CARL E. BARNARD, AND WIFE, LOUISE BARNARD AND BARNARD DEVELOPMENT COMPANY, APPELLANTS,
v.
FIRST NATIONAL BANK OF OKALOOSA COUNTY, APPELLEE
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The Barnards borrowed $50,000 from First National Bank, mortgaging seven residential lots as security. When they defaulted, the bank foreclosed and purchased the property at sale for $51,229.49, then sought a deficiency judgment of $9,892.56. The court reversed, holding that uncontroverted expert testimony showing fair market value substantially exceeded the debt precluded the deficiency judgment.
A deficiency judgment must be denied when the fair market value of the property exceeds the amount of the debt at the time of the foreclosure sale. The trial court abused its discretion in granting the deficiency judgment where undisputed expert testimony showed fair market value substantially exceeded the debt, the mortgagee was the sole bidder, and evidence indicated the bid price reflected 'quick sale' value rather than fair market value.
[1] A court may deny a deficiency judgment if the fair market value of the property at the time of the foreclosure sale exceeds the amount of the debt.
[2] The amount bid at a foreclosure sale is not conclusive evidence of the mortgaged property's value for deficiency judgment purposes.
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Join FLexlaw to unlock all legal intelligence“the court is authorized to deny a deficiency if the fair market value of the property exceeds the amount of the debt at the time of the foreclosure sale”
Establishes the legal standard for denying deficiency judgments based on fair market value comparison.
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Join FLexlaw to unlock all legal intelligenceIn 1982, the Barnards borrowed $50,000 from First National Bank, mortgaging seven residential lots appraised at $87,000 as security. The Barnards defa…
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SHIVERS, Judge.
This is an appeal from a deficiency judgment entered in favor of appellee, First National Bank of Okaloosa County. We reverse.
The appellants in this case initially purchased the property in question in 1966, as part of a larger parcel which they intended to develop into a subdivision. In 1982 they borrowed $50,000 from appellee, mortgaging seven residential lots in the subdivision as security for the loan. At the time of the loan the appraisal of the seven lots reflected a total value of $87,000.
Appellants defaulted on the loan in 1988 and a final judgment of foreclosure was entered in favor of appellees in the amount of $67,267.46 (including principal, interest, taxes, costs and attorney’s fees). A foreclosure sale was held on August 14,1984 at which appellee, the only bidder at the sale, purchased the property for $51,229.49. Ap-pellee then filed a motion for a deficiency judgment on the basis that the amount bid at the foreclosure sale was insufficient to pay the judgment.
At the deficiency hearing appellants presented expert testimony that the fair market value of the seven lots was $96,000 on the date of the foreclosure sale. Appellants also introduced into evidence an appraisal of the lots made by the appellee in January of 1984 (reflecting a total value of $74,000) and an appraisal made by appellee in April of 1984 (reflecting a “cash sale” value of $65,000). The only evidence presented by the appellee regarding fair market value at the time of the sale was the amount of the appellee’s bid. On January 24, 1985, the trial court entered a deficiency judgment in favor of appellee in the amount of $9,892.56.
Appellants argue on appeal that the trial court erred in granting deficiency judgment since the uncontroverted expert testimony at the hearing revealed that the fair market value of the property at the time of the foreclosure sale exceeded the amount of the debt. We agree.
We have held that the court is authorized to deny a deficiency if the fair market value of the property exceeds the amount of the debt at the time of the foreclosure sale. Hamilton Investment Trust v. Escambia Developers, Inc., 352 So. 2d 883 (Fla. 1st DCA 1977). We have also held that the amount bid at the foreclosure sale is not conclusive on the issue of the mortgaged property’s value. Trustees of Central States Southeast and Southwest Areas, Pension Fund v. Indico Corporation, 401 So. 2d 904 (Fla. 1st DCA 1981); Kurkjian v. Fish Carburetor Corporation, 145 So. 2d 523 (Fla. 1st DCA 1962). The trial court has the duty and discretion to inquire into the fair market value of the property, the adequacy or inadequacy of the sale price, and the relationship, if any, between the foreclosing mortgagee and the purchaser at the foreclosure sale. Indico Corporation, supra; R.K. Cooper Construction Company v. Fulton, 216 So. 2d 11 (Fla.1968).
In light of the facts and the evidence in this case, the trial court abused its discretion in granting a deficiency judgment. The undisputed expert testimony showed the fair market value of the seven lots at the time of the sale to be substantially in excess of the debt owed to appel-lee. Further, the purchaser and the mortgagee were one and the same and the mortgagee was the only bidder at the foreclosure sale. Last, fair market value has been defined as “the sum arrived at by fair negotiation between an owner willing to sell and a purchaser willing to buy, neither being under pressure to do so.” Flagship Bank of Orlando v. Bryan, 384 So. 2d 1323 (Fla. 5th DCA 1980). A witness for the appellee admitted at the deficiency hearing that the bank was under pressure to sell the lots and that its bid was lowered because the bank would not be able to sell the lots for what they were worth. The bid price was therefore more an indication of a “quick sale” value than of the property’s true fair market value.
For the reasons stated above, the deficiency judgment entered by the trial court is REVERSED.
MILLS and ZEHMER, JJ., concur.
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Peoples Fed. Sav. & Loan Ass'n OF Tarentum v. Shoreline Garden Townhomes, II, Ltd., 538 So. 2d 864 (Fla. 1st DCA 1988)…ay have reflected more of a quick sale value than a true market value indicated by fair negotiations between a willing buyer and a willing seller, neither being under any compulsion or pressure. See Barnard v. First National Bank of Okaloosa County, 482 So. 2d 534 (Fla. 1st DCA 1986); R.K. Cooper Construction Company v. Fulton, 216 So. 2d 11 (Fla.1968); Trustees v. Indico Corp., 401 So. 2d 904 (Fla. 1st DCA 1981). Although the appellate court might have reached a different conclusion as to fair market value,…
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First Union Nat'l Bank OF Fla. v. Goodwin Beach P'ship, 644 So. 2d 1361 (Fla. 5th DCA 1994)…close to that higher value. If an affirmance of this case turned on sustaining that finding, I might not be able to do so. See Savers Federal Savings & Loan Ass’n. v. Sandcastle Beach Joint Venture; Barnard v. First National Bank of Okaloosa County, 482 So. 2d 534 (Fla. 1st DCA 1986); Flagship Bank of Orlando v. Bryan, 384 So. 2d 1323 (Fla. 5th DCA 1980). The trial judge, as the fact finder in this case, must base value findings on competent and substantial evidence. See Sun Bank/North Florida N.A. v. Edmunds…
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Mun. Sav. & Loan Corp. v. Fiorentino, 512 So. 2d 228 (Fla. 3d DCA 1987)…not persuaded thereby. This being so, there was obviously no basis for a deficiency judgment in this action because the mortgagee, in fact, suffered no financial loss. We, accordingly, affirm this order. Barnard v. First Nat’l Bank of Okaloosa Cty, 482 So. 2d 534 (Fla. 1st DCA 1986); Wilson v. Adams & Fusselle, Inc., 467 So. 2d 345 (Fla. 2d DCA 1985); Hamilton Inv. Trust v. Escambia Developers, Inc., 352 So. 2d 883 (Fla. 1st DCA 1977). Second, we equally have no difficulty in concluding that the trial judg…
Previewing 3 of 8 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Kurkjian v. Fish Carburetor Corp., 145 So. 2d 523 (Fla. 1st DCA 1962)
- R. K. Cooper Constr. Co. v. Fulton, 216 So. 2d 11 (Fla. 1968)
- Hamilton Inv. Tr. v. Escambia Developers, Inc., 352 So. 2d 883 (Fla. 1st DCA 1977)
- The Trs. OF Cent. States Se. & Sw. Areas v. Indico Corp., 401 So. 2d 904 (Fla. 1st DCA 1981)
- Flagship Bank OF Orlando v. Jackson Bryan, 384 So. 2d 1323 (Fla. 5th DCA 1980)