Florida Foreclosure Sale Surplus Funds – What Happens When a Third-Party Purchaser Tries to Back Out of the Purchase of the Property after the Auction?

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On occasion I take a Florida Foreclosure Sale Surplus case where the new owner (from the foreclosure auction) now wants to back out of the purchase. Why would someone want to get out of purchasing a property at a foreclosure auction, and what can you do to prevent it? Sometimes a purchaser at a foreclosure auction suddenly realizes they aren’t getting as good of a deal as they thought, and sometimes they realize they just don’t have the funds available to pay what they bid. How can your attorney prevent them from backing out of the foreclosure auction and make sure you get to keep your Florida Foreclosure Sale Surplus Funds?

First, a purchaser at an auction may want to back out of the sale because once they have completed the bid, they found out there are additional liens that won’t be covered by the surplus funds. Sometimes they are able to back out by just not remitting the final payment to the Clerk of Court and they lose their deposit, and the property gets put back up for auction in a month or two. Florida Statute § 45.031(3) states in relevant part, “if final payment is not made within the prescribed period, the clerk shall re-advertise the sale as provided in this section and pay all costs of the sale from the deposit. Any remaining funds shall be applied toward the judgment.” This means that the buyer paid the deposit and didn’t remit the final payment for the property. They lose the deposit, and the clerk will reset it for auction.

What happens if the buyer pays the final payment to the Clerk and then decides they want to back out of it? This can be tricky. First, Florida Statute §45.031(8) states in part, “any party may serve an objection to the amount of the bid within 10 days after the clerk files the certificate of sale.” 10 days. That is all they have to make an objection and try to get the sale vacated. Additionally, according to Florida case law, there must be a legitimate reason other than they just didn’t know there were other liens on the property. There must be some sort of improper conduct with the foreclosure auction, or the person must be deemed to be legally incapable of entering into an agreement for the auction. The courts have stated, “the general rule is that mere inadequacy of price, standing alone, is not a basis for setting aside a judicial sale.” U.S. Bank N.A v. Bjeljac 43 So.3d 851 (Fla. 5th DCA 2010). Another case states “gross inadequacy of price alone is not enough to set aside a foreclosure sale.” Venezia v. Wells Fargo Bank 306 So.3d 1096 (Fla 3rd DCA 2020). “The law is well-established that an objection to a foreclosure sale must be directed toward conduct that occurred at, or was directly related to, the foreclosure sale.” (Id.)

Next, the courts have stated that “a purchaser of property at a judicial sale is generally subject to the rule of caveat emptor.” Can Fin., LLC v. Niklewicz 307 So.3d 33 (Fla 5th DCA 2021). That means, “let the buyer beware”. The buyer at a foreclosure auction should do his/her due diligence to find out whether there are any other liens on the property before they bid on it. The court stated, “the purchaser could easily and should have discovered the existence of the mortgage in the exercise of ordinary prudence and caution.” (Id.) The buyer can’t just say “I didn’t know about the other liens or mortgage” or “if I had known beforehand, I wouldn’t have bid”, etc. The court says they should have looked into this and been able to find out about these other liens by checking public records. The new buyer takes the property subject to any liens and encumbrances that are still attached to the property.

Why is this relevant to someone who is due the Florida Foreclosure Sale Surplus Funds? If the new owner of the property is allowed to back out of the purchase, it can take many more months for you to get the funds you are due from the foreclosure sale of your property. It can potentially take many, many months for the sale to be reset and you to get the funds you are due, and you don’t know whether the property would sell for as much as it did the first time. But time is the greatest factor. You have lost your home and you are trying to pick up the pieces. The Surplus Funds from the Foreclosure Auction will help you to get back on your feet. In order to make sure you get the most out of these funds and do it in the quickest possible way, I urge you to hire a qualified Florida Foreclosure Sale and Florida Tax Deed Sale Surplus Funds attorney. I know and understand the law in a way those third-party surplus recovery companies don’t.

If you or a deceased loved one has lost your property to foreclosure sale and you believe there are Florida Foreclosure Sale Surplus Funds available from that sale, please give me a call for a free consultation. It is important to act quickly to make sure any potential issues with the case are handled in the best way possible. I will be happy to discuss your case with you and let you know if the new buyer’s attempt to vacate the sale is justified. I handle Foreclosure Sale 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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