Fourth DCA Seeks to Change Process in a Deceased Foreclosure
Occasionally, a credit union is faced with a foreclosure that results from the borrower having passed away, and with no one in a position to step forward and resume payments or pay the balance owed. When this happens, the credit union is left with no option but to wait 120 days and initiate foreclosure. In a foreclosure where the estate has not been probated or title has not vested in a new owner, it has long been the process to include both the known heirs and unknown heirs of the borrower, assuming the borrower was the owner of the property at time of their death. To properly serve the unknown heirs in the foreclosure, we must publish a notice of action in a local newspaper for two consecutive weeks. To then represent the interest of the unknown heirs, we appoint guardian ad litem. The guardian ad litem is tasked with completing a search for any known heirs and filing a response on behalf of the unknown heirs. The Fourth District Court of Appeal has recently called this process into question.
On February 14, 2024, the Fourth DCA, in Desbrunes v. US Bank N.A., 2024 Fla. App. LEXIS 1092, held that the known and unknown heirs is not always a necessary and proper party to a foreclosure. In Desbrunes, the borrower passed away during pendency of the foreclosure. The Plaintiff sought to substitute the known and unknown heirs and appoint a guardian ad litem. The trial court entered final judgment of foreclosure, but upon appeal the Court initially held that the inclusion of the known heirs and unknown heirs was improper. In reaching its initial ruling the Court found that when the borrower and owner is deceased, the proper party is the estate’s legal representative appointed by a probate court, which in most cases is a personal representative, and not someone appointed by the foreclosure court or the heirs. When there is no estate or legal representative, the proper step is to petition for administration of the estate as a creditor. Upon a request for rehearing, the Court clarified its ruling by distinguishing between homestead and non-homestead property. In Florida, homestead property is not property of the estate and passes outside the estate. If the property is non-homestead, then it does become property of the Estate. Based on this clarification and the facts of the case, the Court reversed its ruling and found that final judgment of foreclosure was proper as the property was homestead. Desbrunes v. US Bank N.A., 2024 Fla. App. LEXIS 3570. However, had the property been non-homestead, the Court’s initial ruling would likely have been upheld to find that a legal representative of the estate must be added to represent the interest of the deceased borrower.
It is important to note that the holding in Desbrunes is only binding on cases within the Fourth District Court of Appeal (Palm Beach, Broward, St. Lucie, Martin, Indian River, and Okeechobee Counties). For foreclosures within these counties that involve a deceased borrower and non-homestead property, the Court may require that probate be initiated, and the legal representative be joined. If the family has not probated the estate, it may fall upon the credit union to petition for administration of the estate as a creditor. While this is not binding upon other Circuits, a Court may choose to adopt this holding as persuasive. However, given the long standing process in a foreclosure to appoint a guardian ad litem and include any known or unknown heirs, it is uncertain how many other circuits will adopt this holding.
If you have questions related to a mortgage or foreclosure involving a deceased member, or any other questions related to mortgages or foreclosures, please do not hesitate to contact one of the lawyers at SVL to discuss.
Changes Coming to Florida Rules of Civil Procedure
The way civil lawsuits proceed in Florida is changing. On May 23, 2024, the Florida Supreme Court issued amendments to several of the civil procedure rules, which will go into effect on January 1, 2025.
First, the Supreme Court amended Rule 1.510. Rule 1.510 deals with summary judgment, which is a mechanism for a party to move for judgment without having to go to a trial. Summary judgment is appropriate when there is no dispute regarding the material facts of a case and the arguments are purely how the law applies to the facts of the case. We often file a motion for summary judgment in collections and foreclosure litigation when the debtor does not deny the debt but presents some argument on why they should not be obligated on the debt. The amended rule changes the timelines for a party to respond to the motion. Currently, a party must file their response 20 days prior to the scheduled hearing. Under the amended rule, a party must file their response “no later than 60 days after the service of the motion for summary judgment.”
This rule change could lengthen the time it takes to get a hearing on a pending motion for summary judgment. Currently, we could schedule a hearing between thirty and sixty days after the motion is filed. Under the amended rule, the hearing cannot take place prior to the new 60-day deadline. However, in many counties with a large metropolitan area, the ability to get a hearing within 60 days is already rare given the busy dockets of those judges.
New Rule 1.202 is titled Conferral Prior to Filing Motions. This new rule will impose a duty on a moving party (the party who is filing a motion in the court case) to confer with the opposing party in a good-faith effort to resolve the issues raised in the motion prior to setting a hearing on the motion. The idea is to force the parties to communicate and only bring before the court for hearing motions that are truly contested. This rule does not apply to certain motions, including a motion for summary judgment.
While this new rule can be helpful when both parties are represented by an attorney, this new rule can create challenges in a case where a party is pro se (not represented by an attorney). In most of the collections lawsuits we handle, most debtors are not represented by an attorney. Under this new rule, we are going to have to make a good-faith effort to reach the debtor and discuss the pending motion prior to setting a hearing. As most debtors are not very communicative, this requirement can take time and delay the resolution of the case. Additionally, this new requirement will require more time by the attorney and, therefore, increase the legal fees charged in these cases.
Furthermore, the Florida Supreme Court amended Rule 1.280, which governs discovery in a civil case. These changes follow how the Federal Rules of Civil Procedure operate and now require that parties provide initial discovery disclosures whether the other party makes any discovery requests. This duty will now require us to provide certain information to a debtor during litigation, thereby requiring us to get more information at the beginning of a case so that the required information can be submitted to the debtors.
Other changes in the rules will have a limited impact on routine collections and foreclosure litigation but could impact more complex litigation. Should you have any questions about these rule changes or collections or foreclosure litigation, please do not hesitate to contact a lawyer at SVL.
Staff Spotlight on Rhonda Taylor
Rhonda is originally from Charleston, South Carolina, but moved to Tallahassee when she was eight months old. She has a twenty-eight-year-old daughter named Heather who works as a social worker at a local middle school in Tallahassee. Rhonda enjoys spending her time with Heather and her son-in-law, Ryan. They got married in February 2022.
Rhonda joined the SVL Team in January of this year. She is the legal assistant handling Georgia collection cases for our Credit Union clients. Rhonda enjoys working in the legal field because there is always something new to learn. She loves having goals to strive for as she learns the process.
In her time away from the office and legal work, she loves to get crafty! Rhonda uses sublimation to create resin tumbler cups with fun designs. She loves to be a part of local craft shows to showcase her tumblers. She also does special orders for these special cups.
Thank you for all you do, Rhonda – we are happy to have you here at SVL!
Staff Spotlight on Brianna Hill
Brianna joined the SVL Team in February of this year. She is the legal assistant handling all Florida replevins. Along with working full time at our office, she is currently attending Tallahassee Community College where she will obtain her Associate’s Degree at the end of this summer. She plans on transferring to FAMU in August where she will earn her Bachelor’s Degree in Business Administration.
Brianna enjoys working in the legal field because it is an ongoing learning process. She loves that it keeps her on her toes!
In her spare time away from the office, Brianna enjoys adventuring and trying new things. Going to restaurants that she has never been to and taking classes around town, such as cycling, painting, and barre are just a few of her favorite ways to fill her “extra” time.
Brianna, we love having you apart of our team – thank you for being a true rockstar!
Sorenson Van Leuven in the Community
Sorenson Van Leuven participated in the 24th Annual Friends of the NMCRS Charity Golf Tournament on April 5, 2024. This is an annual Golf Tournament in Pensacola, Florida, proudly supporting the Navy-Marine Corps Relief Society, Inc. The mission of this organization is to provide “financial assistance and educate service members to become financially self-sufficient and better managers of their personal finances.” Attorneys Steve Orsillo and Blair Boyd had a great time playing in this tournament and supporting the cause.
On April 22, 2024, Sorenson Van Leuven participated in Gulf Winds Credit Union’s first charitable golf tournament called the Chip in Fore in Pace, FL. This event raised more than $33,000 with the support of the golfers, sponsors, and donations. It was a great day for networking, fun, and providing support to over 20 local non-profit organizations in the area. Tyler Van Leuven and Blair Boyd were in attendance at this event.
Sorenson Van Leuven was also a Gold Sponsor in the 2024 Tallahassee Chapter of Credit Union’s Golf Tournament held on April 8, 2024, located in Tallahassee. This is always a great event and attorneys Tyler Van Leuven, Steve Orsillo, and Blair Boyd enjoyed supporting the Credit Union movement through a fun day on the course
2024 CUCP Summit
Our firm sponsored and attended the 2024 Credit Union Collection Professionals (CUCP) Summit in Nashville on May 15-17, 2024. The mission of the CUCP is to develop, educate, promote, and provide a professional support system to all people in the Credit Union movement. Attorney Steve Orsillo from our office spoke on the topic of Revolutionizing Collections – the Dynamic Impact of Tech Driven.
It was a great time networking with some of our current Credit Union clients and also building new relationships too. Thank you CUCP for including us!
Out of the Office
On Saturday, June 8, 2024, SVL hosted a Family Fun Day at a local hangout in Tallahassee – District 850. We enjoyed bowling and fun arcade games for the afternoon. It was a fun time away from the office, spending time with our co-workers, their spouses, and their children. We are looking forward to the next staff get-together!
If you file a claim against a member for breach of contract and a court awards you a dollar figure, it is not just the damages that stem from the contract/loan that the court will award you, there is also something know as post-judgment interest.
In 2011, the law changed how interest applies to Florida judgments in two major ways. First, the law now reads that the rate of interest will be adjusted by the Chief Financial Officer on each quarter (on January 1, April 1, July 1, and October 1) of each particular year. The second major change in the law was that, not only does the amount of interest change quarterly, the rate of interest that applies to a particular already established judgment will vary quarterly until the judgment is paid in full. The statute is clear that nothing in the statute shall affect the rate of interest that is set in a contract.
The Consumer Financial Protection Bureau (“CFPB”) has recently issued two advisories on the Fair Credit Reporting Act (“FCRA”). The CFPB was formed around twelve years ago in response to the Great Recession and serves as an aid to consumers in the financial sector. In addition to serving consumers, the CFPB is also responsible for supervising financial institutions, including Credit Unions. This supervision includes issuing guidance and interpreting certain legislation.
For example, if a consumer had an eviction proceeding commence on May 20, 2020, and that eviction proceeding was dispensed on June 20, 2020, the seven-year timeframe would run from the May 20, 2020, date, not the June 20, 2020, date. The CFPB advised that this clarification was intended to promote data accuracy. The CFPB noted that some states had inconsistent procedures for reporting disposition of certain matters that led to uncertainty in consumer reports.
In a Chapter 13 bankruptcy, a debtor has the chance to reorganize their finances and repay debts over a specified period, typically three to five years. For secured creditors, this process introduces a crucial concept known as “cram down,” which carries significant implications. A cram down occurs when a bankruptcy court approves a repayment plan proposed by the debtor that reduces the outstanding balance of a secured debt to the collateral’s value, rather than the total amount owed. However, the Supreme Court ruled in its Till decision that, when this occurs, the secured creditor is entitled to an interest rate of the current prime interest rate plus a 1-3% risk adjustment. Creditors are entitled to this even if the contract rate is less than Till rate.
On Saturday, December 9, 2023, the SVL team gathered at Steve & Virginia Orsillo’s beautiful home to celebrate the holiday season. Staff, spouses, and friends had a great time spreading Christmas cheer. We are thankful that we have such a great work family to spend these special times with.
On Saturday, December 9, 2023, the SVL team gathered at Steve & Virginia Orsillo’s beautiful home to celebrate the holiday season. Staff, spouses, and friends had a great time spreading Christmas cheer. We are thankful that we have such a great work family to spend these special times with.
Interpleader – this type of action has come up a lot lately, and I wanted to address what it is, how it is used, and what a Credit Union may expect from such an action. 
