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By gedlaw50486353, Sep 6 2017 01:47AM

The First District Court of Appeal of Florida (“1st DCA”) recently upheld a lower court judgment ruling that short-term vacation rentals do not violate restrictive covenants requiring that they have a residential purpose.

In this case, the Homeowners (Appellees) owned properties in the Santa Monica Beach subdivision of Bay County. Santa Monica Beach Prop. Owners Ass’n, Inc. v. Acord, 219 So. 3d 111, (Fla. 1st DCA, 2017) The properties were subject to a restrictive covenant which provided

that the land “shall be used only for residential purposes” and that no building on the land could be used for a “ business” nor for purposes of “ public assemblage”. Id at 2. The Association sent letters to the Homeowners in December 2015 stating that the property was being used in violation of the restrictive covenants due to the property becoming a vacation rental and being advertised on VRBO. Id. The Association thereby requested that the Homeowners discontinue their “vacation rental business”. Id at 3.

The Association subsequently filed a complaint alleging that the Homeowners’ properties were being offered and advertised for rent as “public lodging establishments”; Homeowners were required to collect and remit state and local taxes on the rentals; and that Homeowners were licensed to operate the property as a public lodging establishment under a business name. Id at 3. The Homeowners argued that the Association failed to allege the properties were being used for any purpose other than residential. They also argued that the residential use of the property was conclusively established by the Association’s reference to the Florida Statute concerning “public lodging” which refers to lodging as an inherently residential use. Id at 4.

The trial court agreed with the Homeowners and dismissed the complaint stating “the critical inquiry is not the duration of the tenancy, but the character and actual use of the property by those residing thereon.” Id. Further, the Court reasoned that since the proper focus is on the actual use of the property, the nature of that use is not changed from residential to commercial merely because the Homeowners earn income from the rental property or because the property is subject to a regulatory scheme and licensure. Id. Lastly, the Court stated that because the restrictive covenants were silent on the use of short-term rentals, any ambiguities regarding the proper use of the property must be resolved in favor of the Homeowners. Id at 5.

The issue of whether short-term vacation rentals of residential properties violate restrictive covenants requiring properties to be used for residential purposes and prohibiting use for business purposes was a case of first impression in Florida. Id. However, this issue has been resolved in a number of other states which have consistently held that short-term vacation rentals do not violate restrictive covenants under similar facts. Id. The 1st DCA, looking at these other cases, determined that the critical issue in such cases is not the duration of the rental but whether the renters of the property are using the property for ordinary living purposes such as eating and sleeping. Id at 6. The Court reasoned that the Association did not and could not allege that the Homeowners’ properties were being used by the renters for any nonresidential purposes and therefore, the Court upheld the ruling of the trial court in favor of the Homeowners. Id at 7.

See Santa Monica Beach Prop. Owners Ass’n, Inc. v. Acord, 219 So. 3d 111, (Fla. 1st DCA, 2017). (pf)

Click here to read full opinion.

https://edca.1dca.org/DCADocs/2016/4782/164782_DC05_04282017_104637_i.pdf

The information you obtain through this article is not, nor is it intended to be, legal advice. This article intended to provide general legal updates. Information is current only as of the date indicated. Changes occur frequently and often the laws and statutes are complex and/or are difficult to follow and therefore we cannot be held responsible for any errors or misstatements or for any misunderstanding on your part. Thus, you are cautioned to use this information at your own risk. You should consult an attorney for advice regarding your individual situation. The proper answers to your legal problems will turn on your particular circumstances and thus you need to have competent legal advice tailored to those circumstances. Consult a lawyer if you have a legal matter which needs attention. All potential clients are urged to make their own independent investigation and evaluation of any lawyer being considered. This article is not intended to be advertising and David S. Ged, PA does not wish to represent anyone based solely upon the reading/viewing of this article.

By gedlaw50486353, Apr 11 2016 06:22PM

The Fifth District Court of Appeal of Florida (“5th DCA”) recently reversed a trial court’s final judgment of foreclosure where Plaintiff bank failed to establish evidence it was the holder of the note prior to filing the complaint.

In May 2006, the Defendant homeowner executed a note and mortgage in the amount of $168,000. Upon defaulting on the loan, the Plaintiff, HSBC (“the Bank”), filed a complaint on April 1, 2009 to reestablish the note and foreclose the mortgage. In December 2009, the bank filed the original mortgage and the original note. The note filed at that time differed from the note attached to the complaint because it contained an undated special endorsement to HSBC from Quicken.

Throughout both discovery and pretrial motions, the homeowner continued to challenge the bank’s standing to foreclose the mortgage. At trial, the bank offered the endorsed note and mortgage into evidence without any additional testimony. The homeowner objected to the admissibility of the endorsed note, stating that it differed from the note that was attached to the complaint. The trial court overruled the homeowner’s objection and allowed the endorsed note into evidence.

Under Florida law, “a crucial element in any mortgage foreclosing proceeding is that the party seeking foreclosure demonstrate that it has standing to foreclose,” Schmidt v. Deutsche Bank, 170 So. 3d 938, 940 (Fla. 5th DCA 2015). This burden is on the party bringing the foreclosure action and must be proven by substantial competent evidence. Id. Further, a party’s standing to foreclose must be shown “at the time the lawsuit was filed.” McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). F.S. §673.2051(1) defines a special indorsement as an endorsement which is made by the holder of an instrument, whether payable to an identified person or to the bearer, and the indorsement identifies a person to whom it makes the instrument payable. An instrument which is specially indorsed becomes payable to the identified person and may be negotiated only by the indorsement of that person. Id. “The endorsement must have occurred before the filing of the complaint because it is axiomatic that standing must be shown as of the filing of the complaint.” Schmidt, 170 So. 3d at 41.

In this case, the bank attempted to show standing at trial by offering additional evidence including a loan transfer history and reference to a pooling and servicing agreement. This evidence failed to show that the bank became holder of the note through a special endorsement prior to filing the complaint. The Court held that this evidence was insufficient to show that the bank was holder of the note at the time the complaint was filed and thus ruled that the bank had failed to establish standing. Therefore, the Court reversed and remanded the case and ordered the entry of an involuntary dismissal.

See Elsman v. HSBC Bank, USA, 182 So. 3d 770, (Fla. 5th DCA, 2015). (pf)

Click here to read full opinion.

http://www.5dca.org/Opinions/Opin2015/122815/5D14-1753.op.pdf

The information you obtain through this article is not, nor is it intended to be, legal advice. This article intended to provide general legal updates. Information is current only as of the date indicated. Changes occur frequently and often the laws and statutes are complex and/or are difficult to follow and therefore we cannot be held responsible for any errors or misstatements or for any misunderstanding on your part. Thus, you are cautioned to use this information at your own risk. You should consult an attorney for advice regarding your individual situation. The proper answers to your legal problems will turn on your particular circumstances and thus you need to have competent legal advice tailored to those circumstances. Consult a lawyer if you have a legal matter which needs attention. All potential clients are urged to make their own independent investigation and evaluation of any lawyer being considered. This article is not intended to be advertising and David S. Ged, PA does not wish to represent anyone based solely upon the reading/viewing of this article.

By gedlaw50486353, Feb 26 2016 07:47PM

The Fourth District Court of Appeal of Florida (“4th DCA”) recently affirmed a trial court’s order which denied a homeowner’s motion to vacate final judgment of foreclosure finding the motion was untimely and improper.

The Plaintiff, Wachovia Mortgage, FSB (“the Bank”), was granted an order of final summary judgment of foreclosure against the Defendant homeowners on December 15, 2011. The homeowners did not appeal the ruling but later moved to vacate the final judgment on September 27, 2014, almost three years after the judgment was entered against them. The homeowners argued that the “Pick-a-Payment” note that was at subject in the case was considered a “deceptively devised financial product” and the Bank entered into agreements with both state and federal officials to avoid prosecution regarding these type of loans. A “Pick-a-Payment” note refers to a mortgage loan where the borrower is permitted to make a minimum payment for a limited time subject to certain limitations. These loans have been the subject of various class action lawsuits throughout the country. See Murphy v. Wells Fargo Home Mortg., 2013 U.S. Dist. Lexis 118410.

The Homeowners argued that the agreement between the State of Florida and the bank allowed the bank to offer funds and assists its customers in modifying their loans in order to avoid foreclosure. Since the Bank failed to offer Homeowners a modification and to disclose the settlement to the Court, they argued this constituted extrinsic fraud which warrants a vacation of the final judgment of foreclosure pursuant to Florida Rules of Civil Procedure 1.540(b).

Under Florida law, once a court renders final judgment, the trial court loses jurisdiction over the case except to enforce judgment itself. Bank One, N.A. v. Batronie, 884 So. 2d 346, 348 (Fla. 2d 2004). There is one exception to this under rule 1.540 which gives the court jurisdiction to relieve a party from final judgment under limited circumstances. Id. The rule provides relief from “fraud, misrepresentation, or other conduct of an adverse party.” Fla. R. Civ. P. 1.540(b)(3). The rule further states that a motion shall be filed within a reasonable time and for allegations of fraud not more than 1 year after the judgment. Id. This law follows strict compliance and may not be extended for any reason. Batronie, 884 So. 2d at 349. In this case, the motion to vacate was entered almost three years after the final judgment. Thus, the 4th DCA held the trial court had no jurisdiction to hear the motion.

On the issue of fraud, the Court stated that even if the motion were filed in a timely manner, the motion was still without merit. The Florida Supreme Court has discussed extrinsic fraud as involving “conduct which is collateral to the issues tried in the case.” Lefler v. Lefler, 776 So. 2d 319, 321 (Fla. 4th DCA 2001). It is further defined as the “prevention of an unsuccessful party from presenting its case, by fraud or deception practiced by his adversary. Id. The Court found that in no way was homeowner kept from presenting its case or kept away from the court. The agreement was between the State of Florida and the Bank so the Homeowner was not a party to the agreement nor were they a third party beneficiary. The Homeowners were found to have no right of action under the agreement. There was no language incorporating the agreement into the note or mortgage or creating any duty on the bank to offer the Homeowners a modification before foreclosure. Thus, the Homeowners allegation failed to support a finding of extrinsic fraud.

The Court ultimately found that the trial court did not abuse its discretion in denying the Homeowner’s motion to vacate because the motion was untimely.

See Voce v. Wachovia Mortg., FSB, 174 So. 3d 545, (Fla. 4th DCA, 2015). (pf)

Click here to read full opinion.

http://www.4dca.org/opinions/Aug%202015/8-26-15/4D15-34.op.pdf

The information you obtain through this article is not, nor is it intended to be, legal advice. This article intended to provide general legal updates. Information is current only as of the date indicated. Changes occur frequently and often the laws and statutes are complex and/or are difficult to follow and therefore we cannot be held responsible for any errors or misstatements or for any misunderstanding on your part. Thus, you are cautioned to use this information at your own risk. You should consult an attorney for advice regarding your individual situation. The proper answers to your legal problems will turn on your particular circumstances and thus you need to have competent legal advice tailored to those circumstances. Consult a lawyer if you have a legal matter which needs attention. All potential clients are urged to make their own independent investigation and evaluation of any lawyer being considered. This article is not intended to be advertising and David S. Ged, PA does not wish to represent anyone based solely upon the reading/viewing of this article.

By gedlaw50486353, Feb 21 2016 07:09PM

The First District Court of Appeal of Florida (“1st DCA”) recently reversed a judgment of foreclosure where the bank failed to establish standing before the filing of the complaint.

The Defendant in this case appealed a final judgment of foreclosure stating that the Bank failed to file the original note bearing an undated blank endorsement until after the filing of the complaint. The Florida courts have ruled that where a plaintiff files the original note after the complaint is filed, an undated blank endorsement on the note does not prove that plaintiff had standing at the time the complaint was filed. Tilus v. AS Michai LLC, 161 So. 3d 1284, 1286 (Fla. 4th DCA 2015). Further, when standing is asserted by plaintiff based on an undated endorsement, it must be shown that the endorsement occurred before the complaint was filed. Lloyd v. Bank of N.Y. Mellon, 160 So. 3d 513, 515 (Fla. 4th DCA 2015). This can be proved by additional evidence such as a litigation expert. Id.

The Bank in this case brought in a mortgage resolution associate from a prior servicer on the loan who testified that the Bank was the holder of the note. The associate also testified that the loan servicer’s routing history showed the “collateral file” was sent to the bank’s counsel prior to filing the complaint but this evidence was not admitted by the Court. The Court held that the testimony of the associate did not establish that the note was endorsed at the time of filing the complaint and therefore the Bank had failed to show standing to foreclose at time the complaint was filed. Accordingly, the Court of Appeal reversed the lower court’s final judgment of foreclosure.

See Kelly v. Bank of N.Y. Mellon, 170 So. 3d 145, (Fla. 1st DCA, 2015). (pf)

Click here to read full opinion.

https://edca.1dca.org/DCADocs/2013/2778/132778_DC13_07142015_084412_i.pdf

The information you obtain through this article is not, nor is it intended to be, legal advice. This article intended to provide general legal updates. Information is current only as of the date indicated. Changes occur frequently and often the laws and statutes are complex and/or are difficult to follow and therefore we cannot be held responsible for any errors or misstatements or for any misunderstanding on your part. Thus, you are cautioned to use this information at your own risk. You should consult an attorney for advice regarding your individual situation. The proper answers to your legal problems will turn on your particular circumstances and thus you need to have competent legal advice tailored to those circumstances. Consult a lawyer if you have a legal matter which needs attention. All potential clients are urged to make their own independent investigation and evaluation of any lawyer being considered. This article is not intended to be advertising and David S. Ged, PA does not wish to represent anyone based solely upon the reading/viewing of this article.

By gedlaw50486353, Feb 19 2016 05:16PM

The First District Court of Appeal of Florida (“1st DCA”) recently reversed a trial court’s ruling that a foreclosure action was barred by the statute of limitations.


The homeowner in this case first defaulted on their mortgage in February 2007. The lender sent the homeowner notice of intent to accelerate the note in April 2007 and later filed a foreclosure action, however, the suit was dismissed without prejudice due to the lender’s failure to appear in court. The lender sent the homeowner another acceleration letter in November 2010 based on a default from March 2007 and subsequent breaches. The homeowner took no action to cure the default and another foreclosure action was filed in November 2012. The homeowner asserted an affirmative defense based on the statute of limitations stating that the action was barred pursuant to F.S. § 95.11(2)(c), because the action was not filed within 5 years of the original acceleration of the note in 2007.


In Singleton v. Greymar Associates, 882 So.2d 1004( Fla. 2004), the Florida Supreme Court discussed the nature of mortgage obligations between the parties and the continued obligations which arise by virtue of that relationship. In Singleton, the Court held that each subsequent default by a homeowner creates an independent right in the lender to accelerate on the note and bring a foreclosure action. Id. at 1008. The Court based its holding on the underlying principles that a homeowner who defaults should not be unjustly enriched and the lender should be able to avoid obstacles which bar them from challenging subsequent defaults. Id. at 1007-08.


In this case, the Court found that the trial court’s judgment ran contrary to Singleton because the defaulting borrowers were being released from their entire indebtedness and it kept the lender from collecting on any of the total debt. The Court held that the lender’s 2012 foreclosure action, based on breaching occurring after the original complaint, were not barred by the statute of limitations. If you are a homeowner who is facing a foreclosure, it is highly recommended that you seek the advice of an experienced real estate attorney.

See Nationstar Mortg., LLC v. Brown, 175 So. 3d 833, (Fla. 1st DCA, 2015). (pf)


Click here to read full opinion.


https://edca.1dca.org/DCADocs/2014/4381/144381_DC13_08242015_111309_i.pdf



The information you obtain through this article is not, nor is it intended to be, legal advice. This article intended to provide general legal updates. Information is current only as of the date indicated. Changes occur frequently and often the laws and statutes are complex and/or are difficult to follow and therefore we cannot be held responsible for any errors or misstatements or for any misunderstanding on your part. Thus, you are cautioned to use this information at your own risk. You should consult an attorney for advice regarding your individual situation. The proper answers to your legal problems will turn on your particular circumstances and thus you need to have competent legal advice tailored to those circumstances. Consult a lawyer if you have a legal matter which needs attention. All potential clients are urged to make their own independent investigation and evaluation of any lawyer being considered. This article is not intended to be advertising and David S. Ged, PA does not wish to represent anyone based solely upon the reading/viewing of this article.


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