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4th DCA Opinion May Make Foreclosures More Difficult for Lenders/Associations

The 4th District Court of Appeal recently published an opinion in Yang v. Sebastian Lakes Condo. Assoc., Inc., ___ So.3d ___ (Fla. 4th DCA 2013) (consolidated appeal of case numbers 4D12-3363 and 4d12-3364). To read the full opinion, click on the following link: Yang v. Sebastian Lakes Condo. Assoc., Inc.

The case began as a foreclosure filed by the condo association against 2 unit owners for alleged past due amounts owed to the association. The unit owners claimed advance payments were made for future fees owed to the association for each unit, but the credit for the advance payments was effectively erased when the association hired a new management company.

The association filed a motion for summary judgment, and the unit owners opposed the motion by filing affidavits including the allegations above and others. The trial court converted the hearing on the motion for summary judgment into a bench trial by taking evidence. The association introduced, over the objection of the unit owners' attorney on the basis of lack of foundation, ledgers purportedly showing the account of each unit owner's unit. After the association presented its case, the unit owners moved for a directed verdict on the basis that the association's employee could not testify to the account balances that existed prior to her employer's takeover as management compnay for the association in 2008. The court denied the motion for directed verdict and entered judgment in favor of the association.

The 4th DCA agreed that the association failed to estblish a proper foundation for the admission of account ledgers as business records. Business records may be introduced as evidence as an exception to the hearsay rule. Such records are defined by statute in Florida:

A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinion, or diagnosis, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity and if it was the regular practice of that business activity to make such memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, or as shown by a certification or declaration that complies with paragraph (c) and s. 90.902(11), unless the sources of information or other circumstances show lack of trustworthiness. The term “business” as used in this paragraph includes a business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit.

§ 90.803(6)(a), Fla. Stat. (2013).

The association's witness failed to establish the foundation for admission of the ledgers into evidence because the witness testified that the records were maintained by someone else prior to 2008, that she started with an account balance taken from outside records, that she did not know the prior accountant's practice and procedure, and that she never worked for that accountant. The 4th DCA therefore determined that the association's witness could not testify as to the starting balance. As a result, the 4th DCA reversed the decision of the lower court and remanded the case for entry of a directed verdict in favor of the unit owners.

This decision could affect numerous foreclosures and other lawsuits based on debts. In any case in which the loan changed hands, it could become difficult for the plaintiff to prove the amounts owed if the defendant makes an objection to evidence similar to the evidence in Yang. The plaintiff will need someone with actual knowledge of the amounts owed -- that would be the person who was responsible for the account at the times in question. Such evidence may be difficult for some plaintiffs to find. Whether you're a (potential) plaintiff or a (potential) defendant, you may want to consult an attorney regarding this decision's potential impact on case strategy.

The Gosz Professional Limited Company is experienced in representing both lenders and borrowers in foreclosure litigation. We also assist homeowners and investors outside of the courtroom as they try to work out issues with lenders. If you have questions about issues related to foreclosure please feel free to call us at (305) 505-6340, email us at, or tell us about your case here: tell us about your case.

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