I. The Foreclosure Process

In Florida, lenders may foreclose on a mortgage in default by using the judicial foreclosure process. The foreclosure process is commenced by filing a lawsuit in the Circuit Court in the county where the real property being foreclosed is located. [In the State of Florida there are no non-judicial foreclosures.] The Florida Statute concerning mortgage foreclosure is Chapter 702.

II. Foreclosure Timeline

1. Lis Pendens. At the time the lawsuit (a/k/a the Complaint) is filed, the Lender will record a Lis Pendens in the Public Records of the county in which the property is located. The term “Lis Pendens” means “litigation pending” and puts the public on notice that a law suit has been filed against you and the specific property.

2. Summons and Service of Process. After the Lis Pendens and Complaint have been filed and the Summons has been issued by the Clerk, a process server (sometimes a County Sheriff) will deliver to you a copy of the Complaint, the Lis Pendens and the Summons. The Summons details your rights and responsibilities associated with the lawsuit that has just been filed against you.

3. Answer. In response to the Complaint, you generally have 20 days from receipt of your Summons to file your Answer with the Clerk of the Circuit Court, with a copy to the lender’s counsel. An Answer is a legally sufficient response to the allegations in the Complaint.

4. Summary Judgment Hearing. If you do not file an Answer within the prescribed time period, the Lender’s attorney will likely file a Motion for a Summary Judgment. At the Summary Judgment hearing, the Lender’s attorney will present the case against you. Unless you have proof of payment, the judge will likely rule against you, find you in default of the mortgage and will grant the lender the right to foreclose the mortgage and sell your property.

5. Sale Date. Once the Summary Judgment is entered, the Judge will set a foreclosure sale date usually 30-45 days after the entry of the Judgment. This is the date when the property will be sold. Most Florida counties now conducting their foreclosure sales on-line.

6. Certificate of Title. After the foreclosure sale, title is vested in the buyer’s name by the Clerk filing a Certificate of Title. The Certificate of Title is generally issued ten (10) days after the sale date and is recorded in the Public Records of the county in which the property is located.

7. Deficiency Judgment. After the sale, and assuming the lender received less than the full amount due, the lender may then request that the court enter a deficiency judgment against the borrower for the difference between the monies actually received by the lender and the amount due to the lender. The lender may also bring a separate action for a deficiency.

You may have significant tax consequences as a result of a foreclosure because in the event the lender “writes off” the deficiency and issues you a 1099C, this is seen as debt forgiveness by the IRS and may be treated as income. Please consult with your with your tax advisor for specific details regarding your situation.