KEY POINTS | FLORIDA’S APPELLATE COURT DISTINGUISHES REVERSE MORTGAGES & AFFIRMS DISMISSAL OF FORECLOSURE BASED ON RES JUDICATA
- Diaz | Anselmo
- Sep 24, 2024
- 1 min read
Updated: Mar 20
Earlier this month, Florida’s Fifth DCA rendered a surprising opinion wherein it affirmed dismissal of a subsequent foreclosure action brought against a condominium association on a reverse mortgage finding res judicata barred the subsequent action. Assets Mgmt. Series I Tr. v. Harvey, No. 5D2023-2017, 2024 WL 4094183 (Fla. 5th DCA Sept. 6, 2024).
In Harvey, the mortgagor died a year after taking out a reverse mortgage. The bank (OneWest) initiated foreclosure proceedings based on the borrower’s death and named Hidden Ridge Condominium Association (“the Association”) as a defendant due to the Association’s lien. Ultimately, the trial court dismissed the foreclosure action agreeing with the Association that OneWest failed to adequately prove its superiority at trial. Thereafter, OneWest sold the loan to BONYM.
BONYM initiated a subsequent foreclosure action against the Association again based on the death of the mortgagor. The Association raised res judicata as a defense and prevailed at the lower court level. On appeal, the Fifth DCA agreed the subsequent action against the Association was barred by res judicata. The Court pointed out that res judicata did not apply to traditional mortgages based upon the continuing obligation of the borrower to make monthly payments, each of which constituted a “subsequent acceleration event” and a new cause of action. The Court explained in Harvey, there was no subsequent acceleration event, only the death of the borrower which could not be repeated and therefore could not form the basis for a new cause of action. The Court affirmed the dismissal order.