Tax Sale Overages

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Tax Sale Overages

Thursday, October 20

O.K. So I have been getting a lot of questions lately from my website in regards to tax sale overages in Florida, how to claim them, what is true, who to trust, etc., etc.

One of the people in correspondence disclosed that he had paid over $5,000 for a system to assist him in getting those overages in Florida via an assignment. Why after paying so much was he contacting me? He was unhappy with the results.

There seems to be two different plans of action being promoted.

Plan One is to claim the overage as owner.

Basically buy the property just prior to the auction, let the auction happen then claim the overage. This is a valid plan, it can work. It is however not as easy as it looks, you must learn how to conduct a title search to assure the property is not riddled with liens/mortgages which would be superior to your interest in the overage. Secondly, only the party in ownership at time of public notice can claim the overage, as owner. This requires the conveyance of the property to be made prior to public notice of the auction. So, if you wait until the auction is posted in the paper, it's too late. You will have to get the property before the tax collector certification is posted in regards to the tax deed auction. So your best course of action is to search the tax collectors records for properties which have 2 or more unredeemed tax certificates. Buy the property from the owners and wait for the certificate holder to apply for the tax deed. After application is made, the tax deed auction will occur and you can then claim the overage.

I.E. Joe sells his property to you for $1 just before the tax deed auction. The opening bid at the auction is $1. There is a mortgage of $2 and a HOA lien for $1. The winning bidder at the auction pays $2. In this scenario, you as the overage claimant as owner would get zip. Another scenario, winning bid is $6. Order of superiority: tax man gets his $1, HOA gets there $1, mortgage holder paid $2, owner gets balance. Another interesting fact, non owner claimants have 60 days to submit their claim if they do not then they are further barred from making claim for the overage. So, if the mortgage holder does not make claim, funds are disbursed to other claimants based on superiority.

Plan Two is to assist the owners in claiming the overage via an assignment to you. How it works, you contact the owner and have them assign the overage to you. You give them a flat rate, say $500 and you are entitled to keep a percentage of proceeds and disburse the rest back to them.

This doesn't work. Here's why.

Background: F.S. 45.031 In any sale of real property under an order, the procedures provided in this section and ss. 45.0315-45.035 may be followed as an alternative to any other sale procedure.

Forward: The prevailing civil procedure for cliaming overage as an assignee would be persuant to 45.033.

(a) The transfer or assignment is in writing and the instrument:

1. If executed prior to the foreclosure sale, includes a financial disclosure that specifies the assessed value of the property, a statement that the assessed value may be lower than the actual value of the property, the approximate amount of any debt encumbering the property, and the approximate amount of any equity in the property. If the instrument was executed after the foreclosure sale, the instrument must also specify the foreclosure sale price and the amount of the surplus.

2. Includes a statement that the owner does not need an attorney or other representative to recover surplus funds in a foreclosure.

3. Specifies all forms of consideration paid for the rights to the property or the assignment of the rights to any surplus funds.

(b) The transfer or assignment is filed with the court on or before 60 days after the filing of the certificate of disbursements.

(c) There are funds available to pay the transfer or assignment after payment of timely filed claims of subordinate lienholders.

(d) The transferor or assignee is qualified as a surplus trustee, or could qualify as a surplus trustee, pursuant to s. 45.034.

(e) The total compensation paid or payable, or earned or expected to be earned, by the transferee or assignee does not exceed 12 percent of the surplus.

(4) The court shall honor a transfer or assignment that complies with the requirements of subsection (3), in which case the court shall order the clerk to pay the transferor or assignee from the surplus.

(5) If the court finds that a voluntary transfer or assignment does not qualify under subsection but that the transfer or assignment was procured in good faith and with no intent to defraud the transferor or assignor, the court may order the clerk to pay the claim of the transferee or assignee after payment of timely filed claims of subordinate lienholders.

(6) If a voluntary transfer or assignment of the surplus is set aside, the owner of record shall be entitled to payment of the surplus after payment of timely filed claims of subordinate lienholders, but the transferee or assignee may seek in a separate proceeding repayment of any consideration paid for the transfer or assignment.

FINAL

In accordance to the above, the funds will not be disbursed to you under Plan Two . FYI-There are a whole list of requirments to becoming a Surplus Trustee including 1 year of training, $500,000 bond, liability insurance and approval by Dept Of Licensing. If you are not a surplus trustee and if the court finds you are defrauding the owners, then they at their discretion can pay directly to the owner instead of you. Disclosing the retention of more than 12% on the assignment would cast reasonable doubt on your intent and must be disclosed on the assignment.

Case At Hand

Asset Co gets assignment of overage from owner, Joe. Asset Co then presents assignment to County along with proof of prior ownership from Joe. County attorney then advises to make payment to Joe and states that Asset Co can get paid by Joe and ignores the assignment. It is their right and is mandated by statute.

See Page 6

http://www.lakecountyclerk.org/record_searches/tax_deeds/tribute_web/ShowPDF.aspx?D=24606&B=1