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
i believe you are entitled to it if you act in time. I would get in touch with the bank and a lawyer.
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.
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.
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!
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);
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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.
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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
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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.
YO, getitqwik.... Thanks for supporting my opinions with your research!
YO, getitqwik.... Thanks for supporting my opinions with your research!
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.
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.
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.
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
Yeah i dont know how well i "Quick Claim" would stand up.
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.
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.
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
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 ]
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?
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.
If your going to be my competition do you want me to train you to beat me out of deals?
Chris - yes, I would like that education if you are offering
Im going to move to San Diego to take you down myself....lol
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.
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
I am in Wisconsin, you dont know what cold is in CT.