Chapter 5-2 Typical Title Transfers in Foreclosure Litigation

5-2 Typical Title Transfers in Foreclosure Litigation

5-2:1 Certificate of Title Following a Foreclosure Sale

Title is transferred by the clerk of court via Certificate of Title following the expiration of the post-sale objection period.¹ The foremost title concern to the titular owner of the property thereafter is the validity and insurability of her instrument. A Certificate of Title is a valid conveyance of title, provided that it is the product of a valid foreclosure judgment and a valid foreclosure sale.² While that may appear to be obvious, a distinction must be made between void and voidable foreclosure judgments and foreclosure sales.

5-2:1.1 Void Versus Voidable Certificates of Title

Where a court order is so patently defective that substantive rights have been prejudiced, the order (as well as its operative effect) is invalid, as it is considered to never have had any effect.³ On the other hand, where the order is the result of some procedural error that does not irrevocably violate some substantive right, the order (as well as its operative effect) is valid unless and until it is appropriately challenged and vacated.⁴

Accordingly, voidable judgments and voidable foreclosure sales do not necessarily result in invalid Certificates of Title.⁵ Void judgments and void sales, however, do result in invalid Certificates of Title.⁶ This is of particular importance to bona fide purchasers for value at the foreclosure sale, as void judgments or sales will result in an invalid conveyance, but this will not necessarily be the case when the defect or irregularity renders the judgment or sale merely voidable.

Appreciating this distinction is crucial when engaging in complaint drafting, service of process, or any other enterprise the defect of which deprives the trial court of jurisdiction ab initio. This distinction is not always immediately apparent. For example, mortgagors are often absent from the jurisdiction or cannot be located in order to effect service of process. Accordingly, it is common for foreclosing lenders to proceed with constructive service under section 49.021, Florida Statutes. Service by publication under this statute requires that the plaintiff has undertaken a "diligent search" for the defendant. The test for this diligence is "whether the complainant reasonably employed knowledge at his command, made diligent inquiry, and exerted an honest and conscientious effort appropriate to the circumstances, to acquire the information necessary to enable him to effect personal service on the defendant."⁷ Diligence in searching for a defendant's whereabouts prior to proceeding with service of process by publication, therefore, is a bright-line rule. If the insufficiency of the diligence was evident from the record, the Certificate of Title is void.⁸ However, if the insufficiency is not readily apparent from the record, then the...