Have you ever owned a Florida Timeshare only to have it foreclosed on? If so, there could be some surplus funds from that foreclosure sale. The process is a little different from regular foreclosure sales from a residential home or in a homeowner’s association foreclosure sale.
First, when you buy a timeshare, you are only buying an interest in the timeshare and not the entire property. There could potentially be a few dozen different interest holders in the timeshare. This means that even though it is one single property, many people or entities can purchase an interest. What makes this different is that even though you own an interest in the property, you don’t own the entire property. This means that your lending institution puts a lien on your interest in the property and not the entire property as a whole when you purchase the interest. Since there is a lien on the interest, the lender can foreclose on that interest.
Next, the foreclosure procedure can go one of two ways. The foreclosure can go through the regular foreclosure court and handled in much the same way as any other foreclosure case. However, Florida Statute 721.855(1)(a), states that some lienholders can appoint a trustee by recording a notice of appointment of trustee with the county. The appointment of a trustee is designated as a “non-judicial” foreclosure. The trustee must follow the procedures laid out in the statute and can initiate and conduct a trustee foreclosure action. Whether the foreclosure action is done by the court or by an appointed trustee, may depend on the language of your timeshare contract.
Florida Statute 721.855(2)(a) states that a timeshare instrument may contain a provision specifically prohibiting the use of the trustee foreclosure procedure. If this is the case, it is likely that your foreclosure case will go through the regular judicial process. However, the managing entity may opt to amend the contract to provide for the use of a trustee foreclosure procedure, but they must follow very specific rules.
If the timeshare foreclosure is done through a regular judicial proceeding, then any Surplus Funds will be distributed much the same way it is done with any other foreclosure surplus action. An evidentiary hearing might be held if there are any subordinate lienholders (like an association with a lien for past due fees). If there are any funds left after the subordinate lienholders are paid, then the surplus will go to the person who was the owner at the time the lis pendens was filed.
If the timeshare foreclosure is done through a trustee foreclosure action, then you will look to Florida Statute 721.855(11)(a) for how proceeds of the foreclosure sale will be distributed. It states that first, the proceeds are applied to the expenses of the sale, including compensation of the trustee. Next the lender is paid. Then, if there are any junior or subordinate interest holders, they get paid. Lastly, if there are no junior interest holders or all of them have been paid, “any surplus shall be paid to the former owner.” However, part (b) of that statute states that if the trustee is unsure as to who the owner was or if there is a dispute, then they have the “discretion to submit the matter to adjudication by court, by interpleader,” and can recover reasonable attorney’s fees. This means that your surplus case will go to the court and you will have to fight for any surplus you are entitled to.
All of these little nuances of the law of Florida Foreclosure Surplus from Timeshares can be a bit scary to most people. This is why it is important to hire a qualified Florida Foreclosure Surplus attorney. If you have any questions regarding your Florida Timeshare Foreclosure Surplus, please give me a call for a free consultation. I handle Timeshare Foreclosure Surplus cases in every County in the State of Florida, and I don’t get paid unless you do.