Coronavirus: How will Covid-19 Impact your Florida Mortgage Payments? Learn More!

Florida Tax Deed Sale Surplus Funds – Is a Third-Party Purchaser Entitled to the Surplus Funds?

If a property is purchased at a Florida Tax Deed auction and it is purchased for more than what is owed on the taxes, there will be additional funds available that would go to pay off some lienholders that have timely made a claim and the rest goes to the former owner of the property. But what about the person who purchased the property? Is the person who purchased the property at the tax deed auction allowed to receive any of the surplus funds? The simple answer is no. But why are they essentially not allowed to get some of their money back if they overpaid?

Florida Statute §197.582(2)(a) states that if the property is purchased at the Florida Tax Deed sale, “for an amount in excess of the statutory bid of the certificateholder, the surplus must be paid over and distributed by the clerk as set forth in subsections (3), (5), and (6).” The persons mentioned in those subsections are to be notified by the Clerk of Court by mail. The persons to be paid based on these subsections are the former owner or anyone holding a lien on the property before the tax deed sale and based on certain types of claims. The lienholders have 120 days to make a claim, or they are barred from doing so. A purchaser at the tax deed sale is not the former owner, nor are they a lienholder and therefore cannot claim the surplus funds. They don’t get their money back. Additionally, they cannot make a claim on behalf of any lienholders because they are not representatives of those lienholders.

If no potential lienholders have made a claim for those Tax Deed Sale Surplus Funds within that 120-day timeframe, then the remainder will go to the person who was the owner of the property at the time of the tax deed sale. If that person is now deceased, then that person’s direct heirs are entitled to the Florida Tax Deed Sale Surplus Funds. If no heirs make a claim, then the funds escheat to the State of Florida’s Department of the Treasury, Unclaimed Funds division, and may eventually be used for the school system.

Lastly, the biggest reason a third-party purchaser will not be eligible to receive the Florida Tax Deed Sale Surplus Funds is because the Clerk will simply now allow this to happen. If someone other than who is supposed to receive the funds files a claim, and if the clerk’s attorney believes there is someone who is actually due these funds, they will file what is called an “interpleader”. Florida Statute §197.582(6) gives the clerk the ability to file the interpleader action in circuit court within 90 days after the 120-day claim period expires. The clerk of courts is charged with the duty of holding and disbursing any surplus funds it receives as the result of a tax deed sale. Due to this, they will not allow for funds to be disbursed to someone they believe is not eligible to receive the funds. An interpleader is a complaint where the clerk will lay out all of the facts stating who is the person or heir who is entitled to the surplus funds and why they believe the person making the claim is not eligible. As long as you are the former owner of the property or an heir of a deceased former owner, you probably don’t have anything to worry about. But the clerk will not distribute the funds to anyone it feels is improper.

Within statute §197.582 and subsequent case law, there is simply no provision that allows the new owner of the property to “get his money back” by receiving the Florida Tax Deed Sale Surplus Funds to pay off lienholders. But what can they do if there are still liens on the property where a lienholder has not made a claim for the funds? They can contact an attorney to do what is called a Quiet Title Action. This is a type of action that can help the new owner to clear off any liens that may still be attached that weren’t paid off and give them marketable title. If the new owner prevails in this quiet title action, no past lienholders will be able to make any future claims against the property.

If you or a deceased family member are owed surplus funds from either a Tax Deed sale or a Foreclosure sale of your property, please give me a call for a free consultation. I can help you to make sure you get the most of the surplus funds you may have coming to you. I handle Tax Deed Sale and Foreclosure Sale Surplus cases in every county in the State of Florida, and I don’t get paid unless you do.

Categories: