Condition Precedent Defenses in Foreclosure Actions: Raise Them or Lose them

Mortgages are contracts under which both the lender and the homeowner, borrower have obligations.  One of the homeowner’s obligations is to make their mortgage payments.  When homeowners are unable to meet this obligation, the lender typically begins foreclosure proceedings.  However, before filing the foreclosure action, the lender typically has contractual obligations, like giving notice of default, which it must comply with before it can file the lawsuit.  The notice and other requirements are called conditions precedent to filing the lawsuit; in other words, conditions that must occur before the lawsuit can be filed. condition precedent
As we’ve discussed in earlier blogs, the failure of the lender to comply with conditions precedent can be used as a foreclosure defense.  However, as the recent case of Bank of America v. Asbury, 2015 Fla. App. LEXIS 7959 (2d DCA 2015) illustrates, it is important to raise the defense properly and timely or it can be lost.  In Asbury, the homeowner won at the trial court level.  She successfully defended the foreclosure action that Bank of America had brought against her at the trial by arguing that Bank of America failed to prove that it had mailed a default notice to Asbury, a condition precedent to filing the case.  Bank of America appealed.  The appellate court reversed the trial court’s decision and sent the case back for a new trial. Here’s why:
Florida has rules that govern how civil lawsuits must proceed.  One of the rules, Florida Rule of Civil Procedure 1.120(c), governing lawsuit pleadings, states that “A denial of performance or occurrence shall be made specifically and with particularity.”  In response to Bank of America’s allegation that it had complied with all conditions precedent to the foreclosure, Asbury stated in her Answer (a pleading) that she was “without knowledge.”  Pursuant to Florida Rule of Civil Procedure 1.110(c), a response of without knowledge is a denial.  However, Asbury did not in her answer or in an affirmative defense specifically identify any failure of Bank of America to comply with a particular condition precedent.  She did not raise the defense until trial.
The appellate court found that this was too late.  Asbury’s “without knowledge” response was general and not specific as required by Rule 1.120.  The court ruled that by failing to properly raise the condition precedent defense before trial in an Answer of Affirmative Defense, she waived her right to raise it at trial.   Asbury attempted to argue that because there was only one condition precedent to bringing the foreclosure action, proper notice of default, Bank of America should have known that it would be required to prove this condition at trial and thus, the underlying purpose of Rule 1.1.20 didn’t apply and shouldn’t bar Asbury’s argument.  The appellate court was not convincing reasoning, “There is no exception in rule 1.120(c) for claims that have a single condition precedent to their maintenance. Nor will we construe one as Asbury suggests.”
Though the outcome for the homeowner is unfortunate, the Asbury case provides an important lesson for homeowners defending against a foreclosure action: procedure and timing are crucial even when you are substantively in the right. For help with your foreclosure case, contact the Jacksonville foreclosure defense attorneys at Adam Law Group today.