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

Subordinate Lienholders and How They can Affect When A Former Homeowner Receives Their Florida Foreclosure Surplus Funds

Today, we will be discussing Subordinate Lienholders and how they can affect a former Homeowner’s claim to Florida foreclosure surplus funds. If you’ve just heard about Florida Foreclosure surplus funds you may be wondering what they are. Please allow me to provide a brief explanation as defined by Florida Statute 45.032(1)(c): “Surplus Funds are the funds remaining after payment of all disbursements required by the final judgment of foreclosure and shown on the certificate of disbursements.” According to the same statute, “there 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.” Therefore, you as the former Homeowner are entitled to filing a claim for a portion, or the entirety, of the surplus funds that are available due to being the owner of record at the time the foreclosure action was initiated.

Now that we have discussed what surplus funds are it is important to know what is considered a Subordinate Lienholder. Subordinate Lienholders can vary depending on the type of foreclosure action that is filed with the Court.

For example: Should a Homeowners’ Association file a foreclosure action and the subject property be sold, then they would not be considered a subordinate lienholder able to file a claim for surplus funds (should they be available) as they were paid from the proceeds of the auction. In this scenario, if there is a first mortgage on the property and there are surplus funds available, they too are not eligible to file a claim for surplus funds as they are entitled to recovering their debt by initiating their own foreclosure action against the subject property as the first mortgage is the Superior Lienholder. In this case, should the subject property be sold at both a Homeowners’ Association foreclosure auction first and then a first mortgage foreclosure auction after, then the former Homeowner would be able to file a claim for surplus funds (should they be available) in both cases. In contrast, if there is a foreclosure action initiated by the first mortgage and the subject property is sold at auction and there is a recorded lien from the Homeowners’ Association against the property, and the Homeowners’ Association did not initiate their own action for the property to be sold, then the Homeowners’ Association will be considered a valid subordinate lienholder and will be able to file a claim for a portion, or the entirety, of the surplus funds that may be available.

Moreover, examples of other Subordinate Lienholders that may have a valid lien, and therefore, can file a claim for the available surplus funds are construction companies, Air Condition Companies, pool companies, roofing companies, etc. Should a Subordinate Lienholder file a competing claim for surplus funds the Court will require what is known as an “Evidentiary Hearing” to determine the priority in which the funds are to be disbursed to the claimants. If an Evidentiary Hearing is required, then I strongly advise that a former Homeowner consult with an experienced Florida foreclosure surplus funds recovery Attorney so that they can be made aware of their rights when it comes to the surplus funds and be better equipped to attend said hearing. Furthermore, the need for an Evidentiary Hearing can delay the disbursement of the surplus funds to the claimants because they will be at the mercy of the Judge’s availability to hear such matters which can be weeks or even months. Additionally, the claimants will be at the mercy of the Judge’s determination of priority as to how the funds should be disbursed whether they should be disbursed to a sole claimant or to both. As such, it is important to note that an experienced Florida foreclosure surplus funds recovery attorney can often circumvent the need for an Evidentiary Hearing by coming to an agreement with the Subordinate Lienholder’s Attorney. If the competing claimants are able to come to an agreement, then a proposed agreed order will be submitted to the Court for the Judge’s review and consideration. Should the order be granted, then the hearing will no longer be necessary, and the funds would be disbursed to the parties faster.

If you are reading this as a former Florida Homeowner whose home has recently been sold at a Florida foreclosure auction and you would like to know whether there are surplus funds available for you to recover, 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.

Categories: