I received calls on a regular basis from people who have purchased a property at a Florida Foreclosure Sale who are upset that there are still liens on the property and there are also Florida Foreclosure Sale Surplus Funds available to pay off those liens. They want to know if they can either get those surplus funds to pay off the liens or if the court can force the lienholder to take the surplus funds to pay off the lien.
The answer to both questions is no. The purchaser of the property (third-party purchaser) is not entitled to the surplus funds by law. Additionally, the court cannot force a lienholder to take surplus funds to pay off the lien if they don’t want to. This may leave the new owner to pay off the lien or file a quiet title action if they want a clear title.
Florida Statute 45.033(1)
Florida statute 45.033(1) states, “there is established a rebuttable presumption that the owner of the record of real property 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.” The first part of this rule states the owner of the record is the person who owned the property at the time the foreclosure case was originally filed.
This is absolutely NOT a third-party purchaser as they purchased the property after the foreclosure case has ended. The second part of the rule states that subordinate lienholders have to “timely” file a claim. It doesn’t say they must make that claim. The rule only states that if they want the surplus funds, they must make a claim within a certain amount of time. Additionally, a third-party purchaser is NOT a lienholder.
Sometimes when someone purchases a property at a foreclosure sale and the plaintiff was a homeowner’s association, there will still be a lien from the mortgage. This mortgage holder is not a “subordinate lienholder”.
Florida Statute 45.032 (1)(b)
According to Florida 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.” And “subordinate” means “lower in rank or position”. When dealing with a mortgage, it is generally purchasing money that was used to purchase the property and therefore makes it a superior (higher in rank or position) lien to that of an association’s lien.
A superior lienholder is not allowed, by law, to take any Florida Foreclosure Sale Surplus Funds from a foreclosure case filed by a lower in position lienholder because their lien is still attached to the property and this superior lienholder still has the ability to file its own foreclosure action. Additionally, utility liens such as a water company lien, are superior to all other liens as water utilities are government-run.
Florida Statute 153.67
Florida Statute 153.67 states in part, “Such liens shall be superior and paramount to the interest on such parcel or property of any owner, lessee, tenant, mortgagee or another person except the lien of county taxes and shall be on a parity with the lien of any such county taxes.” The water company will not be able to request surplus funds, and they will not file their own foreclosure action either. If you purchase a property that has a utility lien, it is best you just pay it and move on. The courts can’t do anything about it.
What Happens if There Are Subordinate Lienholders That Don’t File a Timely Claim?
Can a court force them to take the funds to pay off their liens on the property? The answer to this is a resounding “NO”.
Generally, when a subordinate lienholder doesn’t make a claim, it is because either:
- The company has dissolved
- They just don’t want to worry about the expense of hiring an attorney to make the claim
- Or they just don’t know about it
Whatever is the case, a third-party purchaser can’t petition a court on behalf of a lienholder because they have no relationship with that lienholder. The third-party purchaser is not the lienholder. ONLY the subordinate lienholder can make the claim.
I see these requests in court all the time. I get calls about this all the time. The answer is still the same. It is up to the subordinate lienholder to make the claim. Period.
How The Haynes Law Group Can Help
If you have lost your property to a Florida Foreclosure or Tax Deed Sale, or you are the heir to a deceased party who lost their property to a Florida Foreclosure or Tax Deed Sale, and you believe there are Surplus Funds remaining from the sale, please give me a call for a free consultation.
I will go over your case and let you know the best way to proceed, and I can fight off third-party purchasers who mistakenly believe they have any rights to your funds. I handle Foreclosure Sale Surplus Funds and Tax Deed Sale Surplus Funds in every County in the State of Florida. And I don’t get paid unless you do.
Call (888) 252-8754 today or contact us online today to set up your no-cost consultation to discuss your case with our experienced team!