People often ask whether someone can be sued personally while (or after) being foreclosed. The short answer is: Yes. The better answer is: It depends.

In Florida, many firms that handle foreclosure cases choose to sue defaulting homeowners on two counts: (1) for Foreclosure; and (2) for Enforcement of a Promissory Note. In an effort to avoid confusion, I will break them down in layman’s terms. Foreclosure is an action to take someone’s real estate due to a breach of the mortgage terms (usually non-payment). The Promissory Note action is an action to enforce a debt against an individual (a lawsuit for cash).

Generally speaking, a lender has the right to sue an individual for non-payment of a debt whether or not they decide to foreclose their lien on the property. We’ve found very few cases in Miami-Dade County, for example, where this has actually happened when the property is the person’s primary residence. But this trend doesn’t mean that banks won’t start doing it.

So, how long after a foreclosure is the individual exposed to being sued for the deficiency (the difference between the debt amount and the amount the bank is able to get from the sale of the property)? There are two schools of thought on this. One believes that the bank has four years from the date of last activity on the account in which to sue on the Promissory Note. The other believes the bank only has one year from the date the property is sold to enforce what is known as a deficiency judgment. Thus, it depends on the way the lawsuit is framed and to some degree the wording of the final judgment.

In any case, it is best to try to avoid this risk all together, which is why short sales, deeds in lieu of foreclosure and bankruptcies are so popular at the moment. Another solution may be negotiating with the lender to enter into an agreed judgment (or consent judgment), where the bank would waive it’s right to sue the homeowner personally. At the end of the day, the choice of remedy here depends on many different factors… yet another reason to seek legal advice on your specific foreclosure case from a licensed attorney.