Last week I had a hearing regarding a Florida foreclosure surplus funds case. These are the facts:
- Foreclosure sale occurred on November 4, 2015.
- Certificate of Title was issued on December 16, 2015.
- The homeowner filed a motion for foreclosure surplus funds on January 6, 2016.
- The United States filed their claim for surplus (via a mortgage lien) on February 18, 2016.
The rules in Florida are very clear for collecting Florida Foreclosure Surplus funds. Florida Statute 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. In fact, all case law in Florida prohibits lien holders from collecting the surplus after the 60-day time limit has expired.
In the above mentioned facts, the homeowner made a claim for the funds, while the United States made a claim well after the 60-day deadline.
At an evidentiary hearing, the United States filed a motion and made argument to the court that the United States is not bound by any state statute of limitations. More specifically, the United States stated that due to sovereign immunity, the United States could essentially wait as long as they want to before they claim the surplus funds, and that they would forever be entitled to them. However, sovereign immunity is not a design for the United States to ignore due diligence in civil cases.
Even though there are literally NO cases in any Court of Appeal, in Florida, which state the United States is not bound by the 60-day time limit, the Judge in this instant case granted the United States’ late motion for surplus funds. We will be appealing to the 5th DCA.
Now the intent of the Florida legislature adding the 60-day time limit to the foreclosure surplus statute was very clear. That time limit was implemented so, 1) the lien holders cannot sit on their rights for years to come; 2) so that the homeowner may take the excess proceeds and reinvest into a Homestead property within a reasonable time; and 3) finality of litigation.
If the 5th DCA looks at our appeal and states that the United States is not bound by the 60-day limitation, it will be opening up a dangerous Pandora’s box for all surplus cases. For example . . .
Imagine this, there is a second lien by the IRS but they fail to make a claim in 60 days. The court, rightfully so, gives the excess funds to the homeowner. Five years later, the IRS files a motion to vacate the final order disbursing proceeds to the homeowner. Legally, if the DCA finds that there is no time limit on the United States’ surplus claims, the court will be required to vacate its order from five years prior. Undoubtedly, by that time the homeowner would have already reinvested the funds in a new home. How are the homeowners supposed to return the funds at that juncture? Exactly my point and emphasis of concern.
There needs to be clarity on this issue. The United States is either bound by the 60-day limitation or they have as long as they want to file a claim. The issue is, if the United States isn’t bound by the 60 days, there will be a nightmare on the horizon for the appellate and trial courts in vacating orders that have already distributed the funds.
The final point is this, there is no “reasonable” amount of time when looking at this statute, no matter what type of lien one holds. ANY lien has 60 days from the day of sale to file a claim for surplus. Period. If any entity, whether private or governmental, fails to do such, they are not entitled to the funds. My hope is that the 5th DCA will reverse the judge’s decision so that there is a clear and concise law that must be followed, as was the intent by the Florida legislature.
If you have a Florida Foreclosure Surplus Funds case and need a Miami Foreclosure Surplus Funds lawyer, Fort Lauderdale Foreclosure Surplus Funds Lawyer, Orlando Foreclosure Surplus Funds lawyer, Tampa Foreclosure Surplus Funds lawyer, or a Jacksonville Foreclosure Surplus lawyer, the law firm of Haynes & de Paz has extensive knowledge in the Florida Foreclosure Surplus law. Contact us today for a free consultation!