Compliments Of The Mortgage Foreclosure Sale And Tax Deed Sale Surplus Proceeds Process.
Homeowners and Condominium Associations are missing out. There exists an overlooked procedure for your community association to recoup sizable sums of monies involving a delinquent homeowner account. When an owner’s account goes delinquent often time the owner’s financial difficulties coincide with a default on the owner’s mortgage resulting in a mortgage foreclosure or perhaps a tax deed sale as a result of the owner’s failure to pay property taxes. The tail end of both processes, i.e., the mortgage foreclosure litigation and a tax deed application involve an online auction/sale of the home/unit. At times a third-party bidder purchases the property for more than what is owed to the foreclosing lender (in a mortgage foreclosure) or what is owed to the County property tax wise (tax deed sale). In such a case, these excess funds are called “surplus” which equal the winning bid less the amount due to the lender, in a mortgage foreclosure, or the tax collector, in a tax deed sale, as the case may be. These “mortgage sale surplus funds” or “tax deed surplus proceeds” can often be significant, many thousands of dollars in most cases. Most associations are in prime position to assert a priority claim for these funds. Reason being Florida statutes dictate that parties possessing lien rights pertaining to the property foreclosed upon or sold at a tax deed sale can make a claim for these monies. As involving properties with a delinquent account Florida’s Condominium Act automatically grants the condominium association a “statutory lien” for any amounts owed. For homeowners’ associations delinquent accounts, if aggressive collection procedures are in place, a Claim of Lien should have been filed in the public records. Whether an actual recorded lien or “statutory” lien exist, either place an association in a high priority position to demand the Clerk release surplus proceeds from a mortgage foreclosure sale or a tax deed sale. Sounds simple. However, the devil is in the details. For example, a timely “Statement of Claim” must first be filed with the Clerk of Court in order for the association be permitted to pursue these claims. Furthermore, tracking existing mortgage foreclosure sales by way of clerk issued “Certificate of Disbursement” filings is critical in order to know when surplus proceeds exist for the taking. Same is true with tax deed sales, whereby consciousness review of the tax deed sale record is needed in order to know when to strike and make the necessary surplus proceeds claim. Lastly, a properly drafted and filed “Motion to Disburse Surplus Proceeds” needs to be filed and set for hearing before the Court culminating in a court Order calling for the Clerk to release the claimed surplus funds, in whole or in part, to the association. Recovery of these monies is a multi-step process and takes knowhow from an experienced community association attorney keenly familiar with mortgage foreclosure litigation and tax deed sales. Unquestionably, devoted conscientious attention to these little-known opportunities can turn into an unexpected and much needed infusion of monies for your association, blunting the financial hit involving an uncollectible balance on an owner’s delinquent account.
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