The Biggest Problem with Florida Statute 45.032: Subordinate Lien-Holders Laziness Collecting Foreclosure Surplus Funds

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Back in the good old days of pre-July 1, 2019, Florida Statute 45.032 gave subordinate lienholders just 60 days to file a claim for surplus funds after the sale. However, after a ratification of said statute, lienholders now have “before the date that the clerk reports the funds as unclaimed.” This essentially means the lienholder has one year from the day of the sale to make a claim.

This amendment was obviously lobbied through greedy banks and corporations that just wanted additional leeway to lack due diligence. To understand why this statement is true, lets break down what Florida foreclosure surplus funds truly are.

Foreclosure surplus funds in Florida occurs when a property is sold for more than what is owed on a Final Judgment. For instance, let’s say a Final Judgment is entered for $100,000.00, but the property sells for $170,000.00. That means the mortgage is paid off and there is $70,000.00 in surplus.

However, using the above hypothetical, let’s also say there is a homeowners association that is owed just $5,000.00. According to Florida Statute 45.032, that homeowners association would have one year from the day of the sale to collect those funds, BEFORE a homeowner would be allowed to collect the rest of their equity.

The point of the previous statute, only giving 60 days for a subordinate lien holder to make a claim, was so that if there was equity, the former homeowner would be able to collect that equity in a reasonably timely manner. This was great for homeowners because homeowners need that equity to invest into a new home to live. Now, many of these homeowners are left waiting for second mortgage and other subordinate lien holders to make a claim for the homeowner to get their money. Its preposterous.

Great news though! I have, many times, been able to use civil procedure arguments to circumvent that year long period even when there are subordinate lien holders. In fact, I have been able to collect surplus funds, keep subordinate lien holders from getting a penny, all while doing this in as fast as two weeks after title is issued.

Regardless, Florida Statute should go back to its original form only allowing subordinate lien holders 60 days, if not less, to make a claim for the surplus funds. It is time to protect families over banks’ greed.

If you have a foreclosure surplus case in any county in Florida, and would like a free consultation, please call me, Ben Haynes, owner of the Haynes Law Group, at 1-888-252-8754.

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