Whether a voluntary grantee is entitled to recognition of its grantor’s mortgage foreclosure “safe harbor” was at issue in last week’s decision in Villas of Windmill Point II POA, Inc. v. Nationstar Mortgage, LLC, Case No.: 4D16-2128 (Fla. 4^th DCA October 25, 2017). The decision affirmed a final summary judgement, subject to remand to correct a calculation error.

Nationstar, as agent of Fannie Mae, sued the POA, seeking compliance with the Safe Harbor provisions of §720.3085(2)(c) Fla. Stat. (2011), declaratory relief and damages.

A brief derogation of title is appropriate:

· Fanny Mae held a mortgage on the property.

· CitiMortgage became the holder of the first mortgage.

· CitiMortgage foreclosed, including the borrower and the Association as defendants.

· CitiMortgage obtained a foreclosure judgment leading to a sale resulting in CitiMortgage taking title.

Thereafter CitiMortgage deeded the property to Fanny Mae.

Reciting the HOA Act’s “safe harbor” provisions:

Notwithstanding anything to the contrary contained in this section, the liability of a first mortgagee, or its successor or assignee as a subsequent holder of the first mortgage who acquires title to a parcel by foreclosure or by deed in lieu of foreclosure for the unpaid assessments that became due before the mortgagee’s acquisition of title, shall be the lesser of….

§720.3085(2)(c) (2011) (emphasis in decision), the court held that:

Here, although Fannie Mae was not “a first mortgagee, or its successor or assignee as a subsequent holder of the first mortgage who acquire[d] title to a parcel by foreclosure or by deed in lieu of foreclosure”¹ under section 720.3085(2)(c), Fannie Mae does indirectly benefit from the safe harbor provision because, under section 720.3085(2)(b), it is jointly and severally liable with the prior parcel owner, CitiMortgage, for all unpaid assessments due up to the time of transfer of title, and CitiMortgage did qualify for the safe harbor provision.

(Emphasis in decision.)

In other words, the Association cannot pull the safe harbor out from under the subsequent grantee.

This decision re-enforces the prevailing view of Association counsel and in doing so helps avoid what otherwise would be unnecessary and costly disputes for Associations. It is noted because of the similarity in language that it is likely that this decision will also be applicable to condominium Associations pursuant to 718.116. The court appeared be very carefully outlining the transfer of title perhaps indicating that the court was not going to re-evaluate the safe harbor requirement that the holder of the mortgage take title.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

Click www.RPPTL.com for Breaking News

About Florida’s Largest Substantive Law Section!

______________________________________

Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2017 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys