House Bill 87, also known as the Florida Fair Foreclosure Act, has successfully made its way through both chambers of the legislature, ordered “enrolled” as of the date of this writing, and should be on its way to the Governor’s desk in the very near future.

So what does this new law do?

Among other matters, it provides for an alternative procedure designed to speed up the foreclosure process in uncontested cases or cases where there is no legitimate defense. Additionally, in non-residential cases, the lender may request a court order directing the borrower to show cause why an order to make payments during the pendency of the proceedings or an order to vacate the premises should not be entered.

There is already significant debate among legal practitioners as to whether this new law is “fair”, or constitutional, particularly as applied to existing loans and pending cases.  There is also significant ongoing effort to convince the Governor to veto the bill.

However, putting aside the politics and policy implications of this legislation, it does provide significant advantages to lenders when it comes to foreclosure process and remedies.

Thus, if you are in the process of making or modifying a loan prior to this new law becoming effective, it may be worthwhile to anticipate these likely changes to the law and consider incorporating them into your loan documents.  Doing so will increase the likelihood that the new procedures will be available should an enforcement action become necessary, and will help mitigate the risk of possible constitutional challenges to the law as applied to the loan in question.

As of the date of this writing, the bill has not yet been presented for execution to the Governor.  Once presented, the Governor will have 15 days to either sign or veto bill.  The law will become effective upon the execution by the Governor, or his failure to veto the bill within the 15-day period.