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Is It Necessary to Have an Evidentiary Hearing to Determine Who Gets the Funds From a Foreclosure Surplus?

Many of our clients are unsure what steps need to be taken to receive the surplus funds from their foreclosure sale. Often, it is required to have what is called an evidentiary hearing to determine who is due those surplus funds. Florida statute 45.032(3)(b) states, in part, ”if any person other than the owner of record claims an interest in the proceeds… or if the owner of record files a claim for the surplus but acknowledges that one or more other persons may be entitled to part or all of the surplus, the court shall set an evidentiary hearing to determine entitlement to the surplus.

Does this mean that an evidentiary hearing is required in all cases? Not necessarily. In cases where there are no subordinate (junior) lienholders, there is no need to waste the court’s time with an evidentiary hearing. This is because any surplus funds will go to the senior lienholder (the mortgage holder who filed the foreclosure lawsuit against you), the Clerk of Courts for any fees that may be due, and to you the owner of the property when the suit was originally filed. Since it is easy to determine who gets the surplus fees, there is no need for an evidentiary hearing.

Next, if there is only one subordinate lienholder, it is not necessary to have an evidentiary hearing either, unless there is some contention as to how much that lienholder is entitled to. In many cases an agreement can be reached between the parties and an agreed order can be given to the judge. This will save money and the Court’s precious time. But if there is any disagreement between the parties as to how much a subordinate lienholder is to receive of those surplus funds, then an evidentiary hearing will be necessary.

Lastly, if there is more than one subordinate lienholder, an evidentiary hearing will need to be held as to which subordinate lienholder has priority to the surplus funds. The court will look to the statutes that determine who will take priority. Florida Statute 45.033(1) states in part, “A person claiming a legal right to the surplus as an assignee of the rights of the owner of record must prove entitlement to the surplus funds pursuant to this section.” The evidentiary hearing us used to determine each subordinate lienholder’s right to the surplus funds and in what order they are to be paid. If there is enough of the surplus funds to pay all of the subordinate lienholders, then there may not be a need at all for the evidentiary hearing as they will all get paid based on what they are owed, as long as there is no dispute on the amount.

Sometimes these evidentiary hearings can be used to make sure you as the original homeowner are to receive the funds instead of the subordinate lienholders. This is because there may be some sort of issue that wasn’t addressed by the subordinate lienholder. For instance, if they did not file their claim to the surplus funds in a timely manner, they are barred from doing so. Additionally, if they did not specifically plead attorney’s fees in their claim or during the foreclosure litigation, they cannot receive those fees. This means that we would be able to keep some of your surplus funds out of the hands of parties that should not get it.

Often we are confronted with issues like this and without our professional help, our client’s wouldn’t receive the maximum amount of the surplus funds they are intitled to. For these reasons, it is not always necessary to have an evidentiary hearing for your foreclosure surplus case, but if it is necessary, it is always best to hire an attorney that will fight for every penny you are due.

It is always important to hire a professional attorney who is well versed in the law to handle your foreclosure surplus case. If you think you may be entitled to Foreclosure Surplus Funds or Tax Deed Surplus Funds anywhere in the State of Florida, 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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