How is your foreclosure surplus distributed?

Many of our new clients know they have surplus funds left over from a Foreclosure Sale or Tax Deed Sale. However, they don’t know how those funds are distributed from the courts, especially if the funds were originally supposed to go to a family member who is now deceased.

First, Florida Statute 45.032 deals with the distribution of surplus funds after a foreclosure sale. It defines Surplus Funds as “funds remaining after payment of all disbursements required by the final judgment of foreclosure and shown on the certificate of disbursements.” This means that after the mortgage has been paid, the clerk’s fees have been paid, and any subordinate lienholders have been paid, then whatever is left (if anything) is the Surplus.

According to Florida Statute 45.032(2), this Surplus is to be distributed to the person who was “the owner of record on the date of the filing of a lis pendens.” A lis pendens is the “lawsuit pending” for the foreclosure action. This means that whomever is the person the lawsuit was filed against, is the person who will receive the surplus funds. But what happens if that person has died either before the case was filed or even during the litigation and before the final foreclosure sale? In this case, the surplus would go to the family members “per stirpes”.

Per Stirpes means “by stock” or “by roots”. This would be the child(ren) of the decedent. For instance, if the decedent had two children, each child would be entitled to fifty percent of the surplus funds. If the decedent had four children, each child would be entitled to twenty-five percent, and so on. But what happens if one or more of those children is also deceased? If that child had children (grandchildren of the deceased original owner), they would split that person’s percentage. However, if that child of the original owner didn’t have any children, then that amount is split between the other remaining siblings.

Now, this can be different if there is a pending probate case or perhaps by a Will that dictates which relative gets what percentage. But, if there is no Will or probate that determines the percentage, then the surplus funds would be distributed to the heirs by way of an “involuntary transfer”. Florida Statute 45.033(2)(b) states, in part, that “An involuntary transfer or assignment may be as a result of inheritance.” This means that it is automatic, by law, that the child(ren), or grandchild(ren), of the deceased would be automatically entitled to the surplus funds by way of their inheritance as heirs of the deceased.

If all the heirs are in agreement, you should hire a reputable law firm, like us, to represent all of the heirs and retrieve your surplus funds. You should always hire an attorney who is well versed in doing Foreclosure Surplus because there may be a few wrinkles that need to be worked out that you might not be able to navigate yourself. We know the law and how to look for any subordinate lienholders, as well as how to tell if those subordinate lienholders aren’t entitled to what they may claim.

Not to complicate things further, but what would happen if the heirs of the deceased don’t get along very well? Sometimes the different heirs will hire their own attorneys or may even sign over their rights to the funds to a surplus recovery agent. The courts would rather have the funds released to the heirs all at once to not waste court time, but sometimes things don’t work out that way and each heir can have their percentage of the funds released at different times. You can hire us to just retrieve your portion of the Surplus Funds if you wish. Sometimes this will get the rest of the heirs to begin to work together if they see one heir receiving their portion. We are happy to take their calls and will represent you and them individually or all together if you wish.

If you think you may be entitled to foreclosure surplus funds in Florida, either from your own property that has sold, or that of a deceased family member, please call my firm and I will personally give you a free consultation. I handle foreclosure surplus cases in every county in Florida. And I don’t get paid unless you do.

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