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Prompt Action Required to Claim Surplus Proceeds from Foreclosure Sale

By: Tracy M. Evans, Esq., Associate, Saxon, Gilmore, Carraway & Gibbons, P.A.

A recent opinion issued by the Second District Court of Appeal (“Second DCA”) in the case of Dever v. Wells Fargo Bank, National Association (“Wells Fargo”), et. al., Case No. 2D13-5830, highlights an important deadline for junior lienholders seeking to claim surplus funds from a foreclosure sale.

Tevans2-cropped-sAfter a foreclosure sale, the proceeds are first disbursed to the judgment holder, up to the total amount of the judgment. Once the judgment holder has been paid in full, junior lienholders can submit claims for any surplus proceeds. Florida Statutes §45.031 requires any junior lienholder claiming a right to surplus funds to file a claim no later than 60 days from the date of the foreclosure sale. If no claims are filed within 60 days of the sale, Florida Statutes §45.032 establishes a rebuttable presumption that the owner of the property as of the date of the filing of the lis pendens is entitled to the surplus funds.

In Dever, the Second DCA reversed the lower court’s award of surplus foreclosure proceeds to a junior lienholder who failed to submit its claim within the 60-day time period under the statute. The Devers owned the real property that was the subject of a foreclosure action filed by the first mortgage holder. After the entry of a final judgment of foreclosure, a foreclosure sale was conducted which resulted in a surplus of funds. Sixty days elapsed following the sale, during which time no junior lienholder filed a claim for the surplus, so the Devers filed a motion to obtain the surplus sale proceeds. In their motion, the Devers acknowledged that Wells Fargo, as a junior lienholder, may have claimed an interest in the proceeds, but argued that Wells Fargo failed to submit its claim within 60 days from the sale, so any claim by Wells Fargo was barred.

In response to the Devers’ motion, Wells Fargo submitted its own motion to disburse the surplus funds, and argued that the answer it filed in response to the foreclosure complaint timely raised its claim to any surplus. The lower court agreed with Wells Fargo and entered an order directing the clerk to disburse the surplus funds to Wells Fargo.

On appeal, the Second DCA disagreed with the lower court’s decision, finding that the language of Florida Statutes §45.031 requiring claims for surplus to be submitted within 60 days of the sale is clear and unambiguous, and reversed the lower court’s order awarding the surplus funds to Wells Fargo.

The 60 day time limit requires junior lienholders to pay close attention to the foreclosure sales of the properties securing their liens. According to the Second DCA in Dever, a junior lienholder’s answer to the complaint claiming entitlement to any surplus resulting from the foreclosure sale is not a proper claim under Florida Statutes §45.031. Rather, a separate claim must be submitted in the 60 day window following the foreclosure sale.

With property values on the rise, foreclosure sales resulting in surplus funds may become more common, and failure to timely submit a claim could cause a junior lienholder to forgo a sizable amount of money to which it would have otherwise been entitled. As counsel for junior lienholders in foreclosure cases, our firm closely monitors all aspects of the foreclosure sale process, and takes prompt action to submit timely claims for surplus proceeds to ensure the best possible outcomes for our clients.


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