive and get to an attorney, get your defenses lined up so that you’re ready for this show-cause hearing when it comes about. 

When Does Show-Cause Hearing Take Place?

Procedurally, when does the show-cause hearing take place? When the law was originally written, it was written that it had to be done in forty-five days which would put quite a tremendous burden on the defendants in that situation.

In the law the way it was ultimately passed now says that the show-cause hearing cannot take place before sixty days since the time the case was filed. So there is a minimum time that it cannot occur and then it can occur any time there after. So I can see procedurally there will be a lot of things done to delay and avoid a show-cause hearing on the grounds that the defendant has to be given adequate time to prepare to come in and show cause.

Second element of the new law deals with an investment property, rental properties where it is not owner-occupied. There’s a significant change in the law here in that the court can now require the homeowner, the property owner to pay into the court or pay to the lender, regular mortgage payments as the foreclosure process is winding through the court system.

This is somewhat analogous to the situation where a landlord is attempting to evict a tenant. The tenant can raise defenses, but the law requires that they must continue to make rental payments into the registry of the court while the case is pending. A distinction is in the landlord-tenant law is that the statute specifically says that if the tenant prevails in their defenses that the court must pay it back that money back to the tenant.

There is no such language in this new law in regards to what happens to all these monies that have been paid if in fact the property owner ultimately prevails. One would assume that logically the money must go back to the property owner if they have established that the lender is not entitled to the money. But that’s not specifically addressed in the law. 

Homeowner’s Cannot Recover Property After judgment

A third issue is which is also a significant change in the law deals with the homeowner’s ability to recover that property after there’s been a judgment, after there’s been a judicial sale of the property. Under existing law, the homeowner was able to come into the court and if they were able to establish that the judgment should be vacated. Because of example fraud committed in getting the judgment. Then that would undo everything that happened post-judgment including the ultimate sale of the property. So the owner could get back that particular piece of property.

But the way that the new law is written, is if a judgment has been entered and the appeal time to appeal that judgment has passed then any former owners’ action for fraud by the lender in obtaining the judgment is limited to a recover of money damages and not to a recovery of the property itself. So anybody who has subsequently has purchased the property or subsequently purchased it because the lender put it on the market and sold it, that person is going to keep the property and the former owner’s damages or recovery will be limited to money damages. 

Is New Law Unconstitutional? 

Now the question that we’re constantly being asked today is is this new law unconstitutional? I think that most definitely the law will be challenged. I think that are some very weak links in the constitutional change and I would not be at all surprised if the law is not rendered unconstitutional and ultimately voided by the court’s and the legislature will have to go back and rewrite this law.

But in challenging this law as it will most certainly be challenged it’s very important as in any constitutional challenge that it be challenged by the right case.

There’s an old saying in the law that bad facts make for bad law. Every lawyer can see cases where they read the appellate decisions and the supreme court decisions and they say, “this case should not have been taken up on appeal.”

So to the lawyers out there and to homeowners I would say it’s very important that you work with other lawyers in the foreclosure arena as well as lawyers experienced in raising constitutional challenges so that we all make sure the right case with the right facts is the one that ultimately challenges the law. Because that will be the one that will have the greatest likelihood of success of rendering this statute unconstitutional.

Consult with Eric Lanigan about how the foreclosure law will affect you in your foreclosure procedure. Call 407-740-7379 to meet at the Lanigan and Lanigan Winter Park, Florida, offices. 

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