In short: In Cerda v. Total Bank, guarantors of a Miami-Dade development loan handed the bank a signed deed in lieu of foreclosure in November 2008. The bank refused it, foreclosed, and won a deficiency judgment against the guarantors after a bench trial. The guarantors argued the bank should have mitigated by taking the property. The Third District affirmed on January 2, 2014, without a written opinion, and the appeal was later dismissed by stipulation.
The Facts
Total Bank made a loan to South Redland Homes to develop a roughly 60-acre parcel in Miami-Dade County. Gilberto Cerda, Sr. and Clara Cerda were among the guarantors. Only five homes were built, and the loan went bad as the market fell.
In November 2008 the borrower’s side delivered a signed special warranty deed to the bank’s special assets department, along with a borrower’s deed in lieu certificate. Within days, the bank’s lawyer wrote back that it would not accept the deed and asked for a quick and friendly foreclosure instead. The bank then foreclosed, the property was sold, and after a bench trial the court entered a deficiency judgment against the guarantors. They appealed (No. 3D12-2882), and the case was argued in December 2013. The points below are what the lawyers argued, not findings by the court.
- The guarantors said this was a mitigation argument, not a claim that the deed erased their liability. They argued that the bank should have taken the property when it was offered, that the debt should have been credited then, and that interest should have stopped running.
- They relied on a September 2008 appraisal of $5.7 million and a builder’s testimony putting the value near $8.1 million, and argued a notice of commencement was not a cloud on title and had expired.
- They said they never opposed the foreclosure itself, only the guarantors’ liability for the deficiency, and that tenants were placed in two homes to protect the property from vandalism.
- The bank argued the trial court rejected each equitable defense in a detailed judgment, that the guarantors’ value evidence was inconsistent and not tied to the date of the tender, and that the deed in lieu certificate represented the property was worth more than the debt. Accepting the deed on those terms, it said, would have invited a waiver or estoppel defense to any deficiency.
- The bank also argued the guarantors contested the foreclosure for years and used rent from the homes to pay legal fees, which the trial court found was unclean hands. The panel asked several questions suggesting the guarantors’ answer and defenses did resist the foreclosure.
The Decision
The Third District affirmed on January 2, 2014. The ACIS docket lists the disposition as “Per Curiam Affirmed,” so there is no opinion explaining why. On February 5, 2014 the court denied the guarantors’ motion for rehearing and their request for a written opinion.
On February 13, 2014 the court recognized the parties’ stipulation of dismissal and dismissed the appeal, and the docket closed without a mandate. Nothing in the docket explains the stipulation. Either way, the deficiency judgment was not disturbed, and the affirmance is not a rule that a lender may always ignore a deed in lieu.
The Law
Section 702.06 says the entry of a deficiency decree in a foreclosure “shall be within the sound discretion of the court.” That discretion is why borrowers and guarantors raise equitable defenses at the deficiency stage, such as the lender’s delay or conduct, and why the trial court’s findings matter so much on appeal.
A deed in lieu of foreclosure is a deal, not a unilateral act. A lender usually wants title work, releases, and sometimes a written agreement about whether any deficiency survives. The bank here pointed to the borrower’s certificate stating the property’s value exceeded the debt as a reason it would not take the deed.
Current law (2026): In 2013 the Legislature amended section 702.06 to cap a deficiency on owner-occupied residential property at the difference between the judgment and the property’s fair market value on the sale date. That cap does not apply to a commercial development loan like this one.
Lessons
- Tendering a deed is not the same as the lender accepting it. Get a written deed in lieu agreement that says what happens to any deficiency.
- Value evidence should match the date that matters. An appraisal two months off in a falling market gave the bank room to attack it.
- Guarantors who want to argue mitigation should not litigate the foreclosure itself, and should account carefully for any rent from the collateral.
- Deficiency rulings are discretionary. The best place to win them is in the trial court, with clear findings.
Watch the Oral Argument
This is the recording of the actual oral argument, posted on the channel. What lawyers and judges say at argument is not the ruling; the decision is summarized above.
🏗️ A Refused Deed in Lieu and Mitigation of a Deficiency | Cerda v. Total Bank, 3D12-2882
Go Deeper
- Deed in Lieu Held in Escrow: Court Can Order Foreclosure Instead (Safe Harbor v. 9775 Dixie)
- Deficiency Judgments in Florida: Zombie Mortgage Debt After Foreclosure
- Can a Foreclosure Receiver Finish Building the Houses? (Crestview II v. TotalBank)
Frequently Asked Questions
Does a bank have to accept a deed in lieu of foreclosure in Florida?
Generally no. A deed in lieu is a negotiated transaction, and the lender can decline it and foreclose instead. In Cerda the bank refused the deed within days and asked for a friendly foreclosure.
Can a refused deed in lieu reduce a deficiency judgment?
The guarantors in Cerda argued the bank should have mitigated by taking the property when it was worth more. The trial court rejected that and entered a deficiency, and the Third District affirmed without an opinion. Because deficiency judgments are discretionary under section 702.06, the facts and the trial court’s findings drive the result.
Are guarantors liable for a deficiency after a foreclosure sale?
Usually, if the guaranty covers the debt and the sale does not pay it in full. Guarantors can raise defenses, but the court decides the deficiency in its discretion.
What should a deed in lieu agreement say?
At a minimum it should say whether the lender waives any deficiency, how title problems will be handled, and what releases each side gives. Without that, a borrower who signs a deed can still face a deficiency claim.
Talk to a Florida real estate litigation lawyer
Weidner Law, P.A. handles Florida real estate disputes, title problems and appeals from St. Petersburg. If you need a real estate litigation lawyer, call (727) 954-8752 or email weidner@mattweidnerlaw.com.
Read the law yourself, free: every Florida statute and court rule is on floridarules.net.
This article is general information about Florida law, not legal advice about your situation. Reading it, watching the videos, or contacting the firm does not create an attorney-client relationship. Every case turns on its own facts, and past results do not guarantee a similar outcome. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
