Mortgage Deficiency Claim Statute of Limitations

I am often asked by clients how long does a mortgage lender have pursue a deficiency judgment. I have told many people that I have heard different answers from different attorneys ranging from one year to five years after foreclosure. I have also explained to the same clients that I have not seen any case on this issue and that no one has ever hired me to do legal research. That’s true until now. Attorney Larry Kosto, a creditor attorney in Orlando, sent me a 2005 court decision dealing with the statute of limitations for mortgage deficiency claims. The case, Chrestensen v. Euogest, Inc., held that a mortgage creditor has five years to file a lawsuit for a deficiency judgment and that the five year time limit begins to run from the date of the foreclosure sale.

The time period does not begin when the foreclosure case is filed or when a judgment for foreclosure is entered. In this case, the creditor filed a separate lawsuit for deficiency after the foreclosure. The court did not deal with a common foreclosure procedure wherein the lender includes a deficiency claim, or count, within the original foreclosure action. There, the court may close the case if a motion for deficiency is not pursued within one year following the foreclosure sale. The Chrestensen case found at is 906 So. 2d 343.