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Florida Foreclosure Judgment-creditors: Consider Filing Separate Deficiency Action


When the housing market crashed in the mid-2000s, tens of thousands of Floridians made a strategic decision to walk away from properties that were worth a fraction of what was owed. When the mortgage companies received foreclosure judgments, rather than seek and pursue deficiency judgments, the mortgage companies sold the right to seek deficiency judgments to third party purchasers, such as Dyck-O’Neal, Inc. (“Dyck-O’Neal”), which is one of the largest third party purchasers of deficiency judgments in the country.

In some instances, despite the fact that it is legal for third party purchasers, such as Dyck-O’Neal, to purchase deficiency judgments and/or pursue deficiency judgments on foreclosed properties, some judgment debtors have challenged the rights of third party purchasers of deficiency judgments.

Depending on how a mortgage company pursues a foreclosure action, unlike in some states where a deficiency judgment is automatically entered after a foreclosure sale, under Florida law it may be strategic on the part of a judgment creditor to file a separate lawsuit in order to pursue a Florida deficiency judgment against a Florida judgment debtor.

In Gdovin v. Dyck-O’Neal, Inc., the judgment debtor challenged the right of Dyck-O’Neal to file a separate deficiency lawsuit after the foreclosure court reserved jurisdiction to enter a deficiency judgment in the foreclosure judgment. 2016 Fla. App. LEXIS 12038 (Fla. 2d DCA August 10, 2016). Pursuant to Florida law, the appellate court held that Florida law “authorizes the filing of an independent deficiency action in such cases because ‘the foreclosure court did not grant or decline the deficiency claim.”’ Id. (quoting Garcia v. Dyck-O’Neal, Inc., 178 So. 3d 433, 436 (Fla. 3d DCA 2015).

In many instances it may be strategic on the part of a judgment creditor to file a separate lawsuit in order to obtain a deficiency judgment against a Florida judgment debtor. Florida law permits judgments to last up to twenty (20) years and a new judgment may reset the time frame to pursue a judgment debtor’s assets. Recent Florida case law has given judgment creditors more leeway in filing new lawsuits in order to obtain Florida deficiency judgments.

This is good news for Florida foreclosure judgment creditors.

Founded in 1997, Gill Law Firm represents small, medium and large corporations in commercial debt recovery, small business and nonprofit startups throughout the state of Florida. To find out how the firm may help your company, please contact A. Wayne Gill, Esq. via email at awgill@gillattorneys.com or by phone at (561) 454-0301.

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