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Florida Foreclosure Sale Surplus Funds - Will There Be Any Surplus Funds if the Bank Keeps the Property After the Foreclosure Sale?

It seems that almost weekly, I take calls from people who have lost their homes from a Florida Foreclosure Sale auction, but instead of the home being purchased by someone at the auction, the plaintiff (the bank or mortgage lender) gets the property because the bids were not enough to cover what was owed on the mortgage. What happens if this bank or lender then sells the property afterwards? Do the former owners receive any surplus funds from this sale? The simple answer is no. Many former owners want to know how this is fair to them.

At a Florida Foreclosure Sale of property, the plaintiff has the option to put a “Max Bid” on the auction. This is usually the amount that is owed based on the final judgment of foreclosure. This max bid means that if no bids at auction are above that amount, the plaintiff will then get the property (instead of money from the sale) and be issued a certificate of title from the Clerk of Court for that County. At this point the plaintiff now owns the property. Florida Statute 45.031(6) states, “When the certificate of title is filed the sale shall stand confirmed, and title to the property shall pass to the purchaser named in the certificate without the necessity of any further proceedings or instruments.” The plaintiff in the foreclosure case now has title and can attempt to sell the property to recoup their losses.

Many times, when the plaintiff gets the property after the foreclosure sale, they will immediately put it up for sale with a realtor. All they are looking for is to try to get their money back from the unpaid mortgage and their legal expenses. Mortgage lenders are not usually in the business of selling homes. Additionally, since the property didn’t sell at auction for what was owed, they might not be able to sell it for that much on the regular market either. The plaintiff takes a loss. But what if they are able to sell the property at a conventional sale for more than what was owed to them? What happens to the surplus?

Because the lender has obtained title to the property after the foreclosure auction, the Florida Foreclosure Surplus Statutes do not apply. The plaintiff is the owner and can sell the property for either a profit or a loss. Florida Statute 45.032(1)(a) states, “’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.” However, once the foreclosure sale is completed, the case is concluded and there is a new owner. If there were no Florida Foreclosure Sale Surplus Funds at that foreclosure sale, then it cuts off any ability for the former owner to receive anything at all.

This would be exactly the same if a person or other company purchases the property at a foreclosure auction and then decides to sell the property for a profit. You wouldn’t expect to get a portion of their profit from that sale of the property, would you? No. Just because the bank or mortgage lender kept the property after the foreclosure auction, it doesn’t entitle the former owner to any profit the bank or lender may receive when they sell the property. Honestly, most of the time they sell the property for a loss. Once the bank or mortgage lender keeps the property after the foreclosure auction, it cuts off any ability for the former owner to receive any surplus funds… because there aren’t any.

If you or a family member have lost your home to a Florida Foreclosure Sale, and you want to see if you might be entitled to any Surplus Funds from this sale, please give me a call for a free consultation. I can look over you case and let you know how much (if anything) you may be entitled to. I handle Foreclosure Sale and Tax Deed Sale Surplus Funds in every County in the State of Florida, and I don’t get paid unless you do.

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