My Loser Argument of The Week- Is a Spouse Entitled to a Notice of Default?

I’ve had my posterior region handed to me on several key arguments because, quite frankly, I did not do my job correctly. Now, the second part of that is that even after exhaustive legal research, there is a lack of current case law that supports my argument, but that’s just the technical problem.   The real issue is I failed to support my argument to withstand proper legal inquiry.   So I want to turn several out to the larger community and see whether anyone else can take a better crack at these things.

Issue #1- In Florida, a spouse is a necessary party in a homestead foreclosure.   A spouse is a necessary party to the mortgage being foreclosed, she signs the contract. The Florida Constitution protects spouses from forced sale, even after the primary spouse’s death.   I think each party to the mortgage, each spouse, must receive a letter of default as a condition precedent to foreclosure.   Now, the banks assert the provision that “Notice to one borrower is notice to all” but they conveniently forget the rest of the sentence, “(u)nless Applicable Law provides otherwise”.

So help me out people, does the Applicable Law, starting with Florida’s Constitutional homestead protections, require that a spouse in a homestead mortgage receive a notice of default?   Remember, the purpose of those “innocent spouse” protections are so that a spouse has notice before the other spouse’s conduct (concealed from the innocent spouse and kids) divests the family of the homestead….

So chew on this argument and please give me feedback….should we all just walk away and not make this argument again or should it be fought for?

When a mortgage contains a clause which provides that a lender ” shall” give notice to a borrower before accelerating the amounts due, this language creates a condition precedent which must be satisfied before a lender is entitled to a foreclosure judgment.   See Konsulian v. Busey Bank, 61 So. 3d 1283 (Fla. 2d DCA 2011); Laurencio v. Deutsche Bank, 65 So. 3d 1190 (Fla. 2d DCA 2011); Bryson v. BB&T, 36 Fla. L. Weekly D2582a (Fla. 2d DCA 2011); Goncharuk v. HSBC Mortgage Servicing, Inc., 62 So. 3d 680 (Fla. 2d DCA 2011); Taylor v. Bayview Loan Servicing, 74 so 3d 1115 (Fla. 2d DCA 2011); Wroblewski v. American Home Mortgage, 68 So. 3d 431 (Fla. 5th DCA 2011); Frost v. Regions Bank, 15 So.3d 905, 906 (Fla. 4th DCA 2009).
Indeed, where such a clause resides in a mortgage, and a foreclosing lender fails to give such notice, dismissal is the proper remedy.   See Rashid v. Newberry Federal Savings and Loan Association (Rashid II), 526 So. 2d 772 (Fla. 3d DCA 1988).
” [O]nly when the option [to accelerate a debt] is exercised in an effective manner does acceleration take place.” Florida Zippo, Inc. v. Prudential Insurance Company of America, 579 So.2d 192 (Fla. 3^rdDCA 1991).

Argument

Further, to the extent that this provision is ambiguous, the Florida Supreme Court states that courts ” are obligated to construe the ambiguity against the draft and in favor of the [defendant]” Auto-Owners Insurance Co. v. Anderson, 756 So.2d 29, at 36 (Fla. 2000).

Requiring Notice only be Sent to One Borrower is Expressly Prohibited by Applicable Florida Law
Florida’s constitution places the spouse of homestead property into a heightened position:

Florida Constitution, Article 10, Section 4.”ƒHomestead; exemptions.””

(c)The homestead shall not be subject to devise if the owner is survived by spouse or minor   child, except the homestead may be devised to the owner’s spouse if there be no minor               child. The owner of homestead real estate, joined by the spouse if married, may                   alienate the homestead by mortgage, sale or gift and, if married, may by deed                   transfer the title to an estate by the entirety with the spouse. If the owner or spouse is                 incompetent, the method of alienation or encumbrance shall be as provided by law.                   Emphasis added.

The purpose of homestead law is to ” protect and preserve the interest of the family in the family home” and ” promote the stability and welfare of the state by securing to the householder a home, so that the homeowner and his or her heirs may live beyond the reach of financial misfortune and the demands of creditors who have given credit under such law” ” [I]t is clear that the homestead provision is to be liberally construed in favor of maintaining the homestead property.” Snyder v. Davis, 699 So.2d 999 (Fla. 1997)

1. Further, with regards to the rights of the spouse, courts have consistently held that ” the owner of mortgaged property is an indispensable party to an action to foreclose a mortgage on that property.” Further, courts have held that ” it was improper to allow a foreclosure against [one spouse’s] interest alone.” Lambert v. Dracos, 403 So.2d 481 (Fla. 1^st DCA 1981).