Things happen and sometimes your property or property belonging to a deceased relative has been sold at a public auction. Many times, there are some Florida Foreclosure Surplus Funds available from that auction. However, what happens if the person or company that bought the property at auction now wants out of the purchase? This could affect those Surplus Funds you are owed. What we always want to say is “Caveat Emptor!” Let the Buyer Beware! This is a term that goes back to the early days of our Country and even to the laws of England. Basically, this means that you need to do your own due diligence when buying something, especially when it comes to buying a property a Foreclosure Auction. However, it isn’t always that easy.
Generally speaking, once the purchase is made the buyer is not able to back out unless they can give a valid reason why they wish to do so and within a very specific amount of time. For instance, if a buyer at a Homeowner’s Association foreclosure auction later find out there is also a mortgage on the property, they may realize they didn’t get as good of a deal as they thought. This could be a $200,000 property that they purchased for $100,000 from the HOA foreclosure auction. The HOA may have only wanted to recoup $15,000 in past due assessments and fee. That means there is a Surplus of $85,000 that will be due to the former Homeowner. Now the buyer has found out there is still a $150,000 mortgage on the property. This means they just bought a $200,000 property for $100,000 and it still has a mortgage lien for an additional $150,000. That means if they still want to keep the property, they have to pay off that mortgage also. If they pay it off, they are out $250,000 for a property that isn’t worth that much. What do they do?
The buyer could try to negotiate with the mortgage company to pay a reduced amount for cash. They could try to hold onto the property for a while and hope the property value goes up and sell to may a slight profit. Or, in many cases they try to back out of the purchase. All of this is happening while you, the former homeowner, are waiting for your Florida Foreclosure Surplus Funds. Let me also say that there is NO statute or caselaw that would allow the third-party purchaser to receive these Florida Foreclosure Surplus Funds. Many have tried over the years and as long as you have a competent attorney, they will continue to fail.
When the third-party purchaser tries to back out, they sometimes claim “mistake”. Meaning they didn’t know what they were getting into and didn’t have all of the facts. This is where they should have done their due diligence. For about $150 or less, anyone can hire a title company to run a title search on a property to see if there are any liens or mortgages. Most of these records are already in the online public records with the Clerk or Comptroller for your county. Also, Florida Statute 45.031(5) states that a party must file an objection within ten days after the issuance of the certificate of sale. If the buyer waits too long, then too bad. Even still, there would need to be a better reason than “I didn’t know there were other liens on the property.”
Lastly, a buyer can just not complete the sale. This means that they were the highest bidder and paid the deposit but didn’t send the rest of the funds to complete the purchase. If this happens, the Clerk will issue a Certificate of Incomplete Sale. Florida Statute 45.031(3) states that “the deposit shall be applied to the sale price at the time of payment. If final payment is not made within the prescribed period, the clerk shall readvertise the sale as provided in this section and pay all costs of the sale from the deposit. Any remaining funds shall be applied toward the judgment.” Florida courts have debated this a few times and have found that based on this statute the deposit does not go back to the purchaser, even if he backed out at the last minute.
The most important take away from this is to make sure you hire a qualified Florida Foreclosure Surplus Funds Attorney who understands the law. You won’t get this same amount of knowledge from hiring one of those third-party surplus recovery companies. If you believe you have Florida Foreclosure Surplus Funds coming to you from the foreclosure sale of your property or that of a deceased relative, please give me a call for a free consultation. I handle Foreclosure 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.