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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


Comments

  1. No_avatar_colleague_thumb

    David Stooks Reply
    over 1 year ago

    James, can you provide the source for your statement that "only the party in ownership at time of public notice can claim the overage, as owner." I've never heard that before. Is that true for all counties in Florida?

  2. Colleague_thumb_avatar-jamikel

    James Mikel Reply
    over 1 year ago

    Yes it is true of all counties in Florida. In the absense of a Lis Pendens, which is not required for a tax deed sale, the owner of record at the time of public notification would be in standing for auction overage as owner. I have obtained tax deeds and filed quiet title actions on defendants whom acquired possession after the point of public notification and just prior to the sale. In one instance, the deed was recorded 3 days prior to the sale. He appeared at the hearing for quiet title and claimed that a lack of service/notification would adhere and the tax deed would be overturned. He was wrong. I made a quick point that the point of public notification would have been upon the date of print ad and the Tax Collector's Certification based upon the Owners and Encumbrance Report. The first ad date was +/- 30 days prior to his possession. The short of it is that the judge allowed time for the man to hore an attorney and a new hearing date was set. No one appeared, no motion for elongation of time or motion for telephonic hearing, we win. I, at the time of the case, had the exact applicable statute but that was quite a while back. I believe it was Title VI Chapter 48 of Civil Process and Procedure. The exact statute eludes me but the premise of the statute was based on the judicial foreclosure process and so stated the exception for when there is no Lis Pendens required. Sorry can't be more forthcoming with the exact number of statute.

  3. No_avatar_colleague_thumb

    David Stooks Reply
    over 1 year ago

    James, I'm not sure I'm understanding the exact situation you're describing. Are you saying that in case of a pending lawsuit the time of public notice somehow trumps the statute? When I look this up in the Florida Statutes Section 197.291(2) it states: "If the property is purchased for an amount in excess of the statutory bid of the certificate holder, the excess shall be paid over and disbursed by the clerk. The clerk shall distribute the excess to the governmental units for the payment of any lien of record held by a governmental unit against the property. In the event the excess is not sufficient to pay all of such liens in full, the governmental units shall be paid the excess pro rata in full satisfaction of the lien. If, after all liens of record of the governmental units upon the property are paid in full, there remains a balance of undistributed funds, the balance of the purchase price shall be retained by the clerk for the benefit of the person who on the day of the sale was the legal titleholder of record. . . ." I can't find any reference to any other time than at the "day of the sale." I admit to being a complete newbie. Could you explain this? Was this case that you sight settled law or was it just that the guy didn't show up to court so he lost by not being present?

  4. No_avatar_colleague_thumb

    David Stooks Reply
    over 1 year ago

    James, as I re-read your initial response, it sounds like the guy who purchased the deed 3 days before the sale wanted to keep ownership of the property and this was the real dispute. In which case I can understand how the notice of a public auction would have been sufficient warning. My question is about who gets the excess proceeds after the sale. From the statue I sighted earlier, it sounds like it would have to be the title holder at the time of the sale, not time of the auction notice. Is this correct?

  5. Colleague_thumb_avatar-jamikel

    James Mikel Reply
    over 1 year ago

    It is indeed the person in titled ownership at the time of the public notification. While yes the above was a bit convoluted in describing the issue at hand it lends itself to the picture of notification. The guy wanted to retain ownership by and through overturn of the tax deed or the right to claim excess funds. It was brought out that to claim the overage, in the above scenario, the gentleman would have needed explicit right to claim any overage and granted in the conveyance or an assignment thereof. When an assignement is presented with claim request, to the Clerk, there are specific requirments as to the amount and under what circumstances the assignment will be upheld. I have spoken to both attorney's and Clerk office friends who have confirmed this, aside from my personal experience.

  6. No_avatar_colleague_thumb

    David Stooks Reply
    over 1 year ago

    Hmm. I'd really like to see something in a statue that contravenes the statute I listed above. I don't know how the county clerk can decide to interpret ownership based on an auction announcement date when the statue clearly says it's the title holder on the "day of the auction." If your lawyer has any legal references, I'd be really interested. Thanks for all your help, I really appreciate you helping a newbie.

  7. Colleague_thumb_1396941457-avatar-clemdane

    Kirsten Walstedt Reply
    about 1 month ago

    How do you search the tax collectors records for properties which have 2 or more unredeemed tax certificates?

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