Florida Foreclosure Surplus Funds - What Happens To The Surplus If The Mortgagor (Purchaser) And The Owner (Title Holder) Are Different?

Haynes Law Group

There are instances where a person sells their property to someone else but may still be liable for the mortgage. In a case like that, if the property is foreclosed and ultimately sold at auction, who gets the Florida Foreclosure Surplus Funds? To explain the scenario further, let’s say I own a home with a mortgage, and I decide that I want to sell it. I can always go the traditional route and use a realtor and a title company, and the purchaser will gain title to the deed and likely have their own lender and mortgage that pays off mine. This is a traditional sale. But sometimes an owner will sell to a private party and they make an agreement between themselves (without a real estate agent or title company) for the sale of the property and the new purchaser basically takes over the payments on the mortgage. This is sometimes called purchasing “subject to” the mortgage.

When an arrangement like this occurs, the new buyer generally gets a quitclaim deed, but may not have changed anything with regards to the mortgage. This is exactly what happened in a February of 2019 Florida Second District Court of Appeals case called 2017 Bell Ranch v. Burrill. In this case, 2017 Bell Ranch Residential Trust (Bell) purchased the property from Ms. Burrill subject to Ms. Burrill’s mortgage. Ms. Burrill also signed over a quitclaim deed to them. However, Bell stopped paying the mortgage that was still in Burrill’s name and the original lender foreclosed on the property. There was a foreclosure sale to which there were surplus funds remaining after paying off the lender. Because Ms. Burrill was still the one technically being sued since her name was on the mortgage, she felt she should get the surplus funds. But the Court didn’t see it this way.

The court followed the letter of the law and Florida Statute 45.032(1)(a) states in relevant part, “’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.” The owner of record at the time of the lis pendens was Bell because of the quitclaim deed that was executed by Ms. Burrill. Since Bell was the party on the deed, then it was the owner of the property. Unfortunately for Ms. Burrill, she still received a foreclosure on her record and Bell received the benefits of the Florida Foreclosure Surplus Funds.

The biggest take away from this is to first have an attorney look over any sales agreement you might have with a private purchaser or company. Next, always make sure the mortgage is taken out of your name or paid off by the new buyer or you may still be liable in a foreclosure case. Lastly, if you feel you should receive any Florida Foreclosure Surplus Funds from the sale of a property, your name MUST be on the deed at the time of the filing of the lis pendens. In the alternative, you must be an heir to the person who is on the deed to the property.

If you feel you are entitled to Florida Foreclosure Surplus Funds, no matter how crazy the scenario, please give me a call for a free consultation. I handle Foreclosure Surplus cases in every County in the State of Florida and I don’t get paid unless you do.

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