Mortgages usually contain a “one-way” fee provision requiring the borrower to pay the lender’s fees if it wins the case, but not the other way around if the lender loses. But Florida has a law, F.S. 57.105(7), that permits courts to treat one-way fee provisions as reciprocal:
“If a contract contains a provision allowing attorney’s fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney’s fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract. This subsection applies to any contract entered into on or after October 1, 1988.”
While the cited language is permissive, not mandatory (the court” may,” not “shall” award fees to the other party), courts generally do award fees if the other party wins the case. So when a borrower wins a foreclosure case, he or she usually gets a judgment for attorneys fees against the losing lender.
But what happens when a defendant (here, the wife) claims she didn’t sign the note or mortgage? If she wins, can she still get her fees from the lender under the mortgage’s fee provision?
According to a recent Florida appellate ruling, the answer is “No.” In Florida Community Bank, N.A. v. Red Road Residential, LLC, 41 FLW D1358a (Fla. 3rd DCA 2016), the lender sued a business and its husband-and-wife owners, who had purportedly mortgaged their property to secure the loan. But the wife denied signing the mortgage, arguing that it was fraudulent. After the lender dropped the wife from the suit, the trial court ordered the lender to pay her attorneys fees under the mortgage’s prevailing party fee provision.
On appeal, the Third District Court of Appeal reversed the wife’s fee award, explaining that because she won the case by claiming she wasn’t a party to the mortgage, she had no right to rely on that mortgage’s fee provision.
The court noted there may be other possible ways to win a fee award under the right facts. But to get fees based on a one-way fee provision based on the reciprocal fee statute, F.S. 57.105(7), one must to be a party to the contract.