One of the things that scares many people about making a claim for Florida Foreclosure Surplus Funds as an heir to a deceased family member’s foreclosed property is whether it would open them up to future lawsuits. Their reasoning behind this is the person died and had a bunch of creditors, i.e., credit cards, medical debt, etc. Are the heirs required to pay those debts from the proceeds of the surplus funds after the property is sold at foreclosure auction? The simple answer is usually no.
As a general rule, no one inherits someone else’s debt. You cannot be forced to pay someone else’s bills unless you are also attached to that debt as a co-signor or other reason that attaches you to the debt. This works with mortgages, credit card debt, medical debt, judgment liens, etc. One exception is if you receive the Florida Foreclosure Sale Surplus Funds as the personal representative or executor on behalf of the Estate of the deceased party. In order for this to happen you must have already gone through probate and been named as the personal representative of the estate. Also, if there was a Will, the Will would need to be probated and you named as the executor of the estate. Either way, the money the creditors are after doesn’t come from you. It comes from the estate of the deceased person.
Of course, another exception to this is if you are the spouse of the deceased party and you receive the surplus funds. You might be liable to certain debts incurred during the marriage even if you personally are not on the contract agreement with the creditor. For instance, if your spouse had a credit card that was in his/her name but not yours, you may have to pay off that credit card because in marriage, you share both assets and debts. So, if you receive the Florida Foreclosure Surplus Funds as a spouse, you may need to use some of those funds to pay off some creditors. But these creditors couldn’t just take the funds. You would have to voluntarily pay the debt, or they could sue you in court and obtain a judgment against you. But that is with any debt incurred during a marriage.
However, if you receive surplus funds after the foreclosure sale of a deceased relative’s property, and you are simply stating you are an heir, you are not receiving those funds on behalf of the estate, you are receiving them on behalf of yourself. Florida Statute, 45.033(2)(b) states in part, “An involuntary transfer or assignment may be as a result of inheritance.” This means that due to your lineal relationship with the deceased, you should be able to receive the Florida Foreclosure Sale Surplus Funds without a probate. Therefore, you are not personally liable for any debt that you are not a cosigner to. Just remember, this doesn’t mean that it would exclude any subordinate lienholders in the foreclosure case from getting their funds. They are allowed to be made whole based on Florida Statute 45.033(1) that states a subordinate lienholder is entitled to surplus as long as they have “timely made a claim.”
Lastly, if you are the heir of a deceased party who is entitled to Florida Foreclosure Sale Surplus funds, and you have to file a probate in the case to show the court you are entitled to the funds, it still doesn’t necessarily open you up to losing those funds to a creditor. If a Summary Administration probate is filed. Summary administration is if the property was protected exempt homestead, the funds are less than $75,000, or if it has been more than two years since their death. With summary administration, you are not being named as the personal representative of the estate, you are simply stating that you are entitled to the funds as the heir to the deceased party. This means that you are not subject to having to pay taxes or debts on behalf of the deceased party. The funds/property is just granted to you by the courts.
I know all of this sounds a bit confusing, and it can be. That is why it is extremely important to speak with a highly qualified Florida Foreclosure Sale and Tax Deed Sale Surplus Attorney. I can help guide you through the process and make sure you are comfortable with the outcome of your case. I will do everything I can to help maximize the surplus funds you are to receive as an heir to a deceased family member. I handle Foreclosure Sale Surplus and Tax Deed Sale Surplus in every County in the State of Florida, and I don’t get paid unless you do.