I have recently signed on to a new Florida Foreclosure Surplus case that involves a single mortgage but two different properties. What makes this unique is the two distinct properties that had to be sold off to satisfy the one mortgage. This means two different foreclosure sales. How are the surplus funds distributed in this type of case?
First of all, I would like to say that I don’t recommend using a single mortgage for more than one property. Lenders don’t generally like how complex these mortgages can be. The reason for this is that one of the properties is your residence and the other property is usually an investment property. This means that the entire loan will likely be an investment loan and will have a higher interest rate than if it were simply a residential mortgage. An investment loan means that you will be paying a premium to finance your home. This also hampers your ability to sell one property or another because if you sell one, it must be sold for a high enough price to pay off the entire mortgage.
But for argument’s sake, let’s say that just like my new client you have two properties with one mortgage covering both. This mortgage has gone into foreclosure and properties have sold at auction to pay off the mortgage. How does this work and how do you get the foreclosure surplus funds, if any? In my case, the properties are listed as “Property A” and “Property B”. The court set them for separate foreclosure sales, and they were auctioned off to the highest bidder. When these two properties were sold, there was a surplus.
From here, we must look to the statute. Florida Statute 45.032(2) states “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 after payment of subordinate lienholders who have timely filed a claim.” This means that once the property is sold and all subordinate lienholders are paid, the surplus (if any) goes to the original owner. For my case, this means if Property A sells for a large enough amount to cover the mortgage, then any surplus from that sale and the entire amount from the sale of Property B will go to the original owner (after subordinate lienholders have been paid). However, if Property A sells for less that what is owed on the mortgage, then you have to wait until the sale of Property B to find out if there will be a surplus or how much there will be.
Once again, I do not recommend using a single mortgage to purchase two different properties due to the many logistical complications that there could be with paying off the mortgage and the higher that normal rates you will have to deal with. But if you do, and your mortgage for those properties goes into foreclosure and the properties are eventually sold, I will be able to help you to get the maximum amount of Florida Foreclosure Surplus Funds you are entitled to.
As always, it is important to hire someone who is well versed in Florida’s Foreclosure Surplus laws and I handle Foreclosure Surplus and Tax Deed Surplus cases in every county in the State of Florida. I will be happy to give you a Free Consultation to find out whether you are entitled to those Surplus Funds. I will work to make sure you get the maximum amount of Surplus Funds you are entitled to and I don’t get paid unless you do.