Foreclosure Sale, What Happens To Any Extra Money From Sale.

i own a property in texas that the person who is buying it has defaulted on the deed of trust. I believe there is no right of redemption here. In a foreclosure sale, if my property being bid on is sold at an amount higher than the amont owed in the deed of trust, who gets the extra money that is in excess?



thx, rob

Comments(24)

  • jda25th October, 2005

    i believe you are entitled to it if you act in time. I would get in touch with the bank and a lawyer.

  • slyws625th October, 2005

    Once ALL debts against the property are paid off and the bank has what they need for not only the property but the cost of the foreclosure then you are entitled to the rest of the money. This is pretty rare but can happen.

  • getitqwik3rd November, 2005

    I DON"T THINK SO! Any excess of funds is returned to the person that was foreclosed on. If you sold your house to someone for instance let them take over the mortgage and got a second, they default on the first it is them being foreclosed on your mortgage and them entitled to the excess. They were the current owners.

  • bargain763rd November, 2005

    Now, the VOICE OF EXPERIENCE. The surplus funds left over after the Plaintiff gets theirs is the property of the Defendants who claim it.

    Trust me!

  • getitqwik13th November, 2005

    IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
    FOURTH DISTRICT JANUARY TERM 2005
    AMADO EVARITO GARCIA,
    Appellant,
    v.
    RENEE STEWART, WOODGATE
    CONDOMINIUM ASSOCIATION, INC.,
    JOHN TENANT and JANE TENANT,
    Appellees.
    CASE NO. 4D04-1836
    Opinion filed May 25, 2005
    Appeal from the Circuit Court for the
    Seventeenth Judicial Circuit, Broward County;
    Thomas M. Lynch, IV, Judge; L.T. Case No. 02-
    7571 (21).
    Brenda Cox of Schilian, Watarz & Cox, P.A.,
    Boca Raton, for appellant.
    Ronald E. D’Anna and Jennifer J. Kramer of
    McClosky, D’Anna, Ioannou & Dieterle, LLP,
    Boca Raton, for appellees.
    GROSS, J.
    The former owner of a condominium unit,
    Amado Garcia, appeals from an order denying
    his motion attacking an order that disbursed
    surplus funds generated by a foreclosure sale of
    his unit arising from a second mortgage.
    We reverse, holding that the circuit court
    lacked jurisdiction to distribute the funds to the
    holder of a lien superior to the second mortgage,
    after the lienholder had been dismissed as a
    party in the final judgment of foreclosure.
    Appellee Woodgate Condominum Association
    recorded a claim of lien against Garcia’s unit for
    assessments, attorney’s fees, and costs in the
    amount of $1,170.20.
    Later, Renee Stewart, the holder of a second
    mortgage, filed a foreclosure complaint against
    Garcia. The suit named the Association as a
    defendant because of its claim of lien. The
    Association’s answer raised the defense that its
    lien was superior to Stewart’s mortgage. Garcia
    defaulted. The final foreclosure judgment
    dismissed the Association as a defendant, ruling
    that “[i]ts lien [was] superior to” that of Stewart.
    A third party purchased the property at a
    foreclosure sale. After distributing money to
    Stewart to satisfy her second mortgage, the clerk
    of the court deposited an excess of $17,794.83
    into the court registry.
    On March 11, 2003, the Association moved
    for payment of the surplus from the foreclosure
    sale. The Association’s attorney filed an
    affidavit of the amount due, based on his
    “review of the records of the Association.” The
    affidavit claimed arrearages of $3,580.20 for
    past due assessments and late charges, attorney’s
    fees and costs of $6,119.77, and $6,675.60 for a
    “special restoration assessment” ratified after
    Stewart filed her foreclosure complaint.
    On March 26, 2003, the trial court granted the
    Association’s motion and ordered the
    distribution of $16,375.57 from the court
    registry to the Association’s attorney.
    On October 28, 2003, Garcia filed a motion
    attacking the March 26 order, which in essence
    was a motion filed under Florida Rule of Civil
    Procedure 1.540(b). The trial court denied the
    motion on April 8, 2004.
    We begin by discussing the dismissal of the
    Association as a party defendant in the final
    judgment of foreclosure. Dismissal was legally
    correct because the Association’s lien was
    superior to Stewart’s second mortgage. The
    general rule is “‘that persons holding mortgages
    or liens prior to the mortgage under foreclosure
    are neither necessary nor proper parties to the
    action.’” Cone Int’l Bros. Constr. Co. v. Moore,
    193 So. 288, 290 (Fla. 1940) (citation omitted);
    - 2 -
    Poinciana Hotel of Miami Beach, Inc. v.
    Kasden, 370 So. 2d 399, 400 n.5 (Fla. 3d DCA
    1979). The supreme court has explained that a
    “prior mortgagee may elect for himself the time
    and manner of enforcing his security. He cannot
    be compelled to be a party to a suit by a junior
    encumbrancer foreclosing his lien.” Cone Bros.,
    193 So. at 290.
    The rationale behind the rule is that
    “[f]oreclosure does not terminate interests in the
    foreclosed real estate that are senior to the
    mortgage being foreclosed.” Conversion Prop.,
    L..L.C. v. Kessler, 994 S.W.2d 810, 813 (Tex.
    Ct. App. 1999); Armand’s Eng’g, Inc. v. Town
    & Country Club, Inc., 324 A.2d 334, 338 (R.I.
    1974). The Texas Court of Appeals has
    explained the dynamics of a junior lien
    foreclosure sale :
    [T]he successful bidder at a junior lien
    foreclosure takes title subject to the prior liens.
    The purchaser takes the property charged with
    the primary liability for the payment of the
    prior mortgage and must therefore service the
    prior liens to prevent loss of the property by
    foreclosure of the prior liens. Consequently, as
    a practical matter, a prospective purchaser
    usually will subtract the amount of any
    outstanding senior liens from the fair market
    value of the property in calculating its
    foreclosure bid.
    Conversion Prop., 994 S.W.2d at 813 (citation
    omitted). Unlike a junior lienholder’s security
    interest which is “transferred from the property
    to the fund that stands in the place of the
    property,” see Household Fin ancial Services v.
    Bank of America, 883 So. 2d 346, 348 (Fla. 4th
    DCA 2004), a senior lienholder’s security
    interest remains with the property even after the
    foreclosure sale. See Cone Bros., 193 So. at
    290.
    “After a foreclosure sale, the trial court is
    required to prioritize the interests of the
    competing junior lienholders and the amounts
    due each.” Citibank, FSB v. PNC Mortgage
    Corp., 718 So. 2d 300, 302 (Fla. 2d DCA 1998);
    United States v Sneed, 620 So. 2d 1093, 1094
    (Fla. 1st DCA 1993). “[A]ny surplus remaining
    after a foreclosure sale should be paid to the
    junior lienholders in accordance with the priority
    of their liens on the property. . . .” Gen. Bank,
    F.S.B. v. Westbrooke Pointe, Inc., 548 So. 2d
    736 (Fla. 3d DCA 1989). Only after such liens
    “have been satisfied may any surplus be
    disbursed to the owner of the equity of
    redemption.” Id.; see Asher Perlin, et al.,
    Disbursement of Surplus Proceeds from a
    Foreclosure Sale - - The Urban Myth of the
    Race to the Courthouse, 78 Fla. B.J. 45
    (July/Aug. 2004).
    Because senior lienors’ rights are unaffected
    by foreclosure, holders of liens which are senior
    in priority have no right to share in a surplus
    produced by the foreclosure of a junior
    mortgage. As explained in the RESTATEMENT
    (THIRD) OF PROPERTY:
    When the foreclosure sale price exceeds the
    amount of the mortgage obligation, the surplus
    is applied to liens and other interests
    terminated by the foreclosure in order of their
    priority and the remaining balance, if any, is
    distributed to the holder of the equity of
    redemption.
    RESTATEMENT (THIRD) OF PROP.: MORTGAGES
    § 7.4 (1997). A comment to this section
    explains that since a senior lienholder’s security
    interest is not “terminated” by foreclosure of a
    junior lien, it is not entitled to share in a surplus
    fund:
    Senior lienors have no lien claim to a surplus
    produced by the foreclosure of a junior
    mortgage. Unlike their junior lien counterparts,
    their liens are unaffected by foreclosure and
    remain on the foreclosed real estate. They
    remain free to foreclose on the real estate, and
    thus there is no justification for transferring
    any part of their liens to the junior foreclosure
    surplus. This is true even where obligations
    secured by senior liens are in default.
    RESTATEMENT (THIRD) OF PROP.: MORTGAGES
    § 7.4 cmt. c. Courts in other states follow the
    Restatement. See Davis v. Huntsville Prod.
    - 3 -
    Credit Ass’n., 481 So. 2d 1103, 1106 (Ala.
    1985) (“A first mortgagee has no right to any
    surplus upon foreclosure of the second
    mortgage, particularly in the absence of default
    of the first mortgage.”); Bohra v. Montgomery,
    792 S.W.2d 360, 362 (Ark. Ct. App. 1990) (“On
    foreclosure of a junior mortgage, a senior
    encumbrancer who was not made a party, and
    for whom no provision was made in the decree,
    has no claim on the proceeds of a sale of the
    property under the foreclosure, since . . . the
    foreclosure of a junior mortgage has no affect on
    the rights of a senior lien.”) (citation omitted);
    Thomas v. Haines, 188 N.E. 621, 623 (Mass.
    1934) (“[P]rior mortgages and liens do not carry
    a right in law or equity to any excess received in
    foreclosure of a subsequent mortgage”);
    Armand’s Eng’g, 324 A.2d at 337; Conversion
    Prop., 994 S.W.2d at 813-14.
    The purchaser at the foreclosure sale was
    “jointly and severally liable” with Garcia for “all
    unpaid assessments that came due up to the time
    of transfer of title.” § 718.116(1)(a), Fla. Stat.
    (2004). After its dismissal from the foreclosure
    suit, the Association retained the right to protect
    its interest by initiating foreclosure proceedings
    against the real estate or bringing “an action to
    recover a money judgment for the unpaid
    assessments.” § 718.116(6)(a).
    Even though Garcia is correct that the trial
    court erred in ordering disbursement to the
    Association,1 he must demonstrate entitlement to
    challenge the order under rule 1.540, because he
    served his motion long after the ten-day limit for
    a motion for rehearing and did not timely appeal
    the March 26, 2003 ruling. See Fla. R. Civ. P.
    1.530(b); Sullivan v. Malden Trust Co., 632 So.
    2d 223, 223-24 (Fla. 2d DCA 1994) (holding
    that once the time limitations for rehearing and
    notice of appeal have run, a party seeking to set
    aside a judgment can proceed only under rule
    1Another legal error that occurred was that the trial
    court disbursed surplus funds without setting an
    evidentiary hearing. See D.A.D., Inc. v. Poole, 407
    So. 2d 1072, 1073 (Fla. 4th DCA 1981); Schroth v.
    Cape Coral Bank , 377 So. 2d 50, 51 (Fla. 2d DCA
    1979).
    1.540).
    Rule 1.540 provides relief from judgments
    only “under a limited set of circumstances.” See
    Abram v. Wolicki, 864 So. 2d 18, 20 (Fla. 4th
    DCA 2003) (citation omitted). A substantive
    legal error is not one of the “limited
    circumstances” that can sustain a request for
    relief from judgment under rule 1.540. See
    Curbelo v. Ullman, 571 So. 2d 443, 445 (Fla.
    1990) (“[A] judicial error such as a ‘mistaken
    view of the law’ is not one of the circumstances
    contemplated by the rule.”).
    Rule 1.540(b)(4) permits a court to “relieve” a
    party from a final “judgment, decree, order or
    proceeding” if “the judgment or decree is void.”
    See, e.g., Greisel v. Gregg, 733 So. 2d 1119,
    1121 (Fla. 5th DCA 1999) (citation omitted).
    Because the trial court was without subject
    matter jurisdiction when it entered the order
    distributing funds , the order was void and Garcia
    was entitled to have it set aside.
    In general, there are two aspects to a court’s
    subject matter jurisdiction. The first concept
    “concerns the power of the trial court to deal
    with the class of cases to which a particular case
    belongs.” Paulucci v. Gen. Dynamics Corp.,
    842 So. 2d 797, 801 n.3 (Fla. 2003) (citation
    omitted). The second aspect requires that a
    court’s jurisdiction be lawfully invoked by the
    filing of a proper pleading. See Fla. Power &
    Light v. Canal Auth., 423 So. 2d 421, 423 (Fla.
    5th DCA 1982). As the supreme court has
    explained:
    [B]efore this potential jurisdiction of the
    subject-matter – – this power to hear and
    determine – – can be exercised, it must be
    lawfully invoked and called into action; the
    parties and the subject-matter of the particular
    case must be brought before the court in such a
    way that it acquires the jurisdiction and the
    power to act. There must be a right in dispute
    between two or more parties; a proceeding
    commenced under the proper rules of law;
    process must be served on the opposite party
    or parties in order that they may have an
    opportunity to be heard . . . The jurisdiction
    - 4 -
    and power of a court remain at rest until called
    into action by some suitor; it cannot by its own
    action institute a proceeding sua sponte. The
    action of a court must be called into exercise
    by pleading and process, prescribed or
    recognized by law, procured or obtained by
    some suitor by filing a declaration, complaint,
    petition, cross-bill, or in some form requesting
    the exercise of the power of the court. If a
    court should render a judgment in a case
    where it had jurisdiction of the parties, upon a
    matter entirely outside of the issues made, it
    would, of necessity, be arbitrary and unjust as
    being outside the jurisdiction of the subjectmatter
    of the particular case, and such
    judgment would be void and would not
    withstand a collateral attack, for upon such
    matter a presumption would arise that the
    parties had had no opportunity to be heard.
    Lovett v. Lovett, 112 So. 768, 775-76 (Fla. 1927)
    (emphasis added); see Lockwood v. Pierce, 730
    So. 2d 1281, 1283 (Fla. 4th DCA 1999); In re
    Estate of Hatcher, 439 So. 2d 977, 980 (Fla. 3d
    DCA 1983).
    In this case, before or after its dismissal from
    the case, the Association filed no pleading
    concerning its claim of lien. Section
    718.116(6)(a) contemplates two possible actions
    the Association might have pursued — “an
    action to foreclose a lien for assessments” and
    “an action to recover a money judgment.” The
    Association had the legal right to collect unpaid
    assessments from Garcia; however, the
    Association did not file a pleading to commence
    a proceeding to advance its right to recovery.
    For subject matter jurisdiction purposes,
    Lovett identifies “pleadings” as a “declaration,
    complaint, petition, [or] cross-bill.” 112 So. at
    775-76; Hatcher, 439 So. 2d at 980 n.2. Under
    the current rules of civil procedure, “pleadings”
    sufficient to invoke a court’s jurisdiction include
    a complaint, petition, counterclaim, crossclaim,
    and third-party complaint. Fla. R. Civ. P.
    1.100(a). In Green v. Sun Harbor Homeowners’
    Association, Inc., 730 So. 2d 1261, 1263 (Fla.
    1998), the supreme court relied upon rule
    1.100(a) to hold that while “[c]omplaints,
    answers, and counterclaims are pleadings,” a
    “motion to dismiss is not.”
    Similarly, the Association’s post judgment
    motion to disburse funds, filed after it had been
    dismissed as a defendant in the lawsuit, was not
    a pleading sufficient to invoke the jurisdiction of
    the court to adjudicate its right to the funds. The
    trial court was therefore without jurisdiction to
    disburse the funds so that its order disbursing the
    funds was void. See Lovett, 112 So. at 776;
    Defreitas v. Defreitas, 398 So. 2d 991, 992 (Fla.
    4th DCA 1981); Barolucci v. McKay, 428 So. 2d
    378, 379 (Fla. 5th DCA 1983). A void final
    order or judgment may be attacked under rule
    1.540(b).
    Because the March 26, 2003 order was void,
    we reverse the April 8, 2004 order denying the
    motion to set aside that order. On remand, the
    circuit court shall order the funds disbursed by
    that order to be redeposited into the court
    registry.
    Reversed and remanded.
    STEVENSON and SHAHOOD, JJ., concur.
    NOT FINAL UNTIL DISPOSITION OF ANY
    TIMELY FILED MOTION FOR REHEARING.



    I DO NOT SEE IT THE WAY OTHERS DO. I RELY ON COURT INFORMATION.

  • bargain7614th November, 2005

    YO, getitqwik.... Thanks for supporting my opinions with your research!

  • bargain7614th November, 2005

    YO, getitqwik.... Thanks for supporting my opinions with your research!

  • TheShortSalePro14th November, 2005

    Mold is everywhere, and has been since the beginning of time. There are certain types of mold, however, that can be harmful if humans come into contact with it including, but not limited to arimonium, aspirgillus and penicillium.

    Toxic molds can cause or exacerbate respiratory problems. Evidence of mold can be found under floor systems, in HVAC ducts, and behind walls.. away from sunlight.

  • getitqwik5th November, 2005

    As you are aware the quit claim deed does not release HER or HIM of their debt obligation and with a divorce that can be messy.

    You can make a short sale pitch to the lender. Get both of thems permission in writing and submit to lender to talk of their case and if they have accepted offer less than what they owe, you can deal with lender. Talk to lender ask for short sale package from their loss mitigation department. You could possibly make out better if it works.

  • InActive_Account13th November, 2005

    Most investors do not know this but a Quick claim deed
    is only legal and will only hold up in Court between a
    husband and wife. Consult your attorney if you doubt this info.

  • ryand14th November, 2005

    Depending on what this place has for equity you could do the easiest thing which i think would be to work it out with the owners and sell it. I have delt with the same situation and neither of the people wanted the other to make money. They lived apart and were hard to deal with. So, what i did was talk them into finally deeding the property to trust and letting me take care of the rest. I gave the person living in the house 1000.00 to move and the other one 1000.00 just because. I then put the property on the market and sold it before the sale. In your case, all you have to do is make up the back payments and bring the loan current so this way it can sit on the market and sell. If this doesnt make to much sense im sorry. its really late and im tired, -ryan

  • ryand14th November, 2005

    Yeah i dont know how well i "Quick Claim" would stand up.

  • kmatthews1st November, 2005

    I am just trying to get started myself and would love to know what websites are better than others. That is why I joined this website. Hopefully some people who have learned already will be willing to share.

  • kmatthews1st November, 2005

    I am just trying to get started myself and would love to know what websites are better than others. That is why I joined this website. Hopefully some people who have learned already will be willing to share.

  • maverickstar14th November, 2005

    Your best list for pre-foreclosure in Los Angeles County is the title companies. They have the list which you can download for FREE. It will give you all the information on the property. Always keep the title company in your back pocket as they have escrow officers that know how to close these escrows quickly on the preforeclosure side as well as the escrow on the FLIP. maverickstar

  • capitolinvestor15th November, 2005

    In the Washington Metro area, I use a list broker. better than any website, they send me a daily or weekly (depending on the jurisdiction) list of what was recently posted at the courthouse. Do a google seach and see if there are list brokers in your area. For me, it is worth the cost to have someone else do that research for me. Also, they are not expensive in this area.[ Edited by capitolinvestor on Date 11/15/2005 ]

  • scottydoo17th November, 2005

    How do you go about getting a list from a court house? What do you do with this information, simply knock on the door with some sort of offer?

  • getitqwik7th November, 2005

    What state are you in? What are your goals. Have you written anything down of what you intend to do or attempt? How is the maket in your area. Do you have financial backing or looking for lenders? You need to release some more info.

  • ChrisSanDiego7th November, 2005

    If your going to be my competition do you want me to train you to beat me out of deals?

  • phildo227th November, 2005

    Chris - yes, I would like that education if you are offering

  • Eric57th November, 2005

    Im going to move to San Diego to take you down myself....lol

  • ZinOrganization8th November, 2005

    Quote:
    On 2005-11-07 20:14, Eric5 wrote:
    Im going to move to San Diego to take you down myself....lol


    Can i come too... Its too cold up here in CT.

  • bgrossnickle8th November, 2005

    I have not been impressed with any of my personal observations of mentors. Either they just want your money, or they just want your money. None of them had the best interest of the student in mind.

    Brenda

  • Eric58th November, 2005

    I am in Wisconsin, you dont know what cold is in CT.

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