What Happens if there is a Surplus of Funds after a Foreclosure Auction?

In Florida, if a homeowner is unsuccessful in defending against the bank in a foreclosure lawsuit, the judge will sign a final judgment determining the total amount owed to payoff the mortgage loan. The judgment will further state that if this total amount is not paid within a specified amount of time, the home will be auctioned off in a judicial sale held online by the local clerk of the circuit court.

Typically, homes auctioned off in a judicial sale are purchased for far less than the amount actually owed as determined in the final judgment for foreclosure. While this may be a great deal for anyone looking to invest in foreclosed properties, it is not good for the homeowner because this creates something known as a “deficiency” for the homeowner who just lost their house or condominium. A deficiency means that the sale price the home was sold for in the auction was less than the total amount owed. Absent certain circumstances, the homeowner is likely liable for that deficiency and the bank could later sue the homeowner again to collect that additional amount of money.

However, there are times when the home is sold at an auction for MORE than what was owed on the final judgment. The money is paid to the clerk of court and the excess amount left after the judgment is paid off is known as a “surplus.” If a surplus exists, the clerk of court will file a Certificate of Disbursements declaring how much money is left in excess of the judgment amount (plus interest).

Florida Statute §45.032 governs what happens to these surplus funds. Essentially, the clerk of court retains the surplus funds until either (a) the court determines who should receive the surplus or (b) the funds are determined to be unclaimed. Interestingly, prior versions of the law declared that these funds should be considered unclaimed after sixty (60) days from the date the clerk of court issues the Certificate of Disbursements. Under this old law, that meant the homeowner and anyone else claiming some right to the surplus had to file a Claim for Surplus before that 60 day period expired.

Thankfully, the version of the statute that took effect beginning July 1, 2019, now allows up to one year for anyone claiming an interest in the surplus to file a Claim for Surplus. The downside to this extension is that it can also mean that, under certain conditions, a homeowner may need to wait a full year before the clerk will distribute the surplus funds. Contact Attorney Torrey Taylor for a review of your case to determine if you may be entitled to a surplus and find out how to speed up the release of that surplus!

***All information is provided for general, educational purposes only and should not be construed as the giving of legal advice. Every case is different and results may vary. No attorney-client relationship exists without an express agreement retaining the professional services of Attorney Torrey Taylor is entered into and payment is received.***

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