Okaloosa Foreclosure Changes

Thursday, July 12, was the last day for foreclosures to be heard on the General Magistrate’s docket in Okaloosa County. Going forward, these cases will be assigned to one of three judges. Here are the contacts:

  • Judge Ketchel
    • JA Eileen Vanboxtel
      • 850.689.4116
      • eileen.vanboxtel@flcourts1.gov
  • Judge Brown
    • JA Donna Fought
      • 850.609.5416
      • donna.fought@flcourts1.gov
  • Judge Stone
    • JA Frannie Natalie
      • 850.609.5414
      • frannie.natalie@flcourts1.gov

It is anticipated that the new courthouse in Crestview will be open this Fall.


Florida Foreclosures and Tenants

It’s certainly not unusual for a tenant to be the only defendant to make a court appearance in a foreclosure. Why am I here? What’s become of the lease? My rent? How long can I remain in the house?

As to the first question, tenants are joined as defendants in foreclosure as a matter of economy, avoiding the potential expedient of commencing a separate eviction action as well as giving the purchaser at the foreclosure sale (usually the suing lender) recourse to a writ of possession (a court order telling the tenant to move). The tenant becomes a trespasser once title passes. See, Redding v. Stockton, Whatley, Davin & Co., 488 So.2d 548 (Fla. 5th DCA 1986).

As to the second question, the new owner usually is not a party to the lease. If that’s the case, she bears none of the legal obligations created by the lease. The new owner has no dog in the tenant’s fight.  This is not to say that the landlord is absolved of liability for breaching the lease but only that relief will await another proceeding, usually in small claims court.

The answer to the last question was provided in 2015: Florida’s good-faith tenants only have 30 days of grace after the delivery of a written notice of termination from the new owner.  (A similar federal law, the Protecting Tenants at Foreclosure Act of 2009, expired in 2014. See, https://www.occ.treas.gov/news-issuances/bulletins/2011/bulletin-2011-15.html). The notice can be mailed.

Florida Statutes sec. 83.561 provides:

(1) If a tenant is occupying residential premises that are the subject of a foreclosure sale, upon issuance of a certificate of title following the sale, the purchaser named in the certificate of title takes title to the residential premises subject to the rights of the tenant under this section.

(a) The tenant may remain in possession of the premises for 30 days following the date of the purchaser’s delivery of a written 30-day notice of termination.
(b) The tenant is entitled to the protections of s. 83.67.

(c) The 30-day notice of termination must be in substantially the following form:


You are hereby notified that your rental agreement is terminated on the date of delivery of this notice, that your occupancy is terminated 30 days following the date of the delivery of this notice, and that I demand possession of the premises on   (date)  . If you do not vacate the premises by that date, I will ask the court for an order allowing me to remove you and your belongings from the premises. You are obligated to pay rent during the 30-day period for any amount that might accrue during that period. Your rent must be delivered to   (landlord’s name and address)  .

(d) The 30-day notice of termination shall be delivered in the same manner as provided in s.83.56(4).
(2) The purchaser at the foreclosure sale may apply to the court for a writ of possession based upon a sworn affidavit that the 30-day notice of termination was delivered to the tenant and the tenant has failed to vacate the premises at the conclusion of the 30-day period. If the court awards a writ of possession, the writ must be served on the tenant. The writ of possession shall be governed by s. 83.62.

(3) This section does not apply if:

(a) The tenant is the mortgagor in the subject foreclosure or is the child, spouse, or parent of the mortgagor in the subject foreclosure.
(b) The tenant’s rental agreement is not the result of an arm’s length transaction.
(c) The tenant’s rental agreement allows the tenant to pay rent that is substantially less than the fair market rent for the premises, unless the rent is reduced or subsidized due to a federal, state, or local subsidy.
(4) A purchaser at a foreclosure sale of a residential premises occupied by a tenant does not assume the obligations of a landlord, except as provided in paragraph (1)(b), unless or until the purchaser assumes an existing rental agreement with the tenant that has not ended or enters into a new rental agreement with the tenant.
History.s. 1, ch. 2015-96.

As mentioned earlier, the termination of the lease is enforced by Florida Rule of Civil Procedure 1.580:

(a)     Issuance. When a judgment or order is for the delivery of possession of real property, the judgment or order shall direct the clerk to issue a writ of possession. The clerk shall issue the writ forthwith and deliver it to the sheriff for execution.

(b)     Third-Party Claims. If a person other than the party against whom the writ of possession is issued is in possession of the property, that person may retain possession of the property by filing with the sheriff an affidavit that the person is entitled to possession of the property, specifying the nature of the claim.

Thereupon the sheriff shall desist from enforcing the writ and shall serve a copy of the affidavit on the party causing issuance of the writ of possession. The party causing issuance of the writ may apply to the court for an order directing the sheriff to complete execution of the writ. The court shall determine the right of possession in the property and shall order the sheriff to continue to execute the writ or shall stay execution of the writ, if appropriate.


New Procedures for Escambia Foreclosure Document Handling

Escambia County has now implemented required procedures for the Magistrate to review and sign Word format Reports and Recommendations electronically from the bench.

Hard copies (with envelopes) are still required for Defendants who do not have an of-record email address.  And please keep in mind that Reports must be accompanied by the Final Judgment as Exhibit A.

Hard copies of Final Judgments (with envelopes) are required for distribution to all parties.

Please see Escambia County’s Policies and Procedures – Effective 5-1-17 for full details.


Escambia County Magistrate Report Requirements

Client firms are reminded that Escambia County has particular requirements for Magistrate Reports for summary judgment and non-jury trial recommendations. Foreclosure manager Bridgette Sanders advises

[T]he blank lines in the introductory paragraphs on the Reports and on all of the copies must be filled in by the firm.  Examples are as follows:  the hearing date, Order of Referral to General Magistrate’s date, present before the General Magistrate was “Plaintiff’s Counsel” or “Plaintiff’s counsel and witness,” and “30” day sale date, etc.  Otherwise, the Clerk will not process the Reports, and the Court staff will not fill in or research any missing information.   Also, please be sure to submit the correct Reports for Escambia County not Okaloosa County and use the correct language on the Certificate of Service.  The forms are different, and staff members are unable to make the corrections.

Please understand that if the Reports are incomplete as previously mentioned, the Reports cannot be processed after the hearing.  Perhaps, at times, the Magistrate may complete some of the missing information on one copy as a courtesy.  However, staff members cannot proceed with processing because the remaining copies are incomplete or the Certificate of Service language is incorrect.  You may want to review some of your files to check if the Reports have been processed in the system.  If not, this is why.

Finally, on the FJ’s and proposed Orders Incorporating Reports, it is fine to delete the blank lines in the introductory paragraph requesting a date that the Report will be entered, the tag number or the date the hearing was held.  Staff members are unable to research this information for attorney, and it is causing overall delays.  Please delete it, and it will save everyone some time.

Escambia’s policy can be found here.


New Escambia Policy on Notice of Sale

Effective September 19, 2016, the Clerk of Court for Escambia County discontinued the courtesy  service of signing/providing the Notice of Sale to the newspaper for publication in foreclosure proceedings. Pursuant to F.S. 702.035, it is the responsibility of the petitioner or the petitioners attorney to provide such notice to publication. Should you have any questions, please contact the Circuit Civil Division at (850) 595-4130.


Underwater Creditors Get SCOTUS Lifeline

On Monday, a unanimous Supreme Court ruled in Bank of America v. Caulkett that debtors could not avoid those second mortgages in Chapter 7 liquidations.

BOA held a second mortgage on the Caulkett home but the first mortgage gobbled it up and BOA was left holding the bag. (Caulkett owed just over $230K on a house worth $98K.) Caulkett sought to void BOA’s mortgage under sec. 506(d) of the Bankruptcy Code. The bankruptcy judge granted the motion and the court of appeals affirmed. The question presented was whether a lien against collateral that had no residual value for the holder was in law what it could not be in fact: a “secured claim.”

The argument advanced by the debtor was based on the plain meaning of the text. That is, “[s]ection 506(a)(1) provides that ‘[a]n allowed claim of a creditor secured by a lien on property . . . is a secured claim to the extent of the value of such creditor’s interest in . . . such property,’ and ‘an unsecured claim to the extent that the value of such creditor’s interest . . . is less than the amount of such allowed claim.'”

The court acknowledged that this was the “straightforward” reading of the statute but rejected it nevertheless based on the 1992 case, Dewsnup v. Timm, 502 U. S. 410. The court there refused to read the statute in a way that would allow the bankruptcy court to “strip down” a junior lien to its true value after subtracting the amount absorbed by a senior lien.  It “defined the term ‘secured claim’ in sec. 506(d) to mean a claim supported by a security interest in property, regardless of whether the value of that property would be sufficient to cover the claim.” Caulkett refused to tamper with that gloss: 

Ultimately, embracing the debtors’ distinction would not vindicate §506(d)’s original meaning, and it would leave an odd statutory framework in its place. Under the debtors’ approach, if a court valued the collateral at one dollar more than the amount of a senior lien, the debtor could not strip down a junior lien under Dewsnup, but if it valued the property at one dollar less, the debtor could strip off the entire junior lien. Given the constantly shifting value of real property, this reading could lead to arbitrary results. To be sure, the Code engages in line-drawing elsewhere, and sometimes a dollar’s difference will have a significant impact on bankruptcy proceedings. See, e.g., §707(b)(2)(A)(i) (presumption of abuse of provisions of Chapter 7 triggered if debtor’s projected disposable income over the next five years is $12,475). But these lines were set by Congress, not this Court.

The court made clear that Dewsnup was a policy-driven decision and stressed (more than once) that the debtors had not asked that it be overruled. That case of course, removed a risk for second mortgage lenders by giving them a say in liquidation loan modifications or short sales.

Six justices let it be known that Dewsnup “has been a target of criticism.”  (Justice Thomas, who wrote Caulkett, has been one such critic according to New Republic.) Easy money. Did congress originally intend for second mortgage lenders to pass this risk to consumers in the first place? Are the Supremes telegraphing an interest in getting out of the game? Is this a SCOTUS triple dog dare?