Timeliness of Claims for Surplus Funds in a Foreclosure
We want to make you aware of a recent court ruling from the Florida Supreme Court in Bank of New York Mellon v. Glenville, 43 Fla. L. Weekly S333 (Fla. 2018) that provides clarification on the deadline to file a claim for surplus funds following a foreclosure sale.
With the steady rise in home prices throughout Florida, more and more foreclosed properties are selling at foreclosure sales for amounts that exceed what the foreclosing lending is owed on its final judgment. These monies that exceed what the foreclosing lender is owed in their final judgment are called “surplus funds”. When you have surplus funds, all junior lienholders who were included as defendants in the foreclosure lawsuit may file a claim for the surplus funds. The Court will then hold a hearing to determine how the surplus funds should be awarded. The general rule in Florida is that the funds are to be paid to the junior lien holders who filed a claim based on their lien priority, with any remainder being awarded to the record owner of the property at the time that the lis pendens is recorded. Section 45.032 (2), Florida Statutes. Any junior lienholder who wants to make a claim has 60-days to file their claim. Where the lower Courts disagree is on the question of when that 60-days begins to run. Some Courts held that a junior lienholder had 60-days from the date of the foreclosure sale to file their claim. While other Courts held that the deadline did not begin to run until the Clerk issued the Certificate of Title. The Supreme Court in its holding in Glenville resolved any disputes among the lower Courts by holding that the 60-days begins to run once the Clerk issues the Certificate of Disbursements.
If your financial institution holds a junior mortgage or judgment and has been named as a defendant in a foreclosure, it may be entitled to surplus funds, should they exist. It is our practice, that upon request, we file an answer on behalf of the financial institution and then monitor the case for a final judgment and foreclosure sale date. Upon completion of the foreclosure sale, we will monitor for possible surplus funds, and should any exist, we will file a claim for those funds before the newly allotted deadline.
Please note that this email is meant to inform and educate our clients. This should not be relied upon as a substitute for legal advice as to a specific situation. Should you have any questions, please do not hesitate to contact one of the attorneys at Sorenson Van Leuven, PLLC.