Pending Florida Real Estate Lawsuits Soar in Jacksonville Housing Market

Population growth and building permits aren’t the only record-breaking statistics in Flagler County.

The number of lis pendens, or recorded notices of pending litigation relating to real estate, rose 89.7 percent to 575 in 2006 in the fastest-growing county in the nation, according to information provided by the Real Estate Strategy Center of North Florida Inc.

“It’s a statistic that gets your attention, and I think it certainly should,” said Rogers Towers attorney Bob Cuff, who lives and works in Flagler County. “It certainly reflects a downturn in the residential real estate market.”

Lis pendens are filed for a number of real estate-related lawsuits, the most notable of which is to begin the foreclosure process. They are also filed to recoup delinquent homeowner association dues and for construction liens.

Cuff cautioned against putting too much emphasis on a single percentage, particularly in a county that has experienced a tremendous amount of population growth - 108.4 percent from 1990 to 2006.

“The total number is still significant, but relatively small,” he said, particularly when compared with neighboring counties.

In St. Johns County, 620 lis pendens were filed last year, which was a 35.9 percent increase over 2005. Clay County had 898 filed, a 3.9 percent jump, while Duval County had 5,086, a 3 percent jump on its Florida mortgage holders.

Still, of the lis pendens filed in Flagler County last year, 83 percent were for foreclosures, according to data provided by the Flagler County Clerk of the Circuit Court.

Ray Rodriguez, president of the Real Estate Strategy Center, said many of the foreclosure lis pendens were probably filed on out-of-state investors who bought vacant quarter-acre lots in the core growth area, Palm Coast, and when the market softened simply stopped paying the mortgage.

“I hope it’s vacant land,” Rodriguez said, “because if it’s homes, it’s a whole different story.”

It could take months, and in some cases years, for a Florida mortgage loan lis pendens to result in a foreclosure, and the defendant has until three days after the foreclosure auction to pay the debt back in full to retrieve his or her property. But the fact that so many mortgage-related lis pendens were filed last year, coupled with the 28.7 percent jump in the number of tenant evictions from 2005 to 2006, concerns some county officials.

“I wouldn’t have predicted that this was going to happen,” said Flagler County Clerk of the Court Gail Wadsworth, adding that she had predicted a 20 percent increase in cases in 2006, but her office has been significantly more busy.

Many of those residents who have been foreclosed upon or evicted relied on the county’s once booming residential construction industry for income, Wadsworth said. A bevy of unaffordable housing costs has also contributed to the problem.

“That’s a gut reaction,” Wadsworth said of her conclusion based on the number of construction-related businesses that have closed in the county. “Can I prove it? No, not at all.”

The county’s per capita income is $22,674, according to the Cornerstone Regional Development Partnership, a seven-county economic development agency that includes Flagler County.

Local Realtor Nate McLaughlin of McLaughlin Realty said part of the problem is skyrocketing home prices in Jacksonville. The median price of a home in Flagler County increased from $138,000 in 2003 to $252,250 in 2006, according to Gotoby.com LLC. The Flagler County Association of Realtors reported that the average price went from $189,200 to $324,000.

As a Realtor, McLaughlin said, he wants prices to increase, but as a concerned resident, he knows that the community cannot sustain that increase.

“I’m a big proponent of Palm Coast, I love Palm Coast,” said McLaughlin, who is also the chairman of the city’s Planning and Land Development Regulation Board. “What really needs to happen is that the buyers are just going to have to say no to these properties.”