Posted on March 30, 2018, by Starlett Massey
On March 21, 2018, Governor Scott approved House Bill 1361. The amendments substantially impact the manner in which surplus funds arising from judicial sales of real and personal property are handled and the time frame for claiming the funds.
The amendments go into effect on July 1, 2019.
The amendments substantially alter the timing of the claims process for subordinate lienholders, those entities with lien interests that may be entitled to distribution of surplus proceeds from the foreclosure sale. For all sales that occur prior to July 1, 2019, subordinate lienholders are required to file their claims to the funds within 60 days from the date of sale, or their claims are forever barred.
Effective for sales occurring on or after July 1, 2019, claims for surplus funds must be filed, “no later than the date that the clerk reports the funds as unclaimed.” The statutory scheme now directs the clerk to follow the statutes governing the escheatment of unclaimed funds to the Department of Financial Services, Division of Unclaimed Property. See §717.113, §717.117, and §717.119.
Surplus funds from foreclosure sales are to be remitted to the Department of Financial Services after one year from the date of the foreclosure sale if the funds have not yet been disbursed by court order. Thus, subordinate lienholders’ time frame within which to file claims for surplus funds is lengthened from 60 days to one year from the date of sale.
For subordinate lienholders, this also means a delayed disbursement of surplus funds because hearings that currently can be set after 60 days from the date of sale must not be set until passage of the one-year deadline.
Significantly for homeowners, House Bill 1361 eliminates the role of surplus trustees appointed by the clerk of court to assist prior titleholders with filing claims. Currently, the clerk of court assists owners who do not file a claim for surplus funds by designating a surplus trustee certified by the Department of Financial Services to assist the owner with their claim.
Once designated, the surplus trustee locates the owner, advises them of the availability of surplus funds, and files the owner’s claim with the court. For sales that occur after July 1, 2019, owners whose property has been sold at a foreclosure sale will be responsible for filing their own claims using the form, Owner’s Claim for Mortgage Foreclosure Surplus, provided by §45.032(a). An owner’s failure to file a claim by the one-year deadline, in the absence of any subordinate lienholder claim(s), will result in the funds’ transfer to the Division of Unclaimed Property.
The amendments in entirety are available here: Committee Substitute for Committee Substitute for House Bill No. 1361.
The above is intended to inform firm clients and friends about recent developments in the law, including analysis of statutes and new case decisions. This update should not be construed as legal advice or a legal opinion, and readers should not act upon the information contained herein without seeking the advice of legal counsel.
Looking for a business law, real estate, corporate law, or healthcare attorney? Need better value and results? There is an alternative to the traditional law firm.
Discover the difference — Massey Law Group.