If your home was sold in a Foreclosure sale or Tax Deed sale, there may be a surplus. This means that after the first lienholder has been paid, there is money left over that may belong to you. The first lienholder is generally the Mortgage holder or the Lender you used to purchase the property. The Mortgage holder always gets paid first after a foreclosure sale. When a client comes to us with a Foreclosure Surplus, we are often asked if anyone else might be entitled to that surplus. A subordinate lienholder might be entitled to some or all of it.
What is a Subordinate lienholder? A Subordinate lienholder, according to Florida Statute 45.032 (1)(b), “means the holder of a subordinate lien shown on the face of the pleadings as an encumbrance on the property.” This is any company or entity that has a secondary lien placed on a person’s property. These could be homeowners’ associations, second mortgages, contractors, or other professionals who did work on your home that have not yet been paid. The local tax collector can also be a subordinate lien holder if you have not paid your property taxes. These entities must prove services and lack of payment and can place a lien on your property. These liens, although not as important as the Mortgage holder’s lien, can prevent you from selling your property or from receiving the full amount of a foreclosure surplus.
Does this mean that you are completely out of luck when it comes to receiving the full amount of a foreclosure surplus? Not necessarily. In order for a subordinate lienholder, like a homeowner’s association, to make a claim for some of those surplus funds, they must first have filed a lien on your property. Generally speaking, the association may have a claim to some of the surplus funds if you didn’t pay your HOA or COA dues. But if they didn’t file anything at all, they will likely be defaulted and could also be removed from the case by the Court. We have had cases where a homeowners’ association was a named defendant in a foreclosure case, but never filed a response in the case and never filed a lien on our client’s property. We were able to obtain the maximum surplus for our clients due to this.
Additionally, the subordinate lienholder must also file a timely claim in order to receive any portion of the surplus funds. Florida Statute 45.032 (3)(a), “if the owner of record claims the surplus during the year period and there is no subordinate lienholder, the court shall order the clerk to deduct any applicable service charges from the surplus and pay the remainder to the owner of record.” The subordinate lienholder must file its claim after the certificate of disbursements has been filed or it is not timely. If it is not timely filed, then you should be able to get the entire surplus amount.
Now, you might think that this is settled law, but it really isn’t. Suppose this subordinate lienholder filed its claim before the certificate of disbursements has been filed by the Clerk? What if the subordinate has not filed a single response or pleading in the preceding Foreclosure case and was subsequently defaulted? These are things that need to be figured out by a qualified professional. Here at the Haynes Law Group, P.A. we can help figure out all the nuances that surround who is actually a subordinate lienholder and who isn’t. We are dedicated to helping you to receive the maximum amount of surplus funds owed to you.
Don’t try to get the surplus funds yourself or hire some third-party non-law firm that claims they can get you the surplus. They don’t know the law like an attorney does. If you are unsure whether there is an outstanding subordinate lienholder claim to your surplus funds, please don’t leave it to chance, and give me a call and I would be happy to give you a free consultation. If you decide to hire me to go after your surplus funds, I will only get paid if I win and collect the funds for you. I have handled over 10,000 foreclosure cases in Florida and would be happy to represent you. The Haynes Law Group handles Foreclosure Surplus and Foreclosure Defense cases in all counties in the state of Florida.