If you have just sold a home through the foreclosure process in Florida, you might have a bunch of questions about the process. There is a lot that happens very quickly during these kinds of home sales, and many homeowners are not aware of the sales process from start to finish. There could be surplus funds that you are entitled to as a result of your home sale, and you need to know if you are going to be able to claim them.
In the state of Florida, when the final judgment of foreclosure is entered, the remaining funds will be used to satisfy other amounts owed on the property. If there is anything left over after this process, it might pass to the owner of the home. This is a key step that many people are not aware of, and a lot of homeowners that sell using the foreclosure process miss out on getting these funds.
What Are Surplus Funds?
Surplus funds are the excess funds that are left over after a home has been sold via foreclosure. In most cases, secondary lienholders will need to be satisfied before these surplus funds can be claimed. In many cases, liens like construction liens or secondary mortgages will consume the surplus funds from a foreclosure without leaving anything over. However, if there are remaining funds once these other lienholders are paid off, you, as the homeowner of record, are entitled to claim them.
In foreclosure sales, surplus funds are the difference between the equity in the house and the amount that the home was sold for. In many cases, foreclosure sales are made via auction, which means that the sales price of the home can be in excess of the amount required to pay off the mortgage and lienholders. If your home sold during the foreclosure process for $200,000, but you only owed $160,000 on the loans associated with the property, you would be entitled to the remaining $40,000.
Not every foreclosure sells above the necessary price to satisfy the mortgage. In some cases, secondary lienholders are also not satisfied via these sales, and you might still have to pay off these other loans once your home has sold. The foreclosure process can be complicated, which is why it is often a good idea to have a lawyer to help you navigate the process of selling your home using this method.
Who is Entitled to Surplus Funds in the State of Florida?
Section 45.032 of the Florida Statutes provides direction about who can receive surplus funds. The owners of record for the home, as well as subordinate lienholders, are entitled to the surplus funds from the sale of a home using this method. This means that the subordinate lien holders will be paid before the homeowner of record, which can exhaust the leftover sum that is in excess of the foreclosure judgment for the sale.
In some cases, however, there is still money left over once all the lienholders have been satisfied and paid off. This is the money that many homeowners are not aware that they are entitled to, and many of them do not claim it. It is always wise to make sure that you are aware of the amount of money that is due to subordinate lien holders like second mortgages, liens, or construction liens. This will help you to be sure that there are surplus funds that you are entitled to claim after your house has sold.
How Do You Claim Surplus Funds?
In many cases, you will need to file a claim to be able to access your surplus funds right away. There is usually a set waiting period where the funds are held waiting for the former homeowner to collect them. The clerk will hold the surplus, waiting to see if there is a court order from the homeowner of record to obtain the surplus funds. When the waiting period expires, the funds are considered unclaimed, and court fees will be deducted from the amount. There will be an effort to send the surplus funds to the owner of record at this time, but if you have moved or your information is not current, you may never receive them.
This is why you will want to be sure that you have a lawyer to help you to claim these surplus funds right away. The longer that you wait to undertake this process, the more likely it will be that you will have to chase the funds around in order to claim them. In some cases, if you, as the homeowner of record, do not step forward to claim surplus funds, the other entities involved in the sale of the home can step up to do so. In these cases, by the time the former homeowner creates a claim to the surplus funds, they might already have been claimed.
Who is the Owner of Record for a Home?
The owner of record for a home or property is the person who is listed in the public records as the owner of the asset in question. This can be complex for those who were not named on the mortgage with a spouse who has passed away or in the case that a property has been left to an estate or trust and the mortgage has not been altered to reflect the new owners’ names. This is another key reason for seeking the support of a lawyer for your surplus funds claim since the process of proving ownership in these cases can be quite cumbersome.
The owner of record is the only person who technically has the right to access the benefits and responsibilities of ownership of the property in question. This applies to stocks and bonds, as well as property, and the same process is followed for surplus funds from the sale of a home as would be followed when the sale of stocks and bonds has taken place.
How do You Provide Proof of Ownership for Claiming Surplus Funds?
The claims process will require that you are able to provide some important information and documentation. Your lawyer can collect all of these documents and details from you to present in your claim, but you will need to be prepared to provide this documentation as requested for your claim to be filed.
1. Proof of Ownership
This might be the possession of the actual title of the property, or it might need to be information that is collected through a title search for the state of Florida. For those with a lien on the property or a mortgage when the foreclosure sale occurred, bank records can help to prove that you were the named owner attempting to make payments on the loan at the time of the foreclosure. Title information is public record, even if you do not own the home outright at the time of the foreclosure sale.
2. Verification of Funds
When the foreclosure took place, a foreclosure record was created to track the sales price, the amount of the foreclosure, and the funds that were dispersed after the sale. The loans and liens that were paid will be recorded in this documentation as well. The leftover surplus funds should also be indicated in this document. This is a matter of public record as well, and you should have been given a copy of the foreclosure documentation. This information can also be readily accessed by your lawyer on your behalf.
3. Submit a Claim Form to the Court and the Trustee
Once you have these documents in hand, you will need to submit a claim form to both the trustee and the court. This needs to be done in most cases within two or three months of the sale of the home. The funds will convert to the court after this waiting period has expired. When there are many lien holders for a property, it can take a while for the order of repayment to be determined and for payments to be dispersed to all the lienholders. The waiting period for claiming surplus funds will not begin until the rest of the lienholders have been paid, and it has been determined that there are excess funds that need to be claimed.
4. Hearings and Motions
The court will review the documentation and your submitted claim for veracity. If they find that you are the listed owner of the home and that the foreclosure process has been completed correctly, and that all lienholders have been paid off, you will be given the surplus funds in question. This process can take a few weeks or even months, depending on the schedule of the court, so do not expect that you will have the money within a matter of days. Being patient is really important when it comes to this part of the claims process since you can’t hurry the process along just by being concerned about your money getting to you.
What are Subordinate Lienholders?
Via Florida Statute § 45.033(1), a subordinate lienholder is the “holder of a subordinate lien shown on the face of the pleadings as an encumbrance on the property”. Subordinate means that this lienholder is in a lower rank or position than the primary lien holder who holds the mortgage. This might be a construction loan, a second mortgage, or other liens and encumbrances on the property.
All lienholders have a right to sue for foreclosure if they have not been paid by the homeowner. This also applies in the case of homeowner’s or condo owner’s associations as well. This is more common in places where the fees for the association are quite high and might have been neglected along with the mortgage for the property.
The priority of the lienholders can be hard to determine in some cases, and there might be legal action taken between the lienholders to determine who comes where in the order of payment. This can delay the process of completing lienholder payments, and you might have to wait to claim any surplus funds until this part of the foreclosure has been completed. The more lienholders who are involved in the foreclosure process, the longer it will take to complete the foreclosure in most cases.
A condo or homeowner’s association that has placed a lien on the property will usually also be allowed to come ahead of other lienholders. This is not an issue if you do not have to pay dues to this kind of entity related to your property ownership, but in the case that you do have back HOA or condo owner’s fees that are owing, these might be satisfied right after the primary mortgage. This can be very confusing to homeowners, and it is one of the reasons that having a lawyer working on your case can be such a big help. The entanglements related to a bunch of lienholders being connected to the property can be very confusing, and a legal expert can help to resolve any confusion about the order of repayment.
Surplus Funds Usually Belong to the Homeowner of Record
If you have sold a home via the foreclosure process, you might be entitled to surplus funds from the sale. There are a variety of complexities related to this process that can be difficult to sort out without the help of a skilled lawyer. You will want to be sure that you consider getting legal representation to help you to make a claim for the surplus funds from your foreclosure. This makes the process much easier, and it can help to sort out the process of lienholder assignment in complex situations.
Foreclosure sales can be really complicated and stressful for many homeowners. Part of the reason that these sales are so stressful is that homeowners do not usually know how the process works. This is a big part of why there are often unclaimed surplus funds related to foreclosure sales. Securing a skilled surplus funds lawyer to help you with your foreclosure can make all the difference as you navigate this complicated process.