Can a Third-Party Purchaser File a Claim for Florida Foreclosure Surplus Funds?

house in background with foreclosure sign in foreground

Lately, I’ve received several calls from Third-Party Purchasers who are seeking to file a claim for Florida foreclosure surplus funds after they have purchased a property at a Florida foreclosure auction. Most of the time, they are seeking to file a claim for surplus funds because they purchased the property without conducting a proper title search and have come to discover that there are additional liens attached to the property. Unfortunately, I have to tell them that they are not legally entitled, per Florida Law, to any of the funds that are available. Florida Statute 45.032(2) states that “[t]here is established a rebuttable legal presumption that the owner of record on the date of the filing of a lis pendens is the person entitled to surplus funds after payment of subordinate lienholders who have timely filed a claim.” The ‘owner of record’ is defined by Florida Statute 45.032(1)(a) as “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.” Therefore, meaning that the owners of the subject property prior to the foreclosure action being initiated are the ones that are entitled to a portion, or the entirety, of the surplus funds that are available and not the purchaser of the property at the foreclosure auction. In fact, in Pineda v. Wells Fargo Bank, N.A. (2014), the Third District Court of Appeals of Florida ruled against the third-party purchaser stating that the distribution of surplus foreclosure proceeds is governed by a plain and unambiguous statutory procedure which clearly provides that the owner of record is entitled to the surplus proceeds.” Pineda v. Wells Fargo Bank, N.A., 143 So. 3d 1008, 1011 (Fla. 3d DCA 2014).

After receiving this information, Third-Party Purchasers will then try to have the foreclosure sale vacated. However, this is extremely difficult. The reason being that Florida law incorporates, the rule of Caveat Emptor (which translates to “Let the Buyer beware”) when it comes to the purchase of real property at Florida foreclosure auction. In Can Fin., LLC v. Niklewicz (2020), the Trial Court entered an order vacating the Third-Party Purchaser’s purchase of a property at a foreclosure auction on the grounds that they did not exercise their due diligence by performing a title search to uncover any additional liens that may be attached to the property prior to their purchase of said property. However, the Fourth District Appellate Court of Florida reversed the Trial Court’s ruling, specifically referring to the rule of caveat emptor as the basis for their reversal. I have had several cases where I’ve had to defend a former homeowner from a Third-Party Purchaser’s illegitimate claim. While I do feel for Third-Party purchasers going through this the best advice I can give is that if you are seeking to purchase a Florida property at foreclosure auction; then I strongly recommend that you perform a title search to uncover any additional liens that may be tied to said property.

Moreover, if you are reading this as a former Florida Homeowner and have been contacted by a Third-Party Purchaser about surplus funds being available after the foreclosure sale of your Florida property, then please give me a call and I will personally give you a free consultation. During our consultation, I will confirm whether there are surplus funds available to be recovered as well as answer any questions that you may have. If there are surplus funds to be recovered, then I will also provide you with a personalized strategy as to how we can assist you with the recovery of your Florida foreclosure surplus funds.

At Haynes Law Group, P.A., we have experienced Attorneys who are well-versed in the Florida statutes governing Florida homeowners’ claims to Florida foreclosure surplus funds and have helped to recover millions of dollars for former Florida homeowners. We represent former homeowners all over the state of Florida, no matter which county they are in, and will work tirelessly to ensure that you receive the Gold Standard of Legal Service.

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