As many lenders know, Florida has a five year statute of limitations for mortgage foreclosures. This requires that a foreclosure lawsuit be filed within that amount of time following the borrower’s default. But what happens if a foreclosure is filed and then dismissed? Does the clock start again following the dismissal or does the lender still need to bring the second foreclosure suit within five years of the original default? At the moment, these appear to be open questions in Florida. Although the courts have provided some guidance, the question may not ultimately be answered until the Florida Supreme Court weighs in, which it is expected to do in 2015.
Earlier this year, the Fifth District Court of Appeal in U.S. Bank v. Bartramheld that after a foreclosure action was dismissed by the court, it could be re-filed based upon a new default that occurred after the dismissal of the suit, even if the original default which formed the basis of the first suit occurred more than five years ago. Under this “continuing default” theory, the dismissal nullified the acceleration of the loan such that payments would continue to come due each month after the dismissal and therefore the loan could be reaccelerated following a new default. Accordingly, the statute of limitations would then be five years from the new date of acceleration, allowing the lender ample time to bring a second foreclosure action.