Chapter 5-9 Reformation

• Jurisdiction: United States

5-9 Reformation

Often, the first time a mortgage loan receives scrutiny by an attorney is during the foreclosure process. Accordingly, it is not unusual for the careful practitioner to identify errors in the mortgage or subject deed. Florida law permits for the "reformation" of the mortgage, deed or other loan instruments, provided that the error was a mutual mistake.⁶⁰ Reformation should be pleaded in the complaint and the foreclosure judgment should reflect the correction to the instrument to be made. It is unfortunately common, however, for even the careful practitioner to fail to recognize the need for reformation until after the foreclosure judgment is entered.

As previously stated, when reviewing title documents in preparation for drafting a foreclosure complaint, the attorney is tasked with ensuring that the mortgage's description of the property matches the deed, and ensuring that any and all parties that could potentially claim an inferior interest to the property are included as parties' defendant. The attorney generally enlists the assistance of a title company to provide a title search and/or a foreclosure commitment report. However, if there were to be an error in the legal description of both the deed and mortgage (or if the title company did not recognize the error in the foreclosure commitment), it is possible for the error to not be recognized until after the foreclosure judgment is entered. In such a case, the foreclosure judgment, the foreclosure sale, and the Certificate of Title must be vacated.⁶¹ This is because "the sale was premised upon the erroneous legal description and other potential bidders may have acted in reliance on that description."⁶²

Such errors are often discovered only when a title company's underwriters are scrutinizing the documents in connection with providing title insurance and sale to a third party. This naturally occurs after the foreclosure sale, and so vacatur of the foreclosure judgment has been commonly sought pursuant to Rule 1.540(b). Foreclosure judgments which include such errors have been held to be voidable instead of void, and accordingly, the trial court's jurisdiction to vacate the judgment is limited to the one-year period immediately following the rendition of the foreclosure judgment.⁶³ Creative counselors have advanced the proposition that such errors could form the basis of vacatur pursuant to Rule 1.540(a), jurisdiction under which is not limited to one year. Unfortunately, such clever...