Despite my numerous blogs on the subject of Third-Party purchasers, I still get calls every week from someone who purchased a property at an auction and found out there is a surplus (meaning they paid more than what was owed for the property). They are now seeking to get some of their money back that they paid to purchase the property at auction. I always tell them the same thing, “there is no mechanism by Florida Statute or caselaw that allows for a third-party purchaser to receive the Florida Foreclosure Surplus Funds.”
For instance, I had a call with a third-party purchaser yesterday who had read some of my blogs and still didn’t understand that he cannot get any of those Florida Foreclosure Surplus Funds. He stated he purchased the property at a homeowner’s association foreclosure sale three years ago and there was over sixty thousand dollars in surplus funds still sitting with the clerk of court. He wanted to know if he could get those funds since no one had claimed them. No, he cannot.
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 the lis pendens is the person entitled to surplus funds after payment of subordinate lienholders who have timely filed a claim.” A third-party purchaser bought the property after (sometimes years after) the foreclosure lawsuit began. They could not be the owner of record at the time the lis pendens was filed. They could also not be a subordinate lienholder as this would be an entity that had a lien on the property prior to the foreclosure action. If they had such a lien, then they would be made whole by any of the surplus funds already (provided they made a timely claim).
The person who called me yesterday wanted to know what happened to those Florida Foreclosure Surplus Funds if the prior owner or family members didn’t claim it. He said “that these funds had been with the clerk for over three years and if no one else claimed it, why couldn’t he have it?” Well, as I stated before, he wasn’t the owner at the time of the filing of the lis pendens. That means the funds will stay with the Clerk of Court for a specified time and will go to the Unclaimed Property Division of the Florida Department of Financial Services. This department currently holds approximately $2 billion dollars in unclaimed funds from dozens of types of unclaimed funds. Until this money is claimed, it is deposited into the state school fund where it is used for public education.
This means that even if the money is not claimed by the former owner or their heirs, it is not completely abandoned. And it still means that a third-party purchaser cannot claim those funds. It doesn’t matter if there is a superior mortgage on the property when you purchase it. You do not get these surplus funds back (essentially your money back) to pay off those liens. No. You can’t have it. You take the property subject to any superior mortgages and liens. I suggest you spend a little extra money and hire a title company to search for any liens before you bid on the property. Save yourself some time and frustration. Additionally, it doesn’t matter that the property is in disrepair, and you have to fix it up. Again, there is no mechanism by statute or caselaw that allows a third-party purchaser to receive those Florida Foreclosure Surplus Funds.
If you are a third-party purchaser and you are still unclear about this, please give me a call and I will explain it even further. If you are a former owner or the heir of a deceased former owner and want to find out if you have any Surplus Funds available from the Foreclosure Sale or Tax Deed Sale in any County in the State of Florida, give me a call for a free consultation. I handle Foreclosure and Tax Deed Surplus Funds in every County in the State of Florida, and I don’t get paid unless you do.