Chapter 14-4 Post-Judgment Objections to Sale

14-4 Post-Judgment Objections to Sale

Section 45.031, Florida Statutes, titled "Judicial sales procedure," addresses judicial foreclosure sales and sets forth the procedures that "may be followed as an alternative to any other sale procedure if so ordered by the court."²⁰⁹ Under section 45.031, the trial court, "[i]n the order or final judgment," "shall direct the clerk to sell the property at public sale on a specified day."²¹⁰ A notice of sale shall then be published at certain times and shall contain certain information, including "[t]he time and place of sale."²¹¹

The foreclosing lender may use a credit bid, up to the amount of the judgment, which is a judicially created right granted to the first mortgagee upon foreclosure of the mortgage.²¹² The winning bidder is required to post a deposit "[a]t the time of the sale" and must pay the remaining balance within a prescribed period.²¹³ "After a sale of the property," the clerk is required to "promptly file a certificate of sale."²¹⁴ "If no objections to the sale are filed within 10 days after filing the certificate of sale," the clerk is then required to file a "certificate of title."²¹⁵ Upon the filing of the certificate of title, "the sale shall stand confirmed."²¹⁶

Section 45.031, Florida Statutes,²¹⁷ authorizes objections to judicial foreclosure sales²¹⁸ if timely made, and states in pertinent part:

(4) CERTIFICATION OF SALE.—After a sale of the property the clerk shall promptly file a certificate of sale and serve a copy of it on each party. . . .

(5) CERTIFICATE OF TITLE.—If no objections to the sale are filed within 10 days after filing the certificate of sale, the clerk shall file a certificate of title. . . .

(8) VALUE OF PROPERTY.—The amount of the bid for the property at the sale shall be conclusively presumed to be sufficient consideration for the sale. Any party may serve an objection to the amount of the bid within 10 days after the clerk files the certificate of sale. If timely objections to the bid are served, the objections shall be heard by the court. Service of objections to the amount of the bid does not affect or cloud the title of the purchaser in any manner. If the case is one in which a deficiency judgment may be sought and application is made for a deficiency, the amount bid at the sale may be considered by the court as one of the factors in determining a deficiency under the usual equitable principles.

Fla Stat. §§ 45.031(4), (5), (8).

The right of redemption, per Fla. Stat. § 45.0315, extends until the later of the filing of a certificate of sale by the clerk or the time specified in the final judgment.²¹⁹ Once the right of redemption expires, the only way for the borrower to have their redemption rights revested is to get the judicial sale set aside.²²⁰ If the United States of America is a defendant, it has a special right of redemption following the judicial sale and unique procedures governing its redemption under 28 U.S.C. § 2410(c) and (d).

The statute on its face requires that the objection be filed,²²¹ not merely served, within 10 days after the filing of the certificate of sale, but is somewhat ambiguous. The 10 days to object has been held to be jurisdictional,²²² but there is contrary authority.²²³ Equitable considerations play a role, but tempered by the time limits in Chapter 45, Florida Statutes.²²⁴

Although the statute itself does not expressly require an evidentiary hearing to resolve timely-filed objections, several courts have concluded that under certain narrow circumstances, such a hearing is necessary.²²⁵ As the Third District has noted, however, these cases collectively involve post-bid objections alleging grounds sufficient to support equitable relief from the sale.²²⁶ In a case where the objector failed to plead or proffer any supportive facts or anticipated evidence which would support the conclusion he was entitled to relief, he was not entitled to an evidentiary hearing.²²⁷

Failure to receive notice of the sale can be a valid basis for a late objection, due to the requirements of due process, but the court will look at whether there was actual notice or whether the failure to receive notice should be attributed to the borrower.²²⁸ For the court to "hear" objections as required by § 45.031(8), Florida Statutes, the court must provide both notice and an opportunity for any interested party to address those objections.²²⁹ Further, it has been held that it is reversible error for a trial court to deny a party an evidentiary hearing to which the objector is entitled.²³⁰ The Clerk of the Court lacks authority to issue a certificate of title when an objection to a foreclosure sale is timely filed.²³¹ Also, a foreclosure sale must be set aside if a timely motion for rehearing was pending at the time of the sale.²³²

Under Florida law, actions involving foreclosure of property are brought in courts of equity. The Florida Legislature recognized the need for equitable remedies in foreclosure actions and, thus, codified that foreclosure cases involving mortgages will be tried in equity courts.²³³ The equitable powers of the trial courts are strong, even extending the court's post-judgment powers to allow a trial court to entertain a former third-party purchaser's motion for damages for improvements while owned.²³⁴

Florida law provides that the amount of the bid for the property at the foreclosure sale shall be conclusively presumed to be sufficient consideration for the sale.²³⁵ The Florida Supreme Court has said that only one of several equitable factors is needed to vacate a sale, including gross inadequacy of consideration, surprise, accident, or mistake imposed on complainant, and irregularity in the conduct of the sale.²³⁶ A judicial sale may on a proper showing made, be vacated and set aside on any or all of these grounds, and proof of an inadequate bid price is not a necessary requirement in an action to set aside a judicial foreclosure sale.²³⁷ A judicial sale may on a proper showing made, be vacated and set aside on any or all of these grounds, and proof of an inadequate bid price is not a necessary requirement in an action to set aside a judicial foreclosure sale.²³⁸ But gross inadequacy of price alone is not enough to set aside a foreclosure sale.²³⁹ Instead, the gross inadequacy must result from a mistake, accident, surprise, fraud, misconduct, or irregularity upon the part of either the purchaser or the person connected with the sale.²⁴⁰

The fact that the mortgagor purports that he is attempting to negotiate a loan mod is not a basis to stop or vacate a sale.²⁴¹ While the Real Estate Settlement Procedures Act ("RESPA") and its implementing regulations, Regulation X, 12 C.F.R. § 1024.41(g), do provide that a sale should be stopped in some circumstances if a loss mitigation application is complete,²⁴² Regulation X, by incorporating RESPA's damages provision, directs that its sole enforcement mechanism is monetary damages.²⁴³ Because 12 U.S.C. § 2605(f) authorizes only monetary damages, specifically, actual damages resulting from the RESPA violation and, in the case of "a pattern or practice of non-compliance," statutory damages not to exceed $2,000, a Regulation X or RESPA violation is not a basis to stop or vacate a sale. While no Florida case seems to have directly addressed the issue, a legion of other jurisdictions have uniformly rejected making RESPA and Regulation X into a foreclosure defense.²⁴⁴

A borrower cannot challenge the underlying foreclosure judgment by attacking the sale.²⁴⁵ The law is well-established that an objection to a foreclosure sale must be directed toward conduct that occurred at, or was directly related to, the foreclosure sale.²⁴⁶ If the objection is directed at...