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Homeowners may get the surplus money from foreclosure sale

If a homeowner dealing with foreclosure cannot keep their home at the end of the proceedings, the next best thing could be to get their share of the proceeds after the house is sold. These funds could go a long way toward helping you set up your new household, and move on from the foreclosure.

Under Florida law, the homeowner is the person who is the owner of record at the time the lender files a lis pendens, or written notice that it is filing a foreclosure suit. That person has the right to seek the difference between what the house sells for and what the homeowner owed the bank or the condominium association, once the house is sold. That leftover money is called the foreclosure surplus funds.

For example, let us say that A owns a condo and owes the association $5,000 in assessment fees. The condo goes into foreclosure and sells for $20,000 at auction. When you subtract the $5,000 from the sale price, there is $15,000 left over that A may be able to recover, even if there is a mortgage on the condo or a superior lienholder.

The surplus money will not be waiting around forever. Homeowners have 60 days after the clerk issues a certificate of disbursements. If they do not take action in that time period, they may forfeit their right to claim the surplus.

If the homeowner does not file a claim, the clerk will have a trustee try to track down the homeowner. The trustee will search for a year, then give the funds to the State of Florida’s Chief Financial Officer as unclaimed property.

Meanwhile, a third party creditor like a credit card company or tax lienholder may also make a claim on the surplus money. If multiple parties claim the funds, the court will hold a hearing to determine who is entitled to it.

To keep abreast of your rights and duties during foreclosure, it is best to hire an attorney.

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