Dyck O’Neal and the Defective Notice: Defending Against Deficiency Lawsuits

Although the worst of the economic downturn appears to be over, many people are still feeling its affects. If you went through a foreclosure and did not get a waiver of deficiency, you may be one of those people. Now that the law has changed and lenders only have a year to file for a deficiency, deficiency lawsuits are becoming more and more prevalent. There are ways to defend against these lawsuits.

We recently obtained a summary judgment in favor of our client who was being sued for a deficiency because the lender failed to give him proper notice before it filed its lawsuit. Florida Statute Section 559.715 was amended in 2010 to require that when consumer debts are assigned, the assignee must give the debtor written notice of the assignment as soon as possible “but at least 30 days before any action to collect the debt”. The argument is that this applies to all consumer debt including deficiency claims.

In our case, the Plaintiff failed to give the required 30 days notice before filing suit. While it gave notice, it was a few days shy of the required 30 days. We moved for summary judgment based on 559.715. The Judge agreed with our argument, but gave the Plaintiff permission to file another lawsuit if it wanted to do so. Unfortunately for the Plaintiff, the year statute of limitations has now expired, so it is unlikely they will be able to present such a claim again.

As many of you know, I often say, “the devil is in the details”. This is one example of how that is true. The Plaintiff did not strictly comply with a statutory prerequisite to filing the lawsuit, allowing us to obtain summary judgment in favor of our client and saving him from a deficiency judgment.