MDK Client Alert: Florida's Fourth DCA Decision and Its Ramifications for Foreclosure Cases

On February 14, 2024, Florida’s Fourth District Court of Appeals (encompassing Palm Beach, Broward, St. Lucie, Martin, Indian River, and Okeechobee Counties) sent shockwaves through the mortgage and title industry with a decision from left field. In short, the Fourth DCA ruled that the legal representative of a deceased mortgagor has to be named in the foreclosure case in order for the foreclosure to be valid and, if there is no existing legal representative, the foreclosing mortgagee would need to open a probate estate for the deceased mortgagor to have that legal representative appointed. While the decision is not yet final and binding because the foreclosing mortgagee asked timely for a hearing by the full Fourth DCA bench, preparation now is prudent should the initial decision stand.

Case Analysis: Desbrunes v. U.S. Bank

The case is Desbrunes v. U.S. Bank, NA, as Trustee, and the facts are familiar. The mortgagor passed away and the foreclosing mortgagee had the mortgagor’s known heirs and unknown heirs named in the foreclosure case. The mortgagee then had the trial court appoint an ad litem to represent the unknown heirs. A known heir then asked the trial court to abate the case until the probate court could appoint a representative of the estate. The trial court denied the known heir’s request and ultimately entered judgment in favor of the mortgagee. The known heir appealed the trial court’s decision, asserting that the heirs were not the proper parties for the case and the mortgagee had to name the personal representative of the mortgagor’s estate.  

The Fourth DCA reversed the trial court’s decision and vacated the judgment. The appellate court held that the mortgagee’s actions after the death of the mortgagor were a legal nullity because the mortgagee had to name the legal representative of the deceased mortgagor and that the heirs of the mortgagor are not that legal representative. Additionally, the appellate court held that having an ad litem appointed by the trial court to represent the unknown heirs was improper because only the probate court could name a legal representative of the deceased mortgagor.

Preparing for Potential Changes in Foreclosure Proceedings

There is a lot to unpack in the Fourth DCA’s decision and that will likely be done by either the re-hearing by the full Fourth DCA bench or the Florida Supreme Court (assuming it goes that far).  For now, the issue is what to do with the decision. The good news is that the decision is not yet final, so likely nothing needs to be done at this time and existing cases can proceed as per normal. But, what if the decision stands?

If the Fourth DCA’s decision stands, then foreclosing mortgagees will have an additional obligation in cases brought in Palm Beach, Broward, St. Lucie, Martin, Indian River, and Okeechobee Counties. In these cases, the foreclosing mortgagees will need to add the legal representative of a deceased mortgagor as a defendant to the foreclosure case. If there is no legal representative of the deceased mortgagor found, then the foreclosing mortgagee will likely need to open a probate estate to have one appointed.

Several questions arise from the possible requirement of the mortgagee opening a probate estate, including whether the heirs are named in the foreclosure case at all, whether such requirement applies even if there is a probate estate open in another state, and whether the mortgagee has to take the probate estate through full completion or stop once the legal representative has been appointed. The answer to these questions should be addressed with legal counsel as well as the title insurance companies to ensure clear and marketable title is obtained following the foreclosure sale.

‍Key takeaways for industry professionals:

• The decision is not yet final, but preparation is advisable.
• If upheld, it could add a new step for foreclosures in South Florida.
• Unanswered questions require further legal guidance.

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