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Florida Foreclosure Sale Surplus Funds – Are You Entitled to the Surplus Funds if you Did Not Own the Property?

I receive calls on a regular basis from people who were not the original homeowner to a piece of property that has been foreclosed on. They are usually wondering if they would be able to receive the Florida Foreclosure Sale Surplus Funds from the foreclosure auction of the property. There are a very few scenarios where a non-owner of the property would be able to receive the property and many scenarios where there is no possible way they could.

First, if you are the heir to a deceased loved one who lost their property to foreclosure, then you may be entitled to the surplus funds without having to do probate. Florida Statute 45.033(2)(b) states, “an involuntary transfer or assignment may be as a result of inheritance.” This means that if you are the legal heir of the deceased party, you might be eligible to receive the Florida Foreclosure Sale Surplus Funds without the need for a probate. Generally, heirs would be children. If the deceased party had no children, or the children are deceased without heirs of their own, then the next heir would be the parents of the deceased. If the parents are also deceased, then it goes to siblings of the deceased and then to their children, etc. This is also the same if you are an adopted relative as the Florida courts look to adopted children the same as if they are blood related.

The next scenario to discuss is if you have lived in the property prior to the foreclosure sale but you are not an owner of the property. This might be a boyfriend, girlfriend, fiancé, or just a friend. Because you are not on the deed to the property and you are not related to the owner, you cannot receive any of the Florida Foreclosure Sale Surplus Funds. I just had a call with someone about this today. It doesn’t matter if you helped pay the mortgage. It doesn’t matter if you are on the Note and Mortgage, but not on the Deed. The only thing that matters when it comes to these surplus funds is whether you were on the deed at the time the foreclosure case was filed.

Florida Statute 45.033(1) states, “there is established a rebuttable presumption that the owner of record of real property 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.” This means that the person who is to receive the Florida Foreclosure Sale Surplus Funds must have been on the deed at the time the foreclosure case was filed. Just because you lived there and helped pay mortgage and utilities, doesn’t entitle you to any of the surplus. Although, as previously stated, an heir is able to receive the surplus even though they are not on the deed, but generally that is the only way.

While I am on the subject of Florida Statute 45.033(1), it states that a subordinate lienholder can timely make a claim for the surplus funds. This is an entity that has a lien on the property and might be named in the lawsuit as a potential lienholder. For a subordinate lienholder to make a claim, it is important for them to make a “timely” claim based on the statute. Generally, they must have filed in the case to preserve their right to make a claim, and the claim must be made within a year from the certificate of disbursements filed by the Clerk of Court. If they didn’t make a timely claim or were defaulted, they may not be able to make a claim at all.

Lastly, I want to go into the notion of the third-party purchaser. A third-party purchaser is not the owner at the time the lis pendens was filed. They are not a subordinate or any sort of lienholder. Therefore, the statute mentioned above does not allow a third-party purchaser to receive the Florida Foreclosure Sale Surplus funds at all. I have often touched on this subject and I want to reiterate that according to the Florida Third District Court of Appeals in Pineda v. Wells Fargo Bank, 143 So. 3d 1008, “neither the statutes nor the case law governing distribution of surplus foreclosure sale proceeds provides a mechanism authorizing a third-party purchaser to obtain the surplus.” If you are a third-party purchaser, you are not legally entitled to the surplus funds at all.

If you are the heir of a deceased person who lost their home to foreclosure and you believe you might be entitled to the Florida Foreclosure Sale Surplus or Tax Deed Foreclosure Sale Surplus Funds, please give me a call for a free consultation. I can let you know whether or not you have a valid claim to the funds. I handle Foreclosure Sale Surplus 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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