Over the years, I have had clients who were foreclosed on by their Lender (Bank) and from another lienholder, like the homeowner’s association. These are two separate foreclosure actions. If they both end up foreclosing on the property and setting it for sale, can you get the Florida Foreclosure Surplus Funds from both foreclosure sales? The simple answer is yes, but there may be a few factors involved.
The first thing that we will need to see is which foreclosure sale happens first. If the lender files for foreclosure and your homeowner’s association (or condo association) has a lien on your property for unpaid assessment fees, then the association could be considered a subordinate lienholder. When the property is sold at foreclosure sale, any amount over what is owed to the bank becomes a Surplus. If there are any subordinate lienholders that timely make a claim, they are paid next and whatever is left goes to the “owner of record”.
According to Florida Statute 45.032. “Owner of record means the person or persons who appear to be owners of the property that is the subject of the foreclosure proceeding on the date of the filing of the lis pendens (lawsuit).” Also, “Subordinate lienholder means the holder of a subordinate lien shown on the face of the pleadings as an encumbrance on the property.” So, if the mortgage foreclosure sale of the property happens before anything else, the homeowner’s association will likely be a subordinate lienholder and you are the owner of record. This could play out quite differently if the sale from the homeowner’s association’s foreclosure action happens first.
For instance, if there is a foreclosure action by the homeowner’s association AND a foreclosure action by the lender, and the homeowner’s association gets their sale first, it won’t extinguish the foreclosure action from the lender. The lender could still sell the property again at a foreclosure auction even after it was sold at a prior auction. The mortgage is attached to the property and you are still the owner of record because you were the owner of the property at the time the lis pendens was filed. This means that if there are Florida Foreclosure Surplus Funds from the homeowner’s association foreclosure sale, you are entitled to that. Additionally, you will be entitled to any Florida Foreclosure Surplus Funds from the lender’s sale of the property because you were the owner of the property at the time it filed its lis pendens.
This is also why a third-party purchaser should do his/her due diligence. If someone buys a property at a homeowner’s association foreclosure sale and didn’t see that there is also a pending foreclosure sale from the lender, they will lose the property they just bought due to the second foreclosure sale. There is no recourse for a third-party purchaser to receive any of those Florida Foreclosure Surplus Funds because they were not the owner of record at the time of the filing of the lis pendens.
If your property has been sold at either a homeowner’s association foreclosure sale or a lender’s foreclosure sale and you believe you have Florida Foreclosure Surplus Funds coming to you, please give me a call for a free consultation. These Surplus Funds could potentially ease what would have been a terrible situation. 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.