It Lives! What? The lis pendens statute!

This morning the Fourth District Court of Appeal granted a motion for rehearing in Ober v. Town of Lauderdale By-the-Sea, Case No.: 4D14-4597 (Fla. 4^th DCA, January 25, 2017) This decision withdrew the panel’s decision in Ober v. Town of Lauderdale By-the-Sea, 41 FLW D1978, Case No.: 4D14-4597 (Fla. 4^th DCA, August 26, 2016), substituting with a new decision arriving at the opposite conclusion, reversing and remanding.

The decision is of significant importance to real estate practitioners because the decision reinstates the vitality of the lis pendens statute.

The Facts.

The appeal arose from a quiet title action following a lengthy, seemingly nondescript foreclosure action with the following chronology:

November 26, 2007 - Bank files Complaint accompanied by a Lis Pendens recorded pursuant to §48.23, Fla. Stat.;

September 22, 2008 - Final Judgment of Foreclosure which expressly retained jurisdiction “to enter further orders that are proper including, without limitation, a deficiency judgment.” (Note: quote obtained from the Record on Appeal, not in decision)

July 13, 2009 through October 27, 2011 - the Town records seven code enforcement liens against the foreclosed property allegedly resulting from post-judgment violations;

September 27, 2012 – Bank is the high bidder at the clerk’s sale and subsequently transfers the property to Ober.

Examining the express language of the lis pendens statute, the statute provides in pertinent part:

[T]he recording of . . . notice of lis pendens . . . constitutes a bar to the enforcement against the property described in the notice of all interests and liens . . . unrecorded at the time of recording the notice unless the holder of any such unrecorded interest or lien intervenes in such proceedings within 30 days after the recording of the notice. If the holder of any such unrecorded interest or lien does not intervene in the proceedings and if such proceedings are prosecuted to a judicial sale of the property described in the notice, the property shall be forever discharged from all such unrecorded interests and liens.

Section 48.23(1)(d), Fla. Stat. (2014) (Emphasis in decision). The Court acknowledges that “foreclosures are unlike many civil lawsuits,” and that the lis pendens statute addresses “all interests and liens,”

The court held that the Town’s liens, recorded between the entry of final judgment and the judicial sale were discharged. The holder of a lien arising before a judicial sale must seek to intervene in a pending foreclosure action concerning the property within the statutory thirty day window. The court believes that this holding is consistent with the text in Florida Rules of Civil Procedure form 1.996(a) foreclosing liens.

The court reflects on how we arrived at this point.

The practical problem in this case is the long lag time between the foreclosure judgment and the foreclosure sale. Resolution of the competing interests—of the Town, the lending and title insurance industries, property owners, and buyers at foreclosure sales—is in the province of the legislature.

This is yet one more call to the Legislature to redress the gross inequities creating hardships and problems plaguing the legal system when lenders fail to timely proceed with foreclosures. In this regard, recall that these foreclosures are not delayed just a week, a month, a year, two years or three years. Instead, there are many years of delays.

Perhaps the courts lament to the Legislature may prompt action, being heard better than individual property owners, hardworking families and retirees, who have pleaded for assistance for nearly a decade over the lender delay problem. Perhaps now that another group is hurt, municipalities, there will be action, speeding up the process or alternatively reimbursing associations bearing the burden of protecting the lenders’ security.

A substantive issue of note, the gap of time between the judicial sale and issuance of a certificate of title. Ober did not contest the attachment of liens claimed to have been perfected after the judicial sale. This gap may be significant, particularly concerning the start of a chain of title for examination purposes.

The list of counsel of record includes a significant handful of Section members. This includes Ober counsel’s Manny Farach. The court called out recognition to the Florida Land Title Association’s brief, one of the authors being Marty Solomon.

The opinion’s rationale may sound familiar to readers as it paralleled discussions at Section meetings, and including the Section’s Amicus Brief ably drafted by Kenneth Bell, John Little and Robert Goldman to whom we provide great thanks for their continuing, steadfast and excellent efforts.

Michael J. Gelfand

Immediate Past Chair

Real Property, Probate and Trust Law Section of The Florida Bar

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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