Last year, we reported that Florida's Third District Court of Appeal and Fourth District Court of Appeal had each held that lenders could recover the entire amount due on a mortgage loan that has been in default for longer than the five-year statute of limitations window (See Insight blog here) provided there is at least one default that occurred within the statutory window. See Gonzalez v. Federal National Mortgage Association, ____ So.3d ____, 2018 WL 3636467 (Fla. 3d DCA August 1, 2018), Case No. 3D17-1246; Bank of America, N.A. v. Graybush, 253 So.3d 1188 (Fla. 4th DCA 2018). In doing so, we also pointed out that this law is still unsettled and that Florida's Fifth District Court of Appeal had reached the opposite conclusion in its opinion in Velden v. Nationstar Mortgage, LLC, 234 So.3d 850 (Fla. 5th DCA 2018), holding, instead, that a lender could not recover any amounts that came due prior to the statutory window. Although the law in this area remains unsettled, with both Gonzalez and Graybush currently on appeal to the Florida Supreme Court, the Fifth District Court of Appeal, en banc, receded from its Velden opinion in its recent decision in Grant v. Citizens Bank, N.A. f/k/a RBS Citizens, N.A., ____ So.3d ____, 2018 WL 6816805 (Fla. 5th DCA December 26, 2018), Case No. 5D17-726, and added its voice to the growing consensus that mortgage installments that come due more than five years prior to the filing of a foreclosure complaint may still be recoverable.
In Grant, the Borrower initially defaulted on his mortgage by failing to make a payment that came due in May 2009. After two prior unsuccessful foreclosure attempts, the Lender filed a third foreclosure action in November 2015 based on the Borrower's failure to pay the December 2010 payment and all subsequent payments. Although the Lender's foreclosure complaint only sought to recover interest from November 1, 2010 forward, the trial court's judgment awarded the Lender interest all the way back to the initial default. On appeal, the Borrower argued that the statute of limitation barred any recovery of interest that accrued more than five years before the complaint was filed and that the trial court also erred by awarding more interest than had been requested in the complaint.
The Fifth District Court of Appeal, sitting en banc, rejected its prior decision in Velden and concluded, instead, that the amounts accruing outside the statute of limitations on a standard mortgage loan are still recoverable as long as there is some default that occurs within the five years preceding the filing of the foreclosure complaint. In doing so, the Court relied heavily on Justice Lawson's concurring opinion in Bolleteri Resort Villas Condominium Association, Inc. v. Bank of New York Mellon, 228 So.3d 72 (Fla. 2017), which opined that so long as the right to accelerate a debt for non-payment is optional with the holder of the note, the statute of limitations does not begin to run until the note matures or the holder exercises its right to accelerate the full balance due and that refraining from accelerating the note for non-payment would “not constitute a waiver or defense against future collection of all sums due and owing under the note.” Id. at 74.
Applying Justice Lawson's logic, the Fifth District Court of Appeal found that the Lender could have waited until the note's maturity date to bring its action for nonpayment on the note and to foreclose the mortgage, but was not required to do so under the applicable loan documents. Therefore, it concluded, the statute of limitations did not bar the Lender from foreclosing on the note and mortgage and recovering the entire amount due on the loan. The Court, however, held that although the Lender could have collected all of the amount due had it requested such relief in its foreclosure complaint, its failure to do so precluded the trial court from granting such relief. As a result, the Fifth District Court of Appeal remanded the case back to the trial court to remove any interest that accrued prior to the November 1, 2010 date identified in the complaint's request for relief.
The Grant opinion is final as a Mandate was issued by the Fifth District Court of Appeals on January 14, 2019. However, the Florida Supreme Court still has an opportunity to weigh in on this issue as both Gonzalez and Graybush remain under review with it in Case Numbers SC18-2064 and SC18-1564, respectively.