If The Homeowner Tags Out, You Can Still Tag In: Purchasing Property Already in Foreclosure
Most of the foreclosure clients we have walk through our doors are families trying to stay in their homes or at the very least are the original borrowers on the Note who are looking to either buy time while they renovate the property for sale or rent out the property. Either way, most of the time we are representing the person(s) that were an original borrower on the Mortgage and therefore have contractual rights that the bank must abide by. However, every now and then we come across a client that is now the title owner of the property (thus they have an interest in the action) but acquired their interest subsequent to the filing of the foreclosure action. Because these newly minted owners were not a party to the original mortgage/contract, they are NOT usually a named party in the lawsuit. You may be wondering how this is possible but the answer is actually quite simple. A couple of the more common scenarios involve a situation where either the original borrower had given up on the property once the foreclosure was filed against them so they simply deeded their interest to a third party buyer or they file for bankruptcy Chapter 7, erase all of their debt and walk away from the property, typically resulting in a third party purchasing the property from the bankruptcy trustee. The real question is, what rights do these new owners have considering they were not a party in privity of contract with the bank? Now the banks will have you believe that this new buyer has absolutely no rights and cannot defend the foreclosure in their name because they took title to the property after the lis pendens had been filed. Their logic is that the new buyer was well aware of what they were getting into when they bought the property and knowingly proceeded in acquiring title “subject to” the prior mortgage. There is clear case law that would tend to side with the banks if the attorney was looking to substitute in these new owners via a “Motion to Intervene” which is the typical channel in which a new party can step into an action. However, there is a different, less common strategy lawyers can use to afford these new owners the right to defend the foreclosure as if they were stepping into the shoes of the original borrowers but unfortunately its not a tactic that many attorneys implement and in most instances, don’t even know exists.
Instead of going the all too common route of filing a Motion to Intervene, which based on clear Florida case law will likely fail if the new party took title subsequent to the filing of the lis pendens, I instead recommend taking a more novel and clever route. I suggest filing a Motion wherein you petition the Court to Designate the new owner the Real Party in Interest via Florida Rule of Civil Procedure 1.260(c). Again, the banks attorneys will whine to the Judge that there is clear case law stating a party can’t intervene after the lis pendens has been filed. However, what they’re failing to consider is that all of the case law allegedly in their favor is factually distinguishable because those cases only relate to Motions to Intervene; none of them specifically regard Motions to Designate Real Party in Interest. Argue your point by stating, “When a party transfers interests that are the subject of pending litigation, Florida Rule of Civil Procedure 1.260(c) provides that upon motion, the Court shall designate whether the Real Party in Interest shall (1) proceed in the name of the original named party, (2) be added as a party, or (3) shall be substituted in for the original party. See, Sun States Utilities, Inc. v. Destin Water Users, Inc. 696 So.2d 944, (Fla. 1st DCA 1997).” So as you can tell, there is not just the Florida Rules of Civil Procedure to support this argument, but also clear Florida case law. This is a novel argument which has proven to be successful in various Courts throughout Central Florida.
If you or someone you know has purchased a property out of bankruptcy or have obtained title to a property from the original borrower, it’s important to know that you have the right to fight the bank as well. Just because the original borrower has decided to move on doesn’t mean the bank gets a fast pass to your new property. You are the rightful new owner and you have rights! It is important to hire a Florida Foreclosure Attorney that is well versed in recent case law, especially when those new developments could be a major weapon in the fight to keep your home. If you have any questions concerning your foreclosure case, do not hesitate to call our experienced and aggressive team here at The Freedom Law Firm. We are here to FIGHT to KEEP YOU IN YOUR HOME. Call FREE day or night. 407-883-2618.