On July 29, 2015, Florida’s Second District Court of Appeal held that substantial compliance, rather than strict compliance, is the legal standard for evaluating a foreclosing plaintiff’s compliance with contractual conditions precedent to acceleration of mortgage debt (and in particular, the conditions identified in paragraph 22 of most standard residential first mortgages). Green Tree Servicing, Inc. v. Milam, 2015 WL 4549200, at *4-5, 2015 Fla. App. LEXIS 11324, at *9-11. The Milam decision built upon and clarified prior case law from Florida’s Second and Fifth DCAs that provided an evolving but still uncertain legal standard for paragraph 22 cases. For many years, borrowers have argued that lenders must prove strict compliance with paragraph 22 as a condition precedent to acceleration and foreclosure. Foreclosing plaintiffs, on the other hand, have argued that only substantial compliance is required. While several appellate decisions have addressed this argument over the last year or so, none have done so with as much clarity and precision as the Second DCA in Milam.

Case Law Prior to Milam

In Judy v. MSMC Venture, LLC, 100 So. 3d 1287, 1289 (Fla. 2d DCA 2012), the Second DCA reversed judgment for the lender because the lender’s pre-suit notices of default “generally alleged that the Judys committed a breach,” but failed to “specify the default” as required by paragraph 22 of the mortgage. InSamaroo v. Wells Fargo Bank, N.A., 137 So. 3d 1127 (Fla. 5th DCA 2014), the Fifth DCA found that a default letter omitting notice of the borrower’s right to reinstate after acceleration did not comply with paragraph 22 of the mortgage, which requires lenders to inform borrowers of their right to reinstate after acceleration. Id. at 1128. Although the Second and Fifth DCAs did not reach these decisions by considering whether the lender strictly complied with conditions precedent to acceleration, Judy and Samaroo became the key support for borrowers arguing that lenders must strictly comply with paragraph 22 requirements.

Without addressing its holding in Judy, the Second DCA later held in U.S. Bank National Association v. Busquets, 135 So. 3d 488, 489-90 (Fla. 2d DCA 2014) that a pre-suit default letter does not need to track the exact language of paragraph 22, but simply needs to adequately meet the notice requirements “set forth in the plain language of the mortgage contract.” The Busquets decision did not frame the issue in terms of substantial compliance, and many borrowers and trial courts, at least in the Fifth DCA, still clung to Samaroo to oppose substantial compliance arguments. Then, in Astoria Fed. Sav. & Loan Ass’n v. Kaufman, 158 So. 3d 675 (Fla. 5th DCA 2015), the Fifth DCA reversed summary judgment for a borrower upon finding that the pre-suit default letter sufficiently complied with paragraph 22 by simply informing the borrower that she “failed to make monthly payments required by the note” and that she must contact the lender to obtain the amounts necessary to cure the default. The Kaufmandecision, while not explicitly endorsing substantial compliance or clarifyingSamaroo, did show that even the Fifth DCA would not endorse strict compliance.

Milam: Substantial Compliance is the Standard

In Milam, the Second DCA finally clarified the misconceptions surrounding Judyand Samaroo, and explicitly rejected strict compliance while endorsing substantial compliance. The Second DCA pointed out that Samaroo “merely held that the letter’s silence on one of paragraph twenty-two’s requirements precluded the lender’s substantial compliance argument.” 2015 WL 4549200, at *4. The Second DCA further pointed out that the Fifth DCA has more recently qualified its decision in Samaroo by holding that a failure to comply with paragraph 22 will not bar a foreclosure action “absent some prejudice.” Id. at *4, n2 (citing to Gorel v. Bank of New York Mellon, 165 So. 3d 44, 47 (Fla. 5th DCA 2015)). Similar to its evaluation of Samaroo, the Second DCA also clarified that Judy only applies to situations where, for instance, “the letter [is] silent about one or more of the requirements of paragraph twenty-two.” Id. at *3, n1.

The Court in Milam also held that trial courts must “interpret and apply the provisions of mortgages the same way [they] interpret and apply the provisions of any other contract.” 2015 WL 4549200, at *4. Like any other contractual condition precedent, paragraph 22 requirements must be “evaluated for substantial compliance or substantial performance.” Id. Drawing from established case law requiring only substantial compliance of contractual conditions precedent, the Second DCA articulated the legal standard for compliance with paragraph 22:

Applying these principles to paragraph twenty-two, then, when the content of a lender’s notice letter is nearly equivalent to or varies in only immaterial respects from what the mortgage requires, the letter substantially complies, and a minor variation from the terms of paragraph twenty-two should not preclude a foreclosure action. Where, on the other hand, the lender’s notice letter varies from paragraph twenty-two in a way that goes to the essence of the parties’ bargain, the variation is material and the lender has failed to satisfy a condition precedent to the foreclosure action.

Id. at *5.


Milam is binding precedent in all Florida courts, as there is no conflicting DCA opinion. Although the Fifth DCA has not been as explicit as the Second DCA with regard to Paragraph 22, the ghost of Samaroo as support for strict compliance has been sufficiently exorcised. Milam confirms that the Fifth and Second DCAs stand in solidarity for the proposition that, although an omission of a material requirement of paragraph 22 may bar acceleration and foreclosure, lenders may accelerate and foreclose by showing substantial compliance with the material requirements of Paragraph 22.

Click here to review the Milam decision.