Changes to Foreclosure Process
If you normally find yourself on the delivering end of a foreclosure action, beware these very recent changes to the foreclosure process that could ruin your payday if you’re not careful.
On July 1, HB 65 went into effect creating major changes to foreclosure proceedings in Florida. The following are just a few ways this new law will impact those involved in the foreclosure process:
1. Requires certain language in all final judgments filed after July 1
and adds new notice requirements.
2.Creates a “Surplus Trustee” who is appointed by the Court to
find and disburse any surplus funds to the property owner
after paying all timely and valid claims made against the surplus.
3. Establishes a legal “rebuttable presumption” that the owner of
record when the Lis Pendens was filed is the person entitled to
the surplus funds after payment of subordinate lienholders who
have timely filed a claim. Furthermore, anyone who files a
claim for the surplus funds based on an alleged assignment of
those rights from the owner should have a written document
signed voluntarily by the owner including the
following:
a. A financial disclosure that specifies the assessed value
of the property;
b. A statement that the assessed value may be lower than
the actual value of the property;
c. The approximate amount of any debt encumbering the
property; and the approximate amount of any equity
in the property.
d. The foreclosure sale price and the amount of the surplus
(if the instrument was executed after the foreclosure sale);
e. A statement that the owner does not need an attorney
or other representative to recover surplus funds in a
foreclosure; and
f. A statement specifying all forms of consideration paid
for the rights to the property or the assignment of the
rights to any surplus funds.
4. Creates civil penalties of up to $15,000 for “victimizing”
residential homeowners who are subject to foreclosure
proceedings. The new law provides that the following
factors will be considered to determine whether a
homeowner was victimized (does not apply to the
foreclosing lender or any new lienholders):
a. The compensation received relative to the risk
and the amount of work involved.
b. The number of homeowners involved.
c. The relative bargaining position of the parties.
d. The relative knowledge and sophistication
of the parties.
e. Representations made in the inducement.
f. The timing of the agreement.
Time will tell how the Courts interpret these new rules when they start to be enforced. One can immediately see a conflict with some of these rules and the traditional principles of freedom to contract and free alienability of property. In the meantime, however, strict compliance with HB 65 is advised for anyone claiming entitlement to residential surplus funds in order to minimize the possibility of losing the funds, having the foreclosure action dismissed or reversed on appeal, or paying civil penalties of up to $15,000 per violation.
The new provisions are not yet available in the Florida Statutes online, but you can read the full text of the bill here.
By: Eduardo R. Arista, CPA, Esq.
Phone: (305) 444-7662
Email: Ed@AristaLaw.com |
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