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Third-Party Purchasers and Florida Foreclosure Surplus Funds

Every week it seems like I’m getting more and more calls from Third-Party Purchasers who are seeking to file a claim for Foreclosure Surplus Funds after they have already purchased a certain property at Florida foreclosure auction. Allow me to make clear that current Florida Statutes do not make it possible or provide any sort of entitlement to Third-Party Purchasers for any portion of surplus funds that may result after their purchase of a property at Florida Foreclosure Auction. Instead, Florida Statute 45.032(2) states “[t]here 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.” The “owner of record is defined by Fla. Statute 45.032(1)(a) as “[t]he person or persons who appear to be owners of the property that is the subject of the foreclosure proceeding on the date of the filing of the lis pendens. Florida Statute 45.032(1)(b) further defines a “Subordinate Lienholder” as “[t]he holder of a subordinate lien shown on the face of the pleadings as an encumbrance on the property.” As you can see, Third-Party Purchasers are not eligible to file a claim for Florida Surplus Funds, nor are they entitled to a portion of said funds as they do not fall under any of the above categories. In fact, Third-Party Purchasers are indeed that — third parties; they had no standing nor relation to the foreclosure auction until their purchase of the subject property at foreclosure auction.

Now, as a Third-Party Purchaser reading this, you may be saying to yourself “Well, that’s not fair. I didn’t know about any other outstanding liens on the property when I purchased it. Why should the former Homeowner get a windfall.” While I agree that it may be unfortunate for you, this is why it is most important that you always perform a thorough title search of the subject property prior to purchasing it to uncover any encumbrances that may be hidden or that you may have missed. The reason for this is because the Florida Court’s employ the rule of Caveat Emptor (which translates to “Let the Buyer beware”) when it comes to the purchase of real property at Florida foreclosure auction. An example of this rule being employed can be seen in Can Fin., LLC v. Niklewicz (2020). In this case, the Trial Court entered an order vacating the Third-Party Purchaser’s purchase of a property at a foreclosure auction on grounds that they did not exercise their due diligence by performing a title search to uncover any additional liens that may be attached to the property prior to their purchase of said property. However, the Fourth District Appellate Court of Florida reversed the Trial Court’s ruling, specifically referring to the rule of caveat emptor as the basis for their reversal. I have had several cases where I’ve had to defend a former homeowner from a Third-Party Purchaser’s illegitimate claim. Thus, the best advice I can give is for a third-party purchaser to always conduct a title search as previously mentioned.

Moving on, if you are a former Florida Homeowner reading this, whose home has recently been sold at a Florida foreclosure auction and 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 available 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.

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