Fla. App. Court (2nd DCA) Rejects Argument Mortgagee Thwarted Right of Redemption by Not Providing Estoppel Letter

The District Court of Appeal of Florida, Second District, recently rejected a borrower’s objection to a foreclosure sale under the theory the mortgagee failed to provide him with an “estoppel letter,” which would have allowed him to exercise his right of redemption.

A copy of the opinion is available at:  Link to Opinion.

A foreclosure judgement was entered and the property was sold via public sale.  Ten days later, the borrower objected to the sale of the property.  The objection was denied and a certificate of title was issued to the mortgagee.

The borrower appealed, arguing that the trial court erred in denying the motion to set aside the sale because the notice of sale failed to comply with Section 702.035, Florida Statutes (2014).

The statute provides in relevant part:

Whenever a legal advertisement, publication, or notice relating to a foreclosure proceeding is required to be placed in a newspaper, it is the responsibility of the petitioner or petitioner’s attorney to place such advertisement, publication, or notice. For counties with more than 1 million total population as reflected in the 2000 Official Decennial Census of the United States Census Bureau as shown on the official website of the United States Census Bureau, any notice of publication required by this section shall be deemed to have been published in accordance with the law if the notice is published in a newspaper that has been entered as a periodical matter at a post office in the county in which the newspaper is published, is published a minimum of 5 days a week . . . .

Fla. Stat. § 702.035.

Here, the county where the notice of sale was published has a population of more than one million.  The borrower argued that the strict construction of the statute renders the statute unconstitutional special law.  More specifically, citing City of Miami v. McGrath, 824 So. 2d 143, 148 (Fla. 2002), he argued that the statute “applie[s] to a particular population size and [is] tied to a specific date, so that no other entities could ever fall within the confines of the statute.”

Neither party argued and the record on appeal did not reflect that the borrower complied with Florida Rule of Civil Procedure 1.071, which requires a party challenging the constitutionality of a state statute or a county or municipal charter, ordinance or franchise, to meet certain procedural requirements.  Accordingly, the Appellate Court held it could not consider the constitutional issues, because the borrower did not serve the state attorney general as required by 1.071.  See Diaz v. Lopez, 167 So. 3d 455, 460 n.10 (Fla. 3d DCA 2015).

The Court noted that Section 45.031, Florida Statute is the operative statute in this case.  The statute provides that “[i]n any sale of real or personal property under an order or judgment, the procedures provided in this section and [sections] 45.0315-45.035 may be followed as an alternative to any other sale procedure if so ordered by the court.” Fla. Stat. § 45.031.  Here, the final judgment in this case directs that the sale be in accordance with 45.031.

Section 45.031(2) provides that “[n]otice of sale shall be published once a week for 2 consecutive weeks in a newspaper of general circulation, as defined in chapter 50, published in the county where the sale is to be held.”  Fla. Stat. § 45.031(2).

The Court noted that the borrower here did not argue that the mortgagee did not comply with 45.031.  Because he failed to make that argument, the Appellate Court held the borrower was not entitled to relief on this issue.

Instead, the borrower tried to argue that the trial court erred in denying his motion to set the foreclosure sale aside because the mortgagee failed to provide him with an estoppel letter, which would have allowed him to exercise his right of redemption.

Section 701.04, Florida Statutes requires that “[w]ithin [fourteen] days after receipt of the written request of a mortgagor, . . . the holder of a mortgage shall deliver or cause the servicer of the mortgage to deliver to the person making the request . . . an estoppel letter setting forth the unpaid balance of the loan secured by the mortgage.”  Fla. Stat. § 701.04.

The Appellate Court held that a mortgagee’s alleged failure to comply with section 701.04 is not a basis to set aside the sale.

More specifically, the Court held that “it is simply inadequate to justify the equitable relief requested where [the borrower] was a party to the foreclosure action and received a copy of the final judgment of foreclosure which included the requisite paragraph regarding the right of redemption.”

In addition, the Court noted that the borrower ignored also section 45.031 and the court’s previous ruling in Whitburn, LLC v. Wells Fargo Bank, N.A., 190 So. 3d 1087, 1092 (Fla. 2d DCA 2015).  In Whitburn, the borrower asserted that the mortgagee thwarted the borrower’s redemption rights by failing to provide an estoppel letter.  Just like here, the Appellate Court in Whitburn noted that section 45.0315, Florida Statutes addresses the right of redemption, providing that “the mortgagor or the holder of any subordinate interest may cure the mortgagor’s indebtedness and prevent a foreclosure sale by paying the amount of moneys specified in the judgment, order, or decree of foreclosure.”

Accordingly, the Court affirmed the trial court’s ruling.

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