What are Surplus Funds from Foreclosure Sales and How Can They Impact an Association?  

un vuth

Surplus funds are extra monies above the foreclosure judgment amount held by the Clerk of Court following a sale in a foreclosure case. The plaintiff in such cases (either the Bank or the Association) may only bid up to its judgment amount at the sale. If the winning bid is higher than the judgment amount, the difference between the winning bid and the judgment amount are the surplus funds.  For example, a Bank obtains a judgment for $300,000.00 representing the past-due principal, interest, late fees, attorney’s fees, and costs associated with the mortgage foreclosure lawsuit it filed. At a subsequent public sale, the Bank bids up to its $300,000.00 judgment but the property is so highly coveted that it attracts additional bidding by private parties. These third parties push the bidding well above $300,000.00 and the winning bid is ultimately, for example, $450,000.00 from third-party bidder, John Doe. In this scenario, the surplus funds are $150,000.00.  The Clerk will hold the $150,000.00 in surplus funds in the court registry until a court order instructs the Clerk as to how to distribute the money. A few weeks following the sale, the Clerk will issue the certificate of disbursement which itemizes how much money, if any, is held in the court registry from the foreclosure sale. All parties to the foreclosure case will receive a copy of the certificate of disbursement and will be put on notice of any surplus fund amounts.  If there’s no surplus funds, then the plaintiff Bank, in our example, is the winning bidder at the mortgage foreclosure sale.  Junior lienholders in such a mortgage foreclosure case such as second mortgages, and condominium and homeowners associations claiming unpaid assessments, may and should also file claims against the surplus funds.  The sooner a claim is filed, the sooner it may be set for hearing before the judge. Of course, often there may not be enough surplus funds to pay all junior lienholders in full, so time is of the essence. A junior lienholder who gets in front of the judge first may get paid on its claim if no other...

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Part 3 of Understanding Changes to Florida Statutes for Condominiums, Cooperatives and HOAs: What HB 437 Means for Community Associations

Steven G. Rappaport
Michael Ungerbuehler

House Bill 437 (HB 437), a new law that went into effect on July 1, 2023, should be noted by any person living in a community association and every board member of a community association in Florida. With respect to condos, HB 437 adds Patriot Day to the specified days during which unit owners may display 1 portable, removable flag of the United States or one of its military branches. As for HOAs, homeowners may now display up to 2 flags representing the United States, a US military branch, Florida, a POW-MIA flag, and/or a “first responder flag”; previously, only 1 flag was statutorily permitted. The statute defines a “first responder flag” as recognizing and honoring and of the following: law enforcement officers, firefighters, paramedics, EMTs, correctional officers, 911 public safety telecommunicators, advanced practice registered nurses, licensed practical nurses, registered nurses, statewide urban & rescue program participants, federal law enforcement officers. Finally, HB 437 creates a new section of Chapter 720 providing that a homeowners association may not prohibit owners or their tenants from installing, displaying or storing items that are not visible from the parcel’s frontage or an adjacent parcel. HB 437 Key Factors: HB 437 amends Chapter 718 to provide for Condominium Associations that certain flags may now be flown on Patriot Day (September 11th) in addition to the existing list of holidays for which a Condominium unit owner may fly 1 portable, removable flag.HB 437 further amends Chapter 720 for Homeowners Associations to allow the flying of up to two (2) flags and expands the list of allowable flags to include “First Responder flags”. Why is HB 437 important? For Homeowners Associations, this legislation also creates a new Section of Chapter 720 to allow the installation, display and storage of items in a Homeowner’s rear yard, so long as such items are not visible from the frontage of the parcel or from an adjacent parcel. This would include the ability of a homeowner to store, place or install any items, such as boats, RV’s, and artificial turf, or any other items, so long as they are not visible...

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