Legal Question in Real Estate Law in Florida
Is it true that if the mortgage holders do not attempt to collect on an upside down mortgage in five years that the real estate in question becomes the legal property of the person who is living in the house?
If the person in a home that has an upside down mortgage (owes much more than the current value of the property) but pays the property taxes, while no attempt is made to foreclose on the property for a number of years, is the dweller rightful owner of the house?
2 Answers from Attorneys
No. What I think you are trying to get at is if you go into default for 5 years, and the Lender doesn't begin a foreclosure action before the expiration of the 5 years, the Statute of Limitation kicks in. Then the Lender can't foreclose on the property. They waited too long.
However they can still sue on the Note. If they do they can collect on the judgment from many assets, but not on the homesteaded house, which would then be protected from personal judgments.
There is a statute of limitations for foreclosure lawsuits, but Lenders hire attorneys that know this. If they file a foreclosure lawsuit and get a judgment against you, they will have many years before they have to collect on the deficiency. The only way to avoid a judgment is to defend the foreclosure, and your best defense is a good lawyer with experience fighting the banks.
Good luck!
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