Co-Presenters. Mark M. Wall & Eric E. Page

Size: px

Start display at page:

Download "Co-Presenters. Mark M. Wall & Eric E. Page"

Brianna Craig
8 years ago
Views:

1 COMMERCIAL FORECLOSURES: FLORIDA S PAY-TO-PLAY STATUTE AND OTHER PRACTICAL TOPICS Co-Presenters Mark M. Wall & Eric E. Page

2 Overview In an environment of judicial and clerk of court budget cuts and with the Courts still laboring under the demands of the foreclosure crisis, Mark and Eric will be discussing ways to obtain expedited relief in commercial foreclosures by taking advantage of particular Florida statutes. They will discuss how to obtain an expedited foreclosure and how to require a borrower to make mortgage payments during the pendency of a foreclosure proceeding. Mark and Eric will also review the rights of a lender when foreclosing on income producing properties. These topics will be applicable to both lenders as well as financially distressed commercial borrowers who will be informed of laws on the books and techniques that a lender may attempt to use in the event of a default.

3 Judicial Admin Rule 2.250(a) (a) Time Standards. The following time standards are hereby established as a presumptively reasonable time period for the completion of cases in the trial and appellate courts of this state. It is recognized that there are cases that, because of their complexity, present problems that cause reasonable delays. However, most cases should be completed within the following time periods: (1) Trial Court Time Standards. (A) Criminal. Felony 180 days (arrest to final disposition) Misdemeanor 90 days (arrest to final disposition) (B) Civil. Jury cases 18 months (filing to final disposition) Non-jury cases 12 months (filing to final disposition) Small claims 95 days (filing to final disposition)

4 Foreclosure Crisis Statistics Florida foreclosure starts increased annually 83 percent from May 2011 to May Source: RealtyTrac Tampa and Miami rank 5 th and 6 th in foreclosure activity among the 20 largest U.S. Metros May 2012, with Tampa showing a % change from May 2011 of %, and Miami an 11.25% change. Source: RealtyTrac As of January 2012, the Florida foreclosure backlog stood at 368,000, with more on the way according to State Courts Administrator Lisa Goodner. Goodner expects the backlog of cases to grow by another 380,000 cases by For , she predicted 165,000 foreclosure filings.

5 Foreclosure Crisis Statistics, cont. Court clerks budgets were reduced by 18% in Over the past three years, their offices statewide have seen a staff reduction of about 25%. The state ended its $6 million program to pay retired judges to tackle a backlog of hundreds of thousands of foreclosure cases across Florida on July 1, Although the budget has been increased for next year to re-hire staff and retired judges, for now, the state s courts have fewer judges and more foreclosure cases.

6 Interactive Map of Foreclosure Hot Spots Source:

7 What s a Frustrated Lender to do?

8 Florida Statute Section Invoke Florida Statute Section order to show cause. Seek entry of final judgment of foreclosure. Require payment during foreclosure. Or, as we like to think of it, Florida s summary foreclosure statute sometimes referred to as Fast-Track foreclosure or Florida s Pay-to-Play Statute.

9 Underutilized Statute Can Greatly Expedite the Foreclosure Process Ask for it if you want it- file a motion Subsection (1) applicable to residential or commercial Requires a hearing within 60 days from service Places burden on borrower, as a practical matter Judgment can be entered at hearing and sale scheduled Foreclosure relief only

10 Requires Lender to Have its Verified Complaint Papers in Order Need to be sure loan documents are available and assigned Submit Judgment Obtain Order for Show Cause hearing Required content in Order

11 Statute Requires Borrower to Respond in a Certain Way Borrower s rights are deemed waived if no response Borrower must respond by motion or verified or sworn answer Tactical benefits of sworn answer Standard at hearing is whether there is cause NOT to foreclosure Streamlines attorneys fee award to lender

12 Pay to Play Statute

13 Subsection (2) Can Require Payments to be Made Upon Motion Applies if no relief under Subsection (1) Only applies to commercial (non-residential properties) Mortgage payments for duration of foreclosure proceedings If payments not made, possession (not foreclosure) can be awarded

14 You Have to Pay if You Want to Play Return hearing within 60 days Court can consider Affidavits and other showings Standard is whether lender is likely to prevail in foreclosure action If standard met, borrower has to pay to play, i.e. pay to defend lawsuit

15 Florida Statutes Section Borrower s Assignment of Rents to Lender Rents assigned at closing Assignment is lender s insurance policy security for repayment Rents go to Borrower as long as they service loan Assignment needs to be recorded

16 Lender s Recovery Under Assignment of Rents After default, Lender s written demand should cause turnover of rents Use Section with the Pay-to-Play statute Rents go to (1) pay reasonable operating expenses of property; (2) escrow; or (3) PAY THE LENDER Rent leftover goes into Court s registry until the foreclosure is done Borrower s duty to account Lender s duty to account

17 Questions?

18 This presentation is made available by Hill Ward Henderson for educational purposes only to provide you general information and a general understanding of the law, it is not intended to provide nor does it constitute legal advice. The presentation should not be used as a substitute for specific legal advice from a licensed professional attorney. Further, the subject matter contained in this presentation is complex and subject to change. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties.

CHAPTER 702 FORECLOSURE OF MORTGAGES, AGREEMENTS FOR DEEDS, AND STATUTORY LIENS. 702.06 Deficiency decree; common-law suit to recover deficiency.

CHAPTER 702 FORECLOSURE OF MORTGAGES, AGREEMENTS FOR DEEDS, AND STATUTORY LIENS. 702.06 Deficiency decree; common-law suit to recover deficiency. Florida Foreclosure is Judicial. Notice of Foreclosure Florida foreclosure begins when the lender files a lawsuit (Lis Pendens) against the homeowner. The homeowners must be notified of the legal action