Loophole in Florida Real Estate Law Creates ‘Roadmap’ to Wrongdoing, Miami Attorneys Say

There’s a loophole in Florida law that could serve as a “roadmap for wrongdoers” to steal any piece of real estate property, according to attorneys at Pack Law, a national corporate restructuring law firm in Miami.

Managing partner and founder Joe Pack and associate Jessey Krehl are working on a foreclosure case that they said leaves unresolved constitutional controversy and leaves fraud victims without any recovery.

“It’s not a particularly hard or difficult scheme to effectuate,” said Krehl. “You just have to find someone with a similar name somewhere and just make sure to keep serving them, even if you’re willfully committing fraud, as long as you offload the property at the foreclosure sale and you get out in time, the worst that can ever happen to you is money damages. That money can disappear well before they get that money damages action.”

Pack Law sued Bank of New York Mellon on behalf of owner Vista Financial Group LLC, a Delaware company, and Alla Polishko, a junior lienholder of a luxury condo unit at 17555 Collins Ave. in Sunny Isles. 

In 2009, Bank of New York Mellon brought a foreclosure action against Vista LLC. According to Pack, Vista was not served critical filings of the foreclosure action including an order setting trial. Instead, the documents were served to a defunct, unrelated business with a similar name: a Florida company called Vista Financial Group Inc.

The complaint claims the bank knew about the difference between the two Vista companies because Vista LLC had previously defended a prior foreclosure action on the property brought by the bank.

“The bank continued from that point on and, despite having known better, continued to serve the dissolved Florida entity as the sole served party through the entire case, up though and including judgment and up through and including the foreclosure sale,” said Pack.

In 2014, final judgment was entered against Vista in Miami-Dade Circuit Court in favor of the bank. That same year, the bank purchased the property at the foreclosure sale and sold the property to third parties.

Vista LLC appealed to the Third District Court of Appeal in an effort to set aside the 2014 foreclosure judgment and revert the title back to Vista. The Third DCA ruled that the third-party purchaser is protected by the Finality of Mortgage Foreclosure statute, that says when a title is passed to an innocent third-party buyer, a claim for wrongful foreclosure can be changed into an action for monetary damages against the foreclosing lender. 

“It’s a very bad possible outcome where, if someone sells the property, takes the proceeds, offloads them through a dubious but technically legal way, you can steal property,” said Krehl. 

Attorney Joseph Apatov of McGlinchey Stafford in Fort Lauderdale represents the Bank of New York Mellon, and did not respond to a request for comment by deadline.

But in the bank’s 2019 motion to dismiss, Apatoy wrote, ”Despite a third-party purchasing and taking possession of the property, Vista waited over four years before attempting to challenge the judgment in the foreclosure action. Then, Vista abandoned its effort, electing to bring this collateral attack nearly five years after judgment was entered and it lost the title to the property to a third-party bona fide purchaser.”

Serena Tibbitt of Tibbett Law in North Miami, represented the third party that bought the property.

‘Almost Always Too Late’

If faced with a similar case, Pack said attorneys should do everything in their power to stop the foreclosure sale.

“The problem is it’s almost always too late,” said Pack. “No one should be required to be actively investigating matters regarding their own title.”

Vista LLC is seeking monetary damages and its suit against the Bank of New York Mellon is still pending.

“This case should have ended months ago with a phone call, apology and a check,” said Pack.

According to Pack, he hasn’t heard of any similar cases with the bank.

“Not yet, but I wouldn’t be surprised if this was just the tip of the iceberg,” he said. “Not only this bank but other lenders that are notoriously aggressive.”

Although Pack did not disclose the amount his client is seeking, he said it’s in the millions.

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