By: Edward L. Kelly
Including an accurate legal description (known as the “legal”) in a mortgage is of utmost importance to lenders; in the event of foreclosure, a purchaser (often the lender) cannot obtain clear title to the property unless it obtains a deed where the legal matches the property actually held by the original mortgagor prior to the sale. As Bank of America discovered in Epstein v. Bank of America , a recent case out of Florida’s Fourth District Court of Appeal, correcting a faulty legal description of the property encumbered by a mortgage after entry of a final judgment of foreclosure and subsequent sale of the property is no easy task, and correcting the error is further complicated when more than a year passes between the final judgment and attempted correction of the inaccurate legal.
Vacating a Final Judgment on the Grounds of “Mistake”
If a lender includes an inaccurate legal in a mortgage, and the mortgage is subsequently foreclosed, the lender may move to vacate the final judgment of foreclosure and amend its foreclosure complaint to reform the mortgage to include the accurate legal, beginning the foreclosure process anew and setting a path to obtaining clear title, but action must be taken in a timely manner. Rule 1.540 of the Florida Rules of Civil Procedure dictates how and when a party may move to vacate a final judgment, and Rule 1.540(b)(1) specifically allows a party to move to vacate based on “mistake, inadvertence, surprise, or excusable neglect.” To invoke Rule 1.540(b)(1), however, a party must move to vacate within one year of the final judgment.
In Epstein , Bank of America obtained a final judgment of foreclosure in December 2009, purchased the property at the foreclosure sale, and then discovered an error in the legal ten months after entry of the final judgment. For reasons not disclosed in the opinion, Bank of America waited another two years before filing a motion to vacate the final judgment pursuant to Rule 1.540(b)(1), contending “an inadvertent mistake” in the legal required the bank to amend its foreclosure complaint to accurately describe the property. Because Bank of America filed its motion to vacate more than one year after entry of the final judgment, the court refused to vacate the judgment based on the bank’s inadvertent mistake.
Claiming the Final Judgment is “Void”
To avoid the application of the one year bar under Rule 1.540(b)(1), Bank of America alternatively argued that the limitation did not apply because the judgment was void. As the court in Epstein explained, where a judgment is “entered in the absence of the court’s jurisdiction over the subject matter or the person,” the judgment is void. In contrast, “a judgment that has been entered based upon some error in procedure that allows a party to have the judgment vacated, but the judgment has legal force and effect unless and until it is vacated,” is merely voidable . Only a void judgment may be vacated under Rule 1.540(b)(4).
Bank of America asserted that “because the owner of the property identified in the judgment was not made a party to the underlying case,” the judgment was void and should be vacated. The court rejected the bank’s argument on two grounds. First, the court found that no evidence in the record indicated that the inaccurate legal (which was a “metes and bounds” description) described an entirely different property owned by some other party. The court noted that no evidence revealed the extent of the legal description’s deficiency, and that perhaps the legal merely failed to “close,” meaning that it did not create a true property boundary. Second, the court found that even if the legal description described a real piece of property owned by a party not named in Bank of America’s foreclosure complaint, only that owner could challenge the final judgment; Bank of America could not assert the owner’s rights on its behalf. The court therefore held that the judgment was voidable, not void, and was subject to the one-year limitation imposed by Rule 1.540(b)(1).