Recent Appellate Court Ruling Allows Condo Association to Reset Bank’s Foreclosure Sale

The foreclosure epidemic has caused significant financial difficulties for South Florida homeowners and condominium associations, and many of the strains are caused by unnecessary and troublesome delays from the foreclosing lenders. As a result, the Florida Supreme Court has adopted amendments to the rules of civil procedure relating to mortgage foreclosures based on the findings of a report by the Task Force on Residential Mortgage Foreclosure Cases, which was issued under a directive by the court. In December, the Fifth District Court of Appeals reaffirmed that the Florida courts are going to stringently enforce these amendments and policies based on the Foreclosure Task Force, as it upheld a condominium association’s right to secure a court order for a post-judgment judicial sale.

In the appeal, the lender contended that trial court was not authorized to order a post-judgment judicial sale of the property or had abused its discretion in ordering the sale, which came as a result of the court’s approval of a motion by the attorneys for the condominium association. The lender argued that as the judgment holder, it had the right to control when, if at all, a foreclosure sale takes place, and as the junior lien holder, the association could not demand that a foreclosure sale date be set.

In its decision, the appellate judges ruled that trial court’s order comports with the Florida statutes and the policies proposed by the Foreclosure Task Force and adopted by the Florida Supreme Court in its amendments in early 2010. The ruling notes that the amendments include a list of reasons for the cancellation of a scheduled judicial sale, and the stipulation that if a sale is canceled, the plaintiff then moves to have it rescheduled. The ruling concludes: “In other words, the supreme court, in adopting the [Form 1.996(b) entitled “Motion to Cancel and Reschedule Foreclosure Sale], apparently did not contemplate that a judicial sale would be left in limbo.”

The condominium association lawyers at our firm and throughout the state are going to be able to reference this decision to argue that community associations which are junior lien holders to foreclosing lenders are able to have the trial court set a sale date when the lender refuses to do so. We will continue to monitor and write about important court decisions for Florida community associations, and we encourage those who are interested in this information to enter their e-mail address in the box on the right in order to automatically receive all of our future blog posts.