Florida Foreclosure Surplus Funds - Can a Water Utility Lienholder Make a Claim to Surplus Funds after a Mortgage Foreclosure Sale?

Representing Homeowners

I have been involved in Florida Foreclosure Surplus Funds cases where a third-party purchaser has requested the court reimburse them through surplus funds to pay a utility lien. During the hearing we made it clear that this Water Utility Lienholder was not entitled to any of the Florida Foreclosure Surplus Funds. They were not named as a defendant in the foreclosure case, and they didn’t attempt to intervene in the case in any way. The new owner of the property had to pay the lien in order to get the water turned on in their new property. The question is, why didn’t the water company intervene into the foreclosure case if they had a lien?

Not withstanding the fact that the third-party purchaser is not allowed to make any claims for the surplus funds, the utility is not able to make any claims for surplus funds either. First, the third-party purchaser cannot make a claim for surplus funds as they are not a party to the case. Based on Florida Statute 45.032, a third-party purchaser is not the owner of record at the time the lis pendens was filed, and they are not a subordinate lienholder in the case. They are simply the new owner of the property and take the property subject to any liens that may still be attached to the property that have not been satisfied by the foreclosure sale surplus.

The reason the utility cannot make a claim for Florida Foreclosure Surplus Funds in most of these cases is because their lien is superior to all of the other liens, including the mortgage. Sounds kind of strange, but if you look to Florida Statute 153.67, it states, “Such liens shall be superior and paramount to the interest on such parcel or property of any owner, lessee, tenant, mortgagee or other person except the lien of county taxes and shall be on a parity with the lien of any such county taxes.” This means that a lien from the water utility company is superior to a lien held by anyone else in a foreclosure case. A new owner will take the property subject to this lien and will need to pay it off or the utility company can foreclose on the property itself. Or, if the new owner wants to have the utility turned back on, they will need to pay the lien. They cannot then ask the court for the surplus funds to reimburse them.

This is not the case for a Florida Tax Deed Foreclosure Sale Surplus though. The statute clearly states the utility lien is superior to mortgage liens or other liens except those of Tax Liens. This means that any Florida Tax Deed Sale Surplus Funds would be subject to a request for the surplus funds by a utility lienholder. While many other lienholders are extinguished by a tax deed sale, a utility lienholder is not. This is just the opposite in the case of a Florida Foreclosure Sale Surplus case from your Mortgage holder, Homeowners or Condo Owners Association, or any other lienholder.

In the case of Florida Foreclosure Sale Surplus Funds, the most important take away is that a utility lienholder, such as that from a water company is superior to other lienholders and a new owner takes the property at the foreclosure sale subject to that lien. The new owner cannot get the surplus funds for any reason and especially not to pay off that lien. This is very similar to people who purchase a property at a Homeowner’s Association Foreclosure sale. The new owner takes the property subject to any superior liens, including a mortgage lien as it is superior to the HOA’s lien that is being foreclosed on. The mortgage lienholder cannot ask for the surplus funds because it still has the opportunity to foreclose on the property itself as a superior lienholder.

This is one of the many reasons it is important for you to be represented by a qualified Florida Foreclosure Sale Surplus or Tax Deed Sale Surplus Attorney. It is important to make sure you hire someone who knows and understands the law. Had I not been at the hearing today, it is possible the case would have ended differently. If you have a Florida Foreclosure Surplus Funds Case anywhere in the State of Florida, please give me a call for a free consultation. I can give you a comprehensive assessment of your case and what liens, if any, are not subject to the surplus funds. 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.

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