Some of the most common calls I get from potential Clients requesting a free consultation regarding Florida Foreclosure Surplus Funds are from Third-Party Purchasers. Most of the time these calls can be the most difficult to take however, before I continue please allow me to explain what Florida Foreclosure Surplus Funds are; if you don’t already know.
Florida Foreclosure Surplus Funds are usually the direct result of a “bidding war” that occurs between bidders, also known as Third-Party Purchasers, during a Florida foreclosure auction. During said auction Third-Party Purchasers will line up ready to outbid each other in an attempt to purchase a property for cheaper than what it would actually sale for on the open market so that they can “flip” said property and make a profit or said Third-Party Purchaser may just be a family looking to buy their forever home. However, when there are multiple Third-Party Purchasers bidding on a specific property they can actually end up paying more for the property than what was actually owed to the Mortgage Company, or Senior Lienholder. Thus, resulting in a surplus of funds.
For example: If there is a final judgment of foreclosure entered against a Florida property in the amount of $50,000 and the Florida property is sold at a Florida foreclosure auction in the amount of $100,000, then there will be a surplus of funds in the amount of $100,000!
Moreover, a mistake most commonly made by Third-Party Purchasers is their failure to do research on the property (that is being foreclosed on) that they are attempting to purchase to find out if there are any Subordinate Lienholders attempting to foreclose or that have a lien against said property. According to Fla. Statute 45.032(1)(b) a “’Subordinate lienholder’ means the holder of a subordinate lien shown on the face of the pleadings as an encumbrance on the property.” Furthermore, this same statute goes on to say “A subordinate lienholder includes, but is not limited to, a subordinate mortgage, judgment, tax warrant, assessment lien, or construction lien. However, the holder of a subordinate lien shall not be deemed a subordinate lienholder if the holder was paid in full from the proceeds of the sale.” When a Third-Party Purchaser finds out that there this is a Subordinate Lienholder, such as a 2nd Mortgage attempting to foreclose on the property that they just purchased, it can be truly devastating as they have now put themselves in a bad position. This is why I always suggest that you do your own research on a property before purchasing it at a Foreclosure Auction to ensure that you are a well-informed purchaser.
Subsequently, Third-Party Purchasers, that have purchased a property that is also being foreclosed on by a 2nd Mortgage or even a Homeowners ‘Association for that matter, will start to become desperate and will attempt to search for any light that may be at the end of the tunnel. This desperation is what will often lead Third-Party Purchasers to believe that they’re entitled to the property’s foreclosure surplus funds and will even lead them to file a Claim for said funds with the Florida Courts. However, it must be made clear that Fla. Statute 45.032(2) specifically states that “there is established a rebuttable legal presumption that the owner of record on the date of the filing of a lis pendens is the person entitled to surplus funds”. Additionally, Fla. Statute(1)(a) defines an “Owner of Record” as “the person or persons who appear to be owners of the property that is the subject of the foreclosure proceeding on the date of the filing of the lis pendens.” Thus, as you can see the Third-Party purchaser is out of luck in this very unfortunate scenario and will need to seek out other options in an attempt to get out of this hole. As I stated before, my biggest suggestion to those looking to buy a Florida property via Florida Foreclosure auction is to do your own research before placing your bid.
If you are a former Florida Homeowner reading this and are looking for assistance in filing a claim for YOUR Florida Foreclosure Surplus Funds or are facing off against a Third-Party Purchaser, please give me a call and I will personally give you a free consultation.
At Haynes Law Group, P.A., we have experienced Attorneys who are well versed in the Florida Statutes governing former Florida Homeowners claims to Florida Foreclosure Surplus Funds and have helped to claim hundreds of thousands of dollars for former Florida Homeowners. We represent former Homeowners all over the state of Florida, no matter what county they are in, and will work tirelessly to ensure that you receive the Gold Standard of Legal Service. Best of all, we represent our Clients on contingency which means we don’t get paid unless you do!