After buying a mortgage auction can you use excess auction funds to pay HOA payoff?

Hey Joe,

Welcome to the wild world of Florida foreclosure auctions.
You're asking a great and very common question, so let me try to clarify it as simply as possible.

Under Florida law, the money paid over the judgment amount at auction is called a "surplus", and it follows a very specific distribution order:

1) Junior lienholders to the foreclosed mortgage get first crack at the surplus.

2) If anything remains, the previous owner (or their heirs) can claim it.

3) If no one claims it after 1 year, the winning bidder (you) can try to recover it.

4) After a few years, unclaimed funds eventually go to the Florida Department of Education.

Now, here’s the key part for your case:

The HOA lien is not a junior lien to the foreclosed mortgage unless it was formally recorded after the mortgage and named in the foreclosure complaint. But even if it was, they’d likely avoid claiming from the surplus. Why?

Because once the HOA tries to claim from the surplus, they're essentially saying: "We're a junior lienholder and subordinate to the mortgage."

That’s risky for them, they could be behind others in the queue and get nothing.
Instead, HOAs usually prefer to go after you, the new owner, because the lien survives the foreclosure and attaches to the property. They don’t need to fight over crumbs, they now have a solvent owner who can be held accountable.

It's important to clarify that in Florida, HOAs are considered "super liens", meaning they have special legal treatment. Even without being formally recorded, certain HOA claims (such as unpaid assessments) survive foreclosure and automatically attach to the property. This is part of why a detailed title search before bidding is absolutely critical in this business.

Also, keep in mind that Florida limits how much the HOA can collect.

-For standard buyers (like you), the HOA can only claim the last 5 years of unpaid assessments, due to the statute of limitations under Florida law.

-If the property was acquired by a bank (REO), then under the Safe Harbor rule, liability is capped at the lesser of 12 months of dues or 1% of the original mortgage.

So, technically, you can try to file a motion to redirect the surplus toward the HOA payoff, or seek reimbursement for the payment you already made. But:

-It's very unlikely the court will prioritize your claim over the former owner or other lienholders.

-The HOA almost certainly won't agree to it.

That said, you're not stuck. Here's where it gets practical: Negotiate!

You might be able to reduce late fees, interest, or even negotiate a payment plan. In my experience, many HOAs are open to it, especially when the previous owner was long gone and they had no hope of collecting. You’re a fresh start, and they might prefer some money now over dragging things out.

So while it's probably not worth hiring a lawyer just to chase the surplus, you still have leverage to work out a better deal on the HOA balance.

Best of luck, and congrats on your auction win, even with the headaches, it's often worth it!