Florida Supreme Court rules that each default on mortgage payment resets statute of limitations

In a long-awaited decision in Bartram v. U.S. Bank, the Florida Supreme Court ruled that each default on a monthly mortgage payment creates a new cause of action and resets the statute of limitations for bringing a foreclosure action. The ruling is a complete victory for mortgage banks, providing clarity on the application of the foreclosure statute of limitations and shutting down a potential defense that had been validated by trial courts and one appellate court in Florida.

The dispute began in 2006, when the mortgagee Bank filed a foreclosure lawsuit against Lewis Bartram after he defaulted on his loan. The 2006 foreclosure action was dismissed in 2011 when the Bank failed to appear for a court-ordered conference. Shortly after that, Bartram filed a lawsuit asking a court to declare his entire mortgage canceled and the lien released based on Florida’s five-year statute of limitations. Bartram argued that under the statute of limitations, the Bank had five years from when it accelerated the loan to file a foreclosure action. Because the Bank had not foreclosed on the property within five years of acceleration, Bartram claimed that the mortgage was now invalid.

Bartram’s argument was successful in the trial court, but the court of appeals sided with the Bank. After a conflicting decision from another court of appeals in Florida, the Florida Supreme Court took up the issue. The court found in favor of the Bank and rejected Bartram’s reading of the foreclosure statute of limitations:

A subsequent and separate alleged default created a new and independent right in the mortgagee to accelerate payment on the note in a subsequent foreclosure action. Therefore, with each subsequent default, the statute of limitations runs from the date of each new default providing the mortgagee the right, but not the obligation, to accelerate all sums then due under the note and mortgage.

The Court then determined that “even if the note had been accelerated through the Bank’s foreclosure complaint, the dismissal of the foreclosure action had the effect of revoking the acceleration. . . . Dismissal of the foreclosure action therefore returned the parties to their pre-foreclosure complaint status.” Thus, the court concluded that Bartram could not rely on a statute of limitations defense to cancel his mortgage, and the Bank could go forward with foreclosure proceedings.

This case should put an end to borrowers raising a statute of limitations defense in Florida foreclosure actions. The case also may have application beyond Florida. For example, I recently wrote a post on similar statute of limitations arguments that had been raised in a Texas case. With the highest court in Florida speaking authoritatively on this issue, it will make it more difficult for borrowers to invoke the statute of limitations in similar contexts across the country.

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