Fla. App. Court (5th DCA) Holds Borrower’s Surrender in Bankruptcy Resolves Contested Foreclosure

As an example of the conflicting and contrasting court rulings on the effect of surrender in bankruptcy (see our prior update), the District Court of Appeal of the State of Florida, Fifth District, recently dismissed a borrower’s appeal from a final judgment of foreclosure because the borrower admitted during the course of his bankruptcy proceeding that he owed the mortgage debt and stated his intention to surrender the mortgaged property.

A copy of the opinion in Rivera v. BAC Home Loans is available at: Link to Opinion.

A mortgage loan borrower filed for bankruptcy relief while his appeal of a foreclosure action was pending in state court.  The mortgagee filed copies of the relevant bankruptcy pleadings with the appellate court, and the appellate court granted the mortgagee’s motion to take judicial notice of these documents.

The Fifth DCA pointed out that the bankruptcy court entered an order confirming the debt and the borrower’s surrender of the property. Citing a bankruptcy court ruling from the Middle District of Florida (In re Metzler, 530 B.R. 894, 900 (Bankr. M.D. Fla. 2015), the Fifth DCA then dismissed the appeal.

In so ruling, the Fifth DCA held that in bankruptcy “the term ‘surrender’ means that a debtor must relinquish secured property and make it available to the secured creditor by refraining from taking any overt act that impedes a secured creditor’s ability to foreclose its interest in secured property.”

The Appellate Court concluded that the borrower’s “actions and the orders of the bankruptcy court have fully resolved this matter.”

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Eric Tsai practices in Maurice Wutscher’s Commercial Litigation and Consumer Credit Litigation groups, and in its Regulatory Compliance group. He concentrates his practice primarily on the defense of consumer and commercial financial services companies, including mortgage lenders and servicers, mortgage loan investors, third party debt collectors, and other financial services providers. He also counsels clients on regulatory compliance, licensing, and other consumer protection matters. Eric earned his undergraduate degree from the University of California, Irvine. Prior to attending law school, he worked as a loan officer for national direct lenders. He earned his Juris Doctor from California Western School of Law and thereafter obtained a Master of Laws (LLM) in Taxation from the University of San Diego School of Law. Eric publishes extensively on various issues affecting consumer lending and litigation, including both federal and California-specific developments. He is licensed to practice law in California, Nevada, and Oregon, and is admitted in all United States District Courts in the State of California, the United States District Court for the District of Oregon, the United States District Court for the District of Nevada, the U.S. Tax Court, and the Ninth Circuit Court of Appeals. He is also a licensed real estate broker in the State of California.