In a case of first impression, the March 21, 2014 opinion U.S. Bank National Association, as Trustee for the GSAMP Trust 2006-NCI Mortgage Pass-Through Certificates, Series 2006-NCI v. Jose Busquets, Case No. 2D13-280, the Second District Court of Appeal upheld specific language in a residential mortgage foreclosure notice of default and intent to accelerate as compliant with the terms of the mortgage.  This case represents the first appellate ruling in Florida addressing certain specific language in nearly ubiquitous “paragraph 22” notice of default and intent to accelerate requirement in the standard residential mortgage.

At the trial court level, Busquets filed a “Motion for Summary Judgment or Motion to Dismiss” alleging the notice sent to Busquets did not comply with paragraph 22 of the mortgage in question. Specifically, Busquets asserted that the notice was defective because it (1) only apprised the borrowers that failure to cure the default could result in “foreclosure proceedings,” whereas the mortgage required that the notice advise of the potential of foreclosure by way of judicial proceedingsand (2) asserted that the borrowers “may” have a right to reinstate, instead of disclosing the right to reinstate in less equivocal terms. The lower court granted Busquets’ Motion for Summary Judgment, finding that the notice did not comply with the terms of the mortgage.  The plaintiff appealed.

The Second District Court of Appeal reversed the decision of the trial court, and held that the notice met the mortgage’s notice requirements.  Specifically, the Court held that the omission of the word “judicial” before foreclosure proceedings was immaterial because Florida only permits judicial foreclosure, and other portions of the notice made clear the judicial nature of the proceedings. In upholding the use of the word “may” in the disclosure provisions setting forth the borrowers’ right to reinstate, the Court held that “the right to reinstatement is at best a qualified right, obtainable only after the borrower meets the specified conditions precedent.”

While the opinion is certainly a major victory for lenders, the opinion itself is quite narrow, focusing on the particulars of the language used in the notice in question and the specific sub-parts of paragraph 22 the language satisfied. Notably, the Court did not embellish on any particular standard for reviewing similar arguments geared at specific language deviations in paragraph 22 notices and paragraph 22 itself, of which there are many. However, the opinion in Busquets clearly stands for the proposition that a paragraph 22 notice need not track the language of paragraph 22 identically to satisfy the condition precedent to foreclosure.