Chapter 3-2 Statute of Limitations
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3-2 Statute of Limitations
Foreclosure actions are subject to a five-year statute of limitations.16 Statutes of limitation are procedural, and "their expiration does not affect the underlying substantive rights of the parties involved."17
Once the procedural bar arises under a statute of limitation, the procedural bar itself is a constitutionally protected right.18 Since the procedural bar is a constitutionally protected right, neither a subsequent court decision nor a subsequent statutory enactment can remove the bar once it has arisen against a particular cause of action.19 Nevertheless, the statute of limitations is an affirmative defense which must be pled, or it is waived.20
3-2:1 Accrual
The five-year statute of limitations begins to run when a cause of action accrues.21 Accrual is considered the "trigger" which starts the five-year time clock running.22
The triggering function of accrual and the definition of accrual are contained in Fla. Stat. § 95.031. That statute in awkward fashion describes accrual as the triggering function before it defines accrual: "[T]he time within which an action shall be begun under any statute of limitations runs from the time the cause of action accrues."23 The statute then defines accrual: "A cause of action accrues when the last element constituting the cause of action occurs."24
Consistent with the statute,25 the Florida Supreme Court has stated that "a cause of action cannot be said to have accrued, within the meaning of the statute of limitations, until an action may be brought."26
The language of Fla. Stat. § 95.031 is highly precise; it pinpoints accrual at the occurrence of the "last element" constituting the cause of action. Practitioners must be equally precise in analyzing when the last element occurred in order to correctly assess when the cause of action accrued and the statute of limitations began to run. An imprecise assessment of accrual can result in the limitations period seeming to begin—and thus expire—either earlier or later than it should based on the facts of the case.
Despite the vital importance of accrual for determining whether an action is barred, the law remains unclear on which event constitutes the "last element" of a foreclosure cause of action. The last event could be: the default, an event related to the default, or acceleration of the debt. Practitioners should be aware of these competing theories, explained in detail below, and consider the implications of measuring accrual from different events in a given case.
3-2:1.1 The Default Theory of Accrual
The default theory of accrual holds that the date of default, or a date related to the default, is when the cause of action for foreclosure accrues. This approach flows from general contract principles.
A mortgage is "an executory contract or agreement in which one generally promises to allow a future sale of real property if a debt is not paid."27 Therefore, the last element constituting a cause of action to foreclose would appear to be the default in payment or the default in some other material covenant of the mortgage.28
Consistent with the default theory of accrual, the Florida Supreme Court stated in the 2016 case of Bartram v. U.S. Bank National Association: "with each subsequent default, the statute of limitations runs from the date of each new default. . . ."29 Also consistent with the default theory, the Supreme Court held that the lender was not barred from filing a subsequent foreclosure action "based on payment defaults occurring subsequent to the dismissal of the first foreclosure action, as long as the alleged subsequent default occurred within five years of the subsequent foreclosure action."30 These two dicta from Bartram indicate that the cause of action accrues on the date of default.
However, accrual was not the issue in Bartram31The issue in Bartram was whether the acceleration of a mortgage irrevocably set the statute of limitations running on all possible defaults under that mortgage. The Court answered that question with a qualified "no," but its answer was based on factors that did not depend on accrual—or even refer to accrual. Thus, the above-quoted statements are obiter dicta and are not binding precedent on the question of accrual.
Several District Court of Appeal opinions have similarly implied in dicta that the default theory of accrual applies to mortgage foreclosures.32 However, other District Court of Appeal opinions and one Justice of the Florida Supreme Court have espoused an acceleration theory of accrual for mortgage foreclosures. See Section 3-2:1.2. Accrual thus remains open to further appellate litigation, despite the persuasive majority of dicta favoring the default theory of accrual.
3-2:1.1a Effect of Conditions Precedent on Accrual
Under the default theory of accrual, a cause of action accrues based on the date of default. Several appellate opinions have implied that a cause of action for foreclosure accrues immediately on the day after a payment is missed.33 However, those opinions did not analyze what was the "last element" constituting the cause of action (as prescribed by Fla. Stat. § 95.031) and did not consider the effect of conditions precedent on accrual.
If the mortgage being foreclosed requires conditions precedent to be fulfilled prior to bringing the foreclosure action, the foreclosure is premature until the conditions precedent have been fulfilled or have been waived.34 Since "a cause of action cannot be said to have accrued, within the meaning of the statute of limitations, until an action may be brought,"35 the last condition precedent to be fulfilled should be the "last element" which constitutes the cause of action, and starts the statute of limitations running.
For example, the uniform Fannie Mae/Freddie Mac mortgage36 requires that a notice of default must be given and a 30-day cure period must pass before a foreclosure action may be brought. See Chapter 2, Section 2-2. A foreclosure action filed before the lender gives the notice of default is subject to dismissal.37 Similarly, a foreclosure action filed before expiration of the 30-day cure period is subject to dismissal.38
Therefore, a foreclosure cause of action arguably does not accrue until the contractually required notice has been given and the 30-day cure period has expired.39 This as required by mortgage did not prejudice borrower because he made no attempt to cure the default; reversed on other grounds).
In some cases, the amount of time needed for the lender to give the mandatory notice of default, plus the 30-day cure period required by the mortgage, could push accrual of the cause of action far enough into the future to defeat a statute of limitations defense. In such a case, the rule of State Farm Mutual Auto Insurance Co. v. Lee would dictate that the cause of action only accrued after the required cure period expired, making the start of the limitations period later. A later start of the limitations period means a later end of the period and a later date within which the foreclosure action would be considered timely.
3-2:1.1b Successive Accruals
One consequence of the default theory of accrual is that successive defaults result in successive accruals. As a general matter of contract law, the failure to make several installment payments constitutes a series of defaults.41 When a series of defaults occurs under a contract, a breach of contract cause of action accrues for each default.42
Accordingly, per the default theory of accrual "the statute of limitations starts running against each payment as it becomes due."43 Since each installment becomes due on a different date, several statute of limitations periods run concurrently against the several causes of action—each period beginning when the corresponding cause of action accrued and ending five years later.44 The causes of action that accrue earlier will be barred by the statute of limitations earlier. The causes of action that accrue later will be barred later. "Installments due at different times under a note mature or accrue the day after each is due to be paid, and the statute of limitations may run on some and not others."45
3-2:1.1c Continuing State of Default—"All Subsequent Payments"
Under the default theory of accrual, the statute of limitations may run on causes of action for defaults older than five years, while causes of action for newer defaults remain viable.
Therefore, a case was not barred by the statute of limitations where the complaint alleged a default in the monthly payment due five years and four months in the past (time-barred) and also alleged defaults on "all subsequent payments."46 The "all subsequent payments" allegation included default on all 59 monthly payments that came due within the five years prior to the date the case was filed. All five of Florida's district courts of appeal agree that the statute of limitations is not a viable defense when the plaintiff alleges and proves defaults on "all subsequent payments."47 These courts' reliance on default of all subsequent payments suggests that they should all hold to the default theory of accrual.
Nevertheless, an alternative theory remains—that the cause of action for foreclosure accrues when the loan is accelerated. That theory is discussed below.
3-2:1.2 The Acceleration Theory of Accrual
The acceleration theory of accrual was cogently advanced in the concurring opinion of Florida Supreme Court Justice Lawson in the 2017 case Bollettieri Resort Villas Condo. Ass'n, Inc. v. Bank of N.Y. Mellon.48
In Bollettieri, Justice Lawson criticized the default theory of accrual as "a widespread and fundamental misunderstanding." His opinion was advisory only, as the Supreme Court dismissed the Bollettieri appeal and did not speak to the accrual issue. In his concurrence, Justice Lawson opined that "the cause of action on a thirty-year note does not accrue until thirty years after signing—when the full balance is due— unless the lender...
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