3 Types of Defenses to a Foreclosure Lawsuit in Florida
Floridian homeowners can use three different types of foreclosure defenses when facing commercial litigation. For residential foreclosures, these defenses can be categorized into three arguments:
- The validity of the mortgage
- Whether there has been a “default”
- Whether there was a legal right to accelerate the debt
Let’s review each of these foreclosure defenses under the microscope.
The Validity of the Mortgage
A homeowner can use any contractual defenses that pertain to their circumstances. For example, those defenses can be based on fraud or the statute of limitations.
- If the borrower has evidence to prove that the loan was used upon fraud on the part of the lender and/or its agents, the foreclosure action may fall apart. However, elements of fraud must be proven by a knowledgeable West Palm Beach commercial litigation attorney to raise a successful fraud defense. Borrowers who show fraud in foreclosure actions are entitled to ask for money damages.
- The Statute of Limitations. Every civil action has a deadline. If the deadline for bringing a foreclosure lawsuit has passed, the borrower can pursue a limitations defense. Under Section 95.11 of the Florida Statutes, mortgage foreclosure lawsuits cannot be filed after five years from the first written demand for payment received by the borrower.
Whether There Has Been a Legal Default
Determining whether there was a legal default under the mortgage is another foreclosure defense that may be available to a borrower.
If a mortgagor chooses this defense, the entire loan package will be investigated to determine what obligations were made by each side. The investigation will focus not only on the facts surrounding the inception of the loan but also on the borrower’s actions.
Late payments are often the basis of filing a foreclosure lawsuit in Florida. Whether there was a legal default in the first place can be a defense to challenge the validity of the lawsuit.
It is not uncommon for mortgagors to face a foreclosure lawsuit even when they pay their monthly mortgage payments. In some cases, the lender does not accept or honor those payments, which can result in a foreclosure lawsuit. In that case, the borrower can pursue this foreclosure defense as long as it can be proven that he or she has met his/her pending obligations under the loan.
Whether There is a Legal Right to Accelerate the Debt
This type of foreclosure defense is similar to the one that challenges the legality of the default. Typically, this is the defense where principles of equity apply to a particular situation. Over the past decades, Florida courts have established legal principles for equity defenses, which can be used both in standard business litigation cases as well as in foreclosure actions.
If there are equitable reasons, the court may deny the acceleration of the debt. Such equitable reasons include unconscionability (an agreement is unfair or oppressive to one party), waiver, laches, and equitable estoppel (taking unfair advantage of another through false promises or conduct).
For example, if the mortgagor can prove that the lender took unfair advantage of the borrower through false language or conduct, he or she may have a valid foreclosure defense based on equitable estoppel.