Florida Foreclosure Surplus Funds - How Long Does a Subordinate Lienholder Have to Make a Claim on Surplus Funds?

Representing Homeowners

I speak often about when Florida Foreclosure Sale Surplus Funds are being requested, they are subject to claims of Subordinate Lienholders that have “timely made a claim”. How much time to do these lienholders actually have in order for this to be “timely”?

First of all, what is a Subordinate or Junior Lienholder? According to Florida Statute 45.032 (1)(b), subordinate lienholder “means the holder of a subordinate lien shown on the face of the pleadings as an encumbrance on the property.” This is any company or entity that has a secondary lien placed on a person’s property. This could be a homeowners’ associations, second mortgage, contractor, or other professional who did work on your home that has not yet been paid.

In order for a subordinate lienholder to make a claim for surplus funds, they must have preserved their right by being named as a defendant in the foreclosure case, filing an answer in the foreclosure case, or at least filing a motion to intervene prior to the foreclosure sale of the property. In many instances, if the subordinate lienholder has been defaulted in the case, they may not be able to make a claim. However, as of just a couple of years ago, if they are eligible to make a claim, they have up until one year to do so. This is considerably different from what the law stated prior to the change in 2019. It used to state the subordinate lienholder had 60 days to make a claim. The 60-day language was removed by the Florida Legislature in 2019 and now states they must claim no later or within the number of days stated on the notice after the sale.

The notice stated on the sale will have language that states the Clerk of Court will hold the funds for one year before they are reported as unclaimed funds. This language now means a subordinate lienholder has one year to make the claim. However, there has been much debate as to when the one year begins. Is it when the certificate of sale is issued? Is it when the certificate of title is issued? Neither one actually. The Florida Supreme Court solidified the rules on this back in 2018 in a case called Bank of New York Mellon v. Granville. The court ultimately determined that the period for the filing of claims to surplus funds begins upon the issuance of the Certificate of Disbursements. The certificate of disbursements is issued to show that the foreclosure sale to the new owner is confirmed. It will also state on it exactly how much of the Florida Foreclosure Sale Surplus Funds are being held with the Clerk of Court.

This means that a “timely claim” for the surplus funds must be made no more than one year from the date of certificate if disbursements. If the claim is made later than that, this subordinate lienholder is barred from their claim. This new interpretation of the statutes has been tested a few times since the Florida Supreme Court Ruling in the Granville case and so far, the lower courts have upheld the law and not tried to overturn it. It is extremely important to know when a subordinate lienholder makes a claim on the Florida Foreclosure Sale Surplus Funds so you can also make sure whether their claim is timely or not. The certificate of disbursements filed by the clerk of court will now determine this.

If you believe you or a family member may be entitled to Surplus Funds, have received a letter from the Clerk of Courts stating you might be entitled to Surplus Funds, or have been contacted by a company that claims you might be entitled to Surplus funds, do not hesitate to reach out to our firm for a free consultation. I handle Foreclosure Surplus and Tax Deed Surplus cases in every county in the State of Florida. I will be happy to give you a Free Consultation to find out for sure whether any subordinate lienholders are able to make a claim or are barred by statute. I will always strive to make sure you get the maximum amount of Florida Foreclosure Sale and Tax Deed Sale Surplus Funds you are entitled to. And I don’t get paid unless you do.

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